Thursday, May 23, 2013

How Strategic Are Pakistan-China Ties?

China's new Prime Minister Mr. Li KeQiang has just ended a two-day visit to Pakistan. Speaking to the Senate, Li declared that "the development of China cannot be separated from the friendship with Pakistan". To make it more concrete, the Chinese Premier brought with him a 5-points proposal which emphasizes "strategic and long-term planning", "connectivity and maritime sectors" and "China-Pakistan economic corridor project".

Source: China Daily

From L to R: Premier Lee, President Zardari and Prime Minister Khoso
Here's a recent report by  China's State-owned Xinhua News Agency that can help put the Chinese premier's speech in context:

“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."

The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:

1. Frequent US statements to "check" China's rise.  For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."

Source: The Guardian

2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could  block Chinese sea lanes and cripple its economy, business and industry.

Karakoram Highway-World's Highest Paved International Road at 15000 ft.

Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and  to build land routes (motorways, rail links, pipelines)  from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.

Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz

As to the benefits for Pakistanis, the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.

Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the  Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".

Related Links:

Haq's Musings 

US-Pakistan Ties and New Silk Route

Can Pakistan Say No to US Aid?

Obama's Pakistan Connections

Seeing Bin Laden's Death in Wider Perspective

China's Investment and Trade in South Asia

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?


Hopewins said...

^^RH: "As to the benefits for Pakistanis, the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs"

Link provided to article from Dec 2010, i.e two and a half years ago.

Can you show us where these Chinese Investments over the last two and a half years are in the list provided by our BOI?

Mayraj said...
The Karakoram Highway: China's Asphalt Powerplay in Pakistan

By Hasnain Kazim
China is shelling out massive amounts of money and manpower to improve Pakistan's Karakoram Highway, the highest motorway in the world. The supposed gift to its neighbor is a perfect example of China's economic strategy of taking on short-term expenses for the sake of long-term benefits.

Imran said...

The following link paints a grim picture of the Pak-China Economic Corridor…. Pakistan needs to step up and prepare its institutions to absorb the economic stimulus that comes from China otherwise, its just spilled milk…

Riaz Haq said...

Imran: "The following link paints a grim picture of the Pak-China Economic Corridor…. Pakistan needs to step up and prepare its institutions to absorb the economic stimulus that comes from China otherwise, its just spilled milk… "

This Express Tribune writer is totally ignorant and off the mark. Chinese help by building infrastructure and not by handing over cash which is the best way to help Pakistan where govt is corrupt

There have been several books on this subject. The most recent is Dispensable Nation by Vali Nasr which details how China works with Pak and other allies.

Chinese investments don't show up in SBP reports because the SBP doesn't see the cash; the investment and loans are in the form of hardware and services in projects like Gwadar port, Karakoram Highway etc.

Riaz Haq said...

Here are a couple of excerpts of a story from The Hindu on Chinese infrastructure investments in Pakistan:

China's FDI inflows into Pakistan have shown a sudden rise after the Pakistan-China FTA in 2007 and accounted for 6.5 per cent of all FDI into Pakistan in 2008. A major reason for Chinese interest in Pakistan is the trade and energy corridor from the Gwadar (in Balochistan) port of Pakistan to the Western regions of China. Apart from being short and secure, this route serves as an alternative to the sea route that passes through the Straits of Malacca.
China is building infrastructure, which includes improving connectivity in border areas. China is making strategic investments in important sectors, particularly in visible infrastructure projects and grants-in-aid to India's neighbouring countries, without considering the immediate economic profits. It is time for India to get involved in projects without looking at immediate benefits.

Hopewins said...

^^RH: "Chinese investments don't show up in SBP reports because the SBP doesn't see the cash; the investment and loans are in the form of hardware and services in projects like Gwadar port, Karakoram Highway etc."

That is not the way international transactions work.

The way it works is that the main Chinese company sets up a sub-office in Islamabad. The mother-company then invests in this Islamabad sub-company (via central bank accounting) just enough money to import all the equipment, consultant, and material they need from China. The Islamabad sub-company then the imports all these things, including workers(salary), as any other company in Pakistan would. This is the way all global companies do it.

You can't just bring stuff over into Pakistan and bypass the SBP. No sovereign country will allow that.

This was not even done between communist allies during the cold war, let alone a country like ours with western-style accounting systems.

Riaz Haq said...

HWJ: "The way it works is that the main Chinese company sets up a sub-office in Islamabad. The mother-company then invests in this Islamabad sub-company (via central bank accounting) just enough money to import all the equipment, consultant, and material they need from China...."

Ok, then explain to me how billions of dollars worth of Chinese investment in Gwadar and Karakoram Highway and other infrastructure projects is accounted for? There's no denying it's there. So is it in the form of soft loans or grants or some other form not reflected in SBP FDI figures?

Suhail said...

The Nawaz led government backed by Saudi Arabia is likely to exert pressure on Pakistan to fall in line with the US interests in the region, including containment of China by limiting its access to the region. The big bail out by Saudi Arabia will probably not leave Pakistan in a position to counter US-Saudi pressures. So there is a good possibility of the new government falling in line to stalling Chinese economic interests in Pakistan.

Riaz Haq said...

Suhail: "The Nawaz led government backed by Saudi Arabia is likely to exert pressure on Pakistan to fall in line with the US interests in the region, including containment of China by limiting its access to the region. The big bail out by Saudi Arabia will probably not leave Pakistan in a position to counter US-Saudi pressures. So there is a good possibility of the new government falling in line to stalling Chinese economic interests in Pakistan."

I disagree. Pakistani military has a lot of say in foreign and national security policy.

And the military will preserve its close ties with the Chinese because of its weapons acquisitions and joint military production.

A recent Pentagon report said that Pakistan is China's primary customer for conventional weapons. It added that "China engages in both arms sales and defense industrial cooperation with Islamabad, including co-production of the JF-17 fighter aircraft, F-22P frigates with helicopters, K-8 jet trainers, F-7 fighter aircraft, early warning and control aircraft, tanks, air-to-air missiles, anti-ship cruise missiles, and cooperation on main battle tank production".

Shams said...

I think Balochistan will soon be liberated. US will make that happen to thwart the Chinese strategy of energy transit routes through Gwadar ad Balochistan.

Riaz Haq said...

Shams: "I think Balochistan will soon be liberated. US will make that happen to thwart the Chinese strategy of energy transit routes through Gwadar ad Balochistan."

I think this idea of Balochistan independence is just a pipe dream.

Only a third of the population of Balochistan is Balochi speaking. The Baloch Nationalists are too few in number, highly disorganized and deeply divided among themselves. They are no more than a nuisance that Pak military can effectively handle.

Besides, almost as many ethnic Baloch people live outside of Balochistan province (in Sindh and Southern Punjab) as in Balochistan, according to Anatol Lieven(Pakistan-A Hard Country)....and they are quite well integrated with the rest of the population in Pakistan.

Asif Zardari, the current president of Pakistan, is an ethnic Baloch, as was former President Farooq Laghari and current interim Prime Minister Mir Hazar Khan Khoso.

Retired US Army Col Ralph Peters is a military intelligence guy who knows a lot about Balochistan. Here's an excerpt of a Huffington Post Op Ed on Baloch insurgents:

According to Peters, one of the most serious issues with the Baloch independence movement is "deeply troubling" infighting. In fact, he is emphatic in his condemnation of such bickering; going so far as to assert: "they are quickly becoming their own worse enemies."

In his view, individual Baloch simply don't understand that their personal feuding undermines the larger movement: "Certain Baloch fail to understand that their only hope in gaining independence is if they put their own egos and vanity aside and work together. This is the cold hard fact. They are already outgunned and outmanned. Pakistan will continue to to exploit their differences until they realize this."

So long as the Baloch continue to engage in "petty infighting," including "savaging each other in emails," (Ralph) Peters is pessimistic they can garner widespread support in the West. In fact, he warns that such infighting could eventually put off even their staunchest supporters.

As a result, he recommends that the Baloch leadership and activists set the example and halt their public bickering: "The Baloch leaders need to stop their severe personal attacks on each other and others. In the military, we say that you don't let an entire attack get bogged down by a single sniper. But, there are individuals out there who are causing divisions and attacking people. They tend to look at the debate as if you don't agree with me completely then you're my enemy. This undermines their cause."

Until these leaders and activists "support the big picture," Peters offers little hope that the broader Baloch nation will be able to "work together, put aside their deep divide, and unify." This troubles Peters as he confides: "At this point, do I believe they have a good chance of achieving independence? No. But, it would be much higher in the future if they just start working together. It's frustrating that the leaders can't unite."

Peters is also bothered by the Baloch tendancy to blame such infighting on covert operations by Pakistan's military and security services: "The region as a whole tends to blame conspiracy theories. But, I have come to believe that you never accept conspiracies when something can be explained by incompetence. There are probably a mix of things going on here. The Pakistani military and intelligence services probably have provocateurs working in Balochistan just like they do in Afghanistan. They live by the old rule of divide and conquer and they are good at that. But, the bigger issue is the Baloch's own egos. That's what needs addressed."

Anonymous said...

Riaz Sb.
I am in the process of reading “China” by Henry Kissinger. It is a fascinating book and a must read for everyone who is interested in China or in international relations.
Interesting thing is the Chinese have always formed alliances’ to counter their enemies. Their relationship with Pakistan also falls in the same category. We are allies because of a common enemy that needs to be contained. So this is a relationship of mutual needs.

As far as Balochistan is concerned, I am a skeptic. If you study the separatist movements around the world they always follow certain pattern. Large demonstrations in big cities, united leadership with common goals, ideologically organized groups fighting for a common purpose etc. None of these factors exist in Balochistan. In Balochistan, it the feudal sardars who are scared that sooner or later Pakistan will start educating the poor and then these sardars will lose their grip. Nawab Akbar Bugti once said that “he does not want his people to get educated, because education will only bring them clerical jobs in government offices” and this was the man whose son was at one point the provincial minister of education. Education and people’s empowerment is what they are scared of and think that Balochistan’s separation from Pakistan is the only way for them to sustain their power.
Anyway this is not 1971, today’s Pakistan is much more integrated and socially united. Today you can go from Baltistan to Gawadar and find people using same language, dressed same way and discussing same the issues.


Hopewins said...

^^RH: "Ok, then explain to me how billions of dollars worth of Chinese investment in Gwadar and Karakoram Highway and other infrastructure projects is accounted for? There's no denying it's there. So is it in the form of soft loans or grants or some other form not reflected in SBP FDI figures?"

It is all there. When we say "China will build Gwadar" and "China will build Highway", we mean that China will be the contractor. How much of the cost comes from our own money, how much from world bank, how much from western aid and how much from China (equity or loan) is another question altogether.

Note that we took Gwadar and handed it over to the Singaporeans to run (for a while). If China OWNED Gwadar, would they have allowed that? China is at best a minority owner and loan provider. The rest of the money did not come from China. In fact, the money WENT TO China to import the heavy equipment, and that shows up in the SBP record as well.

(Note that Chinese equity shows up as incoming FDI, but Chinese loans show up in the increasing External Debt total)

Same for Karakoram.

The Chinese are not what you think. They are very shrewd now. They have sworn never to repeat the mistakes they made in the 60s of simply handing out stuff to other Third-World countries in the name of People's Solidarity.

Riaz Haq said...

Here's a News Op Ed by Ambassador Jahangir Kazi, a prominent Baloch:

Nawabzada Changez Khan Marri’s becoming chief minister of Balochistan may portend the beginning of interesting times for Balochistan and Pakistan. His father, Nawab Khair Bakhsh Khan Marri, is a legend in his own lifetime. He is the most important and respected Baloch leader of the contemporary era. Today, he is in his declining years but remains the living symbol of Baloch resistance to the tyranny, repression and exploitation that the Baloch people have endured since the creation of Pakistan. Every effort by the establishment to demonise him in the eyes of his own people has abjectly failed.

Changez Khan Marri is unlikely to be congratulated by his father if he is appointed chief minister. But, as he has rightly observed, time move on and reconciliation is now the best path to restoring the stolen dignity and human, economic and political rights of the Baloch. For this to be possible, it will be essential to immediately end the shameful atrocities that are secretly inflicted on the politically active nationalist Baloch youth. The first casualty in such dirty campaigns is the truth.

If the new prime minister and his chief minister in Balochistan are not able to rise to the challenge of ending this unspeakable tragedy – and indeed other tragedies around the country – no stability or development will ever be possible in Pakistan.

While the Baloch have displayed the tenacity and courage of the Kurds, they should not continue to condemn themselves to the sorrows and tribulations that the valiant Kurds had to suffer. The Kurds are today discovering their rights and their dignity through what I call the P2R policy – political resistance and reconciliation. The Baloch should seek to emulate the Kurds in this respect.

But, as the saying goes, it takes two hands to clap. And today the other hand is the hand of repression, misrepresentation and exploitation. The nature of this hand has to change to a real and reliable hand of partnership, understanding and respect. Only then can the clap of reconciliation in Balochistan and elsewhere begin to be heard around the country.

The Baloch insurgency is completely different from the Taliban insurgency. One is a defence of identity, dignity and rights and the other is an attempt to forcibly impose a doctrine and ideology on a people who have been Muslim for more than a millennium. One is resistance to ‘zulm’ (atrocity) and the other is ‘fitna’ (discord).

If Nawaz Sharif, Imran Khan, Changez Marri, Mahmood Achakzai and an emerging new PPP leadership can find it in themselves to become a genuine and recognised part of a national people’s movement for genuine national transformation, the country’s future will brighten immeasurably. If not, they will sooner or later render themselves politically irrelevant. To be fair to Imran Khan, he has much less to prove than the others. But Nawaz Sharif, Imran Khan and, maybe, Changez Khan Marri will have the opportunity to prove their mettle over the coming months.

Riaz Haq said...

Here's a piece by a CFR Fellow Pir Zubair Shah on the significance of Chinese Premier's visit to Pakistan:

The first foreign leader to visit Pakistan following its recent elections was the prime minister of China, signifying the close relations between the two countries. During the visit, Pakistani president Asif Ali Zardari said, "Our top priority is to further strengthen economic linkages."

Historically, the relations between Pakistan and China have been confined to security and defense ties, but commercial relations have been increasing in the past two decades. Bilateral trade between the two countries has reached $12 billion, and both sides are committed to reaching $15 billion over the next two to three years.

