Pak-China relations reaching new heights

By Mehmood-Ul-Hassan Khan

In times of natural calamities or financial crises, it is the People’s Republic of China that has always rescued us from the deep seas of uncertainties to the shores of survival. That is why Chinese Premier Wen Jiabao described Pak-China friendship as a pine tree, that remains evergreen despite the harshest of winters and it has stood the test of time like a strong horse.

During the recent visit of Prime Minister Syed Yousuf Raza Gilani to China, in-depth discussions took place on further cementing the socio-economic integration between the two countries. Recently, both the countries signed three cooperative documents, including an agreement on economic and technical cooperation, amendment to the memorandum of understanding on crisis management between the China Banking Regulatory Commission (CBRC) and the State Bank of Pakistan, and addendum no. 2 to lease contract Saindak copper-gold project for extension between Metallurgical Corporation of China Ltd. and Saindak Metals Ltd.

Banking and financial cooperation

Mutual collaboration in banking and finance speeds-up the prospects of establishing joint ventures, activates trade and commerce activities and promotes tourism between two countries. It is the main instrument to reduce poverty and generate employment opportunities. It also enhances capacity building and supports better/qualitative human resource management. The Export-Import Bank of China (EXIM) is rigorously engaged in numerous mega projects in Pakistan, including Chashma power plant, Karakoram Highway and Saindak mining project. In addition, the chairman of EXIM Bank showed his intention to finance Karachi’s Gwadar motorway which would be another shining example of Pak-China friendship.

Some other Chinese banks seeking to operate in Pakistan include; Bank of China (BOC) which agreed to facilitate and encourage Chinese entrepreneurs to invest in Pakistan's energy and telecom sectors. The China Development Bank (CDB) had announced $7.67 billion financing for development projects in the country. The chairman of CDB reaffirmed his bank’s contribution in major energy related projects including Bhasha and Bunji dams. Industrial and Commercial Bank of China (ICBC), one of the leading Chinese banks, began its operations in Pakistan with the opening of two branches. The ICBC had business correspondence with 17 banks in the country including the National Bank of Pakistan (NBP) and Habib Bank Ltd. (HBL).

Public-private sector collaboration

Today is the age of corporate financing and foreign direct investment. The secret of free market economy lies in mutual cooperation and collaboration of the public-private sectors. During his visit, the primer sought the assistance of many private Chinese entities to invest in Pakistan. Zhang Hongwei, Chairman of Orient Group told the prime minister that their group, which at present has an investment of around $750 million in Pakistan, plans to invest in the country’s oil and gas sector to help it meet its energy needs. The head of Hudian Group told Gilani that his group will invest $400 million for setting up a 350MW thermal power unit near Lahore. The prime minister invited the group to invest in Thar coal power project and Bhasha dam. Aside from these companies, chairman of Three Gorges Corporation (TGC) expressed his willingness to invest in the country’s hydro-power projects to enhance economic development in Pakistan.

Many Chinese companies such as Harbin Power Engineering Company Ltd., Dongfang Electric Corp., Sinohydro Corp., Zhongyuan Engineering Group, Gezhouba Group, and such are working to help Pakistan overcome its energy dilemma.

These private companies are currently engaged in 40 projects of hydro, thermal and nuclear power. Chashma nuclear power plant II, Neelum-Jhelum hydropower station and Sardhi wind power project are the prime examples of Pak-China strategic cooperation.

A project to generate 2,300MW of electricity through wind turbines and solar panels has turned out to be the most vital agreement signed with China in recent years. The project would involve an investment of $6.5 billion and wind power projects of 1,000MW each would be set up in Punjab and Sindh. In addition, a 200MW solar power project would be set up in Punjab and another one of 100MW in Sindh.

According to the finance ministry, with the technical and financial support of China, Pakistan launched six different projects worth $2757.400 million during 2005-2010. Another five projects worth $409.292 million are under process for implementation. The projects included nuclear power plants, construction of national highways, satellite communication and rehabilitation of earthquake-battered areas.

Space technology

Space technology is pivotal to assess and control damage from natural catastrophes. It plays a key role in tapping climatic changes and strengthens security surveillance. Gilani visited the China Academy of Space Technology (CAST) where a Pakistani satellite PAKSAT-1R is under construction. The new PAKSAT-1R will be sent to the orbit on August 14, 2011 replacing the existing PAKSAT-1. Moreover, Pakistan’s first satellite ‘Badar’ was also launched with the help of China in 1990.

Chinese assistance in times of natural calamities

Last year the summer floods wreaked havoc across Pakistan. In such a crisis situation, China played a significant role in the rehabilitation and reconstruction of flood-hit areas. It provided $10 million for the Citizens’ Damage Compensation Plan, $100 million in preferential loans and $300 million in preferential buyer's credit for projects of importance to Pakistan.

China, being the country’s key strategic ally, supported it in the areas of civil nuclear power generation and construction of infrastructure projects.

Pursuing a strategic alliance with China remains the basis of Pakistan's foreign policy and national consensus. Right from the beginning, Pakistan was adamant on its on policy of ‘one China’ and fully supported the country on the issues of Taiwan and Tibet. We also extended our support to the Chinese over the issues of human rights and Sinkiang. We endorsed the Chinese membership in UN General Assembly. Most recently, we stood by China on the issue of noble prize controversy.

Nevertheless this camaraderie is not one-sided, as it became evident in recent times when the Chinese leadership voiced its support to the Pakistani government and its citizens in the aftermath of the killing of Osama bin Laden by US forces in Abbottabad. China is perhaps the only state to publicly acknowledge Pakistan's contribution and its sacrifices in the war against terrorism, appealing for a global resolve to combat terrorism and extremism in a holistic approach with regional cooperation. China endorsed Pakistan’s role in ensuring regional stability and fighting terrorism and extended full support to its "strategic partner" despite the volatile international political situation.

China termed Pakistan as a "cradle of culture and civilisation” which could be used as a means to spread the message of peace, love and tolerance to the international community. On part of Pakistan, it considers China to be a land of wonders/miracles having people of great commitment, and it takes inspiration from China’s economic transformation that is unparalleled in human history.

Conclusion

According to Chinese data, trade between the two countries totaled $8.7 billion in 2010, up by 27.7 per cent as compared to the year earlier. Pak-China trans-border economic zone, upgrading avenues for trade, and other related measures, including customs harmonisation would enable both countries to bring to play and optimally utilise economic cooperation. Pakistan can help China in its plans to tap the trillion dollar ‘halal’ food market. Likewise, Chinese investors should explore opportunities in the country’s economic sectors like finance, banking, power, alternative energy, IT, engineering goods, textile machinery, agriculture, food, fruit processing, packaging, livestock, dairy farming and real estate.