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Chinese Investments in Pakistan

China Investment in Pakistan

Harbinger of Peace and Security?

April 20, 2015 will be remembered as a historic day in the recent history of Pakistan. On this day, Chinese President Xi Jinping reached Islamabad on his first state visit to Pakistan. President Xi came to oversee the signing of agreements aimed at establishing a China-Pakistan Economic Corridor between Gwadar Port on the Arabian Sea and China’s western Xinjiang region. During this trip, which was planned for September 2014 but had to be postponed due to long protests and sit-ins in Islamabad, Xi became the first Chinese president to address the joint session of Pakistan’s parliament. However, the most striking feature of this landmark visit was the launch of a plan for energy and infrastructure projects in Pakistan worth $46 billion, linking their economies and underscoring China’s economic ambitions in Asia and beyond.

A new element was added to the “all-weather friendship” during President Xi’s trip and that is a renewed commitment to the China-Pakistan Economic Corridor (CPEC). The idea was first proposed by Chinese Premier Li Keqiang, during his May 2013 visit to Pakistan, but it could not really gain any momentum until China unveiled its much more ambitious “One Belt, One Road” initiative under which Chinese leadership planned to build an inter-continental Silk Road. Since then, the “One Belt, One Road” has become a major focus of China’s diplomacy. A flurry of foreign visits by the Chinese president and the premier in 2014 and 2015 speaks volumes about the importance China accords to this dream project. With this the CPEC has also a lot more significance. Chinese officials call the CPEC a “flagship project” of their “One Belt, One Road” plan by pointing out that the Corridor (through Gwadar Port) provides a link between the overland Silk Road Economic Belt and the Maritime Silk Road.

Thus the CPEC, as expected, was high on President Xi’s agenda during this landmark trip. President Xi listed “four key areas” for advancing the project: (1) Gwadar Port; (2) Transport Infrastructure; (3) Energy; and (4) Industrial Cooperation. Accordingly, it was announced that Pakistan will receive the first investment from the new Silk Road Fund — a $40 billion fund unveiled last December — with the sole purpose of financing One Belt, One Road-related projects. President Xi said:

“It has a significant meaning for a China-Pakistan energy cooperation project to be chosen as the first investment project of the Silk Road Fund since its establishment.”

China Investment in PakistanDuring Xi’s visit China and Pakistan inked deals worth $28 billion — all related to CPEC. The major focus has been on energy and infrastructure construction, with the majority of this round of funding going to energy projects. China offered $10 billion in concessional loans for infrastructure projects, but up to $37 billion in funding for energy projects in Pakistan. The Wall Street Journal, citing Pakistan’s Minister for Planning, Development and Reform Prof Ahsan Iqbal, reported that deals signed during Xi’s visit would open the door for projects totalling 8,400 megawatts of electricity.

Clearly, China is willing to put serious cash in to CPEC, and this is proved by the fact that on 19th May 2014, China set up a 10 billion Yuan ($1.6 billion) fund — supported by the China Development Bank (CDB) and the China-Africa Development Fund — to take forward its ambitious Maritime Silk Route plan of building ports and boosting maritime connectivity with Southeast Asian and Indian Ocean littoral countries. But, the wild card will be whether the security situation in Pakistan will ever allow those investments to bear fruit. The planned route for the CPEC will involve major work in restive Balochistan province, where Gwadar Port is located. Rebels in the region are keen to deter any infrastructure work. The killing of 20 labourers by Balochistan Liberation Front and an attack at on an airport in Gwadar district were timed to coincide with Xi’s arrival in Pakistan.

China, however, is not oblivious to these security concerns. Chinese Foreign Ministry spokesman in his regular press conference on April 20, 2015 while responding to a question that Will China and Pakistan strike any security deal to prevent terrorists based in Pakistan from slipping into Xinjiang and secure the China-Pakistan Economic Corridor, said, “We also believe that bilateral cooperation in security and economic fields should advance in parallel and reinforce each other. The Chinese side is willing to deepen defence cooperation and enhance coordination and collaboration with the Pakistani side on regional hotspot issues.”

President Xi had raised the issue of security of Chinese workers during his meetings in Islamabad. So, Pakistani President Mamnoon Hussain promised to establish a special army division tasked solely with protecting Chinese workers in Balochistan. This promise was fulfilled on April 22 when Pakistan Army announced the formation of a new division-sized force of 10,000 personnel for this purpose.

