China’s Xi Jinping in Pakistan to unveil trade plan

Proposed $46bn project will connect Pakistan and China through a 3,000km trade route built over the next 15 years.

A policeman stands guard next to giant portraits of Pakistan''s President Hussain, China''s President Xi, and Pakistan''s PM Sharif, displayed along a road ahead of Xi''s visit to Islamabad
Pakistan and China have held close diplomatic, military and economic ties for decades [Reuters]

Karachi, Pakistan – Chinese President Xi Jinping has arrived in Islamabad for a landmark two-day visit that will see him and Pakistani Prime Minister Nawaz Sharif unveil $28bn in new trade and investment deals.

The deals are part of the proposed $46bn China Pakistan Economic Corridor (CPEC) project, which envisions Chinese investment fuelling road, rail, electricity and other projects that would create a trade route from the western Chinese city of Kashgar to the southern Pakistani port of Gwadar.

Xi was received by a 21-gun salute and personally welcomed by Sharif at a military air base in Islamabad on Monday morning.

The CPEC project will see the 3,000km trade route built over the next 15 years, with Chinese investments and companies building new roads and pipelines along the proposed route, which runs the length of Pakistan.

The CPEC will give China an alternative trade route to using ports on its eastern and southern coasts, and therefore cheaper market access to the Middle East – crucial for the country’s oil imports – and beyond.

It will also see 10,400MW of new power projects added – mostly coal-fired, but also including solar energy projects – at a cost of almost $16bn to the Pakistani national grid, in a bid to address the country’s chronic energy woes by 2018.

The addition of a further 6,600MW is proposed after 2018, at an additional cost of $18bn. 

If completed, these projects would see Pakistan’s current electricity output double, a vital input into a system that currently endures widespread outages and load-shedding in order to meet demand from industry and Pakistan’s nearly 200 million citizens.

In addition to the economic corridor projects, an additional $10bn in infrastructure projects are also outlined under the proposal.

Windfall for Pakistan

The deals, if followed through upon, would represent a windfall of foreign direct investment (FDI) for Pakistan over the next 15 years, which saw annual FDI of just $1.6bn in 2014. Bilateral trade with China last year stood at $12bn.

China and Pakistan to boost trade and investment

According to the International Monetary Fund, Pakistan’s projected economic growth this year stands at a sluggish 4.3 percent.

Pakistan and China have held close diplomatic, military and economic ties for decades, but these projects would represent the largest investment in Pakistani history by the Chinese regional hegemon, as it seeks to solidify economic advantages against regional rival India and the United States.

China has already invested in building and operating Pakistan’s newest major port at Gwadar, control of which was transferred to a Chinese public company in 2013.

Xi to address parliament

President Xi is due to address a joint session of the Pakistani parliament on Tuesday, and in the interim will be holding high-level meetings with Pakistani civilian and military officials.

He is accompanied by members of his cabinet, as well as high-level functionaries of the Communist Party, senior government officials and the CEOs of several Chinese companies, according to a statement released by Pakistan’s Foreign Office.

Xi will also be conferred the “Nishan-e-Pakistan”, Pakistan’s highest civilian honour, by his Pakistani counterpart Mamnoon Hussain during the visit.

In addition to the economic corridor project, security will be high on Xi’s agenda, as he seeks Pakistani cooperation in quelling the ingress of armed Chinese separatist groups from Pakistan’s north into China’s Xinjiang province.

He will also be seeking assurances regarding the security of the hundreds of Chinese workers and engineers who are expected to be based in Pakistan for the duration of the project.

Chinese engineers, in particular, have been targeted by kidnappers and attackers in Pakistan’s Balochistan province – where Gwadar is located – in the past.

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Source: Al Jazeera