Pakistan signs nearly $500 million in China deals at OBOR summit

Irshad Salim — Pakistan signed new deals with China on Saturday worth nearly $500 million ahead of Beijing’s international forum on its “Silk Road” trade and infrastructure initiative for Asia, Africa and Europe, the Pakistani government said in capital Islamabad.

The memorandums of understanding (MOUs) add to $57 billion already pledged for the China-Pakistan Economic Corridor (CPEC), a network of rail, road and energy infrastructure that is part of the wider Chinese project also known as One Belt-One Road.

The deals came as Pakistani Prime Minister Nawaz Sharif alongwith Chief ministers from all provinces, met Chinese President Xi Jinping ahead of the Beijing summit expected to be attended by leaders from at least 29 countries to promote Xi’s vision of expanding trade links worldwide using rail, roads and sea routes.

Delegates in Beijing will hold a series of sessions on Sunday to discuss the plan in more detail, including trade and finance. The World Bank and IMF are attending.

Proposed in 2013 by Xi, the project is broad on ambition but still short on specifics. Some experts say the China-Pakistan Economic Corridor will define the contours of China’s financial models for developing countries going forward.

Pakistan has been a flagship country and one of the most enthusiastic supporters of the One Belt-One Road initiative, in part because many projects are for power plants ($34 billion) to alleviate the country’s decade-long energy-shortage crisis that sees frequent blackouts.

“China-Pakistan Economic Corridor is a core component of your visionary initiative of the “One Belt-One Road,” Sharif told Xi when they met at the Great Hall of China on Saturday, according to APP.

PROJECTS

Xi called for a swift completion of projects involving Gwadar Port and special economic and industrial parks along the corridor, state Xinhua news service reported.

Among the $493 million in deals Sharif’s office said were signed on Saturday were:

* Two cooperation agreements worth $333 million for an airport in the southwestern town of Gwadar in Balochistan, site of a deep-water port that is to provide an outlet to the Arabian Sea from the far western Chinese province of Xinjiang.

* Establishment of the Havelian Dry Port/Container Terminal in Haripur district of Khyber Pakhtunkhwa province, in the anticipated demand of future containerized freight traffic resulting from the China-Pakistan Economic Corridor.

* Agreement on economic and technical cooperation $160 million for the 6-lane East Bay Expressway linking Gwadar port to Pakistan’s existing highway system spanning bidirectionally east and north.

China says that between 2014 and 2016, its businesses signed projects worth $305 billion in Belt and Road countries. Some of the projects could be in development for years.

Some countries are wary of the debt burden that the Chinese financing could create.

Pakistan, however, has expressed an optimistic view, with the government’s chief economist telling Reuters this week that the repayments will peak at around $5 billion in 2022, but will be more than offset by transit fees charged on the new transport corridor.

Most of these projects are being built by China’s state-owned corporations. During construction and operation, security umbrella will be provided by a specially created brigade of the Pakistan armed forces with costs to be borne by the host country.

China recently offered partnership to India — Pakistan’s eastern neighbor, to join CPEC — provided Pakistan agrees, assuring New Delhi that the Corridor would not impinge on anyone’s sovereign rights.

Pakistan and India have history of long-standing disputes specially Kashmir. China and India also have territorial disputes.

Recently, China’s ambassador to India Luo Zhaohui while addressing a Think Tank in New Delhi said, “We need to properly manage differences. As two large neighbors, it is natural that we have some differences. Even family members may have problems,” Mr Luo said.

“Here’s my suggestion. First, start negotiations on a China-India ‘treaty of good neighborliness and friendly cooperation’.

“Second, restart negotiation on China-India free trade agreement. Third, strive for an early harvest on the border issue. Fourth, actively explore the feasibility of aligning China’s ‘One-Belt-One-Road Initiative’ (OBOR) and India’s ‘Act East Policy’,” he said.

Zhaohui, who has also served as ambassador to Pakistan, invited India to join the One Belt, One Road (OBOR) project and reassured New Delhi that for all of China’s close ties with Pakistan, China seeks stable and prosperous ties with India too.

President Xi Jinping and Prime Minister Narendra Modi will have opportunities to meet each other on the sidelines of summits to be held by the Shanghai Cooperation Organization, G20 and BRICS. Modi is not attending the OBOR summit.

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