Artificial Intelligence in Trade Diplomacy: The U.S.-China Experience and Strategic Implications for India

Abstract

This study explores the implications of the U.S.-China geopolitical rivalry in AI for Pakistan's digital sovereignty, guided by the theoretical lens of offensive realism (Mearsheimer, 2001), highlighting how such rivalries can destabilize national security in the realm of artificial intelligence. Caught between its strategic alliance with China and its historical ties with the U.S., Pakistan faces a security dilemma that exacerbates its cyber vulnerabilities, infrastructural dependencies, and risks of sovereignty erosion (Jervis, 1978; Rid, 2020). Drawing upon primary data from Pakistani cybersecurity institutions, comparative regional case studies, and recent policy analyses (Giles, 2015; Jaitner & Geers, 2015), this article contends that the AI arms race intensifies Pakistan’s strategic precarity—manifested in debt-induced tech lock-ins under the China–Pakistan Economic Corridor (CPEC) and restricted access to Western digital ecosystems due to U.S. sanctions (Greenberg, 2019; Jasper, 2022). It argues that overreliance on Chinese digital infrastructure, currently comprising 78% of Pakistan’s mission-critical systems (Case, 2016), combined with fragile domestic capacity, leaves the country exposed to cyber espionage, data breaches, and geopolitical coercion (Kolodii, 2024; Maschmeyer, 2024). Through the lens of survivalist realism, this study proposes a three-tier policy framework. In the short term, it advocates for a National AI Security Task Force and robust data localization laws (Parliament, 2023). For the medium term, it recommends overhauling Pakistan’s educational infrastructure to produce 10,000 AI specialists annually (Shires, Kaminska, & Smeets, 2022). In the long run, the paper envisions the formation of a South Asian Cyber Security Pact to foster collective resilience (Vernygora & Vdovychenko, 2023). These findings contribute to a broader understanding of the digital sovereignty crisis confronting secondary states amid an intensifying AI-driven great power competition (Rid, 2012; Lupovici, 2021).