China Targets India and Pakistan to Grow Trade and Investments

The Chinese Prime Minister Mr. Wen Jiabao is on state visits to both India and Pakistan to grow his country's invesment and trade. He has signed deals worth $16 billion in trade with India, and $35 billion in trade and investment with Pakistan this month.

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.

Related Links:

Haq's Musings

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?

Food, Fuel Inflation Hits India; Primary Price Index Up 15%, Credit Expansion Up 23%

Comments

Riaz Haq said…
Here are a few excerpts from Christian Science Monitor on Wen Jiabao's visit to Pakistan:

Chinese Prime Minister Wen Jiabao wrapped up a three-day visit to Pakistan on Sunday with a warmly received speech to Parliament that pledged closer strategic ties and lauded Pakistan’s fight against militancy, underscoring Beijing’s commitment to a geostrategic ally a Chinese diplomat recently dubbed “our Israel.”...

The Chinese delegation had already inked trade agreements between the private and public sectors of both countries worth some $30 billion. The trade deals are expected to bring up to $15 billion of desperately needed foreign investment over the next five years to this nation of 180 million struggling to cope with militancy and poverty. Last year, direct foreign investment to Pakistan stood at a 5-year-low of $2 billion. ..

“The timing of the trip is very important. Pakistan is facing difficulties in the region with the Obama review [on Afghanistan] excoriating Pakistan, and Western leaders trooping off to India without visiting Pakistan,” says Mushahid Hussain, an opposition senator and chairman of the Pakistan China Institute think tank. “This trip instills confidence in the Pakistani leadership and the Pakistani nation. Even through these hard times, the world’s second-largest economy is standing with us.”..

Decades of unresolved border disputes after a brief 1962 border war have soured relations between India and China.

Solid Pakistan-China ties
Contrast that with Pakistan, where China has maintained solid ties for six decades. In 1951, Pakistan was among the first countries to recognize the People’s Republic of China founded two years earlier by the Communist party, which still governs China.

Today, China benefits from access to Pakistan’s natural resources, which prompted several bilateral agreements from Wen's trip, including a $400 million loan for post-flood reconstruction, $10 million donation to the flood victims, the widening of the Karokoram highway to facilitate trade, and a pledge to assist Pakistan’s energy sector.
david_hatton said…
loving the blog! I'm a regular follower! you seem to always have interesting updates :)

I think you would enjoy the articles I post on my blog; I write about my travels, thoughts and random things: http://davidhatton1987.blogspot.com/

hope you enjoy

keep up the good work

all the way from England,

Dave x
Riaz Haq said…
Indian Bank targets up to 28% credit growth

Inquiring minds are reading Indian Bank targets up to 28% credit growth

According to a top official working with the Indian Bank, the bank has the plans to target the credit growth to around 28 per cent during the current fiscal year as the demand for the credit this year seems to have risen quite a bit.

"We expect a credit growth of 27-28 per cent this year," the Chennai-based bank's Chairman and Managing Director, T M Bhasin, said.

"RBI has always been judicious and its decision to decrease the statutory liquidity ratio by 1 per cent will definitely infuse more liquidity in the system," he said.
The sustained growth assumptions of India and China at about 10% each are simply not going to happen. Both countries are overheating and there is a not so little constraint called peak oil that will get in the way. Should India maintain its rate of growth, do not expect to see any containment in price inflation. The same holds true for China.

For more on China, please see China Hikes Rates, Ponders Capital Controls to Halt Currency Inflows; Eight Reasons China Faces Hard Landing

India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both.


http://globaleconomicanalysis.blogspot.com/2010/12/food-fuel-inflation-hits-india-primary.html
Riaz Haq said…
Here are excerpts from a Wall Street Journal Op Ed by Rupa Subramanya Dehejia on potential for India-Pakitan trade:

How does India fit into this picture? And can two nuclear-armed rivals with a fraught relationship meaningfully engage in trade and commerce with each other?

Trade is one of the engines of growth and development but in the case of Pakistan, this potentially important link with India is virtually missing. At present trade is roughly $2 billion a year.

Pakistan accounts for less than 1% of India’s trade and India less than 5% of Pakistan’s trade. Contrast this to the bilateral trade relationship following independence, when 70% of Pakistan’s trade was with India while more than 60% of India’s exports went to Pakistan.

According to Mohsin Khan of the Peterson Institute, economists estimate a “normal” trading relationship would be five to 10 times larger than the current amount.

There is also an estimated $2 billion to $3 billion a year in trade that takes place unofficially through third countries, especially the United Arab Emirates.

If this could be normalized as bilateral trade, it would occur at a much lower cost and therefore greater economic gain.

I’d argue that we must at least try to improve our economic relationship even if the political relationship is still frosty. The great exemplar here is the European Union, which was built on the premise that binding neighbors together economically was a prerequisite for ensuring peace and prosperity for all. We in India have yet to fully absorb this lesson. A prosperous Pakistan will not only be good for Pakistanis themselves but also good for us in India.

It’s time for the liberal commentators on both sides of the border to stop wringing their hands about the demise of a secular liberal democracy, because Pakistan hasn’t been that for some time, if it ever was.

While the support that the Indian intelligentsia has offered their counterparts in Pakistan following the assassination is heart-warming, it’s not consequential in the big picture. Liberals in Pakistan may fight on but it’s time for us in India to accept that Pakistan is an Islamic state with Islamic values and laws.

The crux here is that trade and commerce know no religious boundaries. We must work towards building a stronger bilateral relationship on that basis.
Riaz Haq said…
Pakistan's exports to China rose 37% in 2010, according to Dawn News:

BEIJING: From January to December 2010, Pakistan’s exports to China increased by nearly US $ 500 million and their overall growth rate was 37.4 per cent.

