China opening trade doors to Pakistan
By Syed Fazl-e-Haider
KARACHI - China has pledged to provide trade concessions to Islamabad that it
is not getting from the United States and European Union, according to a
Pakistan government official after a visit to the country last week by Chinese
Vice Prime Minister Zhang Dejiang.
At meetings with Pakistani officials in Islamabad, Zhang called for
strengthening economic and trade linkages through improved transportation,
communication and energy corridors. China has given assurances it will provide
trade concessions that will have a positive impact on Pakistan's economy,
Business Recorder reported, citing Federal Commerce Secretary Zafar Mahmood.
The US and EU are not prepared to give trade concessions to Pakistan owing to
the international economic recession, he said.
Early this month, the European Union and Pakistan failed to
come up with any breakthroughs on liberalizing bilateral trade when they set
out a five-year plan for improving ties boosting ties. EU-Pakistan trade has an
annual turnover of about US$10 billion.
Last week, US Ambassador to Pakistan Anne W Patterson led a delegation of
Pakistani business leaders to the US to highlight the country's investment
opportunities, The Hindu reported. Pakistan's Minister of State for Investment
Saleem H Mandviwalla was also among the travelling group, the third such
delegation visiting the US since April 2009 as part of the Pakistan Business
Ambassadors Programme, the report said.
Zhang's visit to Pakistan will lead to increased trade with China and more
investments by China's public and private companies over the next 12 months,
local analysts said. China is already challenging the EU and the US in the
top-three ranking of Pakistan's largest trading partners as it has increased
investment in numerous sectors, including port development, roads, railways,
mobile telephony, communication technology, hydro and thermal power, mining,
electronics, and nuclear energy.
China has supported Pakistan in its goal of building a gas pipeline from Iran,
a project agreed to this month, and has said it will build two new nuclear
power plants, Chashma-3 and Chashma-4 in Punjab province, both moves over the
strong opposition of Western countries, including the US.
Pakistan needs to boost exports as it seeks to contain its trade deficit, which
in May was $1.60 billion, up from $1.09 billion a year earlier, according to
the Federal Bureau of Statistic. The country's total trade deficit in the first
11 months of the fiscal year that ends this month eased to $13.88 billion from
$15.31 billion in the corresponding period last year.
Under a free-trade agreement (FTA) of 2006, China and Pakistan are committed to
increase bilateral trade from the current $6.9 billion to $15 billion in the
next three to four years.
The two countries have established a joint investment company for direct
investment and joint ventures. Chinese President Hu Jintao in 2006 inaugurated
the Pakistan-China Haier Ruba Economic Zone (HREZ) in Lahore, the first
industrial park outside China supported by the Chinese government and
exclusively for Chinese investment. Under the FTA deal, China is committed to
consider duty-free access into China for all products manufactured in the park.
Vice Prime Minister Zhang met senior military figures during his visit last
week and called for the development of common approaches to secure common
strategic and economic interests. Zhang also visited the head office of ZONG,
the first venture outside China of the country's leading mobile phone operator,
China Mobile. With an investment to date of $1.6 billion in Pakistan, ZONG is
expanding its network in all four of the country's provinces.
The China Council for Promotion of International Trade (CCPIT) and Pakistan's
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) have also
entered an agreement to foster bilateral economic cooperation. Tariq Sayeed, a
former president of FPCCI, and Li Jiashou, CCPIT executive vice chairman and
chairman of the CCPIT sub-council in southern Yunnan province, recently signed
a memorandum of understanding in the Yunnan capital of Kunming, according to
the Dawn newspaper.
The two sides aim to upgrade efforts to promote trade and investment and to
involve their governments and enterprises to strengthen contact at the public
and private sector level.
Zhang's visit comes at a crucial time for Pakistan-China trade, which has been
hit hard since a landslide early this year closed the Karakoram Highway. The
road connects China's Xinjiang region with Pakistan's Gilgit-Baltistan and is a
vital cross-border trade link. Due to a lake developing behind the landslide,
traders had to evacuate Sost, the Chinese-built dry port on the Pakistani side
of the border. The facilities at Sost have proved a boon in helping to
facilitate customs clearance and other formalities for goods crossing between
the two countries.
In the nuclear sector, China has so far been the only country willing to
cooperate with Islamabad. Chinese companies, as announced in April, are to
build at least two new 650-megawatt reactors at Chashma over the next seven
years. These could prove central to Pakistan's long-term efforts to overcome
energy shortages that cause widespread and prolonged power blackouts. China
began building a reactor at Chashma in 1991 and broke ground on a second one in
2005, which is expected to be completed next year. The Chashma-3 and Chashma-4
nuclear power plants are being built by Pakistan Atomic Energy Commission and
China Zongyuan Engineering Corporation.
Washington is concerned over the security risk of nuclear materials in
Pakistan, where the Taliban movement is waging a bloody offensive, but has been
restrained in the level of its criticism.
"President Barack Obama will not openly criticize the Chinese export because
Washington, in the context of a bilateral security dialogue with Islamabad, may
be sensitive to Pakistan's desire for civilian nuclear cooperation in the wake
of the sweeping US-India nuclear deal," said a report released by the Carnegie
Endowment for International Peace in Washington. The US administration,
however, might object to it inside the Nuclear Suppliers Group, which oversees
such transactions. These objections, however, "cannot prevent China from
exporting the reactors," the report added.
Syed Fazl-e-Haider (http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author of many books, including
The Economic Development of Balochistan (2004). He can be contacted at email@example.com.