An important milestone in this direction was achieved earlier this year when the Pakistanis handed over management of the Gwadar deep sea port to China. The port has important geostrategic and political implications for U.S. policy and interests in the region: it will connect China to the Arabian Sea and to the Strait of Hormuz, an important gateway for a third of the world's traded oil. If used as a Chinese naval base, the port will have new implications, not only for the United States but also for its primary ally in the region, India. China is also heavily investing in Pakistan's nuclear energy projects. Due to Pakistan's history of proliferation, the United States has serious concerns over this cooperation.

The United States can use the growing commercial relations and the increasing economic dependence between the two countries to address some of the concerns and goals that it shares with China in the region. For example, China can be helpful for the United States in Afghanistan, by asking Pakistan to bring the Taliban leadership operating out of the country to the negotiation table. Similarly, China and the United States can work on the issue of terrorism emanating from Pakistan, which is a threat to the security of both countries.

Suhail said...

Balochistan politics is all Sardar dominated, who are cash strapped but want a lot of money to support their lifestyle. On their own and within their tribe, there is no enterprise or industry so they are dependent on outsiders (as subcontractors) to do all the hard work in their area (mining related) and pay them money as a sort of royalty, or get funds from government. In the recent years most of the outside subcontractors (including major state groups like Pak Steel who were mining for iron ore) have gone because of extortion and killings. The only successful subcontractors who remain are Pakhtoons who have their own law and order system in place where ever they work. But they are into small time work like marble and stone quarrying etc. The Baloch Sardars do get benefits out of it but this is not much. Even now the biggest source of funds for Baloch Sardars is from government funds, demonstrated by the fact that all members of Balochistan PA were ministers getting "development" funds from the government. However, apart from money, Baloch Sardars demand respect too so as to keep their prestige and not lose face. Under these circumstances it should have been very easy for the government to manipulate Balochistan politics as they have been financing the Sardars since long. However, the failing of the government leadership is that they do not give respect to the Sardars and treat them like an ordinary person on government payroll.

Riaz Haq said...

Prime Minister (PM) Nawaz Sharif on Friday stressed establishing state of the art railway tracks and expressway to connect China with Pakistan through Khunjrab, Gwadar and Karachi, which he said, will usher in a new era of economic prosperity for both countries and the entire region. “Projects to benefit maximum number of population of the region will be pursued that will enhance economic activities, provide jobs and change the destiny of millions,” observed Sharif in a meeting held at the PM’s office. Minister for Planning and Development Ahsan Iqbal briefed the meeting on projects that were underway and areas for future projects with the Chinese government, including railway network, energy sector and road networks. The PM said he had held in-depth discussions on the proposed projects with the Chinese premier, during his recent visit to Pakistan and was happy to note that the Chinese government was equally interested in the project. “We want concrete projects and tangible results to benefit the people of Pakistan and China,” added the premier. He further said the project was in the greater interest of China as it will reduce distance inside the Chinese territory thus resulting in reduction of cost of transportation and giving access to Chinese trade with India, central Asia and the whole region. Sharif highlighted that the future belonged to this region due to its huge potential, thick population and massive business opportunities. He directed the Ministry of Railways to submit solid proposals for building new railway tracks to facilitate fast moving trains for passenger and cargo services, before a delegation leaves for China in a couple of days. He, however, asked for “out of the box” thinking and doable projects to be identified that could benefit maximum number of people. The PM proposed to work on Havelian-Ratodero-Gwadar-Karachi-Quetta and Havelian-Islamabad-Lahore railway track and expressways that would substantially enhance trade activities and open this region to China and the world. He also directed the planning and development division for identification of economic zones alongside the proposed railway and expressway. The PM underlined the importance of special economic zones and converting Gwadar into an international city and economic hub to bring prosperity for the people of Balochistan and the country. He said missing links in existing roads and railway tracks must be built but the need of the day is to establish new linkages to connect China with Pakistan and give access for Chinese trade to India, central Asia etc. Minister for Information Broadcasting and National Heritage Pervaiz Rashid, Minister for Railways Khawaja Saad Rafiq, secretaries for railways, communication, EAD, CDA chairman and other senior officials were also present in the briefing. - See more at:

Riaz Haq said...

Here's a report from The National newspaper on Pakistan switching from oil to coal:

Pakistan plans to use a port in the Arabian Gulf to import coal and to reduce its dependence on more costly GCC oil. That dependence is "killing its economy", said the country's water and power minister in Dubai yesterday.

One of the aims of the expansion of Gwadar port in Pakistan's Balochistan province is to help Pakistan to overcome an energy crisis by widening the mix of its power supply. The port is financed more than 80 per cent by the Chinese.

Currently oil from Saudi Arabia, the UAE and Kuwait has accounted for "almost all" of Pakistan's energy imports, said Khawaja Asif, the water and power minister, speaking on the sidelines of the US-Pakistan Business Opportunities Conference in Dubai.

"We can develop some area close to Gwadar port for coal imports and coal-based plants. We will import coal from different places like South Africa, Indonesia and Australia," said Mr Asif. "It will lessen our dependence [on oil].
"The energy mix we have today is killing our economy and not providing us with cheap electricity."...
Coal accounts for only 1 per cent of Pakistan's energy generation even though Thar mines in Pakistan's Sindh province account for the world's third-largest coal reserves. While Gwadar will help to serve Pakistan's energy needs, attracting greater scrutiny is China's plans to use the facility.
In February, the management of the port was handed from Singapore's PSA International to Chinese Overseas Port Holdings. Gwadar's close proximity to the Strait of Hormuz, through which a large portion of the world's oil flows, will give energy-hungry China closer access to GCC crude.
The two sides plan to link Gwadar, in the south-west of Pakistan, with China's far western province of Xinjiang through road and rail connections. The proposals have stirred anxiety among officials in New Delhi , where there are concerns that the facilities may be part of a Chinese attempt to encircle India through a string of overseas ports stretching from Gwadar to Myanmar.
Mr Asif played down the geopolitical significance of the port.
"It's purely a commercial thing and will develop a backward province of Balochistan and create job opportunities," he said.
The port aspired to follow the lead set by the thriving commercial trading hubs of Dubai and Singapore, he added. The government of Pakistan's newly elected prime minister, Nawaz Sharif, has declared Gwadar a duty-free port on the lines of Jebel Ali.
"In Dubai and Singapore and all of these ports there economies are based on their ports and access to major sea routes," Mr Asif said.

Riaz Haq said...

Here's a News report on Pak-China accords signed during Nawaz Sharif's visit:

The China Overseas Port Holding Company has offered to build an international-level airport as well as access roads in Gwadar, the site of the deep sea port on the Arabian Sea coastline in Balochistan, Prime Minister Nawaz Sharif told The News after a meeting with the head of the Chinese firm.

Sources in the prime minister’s entourage said the Chinese premier during talks with the Pakistani prime minister agreed to waive off insurance premium worth millions of dollars on sovereign guarantees related to bilateral contracts.

Prime Minister Nawaz Sharif said in an interview with the state-run television that an understanding has been reached with the Chinese for a planned Lahore-Karachi motorway project, terming the development a major achievement.

A feasibility study on the cross-country motorway project will be completed soon and followed up with concrete steps to start the work on its construction, the prime minister told the state-run television.

One of the accords inked in the presence of the two prime ministers envisages the establishment of an Economic Corridor between Gwadar and the historic Silk Road city in western region Xinjiang region of China, connected to Gilgit-Baltistan through the 15,397 feet altitude Khunjerab Pass.

The ambitious Pakistan-China Economic Corridor plan involves an estimated cost of 18 billion dollars, requiring construction of a string of tunnels in the mountainous terrain.Minister for Planning and Development Ahsan Iqbal and Chairman National Development and Reforms Commission of China Xu Shao signed the corridor accord, which the Chinese premier said was a project of strategic value. The two sides also concluded an agreement on the Economic and Technical Cooperation, Adviser to Prime Minister on Foreign Affairs Tariq Fatemi signing it with a senior Chinese official.

Besides cooperation in delegation by Pakistan’s prime minister.As both leaders reached the welcome dais, a contingent of People’s Liberation Army played national anthems of both the countries.

Following the welcome ceremony, both the dignitaries held bilateral talks.Briefing the media, Premier Li said he clearly remembered his visit to Pakistan in May the Prime Minister-in-waiting Nawaz Sharif participated in his meetings with the then leaders of Pakistan.

Premier Li greatly appreciated Nawaz Sharif’s warmth and deep affection for the people of China.

Nawaz Sharif thanked Premier Li for his remarks and said what he has been observing here during his visit to China, substantiates the fact that “our friendship is higher than the Himalayas and deeper than the oceans and sweeter than honey.”

Nawaz Sharif thanked the Chinese Premier for the hospitality extended to him and his entourage.

He recalled his meeting with Chinese President Xi Jinping held on Thursday and said, “He was very kind to invite us. We exchanged similar views last night as well.”

Nawaz Sharif also thanked Premier Li for inviting him to visit China and added that he felt proud to visit China as my maiden foreign visit after assuming office.

Meanwhile, talking to state-run television, Prime Minister Nawaz Sharif ordered completion of Lahore-Karachi Motorway within two and half years after finalising the feasibility study of the project in three months.

After an MoU signing ceremony between Pakistan and China for cooperation to construct Lahore-Karachi Motorway, the prime minister said the government was committed to provide comfortable and affordable transport facilities to its citizens within minimum possible time....

Riaz Haq said...

Here's a Bloomberg story on Pak-China deals signed recently:

China and Pakistan signed a deal to build a $44 million fiber-optic cable connecting their border region with the Pakistani military garrison city of Rawalpindi, and agreed to explore a strategic transport corridor.
The pacts were the highlights of talks between Pakistani and Chinese officials in Beijing as visiting Prime Minister Nawaz Sharif seeks to secure the investment his new government needs to repair a shattered economy. In a shot in the arm for Sharif, Pakistan and the International Monetary Fund yesterday agreed a $5.3 billion loan to boost the country’s depleted currency reserves.
By choosing Beijing for his first overseas trip since winning May 11 elections, Sharif signaled that securing Chinese funding ranks among his foreign policy priorities. Pakistan’s growing emphasis on ties with China follows years of strained relations with the U.S. amid the war in Afghanistan and American targeting of Pakistani guerrillas.
Meeting Premier Li Keqiang at the Great Hall of the People in the Chinese capital today, Sharif lauded bilateral ties, telling his host that the two countries’ friendship is “higher than the Himalayas and deeper than the deepest sea in the world, and sweeter than honey.”
Huawei Technologies Co., China’s largest maker of networking equipment, will build the fiber-optic link in three years, project director Waseem Ahmad said, adding that 85 percent of the funding will be provided via Chinese loans. The agreement will give Pakistan more connectivity to international communications networks, Ahmad said. Rawalpindi is home to the headquarters of Pakistan’s army.
Gwadar Pact
An initial pact on a transport corridor to link the western Chinese city of Kashgar with the Pakistani port of Gwadar, control of which was in February transferred to a state-run Chinese company, was also signed today. No details were given on what was described as a “long term” plan.
“China will encourage and support companies to invest in Pakistan and Pakistan will provide a good environment for China’s investment,” Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing today.
While Sharif has called the road-and-rail project a “game changer” capable of generating revenue and jobs for Pakistan, financing and security concerns could prove hurdles. The route would run through Baluchistan province, where anger over exploitation of gas and minerals has spurred a separatist insurgency.
Touted Role
Aside from its touted role as a short cut for Chinese imports of Middle Eastern oil, officials in India and the U.S. have seen Gwadar as part of China’s strategic ambition to project its growing naval power into the Indian Ocean.
Unrest in the western Chinese province of Xinjiang which authorities have in the past linked to Islamist training camps in Pakistan may also be on the agenda for Sharif’s visit which ends on July 8.
Pakistan’s government presented a “very robust reform” agenda to secure the IMF assistance, Finance Minister Ishaq Dar said at a briefing with officials from the multilateral lender in Islamabad yesterday. The program of credit needs approval from the IMF board, Pakistan mission head Jeffrey Franks said.
A plunge of about 40 percent in the reserves in the past year to $6 billion has left Pakistan with enough to cover only about two months of imports, central bank data shows. The slide has weighed on the rupee and adds to other challenges facing Sharif, which include energy shortages and a Taliban insurgency in the northwest. The currency touched a record low this week.

Riaz Haq said...

Here's a AFP report on planned oil pipeline from Persian Gulf to Western China through Pakistan:

Pakistan Muslim League-Nawaz (PML-N) led government has decided to offer China to lay oil pipeline from Gwadar to Western China - a move that will allow the latter to diversify and safeguard its crude oil import routes, sources said.
Prime Minister Nawaz Sharif would make a formal offer to his Chinese counterpart during his current visit to China. The government is expected to sign within a month an operational agreement with China to hand over Gwadar Port to a Chinese company.
Officials said Pak-China oil pipeline could later be linked with Iran that had already offered to lay oil pipeline from its territory to Gwadar to transport crude oil. During the PPP era, Iran had also announced to set up oil refinery at Gwadar Port with 400,000 barrels per day oil production capacity.
“So, this proposal may become feasible after Chinese company takes operational control of Gwadar Port,” official said adding that Gwadar Port is quite near to Persian Gulf through which nearly 40% of world’s oil supply flow is maintained.
Officials maintained that 50% of total oil demand of China is met from imports that come from Middle East. At present supply line to China runs over 10,000km Dubai-Shanghai-Urumqi ocean route.
“The crude oil processed and refined at Gwadar Oil Refinery can be exported and transported to Urumqi through the shortest possible route to China via Dubai-Gwadar-Urumqi which is about 3,600km. For this a oil pipeline will be laid through the envisaged Energy Corridor up to Western China via KKH/Khunjrab bypass,” officials said.
They said that impediments like high altitude, freezing temperature and difficult terrain could be overcome through certain technological advancements since many countries had successfully completed such pipeline projects under extreme conditions and high altitude such as ATACAMA gas pipeline, Trans-Alkaska Pipeline, Trans-Asia Gas pipeline etc.
Meanwhile, in a related development, Punjab Chief Minister Shahbaz Sharif has succeeded in persuading Dong Fong Electricity Company of China to resume work on Nandipur power project.
In this connection, a lengthy meeting was held between Chief Minister Shahbaz, Dong Fong Electricity Company Chairman Si Zefu and senior officials of the company in Beijing in which the Dong Fong Electricity Company expressed willingness to restart work on the Nandipur power project.
The company has also directed its engineers to reach Pakistan next Monday for this purpose.
The Nandipur power project would generate 450 megawatts of electricity.
It is noteworthy that due to the undue delay by the PPP government, the Chinese experts had returned to their country, while the machinery for the project worth millions of rupees is rusting at the Karachi port.
Chief Minister Shahbaz has been strongly criticising the federal government over non-implementation of the project. Dong Fong Electricity Company Chairman Si Zefu said that during a meeting with President Asif Ali Zardari in June 2011 he had told him that injustice was being done by delaying the project as it would cause heavy losses to both the sides.
The chief minister assured the Chinese authorities that they would find the present government completely transparent and determined.
Expressing his views during his meetings with the Chinese investors in Beijing, the chief minister said that Pakistan has a bright future and there are vast opportunities of investment in the country.
He said that the existing problems are temporary and would be overcome soon. Shahbaz Sharif said that he would personally play host to the Chinese investors in Pakistan. He said that priority would be given to joint collaboration and co-operation with Chinese investors in infrastructure and energy sectors.