According to the figures released by China Customs, the total Pakistani exports to China last year were US $ 1.7 billion compared to US $ 1.2 billion in 2009.

Since 2006, Pakistani exports to China has been gradually climbing. The total volume of Pakistan-China trade rose by US $ 2 billion to US $ 8.7 billion approximately.

Last year, textiles, ores and mineral products, leather, chemicals and plastics, sports goods, iron and steel, surgical instruments showed the trend of faster growth rates.

In 2010, Pakistan’s imports from China also increased by US $ 1.4 billion and the total volume of imports from China stood at US $ 6.9 billion. The trade deficit right now for Pakistan is US $ 5.2 billion.

“The two governments have agreed on a series of measures to reduce the trade deficit” said Ambassador Masood Khan on Friday adding that in this regard, China would be sending purchase missions to Pakistan to identify suitable Pakistani products for Chinese markets.

He pointed out that Pakistani traders and businessmen will be attending major trade exhibitions in Kunming, Guangzhou, Xi’an, Urumqi, Kashghar, Dalian, and Beijing.

Trade seminars would also be held to create greater space for Pakistani products in China.

Meanwhile, Pakistan has requested assistance from China in vocational and technical training in the areas of value added textiles, gems and jewelry, ceramics, surgical instruments, leather and light engineering.

At the last meeting of the Free Trade Commission (FTC), China agreed to consider the proposal and invite Pakistan to identify specific training needs in these areas.

Pakistan has also requested China to give unilateral tariff concessions to 268 Pakistani product lines.

Pakistan is the second largest trading partner of China in South Asia.
Riaz Haq said…
Here's piece by Michael O'Hanlon of Brookings recommending closer US ties with Pakistan, including free trade deal and nuclear cooperation similar to US-India nuclear deal:

Under these circumstances, part of the right policy is to keep doing more of what the Obama administration has been doing with Pakistan -- building trust, as with last month's strategic dialogue in Washington; increasing aid incrementally, as with the new five-year $2 billion aid package announced during that dialogue; and coordinating militarily across the border region. But Obama also needs to think bigger.

First, he needs to make clear America's commitment to South Asia, to wean Pakistan away from its current hedging strategy. Obama has frequently used general language to try to reassure listeners in the region that there will be no precipitous U.S. withdrawal next summer. But few fully believe him. Hearing stories like Bob Woodward's accounts of how the vice president and White House advisors have generally opposed a robust counterinsurgency strategy in favor of a counterterrorism-oriented operation with far fewer U.S. troops, they worry that next summer's withdrawal will be fast. Obama needs to explain that he will not revert to such a minimalist "Plan B" approach under any imaginable circumstances. More appropriate would be a "Plan A-minus" that involves a gradual NATO troop drawdown as Afghan forces grow in number and capability, without necessarily first stabilizing the entire south and east, should the current strategy not turn around the violence by next summer or so. This would represent a modification to the current plan rather than a radical departure. The president can find a way to signal that this is in fact his own thinking, sooner rather than later -- ideally before the year is out.

Second, Obama should offer Islamabad a much more expansive U.S.-Pakistani relationship if it helps win this war. Two major incentives would have particular appeal to Pakistan. One is a civilian nuclear energy deal like that being provided to India; Pakistan's progress on export controls in the wake of the A.Q. Khan debacle has been good enough so far to allow a provisional approval of such a deal if other things fall into place as well. Second is a free trade accord. Struggling economically, Pakistan needs such a shot in the arm, and a trade deal could arguably do even more than aid at this point.

But the key point is this: Pakistan should be told that these deals will only be possible if the United States and its allies prevail in Afghanistan. Small gestures of greater helpfulness are not adequate; bottom-line results are what count and what are needed. If Afghanistan turns around in a year or two, the deals can be set in motion and implemented over a longer period that will allow the United States to continually monitor subsequent Pakistani cooperation in the war.

It may seem harsh to Pakistan that America would put things in such stark terms -- but in fact, it is not realistic that any U.S. president or Congress would carry out such deals if the United States loses the war in Afghanistan partly due to Pakistani perfidy. As such, these terms are really just common sense, and they are based on political realism about America's domestic politics as well as its strategic interests.

America's current strategy for the war in Afghanistan is much improved. But it is not yet sound enough to point clearly toward victory. The most crucial problem is the role of Pakistan in the war, and so far, the Obama administration is not thinking creatively enough about how to fix it.
Riaz Haq said…
Here's the latest report from Business Recorder on China-Pakistan trade and investment:

ISLAMABAD: The Federal Minister for Finance and Economic Affairs, Dr. Abdul Hafeez Shaikh said that no in-action by line ministry (implementation department) would be allowed in the implementation of the decisions agreed between Pakistan and China during the last visit of Chinese Premier to Pakistan.

This he said while chairing a meeting with Chinese delegation led by Chinese Ambassador to Pakistan Mr. Liu Jian to review the progress in the implementation of the mechanism for the number of projects in which China has pledged to extend technical and financial assistance to Pakistan.

In the post flood Reconstruction Programme, the Chinese Government has pledged to support Pakistan in the reconstruction of a number of projects which included the Grant for Highways and Agriculture, Transport, Energy and Communication, Establishment of China-Pakistan Agricultural Technology Zones, Upgradation of Karakarum Highway and Reallignment of Ataabad Lake, Disaster for Preparedness and Response System and Environment and Ecosystem.

The meeting also deliberated upon the progress in the operationalization and implementation of the agriculture related component under the Economic and Technical Cooperation and reviewed the progress in the finance and banking sector, and the members of the meeting were apprised that the ICBC Industrial and Commercial Bank of China is coming to Pakistan to open its branches in Karachi and Islamabad.

