Groundwork laid for China-Pakistan free trade zone at Gwadar

Pakistan and China have laid the groundwork for a trade zone at Gwadar and preliminary plans are now being finalised.

Specific plans for the new China-Pakistan trade zone, which will be the part of Pakistan’s Gwadar Port, are under discussion to make this port the one like Hong Kong, the Shanghai Securities News has reported.

The report said that China’s top economic planner, the National Development and Reform Commission (NDRC), is heading the Chinese delegation in the discussions.

A number of companies based in Zhuhai in South China’s Guangdong Province have signed deals with the city of Gwadar worth a total of US$ 1.02 billion to develop the port, the China’s news portal ifeng.com has reported.

Specific plans might include establishing industry parks, which are effective in facilitating investment and trade, said Chen Fengying, an expert with the China Institutes of Contemporary International Relations.

“I believe that more plans will follow, and the establishment of an FTZ at the strategically import port is an important step,” Chen told the Global Times, a Chinese daily.

The Global Times of Beijing quoted a report that China Overseas Ports Holding Co (COPHC) had leased over 650 acres of land in Gwadar to build and operate the FTZ. “That was the first part of a deal signed between the two countries under which Pakistan will provide a total of 2,281 acres of the Gwadar Trade Zone to COPHC as part of a 43-year lease,” the report mentioned.

The COPHC will operate at the trade zone through three main companies Gwadar International Terminal, Gwadar Marine Services and Gwadar Freezone Company – according to the report.

The experts say the new developments in this regard marked a milestone in the implementation phase of the China-Pakistan Economic Corridor (CPEC).

“The new developments are by far the most important step in the implementation of the CPEC,” Sun Lizhou, Deputy Director of the Academy of the World and China Agendas, told the Global Times.

The CPEC is a major bilateral initiative to build infrastructure facilities in Pakistan that will connect the country’s Arabian Sea coast with the Himalayan border with China.

The initiative was unveiled during Chinese President Xi Jinping’s State visit to Pakistan in April. With low tariffs and better coordination, the Gwadar FTZ will serve as an ‘entry point’ for Chinese companies and products to enter the country, Sun said.

Because of the strategic importance of Gwadar port, the establishment of an FTZ is also expected to have profound significance in the implementation of China’s “One Belt, One Road” initiative, which will connect with Europe via Central Asia, Sun noted.

“On the shores of the Arabian Sea in the western province of Balochistan, Gwadar is strategically a well-located port to ensure increasing trade in the region,” the company said in a post on its website.

Located at the mouth of the Persian Gulf, just outside the Straits of Hormuz, Gwadar is close to key shipping routes accommodating a flow of more than 17 million barrels of oil per day and a large quantity of cargo, according to COPHC.