China cautious on Pakistan investment deals

Chinese officials said on Wednesday they were still working out details of a major investment proposal that Pakistani officials had hoped to finalise this week during the on-going visit of President Mamnoon Hussain.

Following talks between Mr. Hussain and Chinese President Xi Jinping, officials indicated both sides were yet to finalise the details of a proposed $ 20 billion investment into projects under a planned economic corridor linking western China and the Arabian Sea port of Gwadar.

Before Mr. Hussain’s arrival here on Tuesday evening, Pakistani officials had proposed to their Chinese counterparts setting up two $ 10 billion funds for energy and infrastructure projects as part of the corridor. The corridor envisages expanding road links, building a railway line and installing energy pipelines running from the western Xinjiang region to Pakistan through Pakistan-occupied Kashmir (PoK), which provides the only land link connecting the two countries.

On Wednesday, following talks between the two leaders, both sides only announced more modest agreements that had been expected.

Of the four deals signed, one was to upgrade the second phase of the Karakoram Highway, which runs from Xinjiang, through PoK, all the way to Islamabad. The second was for the building of an international airport at Gwadar.

It is understood that both agreements are, however, yet to be fleshed out. Asked by The Hindu about China’s planned investment into the two projects, Luo Zhaohui, Director General of the Foreign Ministry’s Asian Affairs Department and its top official on Asia policy, said the two sides were still in discussion.

Both sides also did not announce any agreement on the proposed investment fund. Asked about the Pakistani proposal, Mr. Luo said the idea needed to be worked out. “It is the intention, but we will have to see how it will be carried out,” he said, adding both sides “have a positive attitude on cooperation.”

Mr. Luo described the economic corridor plan as a priority. Both countries hope the long-discussed plan, which was revived last year, will answer sceptics who have pointed out that the lofty rhetoric often been used to describe ties as being “higher than the Himalayas” has, in recent years, not been reflected in actual Chinese financial or material support to its “all weather” ally.

While the difficult terrain has historically been an obstacle to boosting land connectivity, in recent years many Chinese firms have become wary of the security situation in Pakistan, following a number of kidnapping threats aimed at Chinese workers.

The Gwadar port project, strategically located on the Arabian Sea coast, has also stagnated, officials acknowledge. Last year, a Chinese firm took over the operational contract for the port from a Singapore company in the hope of reviving the plan.

On Wednesday, the only other two agreements signed were for the establishment of research institutes for small-scale hydropower technology and to set up Confucius Institutes in Pakistan.

No agreements on new nuclear projects were announced, although Chinese officials said cooperation in this field would continue. Last year, China and Pakistan signed deals for two 1,100 MW reactors in Karachi.

China is also building two reactors at Chashma, C-3 and C-4, where it has already constructed two reactors. Pakistan is understood to have proposed agreements for three more reactors, citing its energy shortage.

During Wednesday's talks, Mr. Xi said the Pakistani President was the first foreign leader he had hosted in the new "year of the horse", with the Chinese new year falling on January 31. This showed the "special nature" of the relationship, he said.

The Pakistani President told Mr. Xi "coming to China is like coming to my second home". "Friendship with China is the most important pillar of our foreign policy and our security policy," he said, describing the two countries as "iron brothers".

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Printable version | Aug 20, 2022 11:27:49 am |