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UPDATED: April 27, 2015 NO. 18 APRIL 30, 2015
On Point for Prosperity
President Xi's Islamabad trip takes the Sino-Pak relationship to new level
By Yu Lintao

HAND OF GREETING: Chinese President Xi Jinping attends a welcoming ceremony flanked by Pakistani President Mamnoon Hussain (left) and Prime Minister Nawaz Sharif (right) in Pakistani capital Islamabad on April 20 (LAN HONGGUANG)

With Chinese President Xi Jinping's latest visit to Islamabad, the two neighboring countries officially upgraded their relations to a new high—terming their diplomatic ties an "all-weather strategic partnership of cooperation." The terms, never before seen within international relations, can certainly be considered an expression of the unique relationship between China and Pakistan.

The attachment of this prefix comes after six decades of friendship based on sincerity and mutual support between the two governments and the two peoples. It similarly forecasts a bright future for their bilateral relations following a decades-long history of cooperation.

During President Xi's Islamabad trip, the two countries held talks concerning the construction of the China-Pakistan Economic Corridor, which connects the Pakistani deep water Gwadar Port and China's in-land city of Kashgar in Xinjiang Uygur Autonomous Region. Xi's trip led to the signing of a total 51 deals on a wide range of issues, from energy and infrastructure to education and culture.

With these steps taken, a more prosperous Pakistani economy is to be expected and a fresh impetus has entered into China-Pakistan relations.

Best for both sides

Of the 51 deals signed between China and Pakistan, 30 agreements were related to the proposed economic corridor.

The economic corridor, which was first announced during Chinese Premier Li Keqiang's visit to Pakistan in May 2013, is a planned network of roads, railways and energy projects for which China will commit $46 billion in investment. The scale of investment is more than the $31 billion the United States has provided to Pakistan over the past 10 years in security and economic funds, according to the U.S. Congressional Research Service.

Pakistani Prime Minister Nawaz Sharif hailed the economic corridor as an excellent example of cooperation between the two countries, adding that it bears great significance to peace and prosperity in the region.

Observers said that the economic corridor will benefit both China and Pakistan greatly.

Zhou Gang, former Chinese Ambassador to Pakistan, noted that he hoped the corridor project could help curb Pakistan's crippling energy crisis, since the economic corridor's initial focus will be on providing power to Pakistan. In the meantime, providing assistance for China's neighbor to overcome this obstacle in its development can help the country tap into its full economic potential. A stronger Pakistan will in turn provide the region with an economic hub once the nation's cash-strapped economy—which previously took out loans from the World Bank and the IMF—stabilizes on account of its energy needs being met.

Federal Minister for Planning and Development, Ahsan Iqbal, the Pakistani minister overseeing the corridor project, was quoted by Pakistani media that China and Pakistan will cooperate in natural gas, coal and solar energy projects that will provide 16,400 megawatts of electricity—roughly equivalent to the entirety of the country's current capacity.

According to Iqbal, some $15.5 billion worth of power projects will come online with Chinese help by 2017.

The minister also stressed the role of the economic corridor in integrating regional economic development. Iqbal added that the project will not only benefit China and Pakistan, but will also give positive economic momentum to other countries in this region. "The roads and rail links will help us integrate the three engines of growth in Asia: South Asia, Central Asia and China. Pakistan will become the economic hub of the region," he said.

Lou Chunhao, a researcher on South Asian studies with the China Institutes of Contemporary International Relations, noted that when compared with their close political ties, the nations' economic ties lagged behind. Trade between China and Pakistan last year was only $16 billion, while that with India, another important neighbor of China in South Asia, was worth $70.6 billion.

ROAD OF FRIENDSHIP: Vehicles traverse Karakoram Highway, constructed with the help of Chinese companies, in the northern part of Pakistan on March 25 (HUANG ZONGZHI)

"One of the factors affecting economic links is poor infrastructure in Pakistan, which hinders the country's sustainable development," said Lou. "The construction of the economic corridor will help improve Pakistan's infrastructure, which will boost the country's ability for economic development."

In addition, Lou noted that the economic corridor runs through almost the whole of Pakistan, and as a result the large-scale construction projects could provide massive quantities of jobs for the local people. The resulting economic takeoff may also help restrain the spread of religious extremism, which would in turn help stabilize the region.

Iqbal suggested that economic corridor could not only be a game changer for Pakistan and the region, but that this could have a ripple effect that would benefit all in the international community.

