PAKISTAN-CHINA ECONOMIC COOPERATION

THE PAKISTAN-CHINA ECONOMIC COOPERATION

Despite the fact that the free trade zone port of Gwadar in Pakistan’s southwestern province of Baluchistan has been an unprofitable enterprise with operational control now in Chinese hands, its potential remains. If anything, the development of the deep ocean port and an associated international airport, as well as the creation of a transport walkway connecting Gwadar to China’s easternmost province of Xinjiang, is a game changer for the Central Asian region.

The Chinese president signed a series of agreements designed for breathe life to the walkway project with the development of the passage, Central Asia, traditionally an economically closed region owing to its geography and lack of infrastructure, will have greater access to the sea and to the global trade network. For Afghanistan and Tajikistan, both of which have signed transit agreements with Pakistan, it will provide a more economical means of transporting goods, making their export products more competitive globally. For China meanwhile the passage will provide it with direct access to the Indian Ocean, enabling China to project itself strategically into the mineral and oil rich regions of Western Asia and Africa.

But for Pakistan, the project provides the country not only a third deep-seaport but also a better connected gateway into China’s backyard, giving Pakistan the potential to make good on its free trade agreement with the dragon economy.

This projects makes Pakistan a complicit satellite in China’s attempt to break the US encirclement of Asia. Commentators link Gwadar to China’s numerous other port facilities and passages developed in partnership with other nations of the globe. All of this looks much like a noose around Southeastern Asia as far as India and the United States are concerned. India in particular has looked on with continued unease at the Pakistan-China passage and port in terms of its effect on the maritime balance of power in the Indian Ocean. Ideally if regional relations were better, the passage would be a circuit linking the three economic powerhouses of the region, China, Pakistan, and India (as well as Iran for that matter), integrating the economic systems of South Asia and Central Asia. The passage will play crucial role in advancing Pakistan’s economic power. Exporting, transiting and transporting goods into and out of Central Asia and carrying them away on the current of the world’s sea lanes, the Pakistan-China walkway will be a vital rector in Pakistan’s economic future. The passage is best thought of as a comprehensive infrastructure package encompassing a wide range of spinoffs, including gas and oil pipelines, railways, an expressway from Karachi to Lahore, fiber optic cabling, metro bus and underground services for key Pakistani cities. One could even link China’s financial assistance in the development of nuclear power plants in Pakistan to the wider picture.

However, it is the same circular argument, the security situation must improve and reform, both economic and social, is required if the future economic prosperity of Pakistan is to be guaranteed.

In reality, agriculture, chemicals, textiles, and various other manufactured items are the stuff of Pakistan’s true productivity- items that are tradable on the global market and capable of boosting national income. Pakistan has always been well placed to export given its access to the Indian Ocean and proximity to key markets in the West and East, to say nothing of its international reach through the Pakistani Diaspora and the fact that it has the third largest English-speaking population in the world.

The cue is now for the Pakistani government and the business community to formulate a more global economic policy. As it stands the failure to fully capitalize on the free trade agreement between China and Pakistan demonstrates the need for a major policy effort to make the most of the corridor. For one the Pakistani government needs to place greater emphasis on trade relations in its overall foreign policy as well as foster the exporting aspirations of small and midsize companies. Expansive economic policy, continued liberal reform and above all an improved security situation are the formula needed to make full use of  the tools of globalization which Pakistan will soon have at its disposal.