Riaz Haq said...

Here's a VOA report on China's growing footprint in Pakistan:

China is one of Pakistan’s largest business partners, and more than 120 Chinese companies are doing business in Pakistan. This is despite the serious security risks Chinese nationals face in Pakistan.

During Pakistani Prime Minister Nawaz Sharif’s visit last month to China, the two countries signed several economic agreements that give Pakistan much-needed foreign investment. China will also benefit, says Derek Scissors of the Heritage Foundation.

"China gains two things. Employment for its workers for a while on these projects and revenue from the projects for the companies. That’s the commercial side. On the political side, Pakistan does need power. It does need a more consistent power supply that will help Pakistan’s economy and social stability," said Scissors.

China is also seeking Pakistan’s cooperation in curbing the militants that China says use Pakistani territory to launch attacks in its restive Xinjiang, or East Turkestan, region.

Aqab Malik is with Johns Hopkins School of Advanced International Studies.

"I think one of the foremost elements of this agreement is the understanding that Pakistan must combat, as far as China is concerned, the threat that is imposed from the East Turkestan Islamic Movement," said Malik.

Malik also says, in order to sustain long term economic growth, Pakistan must crack down on radicalism and extremism.

"Now [that] it has made economic agreements with China, there has to be some progress towards real counter-radicalization, counter-extremism programs, and there must be an off-the-fence, direct, stated goal that they are going to confront it. but actually implement it also," he said.

Anti-U.S. sentiments are high in Pakistan, and many see China as a counterweight to the United States as a trading partner. But relying too heavily on any one country may not be a good option for Pakistan. Derek Scissors:

"Diversification is good. It applies to the United States for Pakistan and it also applies to China. Being too heavily dependent on China would be a mistake," he said.

China-Pakistan bilateral trade was over $12 billion last year, and the leaders of the two countries have promised to increase it in years to come.

Riaz Haq said...

Here's a South China Post story on China's western land route thru Pakistan:

..."We want to open to the west and use your country to help us develop a corridor for trade and tourism," Zhu Rongji said, pointing to the giant map of China on the wall behind his desk.

It was 1993, and Shahid Javed Burki, then director of the World Bank's China operations and later Pakistan's caretaker finance minister, was calling on the then vice-premier in Beijing.

China, Zhu told him, was different from other big countries in that it had sea access only on one side. That was where Pakistan came in.

China's "all-weather friend" is an integral part of its "look west" policy to find economic sustenance for landlocked western provinces. This is why China in 1986 started working on a 600-kilometre highway across the Karakoram mountain range connecting Kashgar in Xinjiang province with Pakistan's northeast.

Nearly three decades on, Burki is on a mission to expand the highway into an ambitious 2,000km China-Pakistan Economic Corridor. It will connect the deepwater Pakistani port of Gwadar on the Arabian Sea with Xinjiang, providing China easy access to fuel imports from the Middle East and Africa while creating a cheap overland export route to a maritime exit port for interior provinces such as Gansu and Qinghai.

"The idea is to develop the Karakoram Highway into a motorway network all the way to Gwadar, establish a railway line and two pipelines for oil and gas, and create industrial hubs along the way," Burki said.

The corridor is conceived and planned at the cost of India's interests S.D. MUNI, FORMER AMBASSADOR
Largely financed and built by Beijing, Gwadar is strategically located near the Strait of Hormuz that channels a third of the world's oil trade. It could play a major role in China's energy security by providing a much shorter alternative to the current, circuitous 12,900km route from the Persian Gulf through the Strait of Malacca to China's eastern seaboard.

But the port and the corridor are not without their problems. Baluchistan province, where Gwadar is located, has been grappling with a low-intensity separatist insurgency. Many Chinese workers have been attacked and killed amid the violence, often making Beijing wary of the venture.

Shahid Javed Burki
The ascent of a new leadership in Beijing, however, seems to have given the China-Pakistan corridor plan a new impetus just as it has done to a proposed Bangladesh China India Myanmar corridor that would provide landlocked Yunnan province access to the Bay of Bengal.

In February, the Pakistani government transferred the contract for running Gwadar from the Port of Singapore Authority to China Overseas Port. During the Pakistan leg of his first overseas trip as premier in May, Li Keqiang vowed to "speed up" the project. An agreement was signed in July when Pakistani Prime Minister Nawaz Sharif visited China within a month of returning to power.

Burki estimates the corridor will take five to 10 years to set up and cost up to US$15 billion. Efforts are being made to raise the money through structured finance instruments with the help of the countries, donor agencies and industrial sectors that will gain from the corridor.

"There is an active South Asian diaspora in the world of structured finance who we hope to rope in," Burki said.

To do that, he is chairing a special session on the economic corridor at the South Asian Diaspora Convention in Singapore this week, hosted by the National University of Singapore's Institute of South Asian Studies....

Riaz Haq said...

Here's Reuters on China financing nuclear power plants in Karachi:

China has committed $6.5 billion to finance the construction of a major nuclear power project in Pakistan's port city of Karachi as it seeks to strengthen ties with its strategic partner, Pakistani officials said.

Pakistani Prime Minister Nawaz Sharif broke ground on the $9.59 billion project last month but officials have provided few details of how they plan to finance it.

Financing documents seen by Reuters showed China National Nuclear Cooperation (CNNC) has promised to grant a loan of at least $6.5 billion to finance the project which will have two reactors with a capacity of 1,100 megawatts each.

Two members of the government's energy team and three sources close to the deal confirmed this. CNNC was not available for comment.

"China has complete confidence in Pakistan's capacity to run a nuclear power plant with all checks in place," said Ansar Parvez, chairman of the Pakistan Atomic Energy Commission which runs the civilian nuclear program.

"As things stand, the performance and capacity of nuclear power plants in Pakistan is far better compared to non-nuclear plants."

Parvez declined to give more details of the funding but said it would be completed by 2019 and each of the two reactors would be larger than the combined power of all nuclear reactors now operating in Pakistan.

As part of the deal, China has also waived a $250,000 insurance premium on the loan, said two sources in the Energy Ministry with knowledge of the project. They declined to be identified as they are not authorized to speak to the media about the financing.

Pakistan and China, both nuclear-armed nations, consider each other close friends and their ties have been underpinned by common wariness of India and a desire to hedge against U.S. influence in South Asia.

Pakistan sees nuclear energy as key to its efforts to solve power shortages that have crippled its economy. Pakistan generates about 11,000 MW of power while total demand is about 15,000 MW.

Blackouts lasting more than half a day in some areas have infuriated many Pakistanis and sparked violent protests, undermining an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.

Under its long-term energy plan, Pakistan hopes to produce more than 40,000 MW of electricity through nuclear plants by 2050.

The United States sealed a nuclear supply deal with India in 2008, irking both China and Pakistan....

Riaz Haq said...

Following is the text of 2014 US-Pak Strategic Dialogue Ministerial Joint Statement:

Secretary of State John Kerry and Pakistan Advisor to the Prime Minister on National Security and Foreign Affairs Sartaj Aziz, accompanied by a high-level delegation, met in Washington on January 27, 2014, for the ministerial meeting of the US-Pakistan Strategic Dialogue.
Reaffirming the strong relationship and enduring partnership between the two countries, the Strategic Dialogue Ministerial marked the commitment of both countries to strengthen the bilateral relationship and advance their shared interests in a stable, secure, and prosperous Pakistan and region. Both sides expressed their conviction that an enduring US-Pakistan partnership is vital to regional and international security. They recognised their shared interest in Pakistan’s economic growth, increased trade, regional stability, and mutually determined measures to counter extremism and terrorism.
Kerry and Aziz reaffirmed the importance of the US-Pakistan Strategic Dialogue and reviewed the progress of the Dialogue’s five working groups: 1) Energy; 2) Security, Strategic Stability, and Nonproliferation; 3) the Defence Consultative Group; 4) Law Enforcement and Counterterrorism; and 5) Economics and Finance. Meetings of the first three working groups convened in late 2013.
Kerry and Aziz reaffirmed their commitment to expanding bilateral trade and business links and welcomed the upcoming US-Pakistan Trade and Investment Framework Agreement (TIFA) Council meeting in March 2014 in Washington. The Secretary underscored the US commitment to supporting private sector-led growth in Pakistan and welcomed the proposal by Advisor Aziz to regularly convene a Joint Business and Investment Forum, involving the private sector. Both sides also look forward to convening a follow-on conference to the successful US-Pakistan Business Opportunities Conferences held in Dubai in June 2013, and to a US-convened conference in April 2014 in Islamabad that will link Pakistani and Central Asian businesses to encourage increased regional trade. They also look forward to the forthcoming announcement of a third fund of the Pakistan Private Investment Initiative (PPII) to leverage private equity for small and medium enterprises. Additionally, they reaffirmed the agenda for the upcoming Economics and Finance Working Group, to be held in April 2014 in Washington, where the United States and Pakistan will discuss trade and investment promotion, economic assistance, and regional economic integration. They further proposed that the working groups continue to refine the benchmarks used to realise these goals.
Strategic Dialogue participants, including Minister of Water and Power Khawaja Asif, reviewed concrete next steps from the Energy Working Group, which was held in Washington in November 2013, as well as a subsequent trade delegation to Houston, Texas. The two sides expressed satisfaction with discussions held in November 2013 on a range of options to enable Pakistan to overcome its energy deficiencies. The two sides noted progress in developing a US technical assistance programme to support the development of Pakistan’s domestic natural gas reserves. Secretary Kerry highlighted that US assistance in the energy sector has added over 1,000 megawatts of power to Pakistan’s national grid, helping provide power to over 16 million Pakistanis. In addition, the Overseas Private Investment Corporation (OPIC), the development finance institution of the US government, is currently working on financing up to 300 MW of wind power generation projects that will deploy US-based investment in Pakistan.
The United States and Pakistan also underscored the importance of intensifying efforts to facilitate regional energy connectivity and continuing to upgrade Pakistan’s transmission infrastructure....

Riaz Haq said...

Here's an AP story on China's investment in projects in Pakistan:

BEIJING (AP) — Longtime allies Pakistan and China signed agreements Wednesday to build a new airport and upgrade the fabled Karakorum Highway as part of efforts to build an "economic corridor" through rugged mountains and regions torn by insurgent violence.

The signings followed a summit in Beijing between Pakistani President Mamnoon Hussain and Chinese leader Xi Jinping that underscored close ties between the neighbors.

"Friendship with China is the most important pillar of our foreign policy and security policy," Hussain said in brief comments at the start of their meeting, which followed a formal welcoming ceremony at Beijing's Great Hall of the People.

VIDEO: The Conflict in Pakistan That’s Never Discussed
Xi said "the Chinese people cherish a profound friendship with the people of Pakistan."

While Islamabad and Beijing have long found common cause in opposing mutual rival India and cooperate closely in military and diplomatic affairs, economic ties have lagged. That's largely a result of Pakistan's poorly functioning government and lack of basic infrastructure such as power plants for generating electricity, something Pakistan is looking to China for help improving. Two-way trade exceeded $12 billion for the first time in 2012, a tiny fraction of China's overall commerce with the world.

The planned economic corridor will incorporate a 2,000-kilometer (1,200-mile) transport link connecting Kashgar in northwestern China to the little-used Pakistani port of Gwadar on the Arabian Sea near the border with Iran. That could at some point include a railway and oil pipeline.

VIDEO: How Does China Impact the Global Economy?
The project received a major boost when control of Gwadar was transferred to China's state-owned China Overseas Ports Holding Co. Ltd. in February 2013. Built by Chinese workers and opened in 2007, Gwadar is undergoing a major expansion to turn it into a full-fledged, deep-water commercial port.

One of the agreements signed Wednesday was a preliminary accord for constructing an international airport at Gwadar. Another was for upgrading a section of the 1,300-kilometer (800-mile) Karakorum Highway connecting to Islamabad.

The sides last year already agreed to build a fiber-optic cable to be laid from the Chinese border to the Pakistani city of Rawalpindi which will boost Pakistan's access to international communications networks. China is to provide 85 percent of the financing for the three-year project's $44 million budget, with Pakistan covering the rest.

VIDEO: China Chanels Resources in Wrong Direction: Beamish
If the corridor project takes off, oil from the Middle East could be offloaded at Gwadar, which is located just outside the mouth of the Persian Gulf, and transported to China through the lawless Baluchistan province in Pakistan and over the towering Karakoram mountains. Such a link would vastly cut the 12,000-kilometer (7,500-mile) route that Mideast oil supplies must now take to reach Chinese ports.

Riaz Haq said...

Here's a PV-Tech report on $20 billion investment in Pakistan:

China has agreed to invest US$20 billion in Pakistan's energy infrastructure.

On a three day visit to China, Pakistan president Manmoon Hussain and minister for Punjab, Shahbaz Sharif met with financial and development companies and banks in Beijing, and signed MoUs for continued investment in solar projects in Pakistan.

An estimated US$20 billion in energy investment has been promised; in return China will take ownership of coal plants, a document issued on Wednesday stated.

The investment will go towards solar, hydropower and coal power plants.

Sharif informed Chinese delegates on the trip that a solar plant in South Punjab is to be operational by the end of this year.

The investment will make a significant contribution to combating energy shortages in Pakistan.

According to the Associated Press of Pakistan, the MoUs signed included progress for the Pakistan-China Economic Corridor, an MoU co-establishing national joint research centres for small-scale hydro power technology, and cooperation on other construction projects.