Meanwhile, the meeting also discussed the opening of Pakistan's National Bank of Pakistan Branch in China under the prevalent procedure in the Chinese Banking laws. Under the bilateral trade, China is to send more trade missions to Pakistan, and Pakistani traders to be given access and free space in trade exhibition in the cities of Kashghar, Urmuqi, Kensing and Chengdu.

The Finance Minister asked the concerned officials to give a comprehensive report on the development in this regard.

The other subjects which have been discussed in detail are Pakistan's market access by considering grant of unilateral tariff concession to 228 Pakistani products, launch of second phase of the Pak-China Free Trade Agreement, in the first quarter of 2011, the Establishment of Pakistan China Entrepreneurs Forum, and exploring possibility of establishing trans-border economic zones.

It may be recalled that during last visit of the Chinese Premier to Pakistan, new air routes between Pakistan and China were also agreed to be opened. The meeting also deliberated upon on airport also.

The youth exchange programme was also brought under dicucussion whereby one hundred Chinese and Pakistani youth delegations to visit respective countries to enhance cultural cooperation between the two friendly countries.

Both the sides expressed their satisfaction over the pace of progress in the affore mentioned projects and hoped that if there is any laxity from any quarter shall be overcome with collaboration and coordination with the line ministries and corresponding agencies.
Riaz Haq said…
China has offered to invest about $15 billion in Pakistan’s energy sector projects, according to Dawn News:

A Chinese delegation led by Cao Guanging, chairman of the state-owned China Three Gorges Project Corporation (CTGPC), discussed the Kohala, Bunji, Bhasha, Dashu and other hydropower projects in the upper and lower Indus valley during a meeting with Finance Minister Dr Abdul Hafeez Shaikh on Wednesday.

Dr Hafeez welcomed the offer and said he would try to develop consensus on issues relating to the projects. He said he would consult with the ministries of water and power and law and justice to sort out legal and other issues.

He informed the delegation about the country’s bidding rules and laws and assured it that the bidding process would be held in a transparent manner.

He said the Chinese offer had been discussed at a recent meeting of the Economic Coordination Committee of the cabinet. He said the projects identified by the CTGPC would be taken up with it but only after the completion of procedural matters.

The Chinese offer to provide financial and technical assistance for hydel and wind power projects, upgrade the transmission system and provide an integrated solution to the problems of power shortage and disruptions was elaborated by the CTGPC delegation at the Aiwan-i-Sadr on Wednesday.

Presidential spokesman Farhatullah Babar said in a statement that President Asif Ali Zardari had advised the government to consider tasking the CTGPC with building a run-of-the-river hydro project at Sukkur Barrage and asked Water and Power Minister Syed Naveed Qamar to discuss the project with the sections concerned and prepare a proposal in two months.

The president said that agreements with China ensured full security of Chinese investments in Pakistan. He said the true potential of business partnership between entrepreneurs of the two countries had yet to be fully realised.

Mr Babar said the CTGPC was already involved in a number power projects in the country and offered to build more to address the problems of power shortage. He said the corporation was currently undertaking Karot, Taunsa, Kohala and Bunji hydro-electric power projects. A letter of intent for the 720MW Karot project has been issued after the approval of its feasibility study. The project is currently at the tariff petition stage.

A memorandum of understanding for the 120MW Taunsa hydro-eclectic project has been signed and a development agreement will be signed this month. Mr Babar said the 1,100MW Kohala project was ready for tariff negotiations. A letter of intent for the project has already been issued after the approval of its updated feasibility study.

The 7,100MW Bunji project is ready for site survey. The MoU for the project was signed in August 2009.

Mr Babar said that wind power projects, including Sindh’s first and second wind farms and Punjab’s wind and solar projects, were also in an advanced stage.
Riaz Haq said…
China is opening bank branches in Pakistan as part of trade and investment promotion, according The Nation:

ISLAMABAD (APP) - President Asif Ali Zardari on Friday inaugurated two branches of Industrial and Commercial Bank of China (ICBC) here at a ceremony at Aiwan-e-Sadr.
President ICBC Yang Kaisheng and senior management of the team were present at the ceremony.
Speaking on the occasion, President Zardari said the initiative taken by the Industrial and Commercial Bank of China by opening its branches in Islamabad and Karachi, would begin a new era of cooperation in the banking sector of the two countries.
The opening of ICBC branches will take the economic relations between the two countries to new heights, he added. The President said that the opening of ICBC branches coincided with the anniversary of 60 years of diplomatic relations of Pakistan and China.
The President said by opening bank in Pakistan, Chinese have shown confidence in the financial sector of Pakistan.
He said when the world was passing through a difficult economic phase and the investors were not readily coming forward to make investments, the initiative taken by ICBC was most commendable. The President hoped that ICBC's investment in Pakistan would prove to be profitable and the bank would play a prominent role in channelizing bilateral investments.
The President said the government and State Bank would extend every possible assistance to facilitate ICBC operations in Pakistan. Appreciating tremendous economic progress of China, the President said since becoming President he had visited China six times in order to learn from the Chinese experience of development. "There is so much to learn from the Chinese experience," he remarked.
The President said Pakistan has offered to set up special Chinese investment zones in Pakistan where special tax concessions will be offered. With captive power, tax concessions, low cost labor and access to a huge market the Chinese investors will find Pakistan most profitable place for investment, the President added.
Riaz Haq said…
Here's an interesting excerpt from a recent Washington Post story on Pakistan's China card:

Pakistanis love China just about as much as they dislike the United States: 87 percent of Pakistanis say they have a favorable view of China, compared with 12 percent who say the same about the United States, according to a Pew survey. The divergent attitudes begin early: Schoolchildren here are taught that the China-Pakistan partnership is “as high as the mountains and as deep as the seas,” but that the United States has been a fickle friend.

Those perceptions have hardened of late amid U.S. pressure on Pakistan to do more in the fight against militant groups, and a widespread sense that U.S. assistance comes with strings while China’s does not. U.S. lawmakers have been particularly critical of Pakistan since the bin Laden raid, while Pakistan has bristled not being notified in advance.

