Pakistan signs deals with China to build "economic corridor"

Premiers and prime ministers

Following his trip to India, Li Keqiang, now the second-most-powerful figure in China's power structure, flew into Pakistan yesterday (22 May). He arrived at a moment at which Pakistan does not yet have a government, following its 11 May general election, but with the contours of its new political leadership already established. The visit offered Li an opportunity to establish a personal relationship with Nawaz Sharif who, once his government is formed, will become the most powerful civilian leader in Pakistan's recent history following his Pakistan Muslim League's impressive electoral performance. Sharif has pledged to improve regional trading relations, for instance with India. Li's visit was designed to ensure that China remains Pakistan's main strategic ally during Sharif's third term in office.

According to a statement issued by Pakistan's foreign ministry today, eleven deals between the two were struck yesterday. The most significant were:

• A memorandum of understanding (MoU) on Co-operation for a Long Term Plan on the China-Pakistan Economic Corridor
• An agreement for Co-operation in the field of Satellite Navigation
• An agreement on Boundary Management
• An agreement on Border Ports
• An MoU on maritime co-operation
• An agreement on Economic and Technical Co-operation, plus handing over a certificate of Seismograph Network
• An MoU on Co-operation in Marine Science and Technology
• Agreement on Establishment of a Confucious Institute at Karachi University
• The business delegation accompanying Li also signed USD450-million-worth of deals with half a dozen Pakistan companies, although a breakdown of these was not provided.

China's orbit

The majority of the agreements appear designed to make it easier for truck traffic to navigate between Pakistani ports and Western China – the "economic corridor". The satellite navigation accord, for instance, brings Pakistan under the umbrella of Beidou ("Compass"), China's national equivalent of the US Global Positioning System (GPS, see China: 29 December 2011: China's Satellite Navigation System Becomes Operational). Chinese state media reported last week that Pakistan was set to become Beidou's fourth international user, after Thailand, Laos, and Brunei. Beijing BDStar Navigation, which helps to promote Beidou internationally, will build a network of ground stations in Pakistan to improve the accuracy of the satellite positioning service.

Beidou has civilian and military uses, and the countries to sign up each have slightly different plans for the system. The state-owned China Daily reported that Laos will use it to develop agriculture and to suppress opium production, noting that Beidou was instrumental in tracking down the Laotian militia leader Naw Kham, who killed 13 Chinese sailors on the Mekong River in 2011. China envisages Beidou becoming useful for Pakistan's fisheries sector, allowing fishing vessels to send emergency messages and report fishing conditions to the shore. Trucks will also be able to use the system to navigate between Pakistan's ports of Karachi, Bin Qasim, and Gwadar into western China, a route expedited by the new accords on border ports and management. Today Li alluded to this trade route during a speech to Pakistan's senate, saying that China was willing to speed up work to upgrade the Karakorum Highway linking northern Pakistan to China's Xinjiang Uighur Autonomous Region (XUAR). His speech employed the usual fulsome praise of bilateral ties, described as being "all-weather" and "special".

Outlook and implications

Li's visit prompted an unusual outburst of scepticism from some quarters in Pakistan. The Express Tribune newspaper ran an op-ed that described the Sino-Pakistani relationship as "economically worthless" to the latter country. It called Li's visit a sop to placate Pakistan after his three-day visit to India, and questioned whether Chinese investment in Pakistan had actually enriched the country at all given the terms of trade – high-tech electronics from China, such as Beidou, outmatching Pakistan's exports of cotton yarn to China. The article did not acknowledge China's extensive co-operation with Pakistan's military or its services in aiding Pakistan's nuclear power programme, but nevertheless with India-Pakistan relations set to improve, at least in terms of economic co-operation, such questions over Pakistan's relations with China are likely to become more common over the next five years. That Pakistan was among the first countries to be visited by Li suggests that China is aware that work needs to be done on the relationship.

For China there is a very real need to retain Pakistan's co-operation, or at least that of its military. With US-led forces set to withdraw from Afghanistan next year, and with Sharif voicing his willingness to talk peace with Pakistan's domestic Taliban, the operating environment for Islamist militants in southwest Asia is likely to improve over the next 18 months. This poses a risk to China, given the volatility of relations in XUAR between Han Chinese and Muslim Uighurs, and also because of the risk of militant contagion into the post-Soviet regimes that govern Central Asia. Pakistan's military, which has longstanding relationships with elements of the Taliban leadership and the ability to eliminate anti-Chinese Uighur groups in Pakistan, is therefore a key ally. By offering Beidou as another element of the neighbours' close military-to-military co-operation, China can ensure that this relationship remains strong, even if Pakistan's civilian leadership decides to readjust their country's diplomatic alignments.