Andrew Small, the author of “The China-Pakistan Axis,” points out that it’s precisely because of these security concerns that China is so committed to developing the region. He told AFP that “China is certainly not completely confident that all the projects will be protected, but they think these security problems are one of the main reasons that it’s so important that they move ahead, for the sake of Pakistan’s stability.” Unrest in Pakistan has a negative influence on China’s own security, particularly in Xinjiang. Beijing hopes that by boosting economic development, it ban bring stability to its neighbour.

Agreements Signed During Xi’s Visit to Pakistan

  1. China Investment in PakistanJoint Statement between the People’s Republic of China and the Islamic Republic of Pakistan on establishing the all-weather strategic cooperative partnership.
  2. Minutes of the 4th JCC of China-Pakistan Economic Corridor.
  3. Economic and Technical Cooperation Agreement between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  4. Exchange of Notes of feasibility study of the Demonstration Project of the DTMB between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  5. Exchange of notes on provision of Anti-Narcotics Equipment between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  6. Exchange of notes on provision of Law Enforcement Equipment between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  7. Exchange of Notes on Feasibility Study of Gwadar Hospital between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  8. MOU on provision of Chinese Governmental concessional Loan for second phase up-gradation of Karakorum Highway (Havelian to Thakot) between Ministry of Commerce of the People’s Republic of China and Ministry of Finance and Economic Affairs of the Islamic Republic of Pakistan.
  9. MOU on provision of Chinese Governmental concessional Loan for Karachi-Lahore Motorway (Multan to Sukkur) between Ministry of Commerce of the People’s Republic of China and Ministry of Finance and Economic Affairs of the Islamic Republic of Pakistan.
  10. MOU on provision of Chinese Governmental concessional Loan for Gwadar port East Bay Expressway Project between Ministry of Commerce of the People’s Republic of China and Ministry of Finance and Economic Affairs of the Islamic Republic of Pakistan.
  11. MOU on provision of Chinese Governmental concessional Loan for Gwadar International Airport between Ministry of Commerce of the People’s Republic of China and Ministry of Finance and Economic Affairs of the Islamic Republic of Pakistan.
  12. Protocol on Banking Services to Agreement on Trade in Services between the Government of the Islamic Republic of Pakistan and the Government of the People’s Republic of China.
  13. MOU on provision of Material for Tackling Climate Change between National Development and Reform Commission of the People’s Republic of China and Ministry of Finance (EAD) of the Islamic Republic of Pakistan.
  14. Framework Agreement on Cooperation on Major Communications Infrastructure Project between the Government of the People’s Republic of China and the Government of the Islamic Republic of Pakistan.
  15. MOU on Cooperation between NDRC of the People’s Republic of China and ministry of Planning Development and Reform of the Islamic Republic of Pakistan.
  16. MOU on Pro Bono Projects in the Port of Gwadar Region between Ministry for Planning, Development and Reform of the Islamic Republic of Pakistan and the International Department of the Central Committee of the Communist Party of China.China Investment in Pakistan
  17. MOU on establishment of China-Pakistan Joint Cotton Bio-Tech Laboratory between the Ministry of Science and Technology of the People’s Republic of China and the Ministry of Science and Technology of the Islamic Republic of Pakistan.
  18. Framework Agreement between the National Railway Administration, Government of the People’s Republic of China and the Ministry of Railways, Government of the Islamic Republic of Pakistan on Joint Feasibility Study for up-gradation of ML1 and Establishment of Havelain Dry port of Pakistan Railways.
  19. Protocol on the Establishment of China-Pakistan Joint Marine Research Center between State Oceanic Administration of the People’s Republic of China and the Ministry of Science and Technology of the Islamic Republic of Pakistan.
  20. MOU on cooperation between the State Administration of Press, Publication, Radio, Films and Television of China and Ministry of Information, Broadcasting and National Heritage of Pakistan.