For China, the planned economic corridor will shorten China's oil and gas import routes from Africa and the Middle East for thousands of miles—what once took 45 days of transit will be expedited to only 10. This makes Gwadar a potentially vital link in China's supply chain. The network is designed to stretch 3,000 km from the Gwadar Port on the Arabian Sea to the city of Kashgar in northwest China's Xinjiang Uygur Autonomous Region.

In an interview with China's Xinhua News Agency, Khalid Mahmood, President of the Islamabad Council of World Affairs, enthused that the economic corridor will bring prosperity to both countries.

"It can help China connect to the Gulf region, Africa, Europe and other parts of the world faster and more efficiently. Meanwhile, for Pakistan, there will be more business and trade activities in the region. Pakistan will also become the center of energy transmission from the Gulf," Mahmood said.

During talks with Sharif, Xi proposed what he has termed a "1+4" cooperation structure—the "4" consisting of the Gwadar port, transport infrastructure, energy and industrial cooperation which will help achieve common development of both sides, and the "1" being the economic corridor at the center. The Chinese president also called for meticulous planning of industrial parks along the corridor and finalizing the free trade area talks between the two countries at an early date.

Challenges ahead

However, observers also warned of the difficulties the two countries face in the construction of the corridor, which is particularly bleak as a result of extremist and separatist forces in the area.

In the province of Balochistan where the Gwadar Port lies, insurgents known as the Balochistan Liberation Front have attacked numerous gas pipelines, trains and construction workers. In early April, the militia claimed responsibility for an attack in the province that left 20 construction workers dead.

Deeply concerned about regional security, the two countries vowed to strengthen cooperation on combating terrorism and safeguarding the region in a joint statement made during Xi's visit.

Reports from the Pakistani media said that the government plans to enroll a special army division of about 12,000 staff to ensure the safety of the economic corridor-related projects and Chinese workers.

Lou stated that China is aware of the security issues that exist, but remains committed to the project regardless. Lou said the employment opportunities that the corridor's construction will create in the region are sure to bring stability to the area.

Flagship for the initiative

The projects in Pakistan are expected to proceed smoothly with the security guarantees from the Pakistani side and the pledged capital support from China.

The significance of the economic corridor is even more apparent when its location, where the Silk Road Economic Belt and the 21st-Century Maritime Silk Road (the Belt and Road initiative) meet, is taken into consideration

The Belt and Road Initiative refers to a host of international trade and infrastructure projects proposed by President Xi in 2013. The belt will be an overland network focused on bringing China, Central Asia, Russia and Europe together; linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia while also connecting China with Southeast Asia, South Asia and the Indian Ocean. The Road will be a maritime network that links China's coast to Europe through the South China Sea and the Indian Ocean in one route, and China's coast to the South Pacific through the South China Sea in another. With an eye on encouraging economic diversity in the region, the Belt and Road Initiative seek to promote cooperation among participating nations by breaking the infrastructure bottlenecks, by boosting efficient allocation of resources and by further market integration.

Ye Hailin, deputy head of the Institute of Asia-Pacific Studies at the Chinese Academy of Social Sciences, said the economic corridor, particularly the Gwadar Port, lies at a critical juncture for the Belt and Road Initiative. After its completion, the port will greatly strengthen the economic links between China's inland region with coastal countries along the Indian Ocean, benefiting directly about 3 billion people in the whole region.

The Gwadar Port, a warm-water, deep-sea port, is located at the mouth of the Persian Gulf. Just outside the Strait of Hormuz, the port is adjacent to key oil routes in and out of the Persian Gulf, while also being the nearest warm-water seaport to the landlocked but energy rich Central Asian republics.

At present, due to the poor infrastructure, the potential of the Gwadar Port cannot be fully realized. There is only one road connecting the port with the outside world.

With Chinese investment, highways linking Gwadar Port and other regions will also be built, and the construction of a new international airport is also scheduled.

Lou claimed that compared to other projects of the Belt and Road Initiative, the construction of the economic corridor is the most difficult and costly, but it demonstrates China's determination to succeed.

"The economic corridor can be seen as the flagship project of China's Belt and Road Initiative. The advancing of the economic corridor shows that China is focused not only on its own development but that of its neighbors and the region as whole," Lou added.

During Xi's visit to Pakistan, a total of $1.65 billion was pledged toward the newly unveiled Karot hydropower project—the first endeavor to receive funding from China's $40-billion Silk Road Fund.

The fund, which President Xi announced during the Beijing Asia-Pacific Economic Cooperation meetings, will be used to provide investment and financing support for projects to connect the countries along the routes.

Copyedited by Kieran Pringle

Comments to yulintao@bjreview.com

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