At sunset, the Pakistan Café on Seman Road here bursts into life. Here, Pakistani traders from across this dusty trading town gather for tea, sharing stories of their day’s work, all united by a common ambition of grabbing a slice of this region’s growth.

“We have great belief in what China is doing here,” says one trader who has driven to Kashgar from Gilgit, in disputed Pakistan-occupied Kashmir (PoK).

The ongoing transformation of this old Silk Road town has left their spirits high. China is planning to build its first Special Economic Zone (SEZ) in the west in Kashgar, hoping to boost development in southern Xinjiang which has lagged behind the rest of the region and has been the source of recent ethnic unrest.

Kashgar, a town largely inhabited by Uighurs, the ethnic Turkic group native to Xinjiang, is far removed from cities like Urumqi, the centre of Chinese development in the far west. There are no skyscrapers here — a livestock market on the city’s outskirts is where most business gets done.

That will soon change, say local officials, with plans for an SEZ that will transform the city into a regional trading port and export hub.

The city’s future, Chinese officials and Pakistani businessmen say, is now closely tied with that of its neighbour — Kashgar lies a few hours away from China’s border with PoK.

China has stepped up its investments in roads and infrastructure projects in neighbouring PoK, while officials here say feasibility studies are under way into a railway line from Kashgar through PoK. The plans have concerned India, which has reminded China of the region’s disputed status. Chinese officials, however, say their plans are “without prejudice” to the dispute, which is “for India and Pakistan to solve”.

Contrasting with the trouble Indians resident in Jammu & Kashmir face in travelling to China, which has issued stapled visas to them because of the region’s “disputed status”, Pakistanis from Gilgit-Baltistan and other areas in PoK say they are “welcomed” to travel and invest in Kashgar and face “no troubles”.

Kashgar even houses a Pakistan China Business and Investment Promotion Council, mainly represented by businessmen from Gilgit. Following recent violence in the city, the local government here blamed terrorists trained in Pakistan for carrying out the attacks.

There, however, appear to be no new restrictions on travel, traders said, adding they faced little suspicion from local authorities. A community of several hundred Pakistanis has made Kashgar their home, with some traders marrying local Uighur women and settling down here.

Others spend half a year in Kashgar, and move back home during the winter when travel becomes difficult.

Stapled visas may be no obstacle, but the forces of nature are — travel along the Karakoram Highway from Gilgit to the border town of Tashkurgan is frequently disrupted by flooding and mudslides. This week, too, the road from Kashgar was closed as a result of landslides.

“The Chinese have done a fantastic job in widening the highway up to the border, but on our side the road is poor,” said one trader from Karachi. The Karakoram Highway currently remains closed for six months every year, but is being upgraded to withstand adverse weather conditions.

This Wednesday in Urumqi, Pakistan President Asif Ali Zardari told Chinese Vice Premier Li Keqiang “it was important to re-establish the strategic road link of Karakoram Highway (KKH)”, with Pakistan accepting a proposal from the China Reconstruction Bridge Corporation (CRBC) for the construction of 13 km of new road, as well as rehabilitating 22 km of the highway. He said, “The widening and upgradation of Karakoram Highway would further facilitate and enhance the trade and people-to-people contacts,” reported the Associated Press of Pakistan.

The new plans mean Chinese officials here tend to overlook the region’s disputed status. A report in the official Xinhua news agency this week described Kashgar as being “near Pakistan’s northeastern border”.

Accompanying Mr. Zardari during his talks with Mr. Li were Syed Mehdi Shah, the Chief Minister of Gilgit-Baltistan who is on his second visit to China, and Chaudhary Abdul Majeed, who Pakistan calls the “Prime Minister of Azad Jammu & Kashmir”.

Farhatullah Babar, Mr. Zardari's spokesperson, told reporters Mr. Li had “appreciated President Zardari’s gesture of bringing with him the Chief Minister of Gilgit Baltistan”.

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