Shahbaz Sharif’s official Facebook page stated yesterday the “mutually agreed China-Pakistan Economic Corridor is a gigantic development project which would prove to be a game changer in transforming the whole region by generating massive trade and economic activity”.

In a meeting between China and Pakistan’s Joint Cooperation Committee (JCC) to finalise projects to be part of the Economic Corridor, Sharif said thanks to a comprehensive framework of the JCC, Economic Cooperation Group, Joint Energy Working Group, Joint Investment Committee and several other mechanisms, the volume of trade had almost exceeded US$12 billion, with Pakistan’s exports increasing by 48%.

Punjab minister Sharif told The Guardian "security agencies" in Pakistan and India are acting as "blockages" to free trade between China and Pakistan. He said: "Unless you have economic security then you can't have general security."

The Punjab ministry said in a statement this January: “Shahbaz Sharif has said that resolving of energy crisis is the top priority of the government as it is essential for economic development and strengthening of economy.”

China’s Foreign Ministry spokesperson Hua Chunying said in a press conference yesterday that President Xi Jinping and President Hussain spoke “highly of the development of bilateral relations, the two presidents agreed to jointly uphold and develop the traditional friendship and translate that into more tangible results of cooperation”, with both countries working towards “steering cooperation in energy”.

The China-Pakistan meeting prioritised projects and practical cooperation in energy infrastructure, with the two sides reaching “extensive consensus” Chunying said.

A statement published yesterday from the Foreign Ministry said “The two sides will speed up the second phase of negotiations on China-Pakistan Free Trade Area and push forward a balanced growth of trade between the two countries. The Chinese government encourages Chinese enterprises to invest and develop in Pakistan"..

It added that an “advance [in] cooperation in the fields of energy” will be pursued.

In October Sharif visited China to discuss solar energy projects and China offered Punjab 32GW of exported electricity.

In September last year the Punjab government finalised plans for 700MW of solar power.

Pakistan’s government separately signed MoUs for 150MW with a consortium of European countries and another with China North Industries Corporation (NORINCO) as well as 400 smaller solar projects in the pipeline.

Pakistan also finally announced FiT rates for large-scale solar projects last month.

Riaz Haq said...

Here's an interesting Op Ed by a NZ doctoral candidate Christopher Barber in the Diplomat on Pakistan-China economic corridor:

Historian Daniel Headrick made the crucial connection between means and ends in the projection of global influence. For instance, Headrick argued that the Suez Canal, which opened in 1869, acted a tool of empire for the great powers of the nineteenth century. The building of a canal through the Sinai Peninsula not only made trade and empire in Asia faster by avoiding the Cape of Good Hope, but more economical too. This was particularly the case for the world’s superpower, Great Britain. For Britain, the Suez was an important strategic consideration in its imperial outlook, making the transport of goods, officials and soldiers to Bombay and other key colonial hubs easier and affordable....

With the development of the corridor, Central Asia, traditionally an economically closed region owing to its geography and lack of infrastructure, will have greater access to the sea and to the global trade network. For Afghanistan and Tajikistan, both of which have signed transit agreements with Pakistan, it will provide a more economical means of transporting goods, making their export products more competitive globally. For China, meanwhile, the corridor will provide it with direct access to the Indian Ocean, enabling China to project itself strategically into the mineral and oil rich regions of Western Asia and Africa (and beyond). And for Pakistan, the project provides the country not only a third deep-sea port but also a better connected gateway into China’s backyard, giving Pakistan the potential to make good on its free trade agreement with the dragon economy.

Nevertheless, the corridor will play a crucial role in advancing Pakistan’s economic power. Exporting, transiting, and transporting goods into and out of Central Asia and carrying them away on the current of the world’s sea lanes, the Pakistan-China corridor will be a vital factor in Pakistan’s economic future. The corridor is best thought of as a comprehensive infrastructure package encompassing a wide range of spinoffs, including gas and oil pipelines, railways, an expressway from Karachi to Lahore, fiber-optic cabling, metro bus and underground services for key Pakistani cities....


In reality, agriculture, chemicals, textiles, and various other manufactured items are the stuff of Pakistan’s true productivity—items that are tradable on the global market and capable of boosting national income. Pakistan has always been well placed to export given its access to the Indian Ocean and proximity to key markets in the West and East, to say nothing of its international reach through the Pakistani diaspora and the fact that it has the third largest English-speaking population in the world. Despite government absenteeism—that reoccurring failure within the political sphere to respond to the Taliban and to the reactionaries that routinely thwart Pakistan’s potential—as well as rampant inflation and a serious lack of currency reserves, Pakistan’s private sector has proven resilient, capable of going in for global trade with the right encouragement. The cue is now for the Pakistani government and the business community to formulate a more global economic policy.

As it stands, the failure to fully capitalize on the free trade agreement between China and Pakistan demonstrates the need for a major policy effort to make the most of the corridor. For one, the Pakistani government needs to place greater emphasis on trade relations in its overall foreign policy as well as foster the exporting aspirations of small and midsize companies. Expansive economic policy, continued liberal reform, and, above all, an improved security situation are the formula needed to make full use of the tools of globalization which Pakistan will soon have at its disposal.

Riaz Haq said...

Few emerging nations in modern times have made the leap from assembler to inventor, copycat to innovator. For China, this would mean an overhaul of its economy. Many of the products China manufactures today aren't really very Chinese at all. Apple iPads might be exported from assembly lines based in China, but the Chinese themselves do little more than piece them together. The core technologies come from elsewhere, and even the factories are run by foreign firms (like Taiwan's Foxconn). For Chinese companies to compete with the world's best, they have to create products of their own that have a similar impact as the iPad. That requires a set of skills and know-how they don't yet possess and a level of managerial expertise they haven't yet developed. Economist William Janeway, author of the book Doing Capitalism in the Innovation Economy, says what has gotten China thus far won't be enough for the next step: "It is hard to start the process of pushing the frontier with [such] practices and policies.",9171,2156209,00.html

Riaz Haq said...

Here's an excerpt of a report on the importance of Pak-China economic corridor:

A study on “A Socio-Political study of Gilgit-Baltistan” conducted by Omar Farooq Zain stated that northern areas are geo-strategic as well as trade because of its borders with China, Afghanistan and India. As a potential gateway to Central Asia, the northern area location becomes unique.

In addition to the trading importance of Gilgit-Baltistan and its environs, its site at the doorstep of China and Central Asia, with Afghanistan and India close by, makes it a very important cultural region.

K. Warikoo in his book Himalayan Studies in India pointed out that the British used Ladakh and adjoining areas in Gilgit, Skardu, Hunza and Chitral as “frontier listening posts” to check the developments in Central Asia and Xinjiang throughout the Dogra period.

The leadership of both Pakistan and China in the recent past had thought it advisable to build up an economic corridor that can open up the underdeveloped areas of the region to a new era of economic development and prosperity.

The elites of both countries have termed Pakistan-China Economic Corridor as “future of the world,” as almost 3 billion people, which is almost half of the world’s population, from China, South Asia, Central Asia could benefit from this economic corridor.

The official data provided by Pakistan’s Federal Ministry of Planning and Development showed that being one of the biggest transit trade routes in the world, it would link China to the Middle East, Central Asia, Africa and other regions and give access to the landlocked countries to the world biggest markets, India and China.

It stated that the Pakistan-China Economic Corridor would be of high economic value as about the 3 billion people at both sides of the border would be its direct beneficiary while the overall bilateral trade volume would be increased to 7 billion dollars.

The data further showed that Pakistan intends to get the greatest benefit out of this project and for that it has planned to establish industrial parks and economic zones along the Kashgar-Gwadar trade corridor.

Pakistan’s central government’s seriousness to get maximum benefits from the Pakistan-China Economic Corridor can be judged with the fact that it has already approved the projects worth 52 billion to be started in the economic zones.

Dr. Zafar Mehmod, a prominent economist, opined that the poverty rate would be reduced to the minimum while the unemployment would almost come to an end.

Talking about the economic corridor, Javed Shahzad Malik, the high official of Ministry of Kashmir Affairs and Gilgit-Baltistan, said the dream of building up economic corridor is being translated into reality and work is under way to upgrade KKH, motorways, and railway lines, fiber optic, and oil and gas pipe lines.

He said a number of tunnels with overall length of 200 km would be constructed on different locations to maintain the vehicular speed on KKH at 80 km per hour.

Speaking with a Kabul-based Journalist, writer and political activist who worked as an advisor in the Hamid Karzai government, Azam Beg Tajik hoped that such a trade route would become a profitable hub and economic activity center, serving as a lifeline to the economy of the country in the near future.

Given the future economic prospects highlighted by the experts, government officials and local people, it is expected the Pakistan-China Economic Corridor would not only help boost economic activities but also bring the socioeconomic conditions and living standard in this region at par with other developed regions of the world.

Riaz Haq said...

Here's China Daily report on China's plans to build Pak-China economic corridor:

China has allocated funds to do preliminary research on building an international railway connecting the westernmost city of Kashgar in the Xinjiang Uygur autonomous region with Pakistan's deep-sea Gwadar Port on the Arabian Sea, according to the director of Xinjiang's regional development and reform commission.
"The 1,800-kilometer China-Pakistan railway is planned to also pass through Pakistan's capital of Islamabad and Karachi," Zhang Chunlin said as the two-day International Seminar on the Silk Road Economic Belt commenced on Thursday in Urumqi, Xinjiang's capital.
"Although the cost of constructing the railway is expected to be high due to the hostile environment and complicated geographic conditions, the study of the project has already started," Zhang said.

The railway, which cannot avoid running through the Pamir Plateau and Karakoram Mountains, will be one of the hardest to build but most vital transportation infrastructures on the China-Pakistan corridor along China's newly proposed Silk Road Economic Belt, he added.
"China and Pakistan will co-fund the railway construction. Building oil and gas pipelines between Gwadar Port and China is also on the agenda," Zhang said.
Control of Gwadar Port was given to China and an agreement was signed with China Overseas Ports Holding Co on May 16, 2013, to transfer operational rights from the Port Authority of Singapore.
The move means China now is running a port just opposite the Gulf of Oman, an important route for oil tankers.
The speed of road and railway construction in Xinjiang was significantly increased after September 2013, when President Xi Jinping raised the idea of the economic belt, Zhang said.
Xi proposed reviving the ancient trade routes connecting China, Central Asia and Europe.
To become a transportation hub and China's core area on the economic belt, the government has decided to develop three main corridors through southern, central and northern Xinjiang, which connects China with Russia, Europe and Pakistan.
Work is also due to begin soon on the long-planned China-Kyrgyzstan-Uzbekistan railway.
The region, which borders eight countries, also plans to open three new land ports to Kyrgyzstan, Kazakhstan and Russia.
"We will consider opening the ports to Afghanistan and India once social stability can be ensured. After all, openness is the foundation of boosting trade," Zhang said.

Riaz Haq said...

Here's a Bangkok Post Op Ed by Ali Khizar on China-Pakistan trade and investment:

While the potential for trade with India is high, it accounts for just 5% of total volume due to longstanding military tension between the wary neighbours, while Pakistan’s exports to Afghanistan are on...
One country that is taking a bigger slice of the pie is China, which is on pace to become Pakistan’s biggest trading partner. Its share of official trade has doubled in the last decade and in absolute...

China has pledged to invest $32 billion in energy, transport and infrastructure projects in Pakistan in the next five to seven years. The Exim Bank of China has agreed to fund these projects in both the...
As they say, there is no such thing as a free lunch – Pakistan has to be cautious in selecting these projects and should not fall into a state of complacency. These investments will be in the form of loans...

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Riaz Haq said...

From Wall Street Journal:

ISLAMABAD—Pakistan plans to sign deals worth billions of dollars with China for development of infrastructure and energy projects during Prime Minister Nawaz Sharif ’s visit to Beijing this weekend, Pakistani officials said.

Mr. Sharif is to meet the Chinese leadership on the sidelines of the Asia-Pacific Economic Cooperation summit, which starts in Beijing this week. Pakistan suffers from a crippling shortage of electricity and it is looking to its close ally China for a solution.

The agreements are part of a bigger aim to establish a Pakistan-China economic corridor that will link south west China, by road and rail, to the Pakistani port of Gwadar, giving China a harbor close to the Middle East, a $35 billion program in total.

“Pakistan and China have strong relations and we’ve now decided to take this relationship to the next level of strategic economic cooperation,” Ahsan Iqbal, Pakistan’s Planning Minister, said in an interview.

Mr. Iqbal said the Pakistani side’s focus in Beijing will be on energy, with agreements or memorandums to be signed on a series of specific power projects. He said that previously, negotiations had been over the broad framework for the proposed economic corridor.

“The Chinese have agreed to invest at a critical time, when Pakistan is really starved of energy,” said Mr. Iqbal.

Mr. Sharif will sign agreements on 14 power plants, that will provide the country with 10,400 Megawatts of new generation, said Musadiq Malik, the spokesman for the prime minister. The Chinese companies will invest in building the power stations as commercial ventures, raising their own financing, as foreign direct investment, so Pakistan won't be taking on any additional debt, Mr. Malik said.

Another official said that two of the power plant projects are sufficiently developed to begin work on the ground within the next 12 months. The plants are mostly coal-fired.

Building power stations on that scale would cost at least $10 billion, experts said. Pakistan will also need to upgrade its electricity transmission network and build facilities to import and transport the huge quantities of coal that would be required.

Pakistan’s daily electricity output is generally 13,000 MW to 15,000 MW, leaving it at least 5,000 MW short of demand. That deficit means hours of rolling supply cuts to homes and businesses every day across the country, a situation that economists estimate slashes several percentage points off national income.

Aside from China, Pakistan has struggled to attract other foreign investors to its energy sector. Pakistan’s current generation is based on oil-fired stations, which are expensive to run, and gas-power plants that are stymied by a shortage of gas in the country. Pakistan now plans to build plants that use coal, along with limited solar and wind power projects, officials said.

“We have received a signal from the Chinese that these [power] projects are ready to proceed,” Mr. Sharif told a cabinet meeting Thursday, in televised remarks. “These power stations will start to be built, but to complete them it will take about 3½ years.”

Riaz Haq said...

