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Najabat · #2 Friday, December 15, 2006

Now I come up with Second Episode of Pak-China Relationship and Recent Developments On Socio-Economic Grounds.I start here with Label C.Since A and B part i discussed already.

C. Shanghai Co-operation Council
During Musharraf’s February 2006 visit, he expressed the hope that Pakistan’s status as an observer in the SCO would be promoted to a full membership, whereby it could strengthen and increase its economic tie-up with China. Moreover, Pakistan supporting China’s entry into SAARC is basically attempts to restructure the regional balance of power, which is of significance in the geopolitical context of South Asia.

D. Trade and Energy Co-operation
The trade volume between China and Pakistan increased by 39 per cent in 2005 to $4.26 billion. The balance of trade, however, remains overwhelmingly in China’s favor, whose exports amounted to $1.8 billion compared to Pakistan’s $575 million. In the first three months of 2006, bilateral trade was $1.018 billion, 42.3 percent more than the same period last year. Furthermore, since 2003, China has emerged as a major trading partner for Islamabad, accounting for nearly 11% of Islamabad’s imports.

Pakistan is not merely expanding its defence co-operation but also improving its economic cooperation with China and subsequently attempting to reposition itself as an important trade route in South Asia. During President Musharraf’s visit to China, both countries signed an agreement to promote bilateral trade and co-operation, and a general loan agreement regarding the use of ‘preferential buyer’s credit’. It was strongly emphasised that China must encourage foreign direct investment I Pakistan and perhaps consider it as the manufacturing centre of the region, shifting some production capability to Pakistan through the encouragement of joint ventures between the two countries. It was further postulated that China would invest $12 billion in projects in Pakistan, as well as another $500 million in a joint venture company. President Musharraf also promised to set up various industrial zones in Pakistan solely for Chinese entrepreneurs. From 2006 onwards, the two countries will implement the first part of the free trade agreement. As tariffs drop to zero, the zone could emerge as a possible commercial hub of the region.

The emphasis on making Pakistan an Energy and Trade corridor for the region was further consolidated at a high level meeting in April 2006, where both countries agreed to step up co-operation in the energy sector, promising to give China access to the gas and oil resources of Central and Western Asia. A memorandum was signed on building this energy corridor, and it was suggested that China build direct pipelines to Karachi or Gwadar, where this would then be the shortest route for ensuring a stable and fast supply of oil to China. “We particularly look forward to materializing cooperation in the energy sector where establishment of oil refineries, oil storage facilities and gas pipelines stand out,” said President Musharraf. He continued, “When the Karakoram Highway was built, the world called it the eighth wonder, we can create the ninth and tenth wonders by establishing energy pipelines and railway linkages between the two fast growing economies.

E. Gwadar Port & Karakoram Highway
Construction of the port began in March 2002 after the Chinese agreed to provide $198 million of the $248 million required for Phase I of the project.26 China has also invested in support infrastructure by financing a highway link from Gwadar to a central Balochistan town, connecting Karachi and Quetta. It is relevant to note that China was initially reluctant to help with the construction of the port, though finally agreed to fund it provided that it had “sovereign guarantees to the port facilities.” Pakistan agreed to this condition, resulting in a disgruntled United States. Just 250 miles from the straits of Hormuz, through which nearly 40 per cent of the world’s oil supplies flow, the port is strategically located to serve as a key shipping point in the region. It is of great strategic value as it augments Pakistan’s importance in the region, while allowing China to diversify and secure its crude oil import routes and simultaneously gain access to the Persian Gulf. Through the construction of the Gwadar port, Beijing also will gain considerable influence in the region, giving it a strategic entrance to the Arabian Sea and the Indian Ocean.

In addition, the port and the other supporting infrastructure will help integrate Pakistan into the Chinese economy by out sourcing low tech, basic production and manufacturing jobs, making it into a giant factory floor for China. Having invested $400 million in the project, the port will be accessible for Chinese imports and exports through overland links that stretch across the Karakoram Highway.

It’s just a glimpse of strong relationship between China and Pakistan, always proved their worth on time. As H.E Mr. President of China well said our Relationship with china is higher than Kurahkarram and sweater than honey. In the End I would like to say “Pak Cheen doosti zinda baad”:-)

Note: I made this thread in parts to concentrate readibility aspect of the topic.And also for future enhancements in our Strong relationship with Chin@.