PTI chief, Imran Khan, recently threatened to do a sit-in Islambad if the incumbent government decided to change the route of Pak-China Economic Corridor, which would, if implemented, bypass the KPK province, currently being ruled by PTI. Notwithstanding this threat, there is no denying the fact that this corridor is very significant as far as Pakistan’s larger economic development is concerned. In fact, it is a part of Pakistan’s policy to achieve financial and economic self-reliance.
Pakistan`s trade, finance and development are tightly tied to the West; the 2008 US financial meltdown and the European crisis have, compounded with domestic mismanagement, served to severely depress Pakistan`s growth and increase poverty. And the portents aren`t too good for future Western economic support for Pakistan.
However, Pakistan can, if it wishes to, rely on its strategic relationship with China to reduce its economic vulnerability and promote growth. This relationship is geopolitical in nature and has stood the test of time. China`s ability to contribute to Pakistan`s growth and development is considerable. China already contributes significantly to Pakistan`s defence capabilities and extends critical diplomatic support.
Chinese state companies are financing and executing a number of important infrastructure projects in Pakistan. Nevertheless, the two countries` economic relations do not match the depth of their strategic relationship. Bilateral trade stands at around $10bn and is heavily imbalanced; private-sector interaction is limited. Chinese investment in Pakistan amounts to a couple of billion dollars, while in India it is about $40bn.
However, the project Pak-China Economic Corridor, which is a part of China’s larger Silk Road Plan, is expected to unleash forces of development on an unprecedented scale because many doors of development, hitherto closed or unreachable for Pakistan, are going to open as a result of this project. In this behalf, the port of Gwadar has acquired special significance. Gwadar not only is designed to facilitate trade among more than 12 states of these regions – the Silk Road spinning ever farther afield – but also to become an integral part of China’s international trade and make Pakistan its hub. As such, Gwadar has numerous imperatives for a number of states.
For China, using the transport corridors to develop its landlocked western region is of prime importance. For Pakistan it is the development of Baluchistan in particular. The re-opening of the ancient trade routes and expansion of new ones from China not only reduces Pakistan’s own isolation, but also makes it one of the most feasible ports in the region given the fact that, as a report of Asian Development Bank has detailed, Gwadar, given its geographical advantages, has the potential to replace Dubai for China.
Apart from Gwadar, the development of Kashgar City is also expected to provide good opportunities for the Pakistani business community. Under the program, Kashgar – an ancient Silk Route town – will become a regional logistics center, a financial and trading hub and a key processing center for internationally traded goods. Pakistani businessmen will be treated to a five-year tax holiday.
Pakistan naturally benefits from increased Central Asia-China-Pakistan trade, the much needed foreign direct investment from China, transit revenues, economic and infrastructure development and consequently becoming a regional trade hub and energy transit corridor bringing huge transit revenues and employment opportunities. This in turn can result in industrial, agricultural and overall sustainable economic growth and development of Pakistan. On the other hand, the expected revenues from oil and gas transit and land to sea trade via Pakistan can total around US$1 billion annually, according a feasibility report on the Economic Significance of Gwadar.
It is therefore of immense significance that Pakistan does its best to exploit this project to its fullest potential. Amid immense economic loses during the ‘war on terror’, this project can really boost up Pakistan’s economic position. It is in this context that the up-coming tour of Chinese premier to Pakistan is also of immense significance for Pakistan and Pakistan is all set to make it a successful one.
PD
Pakistan President, Nawaz Sharif with Li Keqiang, Premier of the Peoples Republic of China