The annual APEC summit is underway in Beijing. Perhaps the most notable absentee is India’s Prime Minister Narendra Modi, who received an unprecedented invitation in July from Chinese President Xi Jinping to attend the gathering. Despite growing to become the world’s third largest economy in PPP terms, India is not a member of APEC, and as a result would not normally attend the summit. But this year President Xi used his platform as the summit host to extend invitations to non-members India, Pakistan, and Mongolia. While Pakistan and Mongolia’s leaders made the trip to Beijing for APEC, Prime Minister Modi decided not to do so. It’s a missed opportunity for India’s economic diplomacy at a time it could use a boost.

Riaz Haq said...

ISLAMABAD: Federal Minister for Planning, Development and Reforms, Ahsan Iqbal Tuesday said that Energy projects of 16600 Mega Watt (MW) signed under Pak-China Economic Corridor during recent visit of the Prime Minister to China would help overcome energy crisis in the country.
Addressing a press conference here, the minister said that the energy projects would be completed in two phases.
"During the first phase the energy projects of 10,400 MW electricity worth of $15.5 will be completed while in the second phase different projects of 6600 MW electricity will be concluded ", he said adding development of energy infrastructure and up-gradation of system of transmission lines was also included in the agreements.
Ahsan Iqbal said that energy projects of 9000 MW would be completed by 2018 which would mean that the government would be able to eliminate power load-shedding in the country during its tenure.
The minister said that coal-based power plants would generate 7500 MW and the cost per unit of electricity would be about 10 cents which would be far cheaper than that of oil.
He said that under the Corridor, 1000 MW of the largest solar park would also be established in Cholistan while hydal based energy projects would be of 1600 MW.
Giving details about Thar Coal Projects, the minister said that in the first phase two projects of 2000 MW would be developed from Thar Coal while under the agreements with China overall 6600 MW Thar Coal projects would be completed
He said that a package of $650 million was also included in the agreements for development of Gwadar sea port and airport.
Iqbal further said that 1736 kilometers of railway track would be upgraded which would not only help to ease out transportation system of goods and coal but it would also help improving transportation facility for the passengers.
The Minister strongly condemned Pakistan Tehreek-e-Insaf (PTI) Imran Khan's statement against Chinese development assistance to Pakistan under "China-Pakistan Economic Corridor" and said that Pakistan and China are closest friends and enjoy time tested all weather friendship.
"At a time when international investors were shying away from Pakistan due to security environment in the region, decision of Chinese and Pakistani leadership during PM Nawaz Sharif's visit to Beijing to take Pak-China relations to new heights in economic field through China Pakistan Economic Corridor Project is a milestone", he added.
The most critical energy and infrastructure sectors related projects will infuse new life into Pakistan's economy, he added.
He said the projects are in IPP mode as investment projects and rejected Imran Khan's assertion that these projects were being financed through borrowing.
Iqbal said that these projects were coming under the energy policy which was open for all investors from any part of the world.

Riaz Haq said...

Excerpts From National Interest article by China critic Gordon Chang:

In early November in Beijing, Sharif signed Corridor pacts authorizing $45.6 billion in projects in his country. Of that total, $33.8 billion is allocated for electricity generation—the addition of 16,520 megawatts by 2021—and $11.8 billion for transportation infrastructure.

The November pacts follow those signed this February, when the two countries inked deals to improve the Karakoram Highway and build an airport in Gwadar, a port on the Arabian Sea near the Iran border. The February agreements in turn came on the heels of one signed last year, when China and Pakistan agreed to build a fibre-optic cable from the Chinese border to the city of Rawalpindi, next to Pakistan’s capital.

Chinese premier Li Keqiang called the Corridor, during his visit to Pakistan in May of last year, a “flagship,” and the ambitious undertaking is indeed a wonder to behold. The transport and communication links—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar to the Khunjerab Pass, where the Karakoram Highway leaves Kashmir and enters China, not far from the Chinese city of Kashgar.

Moreover, Islamabad will establish special economic zones in the Corridor where Chinese companies will locate operations. Beijing, as Tarique Niazi of the University of Wisconsin observed, is trying to “integrate Pakistan into the Chinese economy by outsourcing low-tech, labor-absorbing, resource-intensive industrial production,” and the Corridor initiative makes it easier to transform the client state “into a giant factory floor for China.”

Beijing has obviously gone all-in on Pakistan. Sharif’s government will provide 15 percent of the financing for the cable to Rawalpindi, but almost all the rest of the Corridor projects will be on China’s tab. Pakistan does not have the money to pay for the large projects, and according to Khawaja Asif, Pakistan’s minister for water and power, Pakistan will not be incurring debt.

Beijing, it appears, will be providing almost all the funding, which means it will, one way or another, own resulting cash flows as the projects are supposed to be profit-making. Chinese companies will participate in the building of the infrastructure, and Chinese banks, especially the China Development Bank and Industrial and Commercial Bank of China, will be providing financing. The Beijing-sponsored Asian Infrastructure Investment Bank, when it opens its doors for business next year, will probably support Corridor projects as well. Sharif, therefore, should be worried that the tide of Chinese cash will effectively turn his country into Beijing’s newest colony.

For now, Beijing’s strategy is to build additional facilities in the port area so that it can then offload oil there and send it across the Himalayas to Xinjiang. On paper, the overland route eliminates the need to ship crude through the easily blocked Malacca Strait, but the Gwadar-Kashgar plan has its own vulnerabilities, especially at both ends.

Riaz Haq said...

KARACHI: The Export Processing Zones Authority (EPZA) was established in 1980 with the mandate to plan, develop and operate export processing zones (EPZs) in Pakistan. EPZA is an autonomous body working under the Ministry of Industries. It has a nine member board of directors, and is tasked with setting up EPZs in Pakistan.
EPZA as a system has worked well in Pakistan, especially in Karachi. As an already established, known and tried system for attracting investments and generating exports from Pakistan, it can provide almost risk-free economic uplift.
As an organisational concept, EPZA facilitates, promotes and provides business support to those who wish to set up their units in EPZs. Primarily, it is a service-oriented organisation for the promotion of exports from Pakistan. EPZA itself is not involved in physical business.
The main objectives of EPZA are to improve industrialisation through commercial and marketing activities, provide country-specific investment linkages on reciprocal basis and to simplify paperwork and transfer of technology through foreign investment. For a more holistic picture of what EPZA does, consider that it attracts foreign capital, sets up export-oriented industries, assists in acquiring sophisticated technology, transfer such technology to Pakistan, generates employment and skill development activities, boosts exports and foreign exchange earnings and increases import of raw material from Pakistan.
For businesses, EPZA provides developed land on highly competitive rates for 30 years lease. All zones are enclosed in a boundary wall with well-defined security parameters. EPZs enable business to import machinery, equipment and materials free of duty, while allowing them freedom from national import regulations and exemption from exchange control regulations. Repatriation of capital and profits is allowed to foreign investors, and there is no sales tax on input goods, including electricity and gas bills. Furthermore, duty-free vehicles are allowed under certain conditions
EPZs in Pakistan
Over a period of time, EPZs have been established in different places in Pakistan to develop the natural resources of these areas and to provide job opportunities to locals. Zones which are currently operational include those in Karachi, Risalpur, Saindak, Sialkot, Duddar, and the Tuwairqi Steel Zones in Gujranwala, Gwadar, Reko Diq and Khalifa Coastal.

Riaz Haq said...

The term special economic zone (SEZ) is commonly used as a generic term to refer to any modern economic zone. In these zones business and trades laws differ from the rest of the country. Broadly, SEZs are located within a country's national borders. The aims of the zones include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone liberal policies are introduced. There policies typically regard investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays.

The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI).[1][2] The benefits a company gains by being in a Special Economic Zone may mean it can produce and trade goods at a globally competitive price.[1][3] The operating definition of an economic zone is determined individually by each country. In some countries the zones have been criticized for being little more than Chinese labor camps, where labor rights are denied for workers.[4][5]
Taking the example of the Chinese success with their SEZs, China is helping Pakistan develop the RUBA SEZ on the outskirts of Lahore. RUBA SEZ PVT LTD is a subsidiary of RUBA Group of Companies and was expanded from existing Haier – RUBA Economic Zone.

Other economic zones include the China-Pakistan economic zone open only to Chinese investors and also the future crown jewel of Pakistan, Gwadar.

There are also talks of creating a Japanese city for foreign investors from Japan only.

There has also been new SEZ proposed on the currently under construction Sialkot-Lahore motorway, Qatar has proposed an investment for $1 billion in a new SEZ along the motorway.

There is also a new zone under construction in Faislababd, which will be the biggest industrial estate of Pakistan when complete, it has sections for each country and the first phase is already complete with a special Chinese zone in it.

Special economic zones in Pakistan:

Karachi Export Processing Zone, Karachi, Sindh
Risalpur Export Processing Zone, Risalpur
Sialkot Export Processing Zone, Sialkot, Punjab
Gujranwala Export Processing Zone, Gujranwala, Punjab
Khairpur Special Economic Zone, Khairpur, Sindh

Riaz Haq said...

Yet misgivings also abound, as Andrew Small, an Asia expert at the German Marshall Fund of the United States, points out in an impressive account of a little-understood friendship. China is growing increasingly squeamish about the dangers of having Islamist extremists just across the border. Chinese engineers working on aid projects in Pakistan have been killed by Pakistani extremists. In 2007 Chinese massage-parlour employees were held hostage by militants in Islamabad. The authorities in the capital do not do enough, the Chinese complain, to destroy Pakistani havens of the East Turkestan Islamic Movement, a Muslim separatist group drawn from the Uighur ethnic minority who live in China’s western Xinjiang region.

“China has a good understanding of almost everything in Pakistan, political, security or economic, that might affect the bilateral relationship, but there is one piece they just don’t get: Islam,” Mr Small quotes a Pakistani China specialist as saying. It was especially embarrassing to Pakistan that on the day the retiring head of the army, Ashfaq Parvez Kayani, paid his last visit to China in October 2013 a car with three Uighurs and packed with explosives burst into flames in Tiananmen Square. “The most damning narrative would be hard to shake off—that a Pakistan-based Uighur separatist group masterminded a successful suicide attack in the most visible location in China during the valedictory visit of Pakistan’s army chief,” Mr Small writes.

Still, if there were recriminations they were not made public. Indeed, as Mr Small argues, China’s ties with Pakistan, which were established during Mao’s rule and are based on shared hostility towards India, thrive on many common interests. A long history of secret deals between their two armies—overrides the problems with Islamic extremism.

Six years of research have enabled Mr Small to produce a detailed account of decades of close dealings between the two countries. In that time he won the confidence of many sources in the Chinese army, military intelligence and the security services. Their officials are as tight-lipped as the Pakistanis are garrulous. Yet he managed to loosen them up, at least enough.

Mr Small describes a friendship that is more enduring and has far better prospects than Pakistan’s up-and-down connection with America. The high points of that relationship—as when Pakistan facilitated the groundbreaking visit of Henry Kissinger to China in 1971 which led in turn to Richard Nixon’s historic trip to Beijing and later during the Soviet invasion of Afghanistan—have long since passed.

China helped Pakistan acquire the nuclear bomb, and is Pakistan’s biggest supplier of military equipment. Now it is building two sizeable civilian nuclear reactors that should help ease the country’s chronic energy shortfall. As China expands its reach throughout Asia, Pakistan has become central to its plans for a network of ports, pipelines, roads and railways that will bring oil and gas from the Middle East. The Chinese government is offering tens of billions of dollars for Pakistani projects, Mr Small says. As America’s influence recedes, China is stepping in, though officials will doubtless keep a wary eye on Pakistan’s nuclear weapons.

Part of China’s justification for spending so much is to bring stability to Pakistan, an argument that the Obama administration has also used, though with little success. Mr Small seems to think the Chinese will have better luck. He may be too optimistic about their ability to achieve much, but given the feckless Pakistani governance that he so ably describes, he has every right at least to hope the Chinese will help restore some order to the chaos.

Riaz Haq said...

All political parties in the Khyber Pakhtunkhwa Assembly vehemently opposed any changes to the route of the Pakistan-China Economic Corridor and threatened resistance if the federal government chose the eastern route instead of the western one.

The Awami National Party (ANP) warned any change in the route could jeopardise the integrity of Pakistan for which the present rulers would be held responsible.A joint resolution passed unanimously by the assembly called upon the federal government to initiate work on the western route of the corridor without making any changes to it. “The economic corridor route is planned to connect Gwadar with China’s Kashgar through Karakorum Highway, Abbottabad, Dera Ismail Khan, Mianwali and Zhob,” the resolution read out by the parliamentary leaders said. “This project will have positive effects on the economy of KP, Fata and underdeveloped areas of Balochistan and Punjab,” it said. Aligning the economic corridor, it noted, through another route via Punjab would be great injustice with the people of the less developed KP, Fata and Balochistan.

“The Pakistan-China Economic Corridor has immense significance for the economic progress of the country, particularly the Pakhtun belt,” said ANP’s Sardar Hussain Babak who delivered an impassioned speech to warn the Pakistan Muslim League-N-led federal government against what he described continued discrimination against the Pakhtuns.“If the federal government did not change its mind about changing the route of the economic corridor, we will resist it tooth and nail,” he threatened.

“If the route is changed, we are all set to go for a protest campaign,” warned Qaumi Watan Party’s Sikandar Sherpao. “We are ready to go to any extent on this issue,” he warned. He said the air, land and rail routes were already concentrated in Punjab and changes in the route of the economic corridor would increase the sense of deprivation and alienation among the Pakhtuns.

He said the economic corridor was a $45 billion Pakistan-China bilateral agreement that included the construction of highways, railroads, and laying of gas and oil pipelines. He said the corridor would create hundreds of thousands of jobs and would earn Pakistan an annual $100 million. He argued that the western route was the shortest and feasible and hoped it would boost economic activity in KP. “It will help us in properly tapping the oil and gas reservoirs in our southern districts,” he said.

The joint resolution also noted the importance of the route for the region’s development. “This project is important for the economic development of this region which has remained underdeveloped due to terrorism,” the resolution said.

Sardar Hussain Babak said the western route was 653 kilometres shorter than the eastern route. He alleged that Prime Minister Nawaz Sharif was furthering the interests of Punjab and was interested in the development of his native province only. “If the prime minister considers he only represents Punjab and that he has nothing to do with the rest of the country, he should come up with a clear statement,” Babak said.

Imran Khan’s Pakistan Tehreek-e-Insaf, which is ruling KP, did not take up the issue of change in the route of the economic corridor. However, it supported the stance of the opposition parties regarding the change of the route. “We agree with whatever Sardar Babak said,” announced the Minister for Public Health Engineering Shah Farman. “The government and the opposition are in agreement on this issue.”