“The Chinese are not involved in internal Pakistani problems,” said Amir Rana, director of the Pak Institute for Peace Studies. “Washington gives statements about Pakistan every day. China prefers to give its reaction only when needed.”

But that is not to say China does not have strong interests here. Most important, Pakistan serves as a check on the rising influence of India, China’s main rival for Asian supremacy.

Pakistan’s location is also strategically important to China. A Chinese-built deep-sea port in the southwestern Pakistani city of Gwadar offers Chinese companies a potentially faster route to natural resources — including energy supplies — in the Middle East and Africa. It also gives China a possible shortcut for transporting goods from its western regions to foreign markets, and for projecting its growing naval influence into the Arabian Sea.

But the port, which opened in 2008, has so far been a disappointment. While former Pakistani President Pervez Musharraf hailed it as the next Dubai, Gwadar has attracted little business. When Pakistani Defense Minister Chaudhary Ahmed Mukhtar floated the idea last month of China building a naval base at Gwadar, China politely denied any such plan.

Much of the problem is Gwadar’s isolation: The port is in Balochistan, a remote and relatively lawless province that lacks a viable road network.

Missing infrastructure

In the long term, China hopes to link Gwadar with the Karakoram Highway, another major Chinese investment in Pakistan that has yielded few dividends. The world’s highest paved international road, the highway is an engineering marvel that slices through 15,000-foot-high mountain passes, but attracts sparse traffic: A massive landslide last year buried a miles-long stretch of the road under water, and any goods being transported between Pakistan and China must now make part of the journey by boat.

Still, China is upgrading the road, which enters the country near its western border in the restive and underdeveloped Xinjiang region. Long-term plans call for the addition of an oil pipeline.

“We should have capitalized on the China opportunity far earlier. We had a highway into China in the 1980s. We could have had the first-mover advantage,” said Sakib Sherani, a former top Pakistani finance official.

But Sherani insists it is not too late: With China focused on developing its western regions, Gwadar and the Karakoram highway could fit in perfectly with those plans. “There’s a much bigger business opportunity for us, if we can get our act together,” he said.


http://www.washingtonpost.com/world/asia-pacific/pakistan-courts-china-as-relations-with-us-grow-strained/2011/06/19/AGDCyWfH_story.html
Riaz Haq said…
Here's India's Economic Times fretting about China-Pakistan growing collaboration in Gilgit Baltistan:

At a time when the distance between American and Pakistani priorities in the post-Osama period continues to grow, China is passionately vouching for Pakistan's entry into the Shanghai Cooperation Organization (SCO), which is seen as the upcoming Asian NATO . For some time now, China and Pakistan have aspired to create a regional alliance comprising the Arab countries, Central Asian Republics, Iran, Afghanistan and Turkey, and SCO could most likely help that dream come true.

But there is more to it than meets the eye. The lynchpin connecting these countries will be Gilgit Baltistan, a disputed region rivaling Serbia in area. Although constitutionally a part of India and bordering China's Xinjiang province, Afghanistan and Tajikistan, Gilgit Baltistan remains in Pakistani control since 1947.

The political uncertainty owing to India's claim to the region is especially worrisome for China, which currently depends on her southern neighbour for two reasons. Firstly, China uses transit routes of Gilgit Baltistan to reach Pakistan, Iran, Afghanistan and the ports along the coastline of Arabian Sea; and secondly, Chinese mining companies control the region's much valued mineral deposits of uranium, gold, copper, marble and precious stones.
---------------
But the person, making the headlines in local newspapers for criticizing foreign miners, is Advocate Shahbaz Khan, the chairperson of Metals, Minerals and Gems Association of Gilgit Baltistan , who has recently accused some individuals of acquiring 35 tonnes of certain mineral deposits from uranium-rich Karkalti village of Ghizer district, and smuggling to China.

Shahbaz is also critical of a uranium exploration company called Mohsin Industries, which has sought partnership with the locals as well as Chinese and Korean miners. Last year, Mohsin Industries was banned for attempting to smuggle uranium outside Pakistan. However, the company has recently been awarded exploration licenses in the uranium-rich areas of Sakwar, Minawar, Pari Bangla and Bonji, as well as parts of Shigar district and Skardo.

Locals accuse Mohsin Industries of bypassing standard procedures to obtain licenses. Mirza Hussain, a member of the Gilgit Baltistan Legislative Assembly (GBLA) from Nagar, believes that the owner of the Mohsin Industries receives special treatment due to his close links with the director general of the Federal Mineral Development Agency and Syed Mehdi Shah, who is currently the chief minister of Gilgit Baltistan. Hussain also suspects that its owner has established links with members of pro-Taliban groups such as Jamiat Ulema-e-Islam of Maulana Fazlur Rehman.

Today, Chinese miners and their affiliates are everywhere in Gilgit Baltistan especially in the Hunza-Nagar district, which is rich in uranium and certain minerals used in space technology. Some areas in upper Hunza, for instance, like the Chapursan valley have become no-go areas, where the Chinese continue their work on tunnel building and mineral exploration.
Riaz Haq said…
Emerging market specialist investor Mark Mobius sees investment opportunity in Pakistan as China-Pakistan alliance grows, according to Business Recorder:

Pakistan is set to benefit from its strategic importance to China, which is seeking to cement relationships with countries surrounding India, Franklin Templeton's Mark Mobius said. "They are trying to secure their lines of transport and communication," he said.

