China and Pakistan agree to push forward economic corridor plan after dam deal scrapped

Analysts say disputes over individual projects won’t get in the way as officials sign long-term plan for US$57 billion scheme

PUBLISHED : Tuesday, 21 November, 2017, 8:39pm
UPDATED : Tuesday, 21 November, 2017, 10:00pm

As China and Pakistan agreed on Tuesday to push ahead with their huge economic and infrastructure scheme, analysts said disputes over individual projects would not have a significant impact on its progress.

Officials from both sides were finalising a long-term plan to 2030 for the US$57 billion China-Pakistan Economic Corridor (CPEC) on Tuesday as they wrapped up a Joint Coordination Committee meeting in Islamabad.

The CPEC is a flagship project under Beijing’s “Belt and Road Initiative” to open up trade along land and sea corridors from Asia to Africa to Europe. China is hoping to export its infrastructure and industrial capacity and expand economic ties and influence with countries involved in the initiative.

The two nations on Monday agreed to begin the first phase of developing special economic zones, the World Tribune Pakistan reported.

But Pakistan rejected China’s demand to use the yuan in the Gwadar Free Zone, saying this would compromise its “economic sovereignty”, the Express Tribune reported.

Last week, Pakistan pulled the plug on a US$14 billion deal to build the Diamer-Bhasha Dam – excluding it from the CPEC – saying China’s conditions for funding the project were unacceptable and went against its interests.

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However analysts said these were not significant setbacks given the breadth of the CPEC plan, which will connect China’s landlocked far western Xinjiang region with Gwadar Port near the Persian Gulf via road, rail, air and pipe – as well as a series of industrial zones.

Beijing and Islamabad regard themselves as “iron brothers” sharing an “all-weather friendship”.

“No matter how good the Sino-Pakistan relationship is, it is unavoidable that differences will occur in a programme of this scope,” said Du Youkang, head of Pakistan research at Fudan University. “We are talking about dozens of billion-dollar major projects and hundreds of smaller projects.”

He added that Islamabad was generally supportive of the CPEC plan as the government wanted to boost development in the country, including infrastructure, jobs and living standards.

“Chinese and Pakistanis – and also Pakistanis among themselves – have different ideas about so many issues,” he said. “It’s going to take a lot of discussion and consultation to reach agreement.”

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The long-term plan follows an initial list released in 2014 of 33 infrastructure projects identified for the CPEC. Construction has already begun on 18 of those projects.

Of those on the initial list, 21 are energy-related, 16 involve power generation and transmission, eight are to do with the development of Gwadar Port, and four are transport projects.

The coordination committee has met twice a year to discuss the CPEC’s progress since it was set up in 2014. However it has been 11 months since its last meeting in Beijing in December.

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On Monday at a strategic dialogue in Islamabad, China’s Assistant Foreign Minister Kong Xuanyou and Pakistan’s Foreign Secretary Tehmina Janjua agreed to positively promote the CPEC, according to Chinese foreign ministry spokesman Lu Kang.