Enhancing Sino-Pakistan Economic Ties
Khalid Khokhar
5/27/2013

 

The symbiotic relationship between Pakistan and China is characterized by geopolitical and geo-strategic cornerstone for both countries that transcend diplomatic relationships Pakistan has with any other sovereign State. A cursory look at the history of Pak-China relations beginning from 1951 to date, would give a fair idea that notwithstanding the changing global scenarios, these relations have continued to flourish. As the US Colonel Christopher J. Pehrson’s describes in his paper, “String of Pearls: Meeting the Challenge of China’s Rising Power Across the Asian Littoral”, that China is trying to have an access to ports and airfields that extend from the South China Sea to the Arabian Gulf, Beijing’s assistance to Pakistan has been free of strings, timely and in fields that are vital to our sovereignty and survival.

. Chinese economic assistance has been invaluable in areas as diverse as construction of nuclear power plants, dams, roads and industrial, Heavy Mechanical Complex, the Kamra Rebuild Factory, cooperation in satellite technology, expansion of Karachi Shipyard, the Karakorum Highway, the Chashma power plant and the Gwadar deep seaport. Pakistan, too, can reciprocate by helping in China's growth for opening energy supplies lines/routes from the Gulf to China. Beijing believes that helping develop Pakistan will boost economic activity in its far western province of Xinjiang. China doesn’t have any port of hot waters, which can be used the whole year. The Shanghai port is approximately 16,000 km away from Chinese industrial areas and sea travel takes an additional two to three months. This is very cost-effective proposition. Compared to this, Gwadar port is only at a distance of 2,500 km from China. China’s decision to finance the construction of Gwadar port and coastal highway linking the port to Karachi will help its plans to develop western China. The distance from Kashgar to Chinese east coast ports is 3,500 km, whereas the distance from Kashgar to Gwadar is only 1,500 km. The cost benefits to China of using Gwadar as the port for western China’s imports and exports are as evident as the long-term economic benefits to Pakistan of Gwadar becoming a port for Chinese goods. Beijing has agreed to spend hundreds of millions of dollars to finish a 900-kilometer (550-mile) road that would link the port with Pakistan’s north-south Indus Highway, facilitating overland transport from Gwadar to China.
After the collapse of Soviet Union, the world witnessed a major paradigm shift - from bipolar to unipolar world order. The super power is the US, which militarily, economically, politically and in resources excels the rest of the world. Nevertheless, China views that one super power and four big powers will control the world from unipolar world to the multipolar world in the 21st century. The big four are the EU, Russia, Japan and China. Chinese leaders think that the possibility of a world-wide war has decreased after the collapse of the USSR, only religious, ethnic or territorial problems may cause local conflicts. Keeping this in mind, China has developed a new security concept based on “Soft power”, that seeks to assure that China’s economic development and military growth is not a threat to its neighbors or the world. The Chinese economy has been growing at an average rate of over 10% for a decade. Recently China overtook Germany as the world’s third largest economy. The "Go West" plan of economic strategists envisages a US $ 29 billion investment of infrastructure projects in western China over a period of 5 years covering an area of 6.85 million sq km or 71.4 % of the country’s total land territory. To achieve the objectives, China in recent years has crafted a multitude of bilateral agreements and partnerships with most of the countries across the world. China has embarked upon a proactive policy of improving relations with the ASEAN countries through resolution of disputes and increased economic interaction. Present day China is a shining star on the international scene.
Pakistan and China enjoys good trade relations. Under five-year Development Programme for Economic and Trade Cooperation (DPETC), 36 projects valued at $14 billion; covering energy, transport, information and communications technologies, industrial, agricultural, health care and education sectors; have been identified. Since 2008, the total volume of trade between the two countries has grown by 70%; and Pakistani exports to China increased two-fold from $1 billion to $2.2 billion during the same period. Year 2011 was celebrated as “Pakistan–China Friendship Year, on 60th Anniversary of Pak China Relations”. More than 11,000 Chinese engineers, technicians and workers are rendering their valuable services in progress and development of Pakistan. However, an imbalance in the export-import between the two states to the tune of $ 3.14 billion against $ 9.2 billion in favour of China needs to be reduced. In order to fill the gap, a lot is being done to invite the Chinese business community to invest in Pakistan to further boost bilateral trade ties. The Chinese market will absorb more Pakistani products if Pakistan has more goods and services to export. The Chinese government is planning to send official purchase missions to Pakistan to enhance our exports, while Pakistani traders are attending China’s trade and investment expos and fairs in larger numbers. In a conference on “Pakistan-China Economic Cooperation with special focus on Thar Coal, Kashgar Special Economic Zone and Gwadar Sea Port” organised by Islamabad Policy Research Institute (IPRI), it was discovered that procedural delays was the sole reason in stalling progress of economic cooperation between Pakistan and China. China Investment Corporation (CIC) President Gao Xiging stated that Pakistan has very good potential in different fields and China is also giving new face to its industry with sector diversification. However, Fazal-ur-Rahman, identified some of the factors that are hindering in improving trade-deficit between Pakistan and China: 1) Infrastructure technological deficit in the field of energy and excavation of natural resources like gold, cooper, etc, 2) Low level of labour productivity, 3) Low levels of manufacturing capacity value addition, 4) Little Foreign Direct Investment (FDI) in manufacturing and exportable sectors, 5) Increasing costs of exports as compared to imports, 6) Pakistani businessmen’s ‘go west policy’, 7) non-exportation of sports and surgical item, 8) lack of survey/research-based policies in locating markets, 9) slow in implementation of decision, 10) lack of contractual and negotiational proficiency.
How to improve our trade? Some of the suggestions to expand the scope of bilateral trade presented in China-Pakistan Business Cooperation Conference-2005 by Chinese Premier Wen Jiabao still hold good. These are: a) Pakistan is a resource-rich country, whereas China possesses the applicable technologies and development experiences. So, China will try to optimize China-Pakistan trade structure and improve the trade imbalance with Pakistan, b) The governments of both countries should build a platform and create opportunities to promote the establishment of cooperation and communications mechanism. The exchange and cooperation between enterprises are important pillars of China-Pakistan economic and trade relations. China encourages the enterprises of both countries to strengthen mutually beneficial cooperation and learn from each other for common development in a manner that better complies with the rules of market economy, and c) expanding the cooperation fields and seeking for varied means of cooperation. The established cooperation basis should be solidified. The cooperation in such fields as agriculture, finance, science and technology should be expanded and the cooperation in new fields continuously sought, such cooperation means as joint venture, sole foreign ownership, lease, training and contracting explored actively so as to inject new vitality to China-Pakistan economic and trade relations.