"That means Pakistan is quite critical." Mobius said he wants to start investing in Libya in the next 12 months as the oil producer emerges from civil war and looks to outside investment. The country of six million people benefits from oil resources, potential for tourism and a large land area, the veteran emerging markets investor told journalists on Monday, adding that it had a very well-run stock market.
Riaz Haq said…
China has become Pakistan's largest trading partner, replacing the US which slipped to third place, according to Dawn News:

China has emerged as Pakistan’s largest trading partner replacing the US and is being closely followed by the UAE. The US has slipped to third position on the list of the top ten trading partners.

Germany and the UK occupy eighth and 10th slots respectively and Japan is no more on the ten top list. The latest rankings based on the FY11 statistics indicate that Pakistan is doing much more trade within Asia and its reliance on American and European markets is on the decline.
---------
Emergence of the new rich in China and expansion in middle-income consumers in the Middle Eastearn countries opened up new opportunities for Pakistan to boost trade with all these nations. Moreover, the trade gravity played its part in redirecting our external trade towards South and East Asia including Malaysia and Indonesia.

Small wonder then, that in the last fiscal year seven out of the top ten largest trading partners of Pakistan were all Asians—China, the UAE, Saudi Arabia, Kuwait, Malaysia, Afghanistan and India. And all of them except Saudi Arabia and India showed an improvement in their respective rankings, in a small span of three years.

“Interestingly whereas recession in the US and troubled political relationship between Islamabad and Washington affected growth of bilateral trade, the surge in the US troops in Kabul aimed at winding up the military operation there increased our exports to Afghanistan,” according to a senior official of Trade Development Authority of Pakistan (TDAP). That explains, at least in part, why Afghanistan’s seventh slot among our largest trading partners in FY11.

Our exports to Kabul totaled $2.3 billion in FY11. This growth trend is continuing and in the first five months of this fiscal year, exports to Afghanistan have touched a billion dollars mark------------
-----------
Business leaders say Pakistan’s top bilateral trade partners are changing not just because of economic miracle of China and overall better average economic growth in Asia than in America and in Europe. “Increase in imports from China, for example, is also related to the Chinese investment projects in Pakistan part of which are scaling down American influence,” said a former president of the Federation of Pakistan Chambers of Commerce and Industry.
-----------
India and China are two of the six countries on the list of the top ten trading partners with whom Pakistan runs trade deficits.
----------
The other four are the UAE, Saudi Arabia, Kuwait and Malaysia. Whereas Pakistan imports large amounts of costly fuel oil from the first three countries, it runs trade deficit with Malaysia primarily due to huge import bills of palm oil.
------------
With four countries out of the ten largest trading partners, Pakistan boasts of a trade surplus. These are the US, Afghanistan, Germany and the UK. “Whereas it is easier to retain Afghanistan as a major export market and it is encouraging that Bangladesh has emerged as a billion-dollar market for our products, the US, Germany, the UK and other European countries are equally important for sustained growth in overall exports,” remarked chairman of Pakistan Bedwear Exporters Association Mr. Shabbir Ahmad. He and many other exporters believe that normalisation of political relationship with the US and continuing of efforts to win trade concessions in European Union are required for keeping exports on a high growth trajectory.


http://www.dawn.com/2012/01/16/top-ten-trading-partners.html
Riaz Haq said…
UAE to invest more in Pakistan, reports The News:

UAE Ambassador Eissa Abdullah Al-Basha Al-Noaimi said Monday Pak-UAE relations would be taken to the new heights as the leaders of the two brotherly counties are showing keen interest in this.

Federal Minister for Commerce Makhdoom Amin Fahim has said that the trade and business ties of both the countries are satisfactory but the scope of enhancing them does exist and the leadership of the two countries is sincerely trying to expand the same.

They were addressing the gathering of representatives, CEOs, directors of the UAE investment companies and joint venture investing corporations in Pakistan here Monday evening. The meeting provided the two countries officials’ rare opportunity to interact with each other.

Ambassador Eissa Al-Noaimi told the guests that current bilateral trade between the two countries is US $7.6 billion while 27 companies of Pakistan and UAE are working in joint venture. The volume of the business in joint venture is US $21 billion. The UAE firmly believes in the principles of importance of strengthening economic coordination with Pakistan as the later presents suitable environment ready for investment. The fruit of this interest was holding the conference on ‘promotion investment in Pakistan’ in March 2010. The ‘UAE Expo Magnificent 7’ held in Karachi and it was honoured and inaugurated by Prime Minister Syed Yusuf Raza Gilani while the UAE delegation was led by Sheikha Luba Bint Khalid Al-Qasmi, the UAE foreign trade minister.

Ambassador Al-Noaimi recounted that the UAE investment covers all sectors such as aviation, navigation, banks, real estate and energy. In aviation sector, it extends its facilities to different cities in Pakistan to serve the passengers and for cargo. This also applies to the navigation sector. The banking sector actively contributes in developing Pakistani society while the real estate and energy sectors have effective role also.

All those sectors serve the human and economic development in the brotherly country Pakistan. “We might not exaggerate if we describe this relationship as model one, thanks to its solid foundation and due to its divaricating so that to cover different fields and according to agreements and memorandums of understanding which are looked by joint commission headed by both foreign ministers of the two countries. We consider the meeting of the businessmen and officials of both countries would furnish common ground to discover more investment opportunities and to discuss investment related topics,” the ambassador said.

Ambassador Eissa Al-Noaimi said the distinguished relationship and the contacts among the officials of the two countries and the diplomatic delegations here and the UAE are fully ready to solve any issue which might be faced by the companies and investors and if such matters occurred then it would be a natural issue usually happens during investment in countries. “One of my goals that I would be contributing during next stage to establish joint committee especially for businessmen of both the countries. The history of relationship among the businessmen is spread over decades due to religious, geographical, cultural connections and mutual interests in this excellent relationship,” Ambassador Al-Bash Al-Noaimi added.