  21. Triple Party Agreement between China Central Television and PTV and Pakistan Television Foundation on the re-broadcasting of CCTV-NEWS/CCTV -9 Documentary in Pakistan.
  22. Protocol on establishment of Sister Cities Relationship between Chengdu city Sichuan Province of PRC and Lahore City.
  23. Protocol on establishment of Sister Cities Relationship between Zhuhai City, Guangdong province of the People’s Republic of China and Gwadar city, Balochistan of the Islamic Republic of Pakistan.
  24. Protocol on establishment of Sister Cities Relationship between Karamay City, XianjianUgur, autonomous region of the People’s Republic of China and Gwadar city, Balochistan of the Islamic Republic of Pakistan.
  25. Framework Agreement between NEA and MoPNRon Gwadar-Nawabshah LNG Terminal and Pipeline Project.
  26. Commercial Contract on Lahore Orange Line Metro Train Project.
  27. Agreement on financing for Lahore Orange line Metro Train project.
  28. MOU on financing for KKH up-gradation Phase-2 (Havelian to Takot), KLM, Gwadar East Bay Expressway, Gwadar International Airport Projects.
  29. Financing Agreement relating to the 870 MW Hydro-Electric Suki Kinari Hydropower Project between EXIM Bank of China, Industrial and Commercial Bank of China Limited and SK Hydro (Private) Limited.
  30. Financing Cooperation Agreement between the EXIM Bank of China and Port Qasim Electric Power Company (Private) Limited (on Port Qasim 2x660MW Coal-fired Power Plant).
  31. Framework Facility Agreement for 720MW Karot Hydropower Project between China Development Bank Corporation, EXIM Bank of China and Karot Power Company (Private) Limited.
  32. Term Sheet of the facility for Zonergy 9×100 MW solar project in Punjab between China Development Bank Corporation, EXIM Bank of China and Zonergy Company limited.
  33. Drawdown Agreement on Jhimpir wind Power project between UEP Wind power (Private) Limited as Borrower and China Development Bank Corporation as lender.
  34. Terms and Conditions in favor of Sindh Engro Coal Mining Company for Thar Block II 3.8Mt/a mining Project, Sindh province, Pakistan Arranged by China Development Bank Corporation.
  35. Terms and Conditions in favor of Engro Powergen Thar (Private) Limited, Sindh province, Pakistan for Thar Block II 2x330MW Coal Fired Power Project Arranged by China Development Bank Corporation.
  36. Framework Agreement of Financing Cooperation in Implementing the China-Pakistan Economic Corridor between China Development Corporation and HBL.
  37.  MOU with respect to Cooperation between WAPDA and CTG.
  38. MOU among PPIB, CTG, and Silk Road Fund on Development of Private Hydro Power Projects.
  39. Facility operating Agreement for Dawood Wind Power project between ICBC and PCC of China and HDPPL.
  40. Framework Agreement for Promoting Chinese Investments and industrial Parks Developments in Pakistan between ICBC and HBL on financial services corporation.
  41. The financing term sheet agreement for Thar Block –I between ICBC, SSRL.
  42. Energy Strategic Cooperation Framework Agreement between Punjab Province of Pakistan and China Huaneng Group.
  43. Framework Agreement on the China Pakistan Economic Corridor Energy Project Cooperation between Ministry of Water & Power and China Export & Credit Insurance Corporation (SINOSURE).
  44. Cooperation Agreement between Sino-Sindh Resources (Pvt.) Ltd and Shanghai Electric Group for Thar Coalfield Block I Coal-Power integrated Project in Pakistan.
  45. Cooperation Agreement for Matiyari-Lahore and Matyari (Port Qasim)-Faisalabad Transmission and Transformation Project between National Transmission Distribution Company (NTDC) and National Grid of China.
  46. IA on Port Qasim Coal fired Power Plant between Power China and GoP.
  47. Facility Agreement for the Sahiwal Coal-fired Power Plant Project between industrial and Commercial Bank of China Limited, Huaneng Shandong Electricity limited and Shandong Ruyi Group.
  48. Cooperation Agreement on Hubco Coal-fired Power Plant Project between CPIH and Hubco Power Company.
  49. Facilitation Agreement on Salt Range Coal-fired Power Project between CMEC and Punjab Government.
  50. MOU between NUML Pakistan and Xinjiang Normal University, Urumqi China for Cooperation on Higher Education.
  51.  Agreement on collaboration on establishment of NUML International Center of education (NICE) between NUML Pakistan and Xinjiang Normal University, Urumqi, China.

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