Beijing: Chinese President Xi Jinping inaugurated a $46 billion investment plan in Pakistan on Monday that aims to create direct links between China and the Arabian Sea and boost the sluggish Pakistani economy.
Islamabad and Beijing hope the China-Pakistan Economic Corridor (CPEC) will transform Pakistan into a regional economic hub and bring growth to the restive western Chinese region of Xinjiang.
The corridor scheme is part of Beijing`s "Belt and Road" plan to expand its trade and transport footprint across Central and South Asia, while countering US and Indian influence.
The projected investments, $28 billion of which are due to be signed during the course of Xi`s visit, dwarf a US assistance package to Pakistan of $5 billion that began in 2010 but has made less impact than hoped.
They foresee the creation of road, rail and pipeline links that will connect China to the Arabian Sea, cutting several thousand kilometres off the route that transports oil from the Middle East.
The upgrade will stretch 3,000 kilometres (1,860 miles) from China`s western city of Kashgar to the Pakistani port of Gwadar, control of which was transferred to a Chinese public company in 2013.
Ahsan Iqbal, the minister overseeing the projects, said $11 billion has been set aside for infrastructure work, while the remaining $35 billion will go on energy projects. Much of the investment will be in the form of discounted loans.After a lavish airport reception and afternoon talks, Xi and Sharif symbolically broke ground on five renewable energy projects around the country via video link before overseeing the signing of more than 50 agreements.
Xi said China was ready to "support Pakistan`s economic and social development", while Sharif said the corridor would make Pakistan a "regional hub and a pivot for commerce and investment".
"It will also enable China to create a shorter and cheaper route for trade and investment with south, central and west Asia and Middle East and Africa," Sharif said.
Pakistan, a Muslim-majority country of 200 million that has been battling an Islamist insurgency for over a decade, hopes the Chinese investment will spur its long-underperforming economy, which the IMF projects to grow 4.3 percent this year.
The two allies have enjoyed close diplomatic and military relations for decades, though economic ties have only grown more recently. Bilateral trade crossed $12 billion last year compared to only $2 billion a decade earlier.
Iqbal said there were drawbacks associated with recent US aid, provided under the Kerry-Lugar-Berman Act (KLB).
"KLB was $1.5 billion per year, out of which only $600-700 million went to government. Most of it went to non-government sectors and the bulk went to American companies," he said.
"That is a problem with assistance that comes through the aid mode."
Andrew Small, author of "The China-Pakistan Axis", a new book on the two countries` relations, said that for Beijing, the corridor project offers a means of driving growth in China`s interior and helping stabilise Xinjiang at a time when fears of militancy are growing.
Opening up the Arabian Sea also diversifies China`s maritime trade routes, reducing what Beijing sees as to be vulnerabilities in specific choke-points such as the Malacca Straits, Small told AFP.The plans also envisage gas, coal and solar projects, aimed at providing 16,400 megawatts of electricity.
Pakistan has wrestled with chronic power shortages in recent years that have scrubbed several points off GDP growth and inflicted misery on the everyday lives of its citizens.
More than a dozen agreements were signed on power projects on Monday, including seven coal-based initiatives.
But some analysts have warned that the government has its work cut out turning the infrastructure projects into reality -- particularly in Baluchistan province, where a separatist insurgency has raged for a decade.
"I just hope that Beijing`s big-ticket projects are matched by Islamabad`s clear commitment and action on the ground," said Sherry Rehman, an opposition lawmaker and director of the Jinnah Institute think tank.
Questions of regional security will also be high on the list during discussions between the two leaders.
China is wary of the infiltration of militant Islamists from Pakistan to Xinjiang and may be looking from greater assurances from Islamabad on the matter.
Xi hailed Pakistan`s efforts to tackle militancy and reiterated China`s willingness to support the Afghan government in reconciling with the Taliban.
Jinping heads to Islamabad Monday to unveil a $46 billion investment plan that Pakistan hopes will end its chronic energy crisis and "transform" the country into a regional economic hub.
With the plan, known as the China Pakistan Economic Corridor (CPEC), Beijing hopes to ramp up investment in Pakistan as part of its ambitions to expand its trade and transport footprint across Central and South Asia, while countering US and Indian influence.
Pakistan, a Muslim-majority country of 200 million that has been battling an Islamist insurgency for over a decade, hopes the investment will spur its long-underperforming economy, which the IMF projects to grow 4.3 percent this year.
The two allies have enjoyed close diplomatic and military relations for decades, though economic ties have only grown more recently. Bilateral trade crossed $12 billion dollars last year, compared to only $2 billion a decade earlier.
"The real opportunity of this China Pakistan Economic Corridor is that it changes the scope of the relationship from geopolitics to geoeconomics," Ahsan Iqbal, the minister overseeing the projects, told AFP.
The two countries are set to cooperate in gas, coal, and solar energy projects to provide 16,400 megawatts of electricity -- roughly equivalent to the country`s entire current capacity, said Iqbal.
Pakistan has wrestled with chronic power shortages in recent years that have scrubbed several points off GDP growth and inflicted misery on the everyday lives of its citizens.
"These are very substantial and tangible projects which will have a significant transformative effect on Pakistan`s economy," Iqbal said.
The project also foresees the creation of road, rail and pipeline links that will cut several thousand kilometres off the route to transport oil from the Middle East to China, while bypassing mutual rival India.
The upgrade stretches 3,000 kilometres from the Pakistani port of Gwadar on the Arabia Sea to China`s western city of Kashgar.
Pakistan transferred control of the port to a Chinese public company in 2013. Iqbal said $11 billion has been set aside for the purpose.
In Monday`s edition of Pakistani daily The News, Xi said the two countries needed to align their development, trade and economic strategies more closely.
And in keeping with the flowery rhetoric that usually accompanies China-Pakistan exchanges, Xi wrote that he felt like he was "going to visit the home of my own brother" on his two-day visit.The projected investments, $28 billion of which are ready to sign during Xi`s visit, dwarf a US assistance package to Pakistan of $5 billion that was begun in 2010, but has not made as great an impact as hoped.
Referring to the US aid, signed under the Kerry-Lugar-Berman Act (KLB), Iqbal said: "KLB was $1.5 billion per year, out of which only $600-700 million went to government. Most of it went to non-government sectors and the bulk went to American companies.
"That is a problem with assistance that comes through the aid mode."
Iqbal was more optimistic about Beijing`s investment, saying it would integrate three engines of growth in Asia: South Asia, Central Asia, and China.
Some analysts, however, have cautioned that the eye-watering figures being trumpeted look too good to be true and the government will have its work cut out turning the infrastructure projects into reality -- particularly in restive Baluchistan province, where a separatist insurgency has raged for a decade.
"I just hope that Beijing`s big-ticket projects are matched by Islamabad`s clear commitment and action on the ground," said Sherry Rehman, an opposition lawmaker and director of the Jinnah Institute think tank.
"Executive stalemate in Islamabad can kill off the best projects from an ally like Beijing. So basically the Economic Corridor needs to be paved with more than good intentions from Islamabad."Beyond economic matters, questions of regional security will be high on the list during discussions between the two leaders.
China is wary of of the infiltration of militant Islamists from Pakistan to its western Xinjiang province which is frequently hit by unrest, and may be looking from greater assurances from Islamabad on the matter.
In February, China expressed its willingness to support the Afghan government in reconciling with the Taliban, another issue that could be discussed during the visit.
