Pakistan seeks fresh start with Japan to boost economic links
This comes amid Islamabad's effort to engage more Asian nations and diversify trade partnerships beyond China.
Customers visit a car dealer in Islamabad.
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ISLAMABAD: Japanese cars have long been synonymous with quality and reliability in Pakistan’s auto market.
From compact hatchbacks to luxury sedans, their popularity continues to dominate dealership floors and city streets.
Much of this demand is met through private importers such as Haji Baseer, who brings in both new and secondhand models.
"Used cars from Japan are basically in good condition. They’re strong, have a long life, and are in huge demand in the market,” he told CNA.
Pakistan imports millions of dollars' worth of cars, machinery and steel from Japan every year.
Between August 2024 and August 2025, imports from Japan grew by 28 per cent, according to data visualisation and distribution platform Observatory of Economic Complexity.
In contrast, Pakistan’s exports to Japan – mostly textiles and cotton products – fell by 11 per cent over the same period.
Government representatives believe the trade deficit of US$127 million can be narrowed, saying Japan’s recent leadership transition offers an opportunity to reset and strengthen bilateral and economic ties.
Japan in October swore in Sanae Takaichi as its first female prime minister, succeeding Shigeru Ishiba.
Pakistani officials say a more proactive diplomatic approach could help the country showcase its value beyond traditional export sectors.
“Japan, of course, is now a very advanced industrial economy and has little use for most of the raw material that Pakistan produces,” said former commerce minister Khurram Dastgir Khan.
“But Pakistan could be a tremendous partner to Japan in its own effort to gain IT expertise.”
He added that with its expanding technology sector, Pakistan could offer Japan cost-effective IT talent and services.
GEOPOLITICS STAND IN THE WAY
However, analysts warn that Islamabad’s longstanding defence and economic partnership with Beijing may complicate efforts to deepen engagement with Tokyo, given Japan’s own tense rivalry with China.
Experts note that Pakistan’s close alignment with China is a key reason its relationship with Japan has drifted over the past two decades.
Attempts to revive ties, they add, will require careful navigation of wider geopolitical dynamics – not only China’s sensitivities but also Japan’s security commitments.
Diplomatic observers point to Japan’s membership in the Quad – a security grouping that also includes the United States, India and Australia.
"Japan is part of Quad, which is … against China and its ally Pakistan,” said Naela Chohan, a former special secretary at Pakistan’s Ministry of Foreign Affairs.
She noted that Islamabad and Tokyo also diverge in their positions on the South China Sea. Pakistan has previously said it supports China’s stance on the issue and several other territorial disputes, while Japan has consistently advocated for upholding international law at sea.
BOOSTING INVESTMENT
Despite these geopolitical complexities, analysts argue that Pakistan should prioritise attracting investment as it seeks to revive its struggling economy.
One potential partner is the Japan International Cooperation Agency (JICA), which already supports development projects in the country.
"We can have a broader kind of arrangement with (the) Japanese in terms of investment in our energy sector and in the agriculture sector,” said Nasir Iqbal, a professor at the Pakistan Institute of Development Economics.
“These are the two core areas where I think the JICA … and also both governments … can play a role.”
Pakistan’s outreach to Japan is part of a broader push to deepen economic ties across Asia, reflected in Prime Minister Shehbaz Sharif’s recent visit to Malaysia.
No Pakistani head of government has officially visited Japan in the past 20 years. Sharif was scheduled to visit in October but the trip was postponed due to Japan's leadership transition.
Officials said both nations remain committed to advancing cooperation, and that new dates will be set.
Observers hope that under the new Takaichi administration in Tokyo, this long diplomatic pause will finally see a new beginning.