The ambassador said the UAE leadership including President Khalifa Zayed Al-Nahyan, Prime Minister Muhammad Rashid Al-Maktoum, and Foreign Minister Abdullah Al-Nahyan are taking personal interest in enhancing ties with Pakistan in all spheres. A documentary was also shown on the occasion that depicted the marvelous all-round development of the UAE. The U-fone chief executive Abdul Aziz Khan, honorary counsel of the UAE in Lahore Chaudhry Munir Ahmad were also present on the occasion.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=89158&Cat=2
Riaz Haq said…
Here's Der Spiegel story on Chinese investment in Karakoram Highway connecting Pakistan with China:

China is shelling out massive amounts of money and manpower to improve Pakistan's Karakoram Highway, the highest motorway in the world. The supposed gift to its neighbor is a perfect example of China's economic strategy of taking on short-term expenses for the sake of long-term benefits.

The road roller struggles up the mountain, tar steaming in the heat. Several Chinese and Pakistani workers stand there, leaning on their shovels and observing how their boss, Mr. Li, operates the yellow machine. A few meters on, he stops and jumps out on the unpaved side of the road, directly before a chasm about 1,000-meters (3,300-feet) deep. Seemingly unfazed by the elevation, he nods to his workers and calls out: "That's how it's done. Any questions?"

Whether its high-rises, ports or streets, China is building -- worldwide and on a grand scale. The expansion of the famed Karakoram Highway from China to Pakistan, a part of the Silk Road trade routes, is just one of China's massive construction projects and an example of Beijing's strategy for the future -- investing a lot and giving generously in exchange for long-term benefits.

The almost 1,300-kilometer (800-mile) long path, which runs from Kashgar in western China's Uighur Autonomous Region almost to the Pakistani capital Islamabad, is set to be transformed from a dusty, bumpy road into a modern mountain highway. The section on the Chinese side is already finished. "For Beijing, it's about being able to export more goods to Pakistan, through the ports of Karachi and around the world," says China expert Fazal ur-Rehman of the Institute of Strategic Studies in Islamabad. Plans also include a future pipeline that runs along the Karakoram Highway, allowing China to bring in Iranian gas.

But government circles in India, China's rival in Asia, are concerned that after the expansion China will also be able to transport tanks and other heavy military equipment to the Indian Ocean. After all, China already showed its aggressive potential when it marched into Tibet in 1950, and a few years later when it occupied other parts of the region....
----------
The Chinese have summarily decided to drill a tunnel to bypass the newly created Attabad Lake, now a tourist attraction. "It will now take another few years," says Li.

Undeterred by the challenge, the Chinese hauled in heavy equipment. And where bricks were needed to protect the road with walls against landslides or falling rocks, brickworks were swiftly built on site. "Where protective walls were of no use, we built a tunnel," says Li.

Kilometer by kilometer, a monument to Chinese foreign economic policy is being erected. Beijing doesn't worry about the short-term rates of return for its building projects abroad, but on the long-term trade options that they open up instead. The country is also interested in gaining allies with its generous help. In many countries besides Pakistan, Chinese engineers are working on key infrastructure projects. And often the Chinese are also investing in exactly the places from which the West has long since retreated -- such as many African countries rich in natural resources.


http://www.spiegel.de/international/world/china-expands-karakoram-highway-to-pakistan-a-844282.html
Riaz Haq said…
Here's an NPR report on Chinese investments raising suspicions among Sindhi nationalists in Pakistan:

...Boost in Chinese investment has sparked resentment in southern Pakistan, where activists accuse China of trying to be a new colonial power. A bomb blast recently hit near the Chinese Consulate in Karachi — an ominous sign of the rising tensions.

When Bashir Qureshi, a politician in his late 40s, died unexpectedly last month, the medical examiner said it was a heart attack. But Qureshi's friends and family don't believe that. Instead they claim there's been a conspiracy, and that Qureshi was murdered. Poisoned, in fact — by China.
------------
China and Pakistan have been allies for decades, and China recently pledged to greatly increase its investment in Pakistan, from $7 billion to $30 billion a year.

Maleeha Lodhi, a former Pakistani ambassador to the U.S. and Britain, says that money couldn't come at a better time. "Let's face it: Foreign direct investment into Pakistan has plunged to a historic low," she says. "In this environment, when you have China — the second-largest economy in the world — stepping up to the plate and saying, 'We're prepared to help you,' at a time when others are shy of coming into Pakistan, I think that more than offsets the fears that some may have."

The late Qureshi complained that China's big construction projects rely on Chinese workers and Pakistani migrants.

In recent years, China has faced similar criticisms when it has made large investments in other developing nations, including a number of African states...


http://www.npr.org/2012/08/21/159531740/chinas-increased-investment-upsets-some-pakistanis
Riaz Haq said…
Here's an NPR report on Chinese investments raising suspicions among Sindhi nationalists in Pakistan:

...Boost in Chinese investment has sparked resentment in southern Pakistan, where activists accuse China of trying to be a new colonial power. A bomb blast recently hit near the Chinese Consulate in Karachi — an ominous sign of the rising tensions.

When Bashir Qureshi, a politician in his late 40s, died unexpectedly last month, the medical examiner said it was a heart attack. But Qureshi's friends and family don't believe that. Instead they claim there's been a conspiracy, and that Qureshi was murdered. Poisoned, in fact — by China.
------------
China and Pakistan have been allies for decades, and China recently pledged to greatly increase its investment in Pakistan, from $7 billion to $30 billion a year.

Maleeha Lodhi, a former Pakistani ambassador to the U.S. and Britain, says that money couldn't come at a better time. "Let's face it: Foreign direct investment into Pakistan has plunged to a historic low," she says. "In this environment, when you have China — the second-largest economy in the world — stepping up to the plate and saying, 'We're prepared to help you,' at a time when others are shy of coming into Pakistan, I think that more than offsets the fears that some may have."