Riaz Haq said...

China and Pakistan make an oddball but enduring couple

We tend not to see things through Beijing’s eyes. If we are to make sense of shifting realities, we will have to try. From Beijing, the world can seem a hostile place. The US, with its unshakeable faith in liberal democracy, may not be actively seeking regime change in China but it would surely welcome the collapse of the Communist party.
In conjunction with other countries, including India, Australia and Japan, Washington is trying to contain China’s regional military ambitions. Neighbouring countries like the Philippines and Vietnam, which until recently had been reassured by Beijing’s “smile diplomacy”, have grown wary. Even North Korea, almost wholly dependent on Chinese largesse, has grown defiant.
Pakistan looks like Beijing’s one true friend. One of the first countries to recognise the People’s Republic in the early 1950s, Islamabad was a bridge between China and the US. When Henry Kissinger, who later became US secretary of state, made his secret visit to China in 1971 to prepare for normalisation of US-China relations, he sneaked in from Pakistan. And for Beijing, Pakistan has been a way to keep India off balance.
In return, Beijing has kept Pakistan’s military equipped when supplies dried up from elsewhere. Beijing also provided information and enriched uranium for Pakistan’s nuclear bomb. When a US stealth helicopter crashed during the 2011 operation to kill Osama bin Laden, the Pakistanis showed the wreckage first to the Chinese. China built Pakistan a deepwater port at Gwadar on the Indian Ocean.
Andrew Small, author of a book on the relationship, says Beijing has earned real leverage. In 2007, under Chinese pressure, Islamabad raided the Lal Masjid “Red Mosque” after militants kidnapped several Chinese citizens. Chinese pressure has been one factor behind Pakistan’s offensive against militant groups in North Waziristan. For years, the US pushed for the same thing without success. The China-Pakistan axis is worth watching if only because it shows the limits of Beijing’s non-interventionist policy. As it gets sucked into the global whirlpool, it faces the risk of blowback. China now has to deal with attacks by members of the Uighur, a Muslim minority ethnic group. Some may be ideologically inspired — if not planned — in Pakistan’s lawless tribal belt. Like the US, Beijing worries Pakistan may not always crack down as hard on terrorists as it pretends.
Despite all this, China has stayed the course while Washington has blown hot and cold. That raises the intriguing notion of whether the US and China could work more closely in Pakistan. While there is much that divides their strategic interests, a surprising amount unites them. Beijing and Washington want a stable, viable Pakistan, not a viper’s nest of terrorist export. Both want to ensure the Pakistani military keeps a firm hold on nuclear weapons. Both want Pakistan to rein in support for the Afghan Taliban in the wake of US troop withdrawal from Afghanistan.
Some detect signs that Beijing has become more open to the idea. Wang Jisi, a Chinese foreign policy expert, has said that China’s “western periphery” offers a rare opportunity. In east Asia, the US pivot is seen as containment and the two are locked in what he says is a zero-sum game. In Pakistan and Afghanistan, however, Beijing and Washington have “significant scope for co-operation”. It is in neither’s interests for Pakistan to fail. If they could work together in that cause, it would be the oddest thing of all.

Riaz Haq said...

#China's largest embassy opens in #Islamabad symbolizing close #Pakistan-China ties …

An opening ceremony of the new Chinese embassy in Pakistan was held on Feb 13. As China's largest overseas embassy, it is a symbol of friendship between China and Pakistan, Foreign Minister Wang Yi said on Friday in Pakistan, where he spoke of the two countries' 'all-weather' friendship, Global Times reported.

Chinese Foreign Minister Wang Yi's two-day visit to Pakistan is seen as a preparation for the upcoming visit of Chinese President Xi Jinping, according to reports.

"Wang Yi said President Xi Jinping will make a state visit to Pakistan at the earliest possible date this year," a statement posted on the Foreign Ministry's website late on Thursday said.

"This will be President Xi's first visit to Pakistan as head of state," Wang said.

Xi was scheduled to go to Pakistan last September, but the trip was postponed due to domestic situation in Pakistan.

Since taking office in 2013, Xi has pushed the idea of a Silk Road Economic Belt that would connect China to South Asia and Central Asia with roads, railways, ports and airports.

Last year, Xi visited India, Sri Lanka and the Maldives.

Riaz Haq said...

APC rejects changes in Pak-China Economic Corridor (PCEC) route -

The All Parties Conference (APC) here on Tuesday rejected the proposed changes in the Pakistan-China economic corridor route from Khyber Pakhtunkhwa to Punjab and asked the Pakistan Muslim League-Nawaz (PML-N) led-federal government to rollback its decision in this regard. The APC was held under Awami National Party (ANP) in Islamabad. Leader of the opposition in the national assembly, Syed Khursheed Ahmed Shah Asfandyar Wali Khan, vice chairman Pakistan Tehreek-e-Insaf (PTI) Shah Mehmood Qureshi, Mehmood Khan Achakzai, Aftab Ahmed Khan Sherpao and other leaders participated in the conference. ANP chief Asfandyar Wali Khan has said that changes in the trade corridor will increase sense of deprivation among the people in Khyber Pakhtunkhwa, FATA and Balochistan. He said that it is not only trade route but many other development projects are also related with this. The ANP chief said that the corridor can play major role in curbing the menace of terrorism. He said that if the government is serious to strengthen Pakistan, they needed to strengthen provinces. He asked the government not to reverse the mistakes committed in the past. Asfandyar Wali said that following the terrorists brutal attack on Army Public School (APS) in Peshawar the whole nation united. He said that all the political parties supported Prime Minister Nawaz Sharif in war against terrorism. It is mentioning here that the proposed change in the route of Pakistan-China Economic Corridor drew stiff resistance from political parties despite its immense economic potential The 45 billion US dollars Pakistan-China Economic Corridor (PCEC) is believed to be the game changer for the region. It will connect Gwadar with Kashgar town in the autonomous Xinxiang region in China through highways, railroads and pipelines of gas and oil, boosting the economy in all the towns that would become part of this mega economic project. The PCEC is likely to serve as gateway for trade between China and the Middle East and Africa. The project is to cut a 12,000-kilometre route between Middle East and Chinese ports. The two countries, Pakistan and China, have already signed agreements for constructing an international airport at Gwadar, upgrading a section of 1,300-kilometre Karakorum Highway and laying a fibre-optic cable from the Chinese border to Rawalpindi. In November last year, Chinese government announced financing companies to build energy and infrastructure projects worth $45.6 billion under the PCEC. The project has hit controversy after major political parties in Khyber Pakhtunkhwa and Balochistan launched protests against the change in the original route, which is believed to deprive a major portion of Khyber Pakhtunkhwa, Balochistan and Fata of an opportunity of development, business and jobs. Major political parties in Khyber Pakhtunkhwa and Balochistan are still opposed to any change in the route of the Pakistan-China Economic Corridor. The opposition parties have expressed anger over change in the route in the Upper House by staging walkouts twice in a single session. The Khyber Pakhtunkhwa Assembly unanimously rejected any change in the route by the federal government. The Awami National Party has also written a letter to the Chinese envoy to Pakistan, seeking a meeting to discuss how the change in the route is to affect the two already backward provinces and Fata. -

See more at:

Riaz Haq said...

Chairman China’s Three Gorges (CTG) Corporation Chun Lu has planned to invest $10 billion in Pakistan initially that will ultimately jack up its investment up to a whopping $100 billion on long-term basis with focus on the energy sector.

The Chairman, CTG Board of Directors, Chun Lu, leading a nine-member delegation had a meeting with the Finance Minister, Senator Ishaq Dar, here on Tuesday and disclosed its plan of investment. A four-member IFC team also attended the meeting.

During discussion, Chun Lu said the CTG had plans to invest 10 billion dollars in Pakistan, ultimately taking up the investment to 100 billion dollars in the long run with focus on the energy sector.

He said the CTG had entered into collaboration with the IFC forming CSAIL (China Three Gorges South Asia Investment Limited) and both of them would undertake energy projects in Pakistan. The CTG chairman said they already had undertaken investment in projects which would generate 3,000MW electricity, and had plans for further such ventures in collaboration with the Pakistani side. He also evinced keen interest in investing in the ongoing projects.

Finance Minister Ishaq Dar welcomed the investment plans of CTG and their collaboration with the IFC for projects in Pakistan. He said the government attached due importance to its ties with China and wished this strong relationship could be translated into a robust economic partnership.

He said CTG’s 100 billion dollar investment plan would greatly add to realisation of this objective.Both the sides agreed to form their respective teams to discuss modalities for CTG’s investment ventures in Pakistan. The finance minister nominated senior officials from the Ministry of Finance, Ministry of Water & Power and the FBR for detailed discourse with the CTG team. He said all possible cooperation and facilitation would be offered to the CTG for investment in Pakistan.$10-bn-in-Pakistan

Riaz Haq said...

Year of friendship: ‘#China helping #Pakistan overcome energy shortage’ #loadshedding …

Speaking about a number of ongoing power projects set up by China in Pakistan, Chinese Ambassador Sun Weidong said that the country was ready to support its neighbour overcome the energy crisis.

He was speaking at a seminar on “21st Century Maritime Silk Road and China-Pakistan Economic Corridor (CPEC),” on the sidelines of the opening session of the Pakistan-China Business Forum, here at the Comsats Institute of Information Technology (CIIT).

The ambassador said that after their completion the energy projects would inject 10,000MW electricity in Pakistan’s power sector.

The envoy said that cooperation between the two countries would continue in other areas such as infrastructure, transport, education and poverty alleviation too.

He said that the friendship between the countries was based on the ideas of peaceful coexistence, mutual understanding and a focus on development.

The ambassador invited Pakistani businessmen to explore opportunities in China.

He termed 2015 as the year of friendship and exchange of delegations between the two countries.

Weidong said that the two countries were committed to pushing bilateral relations to a new level.

Earlier, while addressing the inaugural ceremony, Federal Minister for Science and Technology Tanveer Hussian stressed on devising national strategies for human resource development and promotion of science and technology.

Federation of Pakistan Chamber of Commerce and Industry (FPCCI) President Mian Muhammad Idrees said that the forum provided businessmen from the two countries the opportunity to improve bilateral trade relations.

The Board of Investment (BOI) Secretary, Iftikhar Hussain Babar invited Chinese investors to invest in various sectors including energy and infrastructure in Pakistan. He said that the $45 billion China-Pakistan Economic Corridor (CPEC) was a great gift from China.

CIIT Rector Dr Junaid Zaidi said that the university had introduced an academia-driven model of business cooperation by conducting the forum.

On Sunday, a number of activities including panel discussions, seminars and workshops were held at the venue.

MoUs were signed between business conglomerates from China and CIIT for development of a “Commodity Exhibition and Trade Centre” in Islamabad.

Riaz Haq said...

Shifting Allegiances – Rethinking #US-#Pakistan Relations as Pakistan grows closer to #China and #Russia via @CFR_org

The once strong U.S.-Pakistan relationship may be set to expire. Since the Afghan-Soviet war (1979-1989), Pakistan has served as a key U.S. ally in the Middle East—providing a base for military operations, participating in the counterterrorism operations in Afghanistan and Pakistan, and mediating relations between the United States and China. This bilateral relationship expanded in 2001 under President Bush, who increased humanitarian and military aid from $187.7 million in 2001 to $2 billion the year after 9/11—totally $20 billion in the subsequent decade. However, recent Pakistani political and military decisions reveal shifting allegiances, calling into question the strength of U.S.-Pakistan relations.

In recent months, Pakistan has embarked on a number of initiatives that support U.S. regional interests. Much of Pakistan’s renewed attention to countering terrorism was spurred by the December 16, 2014, Peshawar school attack—the most violent terrorist attack in Pakistan’s history—in which Taliban militants killed 145 people, including 132 children. Subsequently, in December 2014, the Pakistani government created National Action Plan (NAP) to crack down on terrorism. In January 2015, Pakistan began a process of deepening military ties with Afghanistan to strengthen border security. Also in line with U.S. interests in the region, Pakistan is pursuing friendlier relations with India by resuming dialogues for the first time in almost one year amid tensions on the contested Jammu and Kashmir border. As a result of Pakistan’s counterterrorism efforts, the State Department’s approved Pakistan’s request for nearly $1 billion in military equipment.

In recent months, Pakistan’s allegiances have begun to shift as the country strengthens relations with China and Russia, two countries with which Pakistan’s interests increasingly align. Pakistan’s deepening regional ties have reached an unprecedented level, according to a study by the non-profit group, Pew Charitable Trusts, and pose a direct challenge to U.S. regional influence. Most recently, on April 16, Chinese president Xi Jinping announced plans to embark on a $46 billion infrastructure spending plan in Pakistan known as the China Pakistan Economic Corridor and, in early April, Pakistani president Nawaz Sharif approved an approximately $5 billion deal with China to purchase eight submarines with the potential to attach nuclear warheads. With a security interest in filling the vacuum left by the drawdown of U.S. troops from the region in order to stem the growing threat of terrorist attacks in West China and promises of unprecedented investment to Pakistan, Pakistan may default to a partner with which its interests more directly align—China.

Pakistan’s recent actions reflect an increasingly different set of priorities. While Pakistan’s rivalry with India, quest for regional alliances, and pursuit of a strong military arsenal are not new, the country’s growing alignment of interests and unprecedented collaboration with potential U.S. rivals—China and Russia—threaten the stability of a bilateral relationship founded primarily on Pakistan’s reliance upon the United States. The United States should question whether it is clinging to an outdated perception of U.S.-Pakistani relations.

Riaz Haq said...

If enacted, that (Pak-China Corridor) plan would enable China’s naval vessels and merchants to bypass the Malacca Strait, long a haven for pirates and militants who prey on unsuspecting ships. The CPEC would allow the government and banks in the mainland to lend to Chinese companies operating in Pakistan, facilitating construction along the route. Some of the other line items in the deal aim to fix Pakistan’s failing energy infrastructure: the CPEC calls for $15.5 billion in investments ranging from coal to solar and hydroelectric power, scheduled to become part of Pakistan’s national electricity mix in 2017. That will follow a fiber optic cable linking Xinjiang and Rawalpindi, which will come at the cost of $44 million.

