US-China race for Pakistan: Trump’s transactional diplomacy or Xi’s financial doles?

With China announcing a $3.4 billion loan rollover for Pakistan and an increased engagement between Washington DC and Islamabad, experts believe that Pakistan could emerge as a surprising centre of attention-garnering renewed interest not just from China, its long-standing ally, but also from an increasingly transactional Trump-led United States. To unpack these evolving dynamics, we spoke to Michael Kugelman, Senior Fellow at the Asia Pacific Foundation, who offered deep insights into the strategic recalibration underway in the region.

In a rapidly shifting South Asian geopolitical landscape, Kugelman highlighted how Pakistan’s civilian and military leadership, particularly Field Marshal Asim Munir, has effectively tapped into key U.S. interests-from critical minerals to cryptocurrency and counterterrorism. These alignments, though narrow, have sparked a fresh wave of engagement with Washington, despite Pakistan’s entrenched alliance with China. In fact, recent developments include crypto firms linked to Trump’s family doing deals with Pakistan’s new crypto council—pointing to a blend of policy and personal interests driving U.S. attention.

On Iran and Afghanistan, Kugelman noted limited but real convergence, especially on counterterrorism. He also pointed out how the U.S. may be using Pakistan’s proximity to Iran to quietly gather intelligence, even amid limited military strikes.

India, meanwhile, appears sidelined-possibly due to its cautious response to Trump’s claimed role in brokering a ceasefire with Pakistan. Kugelman cautioned, however, against overstating a U.S.-Pakistan pivot, noting strong underlying India-U.S. ties and ongoing trade negotiations.
He also touched on Pakistan’s adept diplomacy in balancing its China and U.S. relations, and how shifts in Bangladesh and growing ties with Turkey further strengthen Islamabad’s strategic posture.

As for Trump himself, Kugelman described his fascination with power figures like Muneer, contrasting it with his longstanding rapport with Prime Minister Modi-hinting that personal chemistry may yet influence future U.S.-India ties.

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