The late Qureshi complained that China's big construction projects rely on Chinese workers and Pakistani migrants.

In recent years, China has faced similar criticisms when it has made large investments in other developing nations, including a number of African states...


http://www.npr.org/2012/08/21/159531740/chinas-increased-investment-upsets-some-pakistanis
Riaz Haq said…
Here's a News report on Pak-China ties:

Pakistan is China’s Number 1 ally and the most special country for China.



These were the words of Prof Feng Zhongping, President, China Institute of Contemporary International Relations (CICIR), as he addressed members of the Pakistan Institute of International Affairs (PIIA) at the institute Tuesday morning.



The occasion was the visit by a five-member delegation of the CICIR who had an interactive discussion with a compact group of PIIA members and journalists. Chairperson of the institute, Dr Masooma Hassan, presided over the proceedings.



“Our ties with Pakistan”, Zhongping said, “are historic and as such we treat Pakistan as a very special country”. Pakistan, he said, had a geo-strategic location which was of pivotal importance to China. He said that Pakistan was an old friend of China and added that China had a history of never letting her friends down. Pakistan’s population of 180 million was of great consequence to China, he said.



Another member of the delegation, citing the importance of Pak-China ties, pointed out that it was Pakistan that helped open up China to the world by starting off an air service between the two countries and cited Pakistan’s efforts in bringing the US and China closer.



Pakistan’s location, Zhongping said, was very important as access to the Indian Ocean would make China a two-ocean power, with the Indian Ocean to one side and the Pacific to the other which would benefit the country greatly in light of her rapidly expanding trade with the world.



Asked by a questioner about the validity of the current perception that the US was grooming India to take on China militarily and was building India as a sequel to China, he said that it was premature to make a prognosis there and lots would depend on the Indian stance towards the issue of which there were no indications as yet. He said that all chances were that India would not be sucked into the US strategic plans of the US in the area as that could affect her rapid economic advances and undo the fruits of her development effort....


http://www.thenews.com.pk/Todays-News-4-146641-Pakistan-Chinas-number-one-ally-experts
Riaz Haq said…
Here's Daily Times on China's Gwadar plans:

ISLAMABAD: Chinese investment in the Gwadar Port is purely economic, said Hu Xijin Editor-in-Chief of the Global Times on Wednesday. Speaking at a roundtable organised by the Institute of Regional Studies (IRS) on Pak-China relations with the editorial staff of Global Times he siad China would make all the necessary investments in the Port to make it fully operational to support Chinese trade with West Asia, especially the trade between western part of China and that part of the world. China considers Pakistan an important friendly neighboring country and Chinese investors want to invest in projects in Pakistan. Some Chinese investors are apprehensive about the security situation in Pakistan. He said China would keep supporting the reconstruction of Afghanistan post-2014. China does not want to undertake projects in any country that are opposed by the host communities. Responding to a question about the imbalance in trade of China with Pakistan, Hu said China was a free market economy where the government could not dictate to the companies to import products from other countries if they were not market competitive. Ashraf Azim President of IRS pointed out Indian concerns about the use of Gwadar Port, as a naval base was completely baseless.

http://www.dailytimes.com.pk/default.asp?page=2013\02\21\story_21-2-2013_pg5_13
Riaz Haq said…
Here's a news item published in The Hindu about a Chinese Think Tank report on Sino-Pak ties:

A new report by an official Chinese think-tank has hailed the relations with Pakistan as a “model of state-to-state relations” and strongly rejected suggestions that the ‘all-weather’ relationship was growing cold amid concerns about terrorism and a lack of aid.

New factors

The report, titled ‘A Model of State-to-State Relations’, was authored by Du Youkang, head of the Centre for Pakistan Studies at Shanghai’s Fudan University and a scholar who advises the government on its Pakistan policy.

Published last month, the report highlights new factors — from China’s growing ties with India to Pakistan’s economic and security troubles — as increasingly shaping the relationship, but comes to the conclusion that the “China-Pakistan relationship will remain a model for countries with different social systems to communicate and interact with each other in the future”, according to a summary published by the Communist Party-run The Global Times.

Increasing doubts

The newspaper said the publication looked to address the “increasing doubts” about the traditionally close relationship. As an example, the relatively small amounts of aid to Pakistan — dwarfed by aid from Washington — has been cited as contradicting the rhetoric about ‘all-weather’ ties. .

Terrorism in China’s far-western Xinjiang region, with Chinese officials blaming Pakistan-based groups, has also been seen by some analysts as an irritant.

However, describing Pakistan as “China’s closest friend in South Asia”, the report said bilateral ties were “established on the foundation of deep-rooted public opinion” and would not be significantly altered.

“Although there are some factors that may influence bilateral relations, for instance, the development of political relations lagging behind economic exchanges and Indian factors, there are no major differences or irreconcilable conflicts between the two,” it concludes.


http://www.thehindu.com/news/international/south-asia/sinopakistan-friendship-a-model-for-bilateral-ties-chinese-thinktank/article4443543.ece
Riaz Haq said…
Here's a PakObserver report on Chinese investment in Pakistan:

Friday, March 29, 2013 - Islamabad—China is committed to invest heavily in Pakistan’s energy and other sectors to improve lives of people, Deputy Chief of Mission of the Chinese Embassy Yao Wen said Thursday.

Speaking at a function at a local school here, Yao Wen said Chinese are already working on 120 projects in Pakistan with around a quarter related to energy.

In addition, during the last five years volume of bilateral trade has grown by 70 per cent to over $ 12 billion with Pakistani exports increased two-fold from $1 billion to $2.2 billion, he informed.

Yao Wen stressed the need for enhancing collaboration between educational institutions and exchanges of students and researchers to promote intellectual cooperation.

Lauding the role of Pakistan in regional and global peace, stability and development, he said that Pakistan has offered great sacrifices to ensure peace.