China has plenty of incentive to unleash a spigot of investment, despite fears that Pakistani radicals are stoking violence in Xinjiang among the 10 million Uyghur Muslims that live there. Beijing has already pushed heavily for other projects in the region, including the 1,240 km Karachi-Lahore motorway, a six-lane, high speed corridor expected to be completed in the fall of 2017, and orchestrating upgrades to public transportation, including metro and bus service, in six cities, including Lahore, Karachi, and Rawalpindi. Modernizing the Karakoram highway, which runs 1,300 km from Kashgar, the ancient silk road crossing in Xinjiang, all the way into the heart of the Punjab, Pakistan’s biggest province, will also prove critical.

All of that leads to Gwadar, which China hopes to transform into a free-trade zone on the order of a Singapore or a Hong Kong, another major focus for Chinese investors. That carries geopolitical weight. China’s aid to Pakistan now exceeds American spending, which has totaled $31 billion since 2002. Washington’s investments have slowed since counterterrorism funding authorized by Congress during the Afghan surge has dried up.

It’s not as though China isn’t interested in military issues. President Xi also used the occasion to finalize a deal to send eight submarines to Pakistan, in a long-promised deal. They’re also working to get on shared ideological ground: the Research and Development International think tank (RANDI), will be chaired by Pakistani and Chinese leaders. That unfortunate acronym became the butt of plenty of Twitter jokes on Monday. But the group could wield serious influence, especially in thinking up plans to help Pakistan fight terror and potentially determining the role of mediators in talks with the Taliban in neighboring Afghanistan.

China’s grand plan for Pakistan’s infrastructure has taken shape over the course of President Xi’s visit. It will have a major impact on what the future holds for Islamabad, and the entire Indian Ocean basin.

Hassan Raza said...

Hi Mr Riaz Haq,

I have a few tiny questions. Now after China President visited Pakistan and 45$ billion dollars agreement have been signed then I want to know that if China invest about 9$ billion each year in Pakistan for 5 years can't we boost our GDP growth to more ten 7% because with between 1.5-2$ billion FDI in 2013-14 Pakistan reached 3.3% GDP growth so with 9$ billion dollar FDI can we take Pakistan GDP growth to at least 7% next year?

The second question is that I read online that if Gwadar post gets operational then Middle east will transfer its oil using gwadar port to china then Pakistan will earn a revenue of 20$ billion annually. SUch big amount can change Pakistan future can't it? I mean lets say that 5$ is operating expenses and still Pakistan govt will have 15$ which will come directly from China and we can utilize it to boost up our economy. Pakistan can use it like the way we get FDI and after that Pakistan won't need any kind of Aids or loans isn't it? And 15$ annually coming from China can't assist Pakistan in reaching double digit GDP growth??

Not only China other countries will also use Gwadar Post isn't it? If all what I have read is true then Gwadar Port can assist Pakistan making itself Asian tiger in a decade.

Riaz Haq said...

HR: "I have a few tiny questions. Now after China President visited Pakistan and 45$ billion dollars agreement have been signed then I want to know that if China invest about 9$ billion each year in Pakistan for 5 years can't we boost our GDP growth to more ten 7% because with between 1.5-2$ billion FDI in 2013-14 Pakistan reached 3.3% GDP growth so with 9$ billion dollar FDI can we take Pakistan GDP growth to at least 7% next year?"

$9 billion FDI is about 4% of Pakistan's current annual GDP.

FDI is only a small part of total investments which include external investments and domestic savings that are invested in Pakistan.

Pakistan needs investment of 20% of GDP to achieve 5% economic growth, a capital-to-output ratio (COR) of four, according to Mohsin Mushtaq Chandna, economic minister at the Pakistan Embassy in Washington, DC.

A COR of four means it would take 36% of GDP as total investment to achieve 9% GDP growth.

Read more at:

Hassan Raza said...

If I am not wrong with 22% FDI Musharraf took Pakistan GDP growth to 7%??

And you didn't answered me regarding Gwadar Port question?

Riaz Haq said...

BBC - #China navy to focus on 'open seas', paper says. Challenge to #America's naval power? #Obama's pivot to #Asia? …

China is to focus on projecting its military presence beyond its borders at sea, according to a strategy document.
The navy will shift its focus to "open seas protection", rather than "offshore waters defence" alone.
It will also speed up developing its cyber force to tackle "grave security threats", the State Council said.
China has been accused of aggressively pursuing territorial claims in the South China Sea which has sparked concern in Washington.
The strategy document highlighted four areas of critical importance - the ocean, outer space, nuclear force and cyber space. Its recent naval policy has prompted the most controversy.
In recent years, China has focused on building up its navy. It has launched an aircraft carrier and invested heavily in submarines and other warships.
It has also exercised its claims over islands in the South China Sea which the Philippines, Vietnam, Malaysia and Brunei variously dispute.
In one disputed area, the Spratly Islands, US officials say China has created about 800 hectares (2,000 acres) of dry land since 2014 that could be used as airstrips.
The strategy document warns of threats to China's maritime rights and interests.
It says China "will not attack unless [it is] attacked, but will counterattack" and mentions the "provocative actions of certain offshore neighbours" and "outside parties involving themselves in South China Sea affairs".
On the same day that the strategy document was released, state news agency Xinhua reported two 50-metre high lighthouses were to be built on a reefs in the Spratly Islands, which are claimed by Vietnam and the Philippines.
At a news conference to release the document, defence ministry spokesman Yang Yujun said: "Looking from the angle of sovereignty, China's development of construction on its islands is no different at all from all the other types of construction going on around the country."
He said island building was "beneficial to the whole of international society" because it aided China's search and rescue, and environmental protection work.
China criticised Washington after a US spy plane flew over areas near the Spratly Islands last week, with both sides accusing each other of stoking instability.
The strategy document also says China's air force will shift its focus from territorial air defence to both offence and defence, and building airspace defences with stronger military capabilities.

Riaz Haq said...

Excerpts of "China-Pakistan Economic Corridor: Towards a New ‘Heartland’?"

By Omar Alam

China’s Pivot to Pakistan

In order to comprehend China’s recent efforts to bolster its relations with Pakistan, one must first understand the intricate interplay between the geopolitical and geoeconomic implications of closer ties between the two Asian nations, as exemplified by the gargantuan CPEC project. Close relations between the two countries are nothing new. However, what has qualitatively enhanced the relationship is the changing geopolitical context. With the drawdown of Western – and particularly, the United States’ – presence in Afghanistan, China seized the opportunity presented by the power vacuum to expand its regional sphere of influence and further its economic and strategic interests in Pakistan.

Laying the Foundations: Sino-Pakistani Agreements

The geostrategic significance of CPEC is heightened by earlier Sino-Pakistani agreements. Firstly, China has been granted 40-year operational control of the port of Gwadar on the Indian Ocean, strategically positioned close to the Strait of Hormuz, at the mouth of the Persian Gulf. This will enable China to monitor its critical sea lines of communication, as 60 per cent of its crude oil imports pass through West Asia.

Once CPEC is completed and the port is fully operational, China will be able to ensure that a large share of its oil needs are secured via Gwadar, saving time and billions in costs. More importantly, the new route would circumvent the potentially vulnerable Strait of Malacca. This is all the more significant given the United States’ growing presence in the South China Sea, where it is seeking to expand its influence as part of its pivot to Asia. Thus, bypassing the Strait of Malacca would present China with the option to avoid potential confrontation with the US and diminish the strategic value of the United States’ navy – all while monitoring US naval activities 460 kilometers west of Karachi and still keeping a safe distance from Indian navy bases. Significantly, while Gwadar is being developed as a commercial port for civilian use, it could potentially be transformed into a military facility for China’s navy.

Another factor of relevance is Pakistan’s pledge to purchase eight Chinese diesel-powered attack submarines, in what analysts have referred to as China’s largest defence deal to date. In addition to entrenching China’s role as Pakistan’s foremost arms provider, the submarine fleet could potentially counter Indian attempts to blockade Pakistani ports on the Indian Ocean.

India’s Conundrum

Despite CPEC’s significant strategic implications for the country, India is yet to comprehensively articulate its stance vis-à-vis the economic corridor. CPEC is projected to cross Gilgit-Baltistan, part of the disputed territory of Kashmir, causing significant concern to India. Similarly, the prospect that Gwadar may one day become a Chinese naval base troubles New Delhi. Despite the fact that CPEC heightens the threat that the Sino-Pakistani partnership poses to India’s regional standing, there are signs of growing Sino-Indian economic interdependence. For instance, this is testified by a steady increase in bilateral trade, as well as China’s pledge to invest almost $20 billion USD in Indian infrastructure development projects. Indeed, CPEC is set to bolster economic relations in the region, potentially benefiting Indian trade and development as well. What is certain is that India cannot sit on the fence much longer, and ought to formulate a clear position regarding CPEC.

Riaz Haq said...

#Pakistan is "the only all-weather strategic partner" of #China - Global Times. #CPEC …

In April when President Xi Jinping visited Pakistan, China and Pakistan elevated the bilateral relations to "all-weather strategic cooperation partners." China has established partnerships with a lot of countries in the world, but Pakistan is the only one that is called an "all-weather strategic cooperation partner."

For countries with different social systems and ideologies that want to collaborate with each other, the China-Pakistan relationship has become a model to follow. This type of relationship is not based on common values and systems, but on same or similar strategic and security interests. Today common security concerns still exist, and some new concerns like global terrorism and maritime security have arisen for both sides in recent years.

Since the beginning of the 21st century, the basis of China-Pakistan cooperation has expanded. The "One Belt, One Road" initiative and China-Pakistan Economic Corridor has enlarged bilateral strategic and cooperative partnership to a more comprehensive framework.

Before, the basis of the all-weather partnership mainly included political, strategic and security cooperation, now the closer economic ties have become a part of this basis, which makes two countries form a "community of shared destiny." The two sides not only have common economic interest and common security concerns, but also share the dream of national peace, stability, and prosperity. "Shared destiny" is the solid foundation for our cooperation in international affairs.

China-Pakistan international cooperation has some key features as follows: First, China and Pakistan respect principles, value friendship, and "share weal and woe." When dealing with international affairs, both sides take the Five Principles of Peaceful Coexistence as the basic principle; when facing international affairs, both sides advocate justice and fairness, protect the common interests of developing countries, and have the courage to speak up.

In addition, China-Pakistan cooperation is always based on close communication and coordination, deep understanding of the other side's situation and interest, and full consideration of the other side's feeling. Pakistan always gives China full support on the Taiwan, Tibet, Xinjiang, and South China Sea issues. China is also a strong supporter of the independence, sovereignty, territorial integrity, and national dignity of Pakistan.

In 1972, the People's Republic of China used its veto power for the first time to support Pakistan at the UN Security Council by refusing to admit Bangladesh, the former East Pakistan, to the UN. After 1989, every time when China was blamed by the US and other Western countries at the UN Commission on Human Rights, Pakistan was always the first one to stand up and speak for China.

China and Pakistan conform to trends of the times, expand scope of cooperation, and jointly resolve challenges. After the Cold War, especially in the 21st century, the world has seen a trend toward peace, development, and cooperation.

Apart from traditional security issues, more and more non-traditional challenges arise. As a result, China-Pakistan cooperation has expanded from political and security fields to economy and trade, climate change, food and energy security. China takes the interests of Pakistan and other developing countries into careful consideration when it negotiates with Western countries.

Riaz Haq said...

Times of India Editorial:

A year or so before Ajit Doval became national security adviser, he famously warned Pakistan that a repeat of the Mumbai 26/11attack could lead to Pakistan losing Balochistan. The Doval Doctrine – as it has now come to be known – involves what he calls a “defensive-offensive” strategy where India’s security establishment acquires a sub-conventional secondstrike capability, to be wielded as and when needed.
The Pakistan military establishment is aware that Balochistan is a natural weakness India could exploit with telling impact. In May last year, the Pakistan army’s media machinery all but accused India of fermenting secessionism there.
But here lies the twist. China – as part of the China-Pakistan Economic Corridor (CPEC) – sees the Balochistan port of Gwadar as an integral part of its One Belt, One Road (OBOR) initiative. Indeed, as former foreign secretary Shyam Saran recently wrote, Gwadar is significant precisely because it is where China’s Maritime Silk Route (“the Road”) meets its Eurasian landbased connectivity project (“the Belt”).
The geopolitical significance of Gwadar to China makes any Indian subconventional response in Balochistan exceedingly complicated. The reality is that the same Balochi rebels who want to secede from Pakistan have also opposed Chinese activities.
This was evident last March when Balochi rebels set fire to five oil tankers servicing a Chinese company. However, it is likely that unrest in that region, organic or manipulated, that hurts Chinese interests could be viewed by Beijing (or could be sold to them), as Indian provocation.
It is also inconceivable that China would sit idle if the separatists, allegedly backed by India, move from being a mere nuisance and acquire the potential to seriously jeopardise their prize – Gwadar – of the $46 billion CPEC investment. China could initiate and enhance its support for militants in the Indian northeast, or worse, encourage and abet Pakistan’s proxy warriors.
Meanwhile, an assertive US AsiaPacific re-balance in the region – in response to China’s naval activism in the South China Sea – is likely to ensure greater US control of the Malacca Strait in order to deter the Chinese from revising marine territorial borders.
China, therefore, seeks alternative routes for its energy supply and goods, which would connect the Strait of Hormuz to a port in the Arabian Sea, along with better land connectivity through the Eurasian landmass.
Even as these new realities reshape multiple arrangements in the region, the challenge for India is to ensure that Balochistan does not transform from being Pakistan’s quagmire to another thorn in the Sino-Indian relationship. India must wean China away from the Gwadar port, and CPEC in general, by offering credible alternatives.
India could fast track its commitment to the Bangladesh-China-India-Myanmar (BCIM) corridor and invite the Chinese to set up a land connectivity corridor from Kolkata to Gandhinagar, passing through Mumbai. It should also offer to partner with the Chinese to refurbish the NH-6 linking Kolkata to Mumbai.
Finally, it should get the Chinese on-board the Sagarmala initiative, and allow the Chinese to co-develop a port off the coast of Gujarat, which would link up with the Indian-Chinese land connectivity corridor running roughly parallel to the Tropic of Cancer. The financial model for this land initiative could be along the lines of what has been proposed for the Delhi-Mumbai Industrial Corridor in collaboration with Japan, and implemented through the China-led Asian Infrastructure Investment Bank in which India is the second-largest shareholder.

I think Pakistan currently has the upper hand in both corridor diplomacy and proxy wars in the region, particularly since 2014 when Pakistan Army started acting forcefully against India's proxies, the TTP and the Baloch insurgents.

