The Sino-Pakistani partnership

Defense and economic ties with China more significant than with the US

China is Pakistan’s most trusted ally. The relations were continued to grow in spite of the Cold and post-Cold War perceptions. Pakistan made enormous efforts to end the international isolation of the Peoples Republic of China throughout in the 1950s and 1960s. Over the years, the relationship has become a mutually beneficial relationship to cater each other’s needs in different geo-strategic situations. Within a short span of time, China has emerged as the second largest global economy. Pakistan could overcome its myriad economic woos with the help of China.

Since the 1990s China has been emerging as an important pillar of Pakistan’s foreign policy especially when leaders undertake their first foreign visits. Beijing is always the first priority. Now defense and economic ties with it are more significant than its ties with the United States. Beijing even replaced Riyadh sometime ago in Pakistan’s foreign policy priorities. New leadership has assumed power both in Pakistan and China. The Chinese Premier Li Keqiang has already undertaken the visit to Pakistan on May 22-23 and exchanged views with the new Pakistani leadership. Prime Minister Mian Muhammad Nawaz Sharif will also meet Chinese President Xi Jinping and Premier Li Keqiang on his present tour.

The official five-day visit of Prime Minister Sharif to China commenced on July 4 is important from the point of view that this is his first foreign visit after assuming office in the first week of June. He has come into power after 14 years. Besides Beijing, the Pakistani prime minister will also visit Shanghai and Guangzhou. High level exchanges are regular feature of the Sino-Pakistan friendship since the 1950s.

The Sino-Pakistan relationship is a vast strategic and expanded economic partnership, which has been developed over years with much scarifies from both sides. The Gwadar Port was handed over to the Chinese Overseas Port Holding Company (COPHC) in February. The present government will continue to honor the agreement. During the prime minister’s visit many agreements are supposed to be inked in the Gwadar context alone particularly developing a trade corridor by linking it to Kashgar in the Xinjiang Uygur Autonomous Region. ‘The corridor would change the fate of the region’, to quote Prime Minister Sharif before the visit.

The corridor would provide alternative route to Chinese business by shortening the distance to 2500 km. The Arabian Sea-South China Sea distance is over 16,000 km. India has been showing concerns as the corridor would pass on the Kashmir side of Pakistan. The Prime Minister’s delegation includes Chief Minister Balochistan Dr Abdul Malik Baloch that represents people’s mandate for greater Chinese cooperation with the province of Balochistan. The minister for planning and development Ahsan Iqbal and advisor to the prime minister on foreign affairs Tariq Fatimi were also included in the 11-member delegation.

Apart from the Gwadar context, a large room exists to invite Chinese expertise in energy sector especially generating coal-based and alternative energy. Hope many pending matters concerning the generation of coal-based energy will be resolved during the visits. Pakistan has been facing a chronic electricity shortage reaching 5,000 mw in summer. Growth and industry has been badly suffering. It is expected that agreements related to energy cooperation will lead all other agreements for cooperation during this vital visit. Prime Minister Sharif has already encouraged the state-owned China North Industries Corporation (NORINCO) to install solar power plants, look into mining, explore iron ore, and undertake train subway networks in Pakistan’s metropolitan cities.

The Chinese cooperation in building motorways and railway network would be a resounding collaboration. Morinco is another Chinese joint venture to build solar-based energy system in Pakistan. The Punjab government has already invited the Chinese company to work on the Nandipur and Chichun ki Malian hydro projects that were delayed by the previous government. The cost of these projects has risen to Rs57 billion from Rs22 billion.

Bilateral trade between Pakistan and China has some serious issues that must be mutually resolved including tariff on imports by China from Pakistan. Trade between Pakistan and China is hovering around US$ 12 billion, which makes Pakistan China’s second most important trading partner in South Asia after India. Trade is expected to touch down the level of US$ 15 billion in the next couple of years. However, in terms of Asia-Pacific trade, Pakistan-China trade is quite meager, which needs to be improved further.

A Free Trade Agreement (FTA) has already been in practice and a Currency Swap Agreement (CSA) has just been signed to bolster mutual trade ahead of Premier Keqiang’s visit. There is also a need to lower down Pakistan’s growing trade deficit with China, which has been mounting quite high. It is reaching over US$ 10 billion. Some sectors of Pakistan’s economy have badly suffered due to FTA. These are paper, paperboard, and ceramics. China is competitive in these sectors. These issues should also be addressed. China has to buy more from Pakistan to correct this imbalance. A trading State of Pakistan needs to emerge in which China could play the lead role.

The writer is Senior Research Fellow at the Institute of Strategic Studies Islamabad.