Speaking on the occasion, President Ex-Chinese Association Raza Khan lauded the Chinese assistance and cooperation in various fields, terming it a great service to people of Pakistan.

He lauded the active involvement of Chinese Ambassador Liu Jian in capacity building of students and said that supporting needy students was a great service for social development. Raza Khan stressed the need for increasing people-to-people exchanges to promote understanding and carry forward cause of Pak-China friendship.

Terming China a sincere friend, Joint Secretary Ministry of Education Prof. Muhammad Rafiq Tahir said that two countries should fully unleash their potential of cooperation to benefit masses.


http://pakobserver.net/detailnews.asp?id=202003
Riaz Haq said…
Mary Kay Magistad of NPR's The World reported that China has reacted strongly to the Pentagon report on China's military growth and modernization with its first aircraft carrier, several nuclear submarines and stealth aircraft.

Magistead reported that Xinhua has for the first time talked about China as a global economic power with global interests and it needs a blue water navy to protect a tremendous number of sea-lanes.

http://www.theworld.org/2013/05/pentagon-china-military/

Riaz Haq said…
Here's a Xinhua report on Chinese Prime Minister Li's visit to Pakistan:

In order to deepen the China-Pakistan strategic cooperative partnership, Li proposed, the two neighbors should firstly strengthen strategic communication and coordination, maintain high-level contact, and thus steer the bilateral relationship forward.

Secondly, the two countries should reinforce strategic and long-term planning, and open up new cooperation areas such as connectivity and maritime sectors, the Chinese premier said.

They should start formulating a long-term plan for the China-Pakistan economic corridor project and gradually push forward its construction, added the premier.

Thirdly, Li suggested, China and Pakistan further raise the level of bilateral trade and realize a dynamic balance while expanding the scale of two-way trade.

China, he said, encourages Chinese enterprises to participate in Pakistan's infrastructure construction.

Fourthly, the two sides should boost people-to-people and cultural exchanges and media cooperation, said the Chinese premier, adding that they also need to expand exchanges between their young generations so as to carry forward their traditional friendship.

Fifthly, he urged the two countries to promote cooperation in regional and global affairs and safeguard the common interests of developing countries.

China respects the development path Pakistan has chosen based on its own realities, and will continue to support Pakistan in defending its independence, sovereignty and territorial integrity, Li said.

China, he added, is willing to provide unconditional help within its capacity for Pakistan's economic development and seek common advancement in state governance through exchanges and mutual learning.


http://news.xinhuanet.com/english/china/2013-05/23/c_124750134.htm
Riaz Haq said…
Here's an FT report on how Pakistan's top central banker used Chinese line of credit to stabilize economy:

In May, with Pakistan’s rupee looking particularly weak, its balance of payments parlous and election jitters increasing, Yaseen Anwar, the head of State Bank of Pakistan, quietly took advantage of a little-known clause in the bank’s central currency swap agreement with the People’s Bank of China and borrowed almost $600m. By drawing down on part of a $1.5bn line of credit, the government was able to report that far from showing a big deficit, Pakistan’s balance of payments were positive at the end of the month.
By the end of June the rupee was under less pressure and by early September the new government of Nawaz Sharif had signed an agreement with the International Monetary Fund that further stabilised the ailing currency.

“China helped us weather the storm,” Mr Anwar says.
Drawing down the Chinese line of credit, of course, was cosmetic: it did not change the underlying economic and financial realities. But since most market participants, including virtually every foreign banker in Karachi, had no idea that the improvement was essentially technical, it contributed to more positive sentiment.
--------
China is quietly but steadily increasing its footprint both in Asia and in emerging markets across the globe. It is especially effective in places such as Pakistan, which are desperately short of capital and in dire need of foreign assistance to tackle the shortcomings of their infrastructure, from telecoms equipment to turbines. The line of credit from the PBoC is largely symbolic, a small part of the billions of dollars from banks such as China Development Bank and China Export Import Bank. China’s vendor financing model has become a principal engine for the development of Pakistan at a time when few foreigners will even get on a flight to visit it.
For example, one of the biggest obstacles to growth in this country of almost 200m people – soon to be the world’s fourth most populous nation – is energy. Pakistan has recently decided to develop its vast reserves of low- quality coal in the Thar desert of Sindh province to fuel its power plants. That is not exactly the fashionable choice in many parts of the world, but Pakistani executives say they rely on coal for less than 1 per cent of their power today, in contrast to say India or China, where the figure is more like 80 per cent.
China is promising to develop some of the Thar tracts and provide financing and equipment to help private Pakistani companies such as Engro develop other tracts.
The Chinese are also taking over management of Pakistan’s newest port, Gwadar, in the west, and will help construct a road that leads from to its border and then on to the oil-rich “stans” of central Asia. That will give China access to yet another warm-water port in Asia and cut by half the time taken by Chinese exports to reach many parts of the world from its western regions. Like so much of what China does, that combines the strategic interests of Beijing with the ability to help its best geopolitical friends develop.
For the Pakistanis, isolated from the west, that sort of self-interest is not a problem: it means that they have leverage with Beijing. Today less than 10 per cent of Pakistani exports go to China and virtually all are priced in dollars. But its biggest lender, Habib Bank, has a China desk in its Islamabad branch and a rep office in Beijing. When executives went to China for a symposium, they were courted by senior banking officials. For Pakistanis who feel that many parts of the world have turned their backs on their country, such courtship is almost painfully welcome.


http://www.ft.com/intl/cms/s/0/63e4900a-4872-11e3-8237-00144feabdc0.html

Popular posts from this blog

Economic Comparison Between Bangladesh & Pakistan

Smartphones For Digital & Financial Inclusion in Pakistan

India's Demonetization Disaster: Modi Likens Critics to Pakistan