I expect India to continue to counter Pakistan in both more forcefully as CPEC nears reality.

Riaz Haq said...

Posted by Fareed Zakaria on March 17, 2017 ·

We do not yet have the official agenda for next month’s meeting in Florida between President Trump and Chinese President Xi Jinping. But after 75 years of U.S. leadership on the world stage, the Mar-a-Lago summit might mark the beginning of a handover of power from the United States to China. Trump has embraced a policy of retreat from the world, opening a space that will be eagerly filled by the Communist Party of China.
Trump railed against China on the campaign trail, bellowing that it was “raping” the United States. He vowed to label it a currency manipulator on his first day in office. But in his first interaction with Beijing, he caved. Weeks after his election, Trump speculated that he might upgrade relations with Taiwan. In response, Xi froze all contacts between Beijing and Washington on all issues, demanding that Trump reverse himself — which is exactly what happened. (Perhaps just coincidentally, a few weeks later, the Chinese government granted the Trump Organization dozens of trademark rights in China, with a speed and on a scale that surprised many experts.)
The Trump administration’s vision for disengagement from the world is a godsend for China. Look at Trump’s proposed budget, which would cut spending on “soft power” — diplomacy, foreign aid, international organizations — by 28 percent. Beijing, by contrast, has quadrupled the budget of its foreign ministry in the past decade. And that doesn’t include its massive spending on aid and development across Asia and Africa. Just tallying some of Beijing’s key development commitments, George Washington University’s David Shambaugh estimates the total at $1.4 trillion, compared with the Marshall Plan, which in today’s dollars would cost about $100 billion.
China’s growing diplomatic strength matters. An Asian head of government recently told me that at every regional conference, “Washington sends a couple of diplomats, whereas Beijing sends dozens. The Chinese are there at every committee meeting, and you are not.” The result, he said, is that Beijing is increasingly setting the Asian agenda.
The Trump administration wants to skimp on U.S. funding for the United Nations. This is music to Chinese ears. Beijing has been trying to gain influence in the global body for years. It has increased its funding for the U.N. across the board and would likely be delighted to pick up the slack as the United States withdraws. As Foreign Policy magazine’s Colum Lynch observes, China has already become the second-largest funder of U.N. peacekeeping and has more peacekeepers than the other four permanent Security Council members combined. Of course, in return for this, China will gain increased influence, from key appointments to shifts in policy throughout the U.N. system.
The first major act of the Trump administration was to pull the United States out of the Trans-Pacific Partnership, a treaty that would have opened up long-closed economies such as Japan and Vietnam, but also would have created a bloc that could stand up to China’s increasing domination of trade in Asia. The TPP was, in Singaporean Prime Minister Lee Hsien Loong’s words, “a litmus test” of U.S. credibility in Asia. With Washington’s withdrawal, even staunchly pro-American allies such as Australia are hedging their bets. Australian Prime Minister Malcolm Turnbull has raised the possibility of China joining the TPP, essentially turning a group that was meant to be a deterrent against China into one more arm of Chinese influence.

Riaz Haq said...

#China now produces 8 million #University graduates a year, twice as many as the #USA. #education

A record-breaking 8m students will graduate from Chinese universities in 2017. This figure is nearly ten times higher than it was in 1997 and is more than double the number of students who will graduate this year in the US.

Just two decades ago, higher education in China was a rare privilege enjoyed by a small, urban elite. But everything changed in 1999, when the government launched a program to massively expand university attendance. In that year alone university admissions increased by nearly 50% and this average annual growth rate persisted for the next 15 years, creating the largest influx of university educated workers into the labour market in history.

Annual enrolment of new students in higher education institutions.Author provided

Growth in the number of engineering students has been particularly explosive as part of the government’s push to develop a technical workforce which can drive innovation. But overall student numbers have increased in all subjects – even in the humanities and social sciences. New universities have sprung up and student enrolment numbers have rocketed. The second most popular subject major is in fact literature – and the fastest growing is law.


In 2013, Chinese citizens started blogging about the “hardest job hunting season in history” – and each year it seems to get harder for Chinese graduates. In 2017 there will be 1m more new graduates than there were in 2013. And yet, the graduate unemployment rate has remained relatively stable – according to MyCOS Research Institute, only 8% of students who graduated in 2015 were unemployed six months after graduating.

But if you delve a little deeper it’s clear that unemployment rates mask the more subtle issue of “underemployment”. While most graduates eventually find work, too many end up in part-time, low-paid jobs.

Six months after graduating, one in four Chinese university students have a salary that is below the average salary of a migrant worker, according to MyCOS data. History, law and literature have some of the lowest starting salaries, and also the lowest employment rates.

And for students who choose arts and humanities subjects in high school, the average starting salary after university is lower than that of their classmates who didn’t go to university, according to survey data. Of the 50 most common graduate occupations, 30% are low-skilled and don’t require a degree. For these students, low starting salaries and limited career progression call into question the value of their degree.

The high cost of living, particularly in big cities, has also forced millions of graduates into “ant tribes” of urban workers living in squalid conditions – often in basements – working long hours in low-paid jobs.

The big divide

But for a different group of graduates, the contrast is striking. Engineering, economics and science majors in China all enjoy high starting salaries and the top employment rates. These graduates fill the highest-paid entry positions in the most attractive employment sectors of IT, operations, real estate and finance. Chinese tech graduates do particularly well. In 2015 the top five highest paying graduate jobs were all IT related.

Riaz Haq said...

#China’s new world order. #US #India #Pakistan #CPEC #OBOR

by Zahid Hussain

CHINA recently hosted 29 heads of state and government at the Belt and Road Forum, reinforcing the country’s claim to leadership of an emerging geopolitical and economic world order. The summit conference that also attracted representatives of more than 40 other countries and multilateral financial agencies was the clearest expression yet of China breaking out of its old foreign policy mould that had restrained it from attempting a global role.

China’s multibillion-dollar One Belt, One Road (OBOR) infrastructure development project linking the old Silk Road with Europe, is a manifestation of China’s growing geopolitical ambitions. A brainchild of President Xi Jinping, perhaps, the most powerful Chinese leader after Mao Zedong, OBOR has now been under development for four years, spanning 68 countries and accounting for up to 40 per cent of global GDP.

President Xi’s ambition of propelling China to centre stage of the global power game represents a sharp departure from the approach of previous Chinese leaders who strictly adhered to Deng Xiaoping’s tenet to “hide our capabilities and bide our time, never try to take the lead”. Thus over the past two decades, China has avoided being drawn into global conflicts and has completely focused its energies on development that helped it to become an economic superpower.

China’s push to take the world leadership has come at a time when a strong anti-globalisation wave is sweeping the Western world that is showing a growing tendency of returning to more protectionist regimes. The United States under the Trump administration with its inward-looking approach has virtually abandoned the mantle of globalisation thus ceding greater space to Beijing’s assertion.


Although Beijing downplays geostrategic motivations, CPEC represents an international extension of China’s effort to deliver security through economic development. Notwithstanding their growing strategic cooperation, terrorist sanctuaries in Pakistan have remained a major source of worry for the Chinese government. China’s security concerns, especially those that arise from its restive region of Xinjiang, and the Islamist militancy threatening Pakistan’s stability have also been a strong factor in Beijing’s new approach to achieving security through economic development.

This growing Pakistan-China strategic alliance has also exposed the regional geopolitical fault lines. Predictably, India boycotted the Beijing forum citing serious reservations about the project, particularly regarding China-funded development in Gilgit-Baltistan that is linked to the Kashmir dispute. Yet another excuse given by the Indian authorities was that a trans-regional project of this magnitude required wider consultation.

Explore: Is India trying to convince the world China’s OBOR plan is secretly colonial?

Despite their geopolitical rivalry and long-standing border dispute, trade between India and China has grown significantly crossing $100bn. But there have been some visible signs of tension between the two most populous nations in the past few years with the strengthening of ties between Washington and New Delhi. India has openly sided with the US and Japan against China over the South China Sea issue.

Indeed, the success of the summit has provoked a strong reaction from Delhi. So much so that some leading commentators have called for tougher action to obstruct the OBOR project. “Far from this, CPEC (the life and soul of OBOR) threatens India’s territorial integrity in a manner unseen since 1962,” Samir Saran, a leading Indian commentator wrote in an op-ed piece.

Notwithstanding the scepticism, OBOR is a new geo-economic reality representing an emerging world order. The process cannot be reversed.

Riaz Haq said...

#Pakistan: A slice of #China in #Islamabad. Growing Chinese footprint. #CPEC @AJEnglish

Restaurants, guesthouses and supermarkets are opening to cater for the influx of Chinese fuelled by the CPEC.

"This year is, as we call it, the year of early harvest," says Lijian Zhao, China's deputy ambassador to Pakistan. "The ultimate goal is to help Pakistan to develop the economy … to help to accelerate the industrialisation process."

The 43 projects that directly fall under the CPEC banner have seen a tripling of the number of Chinese nationals resident in Pakistan to more than 30,000, according to the Chinese embassy in Islamabad. In addition, Reuters reported, that more than 71,000 Chinese nationals visited on short-term visas last year.

As more Chinese engineers, managers and workers flood into the country, Pakistan has seen a mushrooming of supermarkets, guesthouses and other businesses catering specifically to Chinese needs.

Zhao, the Chinese deputy ambassador, says he's a regular visitor to the new Chinese grocery stores, stocking up on traditional ingredients that are just not available anywhere else in the South Asian country.

"I go for those markets. [Even the embassy] cannot bring everything from China," he says.

The aptly named Firstop (a portmanteau of 'First Stop') is one of the largest such stores in Islamabad. The supermarket's shelves are lined with products manufactured in China: everything from noodles to hardhat construction helmets, sea kelp to stationery, spice mixes to industrial meat grinders.

As a Chinese migrant moving to Islamabad, whether you are looking for a quick meal or to procure the equipment and supplies to set up your own restaurant, it looks like Firstop has got you covered. Most of the demand, though, seems to be for food - both ready-made and ingredients - that are not available in typical Pakistani grocery stores, says Zhang Song, a store manager.

"Mostly the food and other seasonings are imported from China," says Song, in broken English. "Only [the cooking] oil is from Pakistan. Others all from China."

Song, a 29-year-old originally from He Bei province in China, says he moved to Pakistan two years ago to take advantage of the boom in businesses aimed at Chinese citizens.

"Most customers are Chinese people," he says.

Pakistanis, he says, seem to be fond of making Chinese food, but the South Asian version of Chinese food - heavy on garlic, ginger and tomatoes - does not necessarily fit the bill of actual Chinese fare.

"[Traditional] Chinese food is too much different from Pakistani food," he says, smiling.

At the Ni Hao Cash & Carry, a few kilometres away, the scene is much the same. The small store is crammed with row upon row of products labelled in Chinese, with an array of spices arranged in open containers near the back wall.

"A lot of [Pakistanis] walk in and are shocked … they see everything in Chinese here, and wonder perhaps if they've arrived in Beijing," says Rizwan Hassan, a manager at the store.

Hassan and business partner Eraj Raza have been working with Chinese nationals on infrastructure projects for the last seven years, and set up this store about six months ago.

"We built the store because we saw CPEC, and all the companies coming in," says Raza. "Lots of investors are coming in. People are opening restaurants, guesthouses, or other services."

About 90 percent of their customers, says Raza, are Chinese, with the rest made up mostly of Koreans, Thais and other East Asian visitors. Ni Hao also operates another store in Karachi, Pakistan's largest city and commercial capital, as well as smaller outlets at more than half a dozen CPEC project sites.

Riaz Haq said...

Any Attack on Pakistan Would Be Construed As an Attack on China

"Any attack on Pakistan would be construed as an attack on China," Beijing recently warned the US. After the Abbottabad operation, in which Osama bin Laden was killed, Pakistani Prime Minister Syed Yusuf Raza Gilani's visited China from May 17 – 21, 2011. His trip was hailed by the Pakistani press as a new historic landmark in bilateral relations, and interpreted as a sign of the progressive breakaway between Pakistan and U.S.

China Warns U.S.: 'Any Attack on Pakistan Would Be Construed As an Attack on China' – Evolving Pakistani-Chinese Alliance to Face the U.S./India

Riaz Haq said...


But neither Belt and Road nor CPEC is a strategic ploy masquerading as investments, as some allege. CPEC specifically has a real and powerful economic logic for Pakistan, China, and even India. The corridor does offer China some indirect strategic benefits — it consolidates Beijing’s alliance with Islamabad and reduces its dependence on the Malacca chokepoint. But CPEC is ultimately about economics. It not only raises the potential for cross-border Sino-Pak trade, it also enhances Pakistan’s ability to trade with the outside world beyond China. Most of the nodes that constitute the project’s road network bolster Pakistan’s domestic connectivity and with the outside world.

In fact, the aforementioned Karachi-Lahore Motorway resembles India’s own planned Delhi-Mumbai Industrial Corridor and runs parallel to it. Much like the Indian highway, the Karachi-Lahore Motorway cuts transport time between Pakistan’s two largest cities. There are also planned industrial zones along the route. And the Karachi-Lahore Motorway will be complemented by upgrades to Pakistan’s main rail line.

Not only do the two highways run parallel to one another, CPEC can potentially fill the gaps in between. For example, with the completion of the Karachi-Lahore Motorway in 2020, Karachi could be the fastest route to sea by road for traders in Amritsar in India’s Punjab state. Additionally, with the completion of the Karakoram Highway realignment, traders in northwestern India may also be able to access western China’s markets more readily through Pakistan, potentially reducing the trade deficit with China that India routinely complains about. While India often thinks of Pakistan as an overland trade route to Afghanistan, there is also potential for India-China transit trade through Pakistan.

Indian commentators, such as Singh, also describe the Gwadar port as a strategic project that is not economically viable. But in fact, that is a more accurate description of India’s Chabahar port project. Gwadar may be able to absorb some of China’s transshipment with the Persian Gulf and East Africa and host industries like mineral processing and petrochemicals. Meanwhile, Chabahar is oriented around Afghanistan, a narco-state whose documented economy has grown at an annual average 1.65% over the past four years, according to the World Bank. India has used Chabahar to send food aid to Afghanistan to bypass the Pakistan transit route and replace Pakistan as Afghanistan’s primary source of imported wheat. But the fact that Indian wheat had to be sent to Afghanistan fully subsidized indicates that the prospects for Chabahar-based Afghanistan trade are dim.