Chinese president to launch economic corridor link in Pakistan

Reuters News
Posted: Apr 19, 2015 5:33 PM

By Katharine Houreld

ISLAMABAD (Reuters) - Chinese President Xi Jinping arrived in Pakistan on Monday to launch $46 billion in projects linking the old allies, a figure that far exceeds U.S. spending in Pakistan and underscores China's economic ambitions in Asia and beyond.

The infrastructure and energy projects are aimed at establishing a Pakistan-China Economic Corridor between Pakistan's southern Gwadar port on the Arabian Sea and China's western Xinjiang region.

The plan is part of China's aim to forge "Silk Road" land and sea ties to markets in the Middle East and Europe and reflected a shift of economic power in the region to China, said Mushahid Hussain Sayed, chairman of the Pakistani parliament's defense committee.

"Pakistan, for China, is now of pivotal importance. This has to succeed and be seen to succeed," he said.

The corridor, a network of roads, railways and pipelines, will run through Pakistan's poor Baluchistan province, long plagued by a separatist insurgency which the army has vowed to crush.

The security of Chinese workers will be a prime concern for Xi. In his talks with Prime Minister Nawaz Sharif and military leaders, Xi is likely to raise China's fears that Muslim separatists from Xinjiang are teaming up with Pakistani militants.

Xi has linked economic cooperation with security.

"Our cooperation in the security and economic fields reinforce each other, and they must be advanced simultaneously," he said in a statement to media on the eve of his two-day visit.

Xi is also likely to call for greater efforts to bring peace to Afghanistan, where Pakistan is keen to restrict the influence of is rival India.


China will provide up to $37 billion in investment for the energy projects to generate 16,400 MW of power, said Ahsan Iqbal, Pakistan's minister for planning and development.

Concessional loans will cover nearly $10 billion of infrastructure projects.

The United States has given $31 billion to Pakistan since 2002, according to the Congressional Research Service. About two-thirds was earmarked for security.

Despite Chinese-U.S. competition for influence across Asia, they share interests in Pakistan, with both wanting a stable government fighting militancy, said Andrew Small, author of a book on China-Pakistan relations.

"China would like U.S. support for Pakistan to continue, in terms of aid, selling arms, and other support," Small told Reuters.

China's government and banks, including China Development Bank [CHDB.UL], and the Industrial and Commercial Bank of China Ltd, one of China's "Big Four" state-owned commercial banks, will lend to Chinese companies, which will invest in projects as commercial ventures.

Chinese companies investing in the projects will include Three Gorges Corp [CYTGP.UL], China Power International Development Ltd, Huaneng Group [HUANP.UL], ICBC Corporation and Zonergy Corporation, Pakistani officials said.

Sharif made ending chronic power blackouts a central promise of his 2013 election campaign and will be hoping for an improvement before the next polls in 2018.

(Additional reporting by Mehreen Zahra-Malik; Editing by Robert Birsel and Mike Collett-White)