Chinese President Xi heads to Pakistan to unveil $46 billion investment
Chinese President Xi Jinping heads to Islamabad on 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 has been battling an Islamist insurgency for over a decade and hopes that 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 (Rs. 75087.54 crore) last year, compared to only $2 billion (Rs. 12512.09 crore) 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 that 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.
Onus on Islamabad
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." Rehman said.