A Pakistani minister said President Mamnoon Hussain will seek to sign a series of agreements with China on Wednesday for the joint development of energy and infrastructure projects valued at an estimated $20 billion. These projects, to be completed by 2018, are part of a long-term strategy by the two countries to build a new trade and transport corridor.
Hussain, who began a visit to Beijing on Tuesday, may sign memorandums of understanding on a range of projects. Ahsan Iqbal, Pakistan's Minister for Planning and Development, said the projects include upgrading roads and railways and building an airport at Gwadar, a Chinese-built port on the Arabian Sea.
Chinese and Pakistani authorities have selected these projects as early-harvest projects under a longer-term plan. That longer-term plan is intended to strengthen economic and transport links between Pakistan and China. China and Pakistan share a border. Largely because neither country trusts India, China and Pakistan have maintained close diplomatic and defense ties for decades. The long-term plan to develop the China-Pakistan Economic Corridor includes an oil and gas pipeline from Gwadar to China's northwestern border. Analysts and diplomats say the long-term plan has been discussed for years but has been repeatedly delayed by corruption, economic instability and security problems in Pakistan.
Iqbal said: In the past, the economic relationship between the two countries did not match the level of the political relationship. Now, the leadership of both countries has recognized that we must close this gap.
He said, our main consideration is not just the economic corridor, but seeking broader integration of the region. Once the China-Pakistan Economic Corridor is opened, it will play a role in regional integration. The region has a population of about 3 billion, nearly half of the global total.
In recent months, China has reaffirmed its commitment to the China-Pakistan Economic Corridor. Analysts say China hopes the project will open a new route for energy imports from the Middle East and help promote economic development in Xinjiang. Xinjiang is located in northwest China and is the main area of activity for separatists from the Muslim minority.
Chinese Foreign Ministry spokeswoman Hua Chunying said at a regular press conference on Tuesday that the China-Pakistan Economic Corridor initiative will provide a model for regional cooperation. She also said the project will promote connectivity in South Asia and East Asia and is also of positive significance for driving economic development and improving livelihoods in surrounding areas.
Iqbal said the Pakistani government hopes that private investment by Chinese companies, on a build-operate-transfer (BOT) basis, and concessional loans provided by China will finance most of the early-harvest projects. Iqbal said China will assess each project individually to decide the amount of funding, and the project assessment should be completed tomorrow.
Iqbal said the early-harvest projects include building an expressway linking the eastern city of Lahore and the southern port city of Karachi, and upgrading the road section from the Chinese border to the Pakistani capital Islamabad. In addition, an airport, a power station and new roads will be built in Gwadar, while railway infrastructure between Lahore and the northwestern city of Peshawar will be upgraded.
The initial scope of the projects also includes investment in developing the Thar coal mines and building power stations in Gadani in the southern province of Baluchistan and Sahiwal in the southern province of Sindh. Both projects are currently under way. Iqbal said the Chinese and Pakistani governments plan to set a timetable for medium- and long-term projects before August this year. Medium- and long-term projects include an oil pipeline from Gwadar to China and a new railway linking the two countries.
Last year, China agreed to fund $9 billion to build two large 1,100-megawatt nuclear power plants for Pakistan. The plants are located in Karachi, and the main source of funding is Chinese concessional loans.
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