China Targets India and Pakistan to Grow Trade and Investments
China is now India's largest trade partner, with bilateral trade expected to reach $60 billion during this fiscal year ending March 31, 2011. On Thursday, the two countries set a target for bilateral trade to reach $100 billion by 2015. The bulk of Chinese exports are financed by Chinese banks on attractive terms. And China has invested significantly in many parts of the world including South Asia, more in Pakistan than it has in India.
China is Pakistan’s third largest trading partner with $7 billion in trade in 2009, after the United States and the European Union, while Pakistan is China’s largest investment destination and second biggest trade partner in South Asia.
Currently, China enjoys two-to-one trade advantage with both South Asian nations, with China exporting twice as much as its imports. This large and growing imbalance stems from the fact that India and Pakistan import high-value manufactured products like power generation and telecom equipment from China, while India's biggest export to China is iron ore, and Pakistan's main export to China is cotton yarn.
The Chinese delegation to India and Pakistan was larger than the number in delegations led in recent weeks to India by US President Barack Obama (215), French President Nicolas Sarkozy (more than 60) and British Prime Minister David Cameron (about 40), according to a BBC report. For his Pakistan visit, Mr. Wen was accompanied by dozens of corporate chief executives and 250 business leaders—many of whom were also present during the Chinese leader's visit to India earlier this week, during which he announced economic deals aimed at stabilizing a fragile relationship with New Delhi, according to Wall Street Journal.
India and China signed some 50 deals in power, telecommunications, steel, wind energy, food and marine products worth $16bn at the end of a business conference attended by Mr Wen in the capital, Delhi, on Wednesday evening.
This overtakes the $10bn of agreements signed between Indian and American businesspeople during the recent visit of US President Barack Obama.
In Islamabad, Pakistan, the Chinese Premiere has signed 45 agreements worth $35 billion in just the first two days of his three day visit, approaching the total value ($40 billion) of all of India's agreements signed with China, US, France and Britain during their leaders' recent visits to New Delhi.
Pakistan and China Saturday signed 22 new trade agreements, worth $15-billion, aimed at deepening strategic and economic toes between the two countries, officials told media covering the visit.
These come on the top of another 13 agreements worth around $20 billion signed Friday after bilateral meetings.
The fresh deals were inked at a business summit addressed by Chinese Premier Wen Jiabao and his Pakistani host Prime Minister Yousuf Raza Gilani and attended by business representatives from the two nations.
Gilani said that the corporate and business sectors of both countries must now seize business opportunities offered by Pakistan and take the lead.
Wen urged the investors from his country to invest in Pakistan and help build the economic ties with the traditional Chinese friend.
"We have strong political relations and now we are building economic ties, which can witnessed from the fact that trade has risen from $1 billion in 2000 to $7 billion by 2009," he said.
The state-run Pakistan Television (PTV) said the agreements are expected to bring $25 billion in investments and double the bilateral trade to $15 billion by 2015.
Through their huge investments in Africa and significant commitments in Afghanistan and Pakistan, the Chinese have shown the extraordinary capacity to see great opportunity where others see large risks.
The Chinese know how to do good and do well. They are clearly demonstrating by Mr. Wen's Pakistan visit what they like to call their "all-weather friendship" with Pakistan. The marked shift in focus of this relationship from mostly defense-related deals to broad commerical ties is particularly welcome, given the rise of China as the world's second largest economy after the United States, and a major lender, investor and trading partner of the United States and the European Union.
The positive impact of China-Pakistan business relationship will only be achieved by full implementation of these agreements. Let's hope Pakistanis hold their end of the bargain to realize the full potential of economic ties with the world's fastest growing and the second largest economy.
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