With more than a few common enemies, it seems China and Pakistan have formed a strong economic bond, allowing both nations to flourish
Pakistan has long been closely aligned with China. The Islamic Republic was one of the first nations to recognise the People’s Republic. They also share geopolitical interests, principally a suspicion of India, whom they have both gone to war with: Pakistan four times and China once in 1962. More recently Pakistan continues to see China as a reliable counterbalance to the US’s influence in the region. On a recent visit by the Chinese security minister to Islamabad, Yousuf Raza Gilani, the Pakistani Prime Minister, described the bilateral relations as “higher than mountains, deeper than oceans, stronger than steel and sweeter than honey.”
Historically, Pakistan has been one of China’s main arms export markets, but other commercial interests have expanded. China’s economic expansion has seen it accumulate the world’s largest foreign exchange reserves. The country’s high savings rate has also given its corporations and banks, both state owned and private, plenty of capital to invest abroad. China has been keen to use these assets to secure strategic holds over energy and raw materials that it sees as vital to maintaining rapid industrialisation. To this end China has taken interest in Pakistan’s deposits of copper, coal and oil, as well as its vital position as a link between China and the Persian Gulf. A notable example of this is the building of an Iranian-Pakistani gas pipeline. President Asif Zardari made a personal visit to Beijing to secure the $1.25bn needed to construct the Pakistani half of the pipeline and in return changed the terminus of the line to China rather than Iran’s original choice of India.
Although the historical ties have been strong, Pakistan cannot be complacent. Security is a major concern. Attacks on Chinese engineers working in the natural resource rich, but unstable, Balochistan province led to mutterings in Beijing that Pakistan could be doing more to protect its nationals and investment. Bombings in major Pakistani cities were cited as a reason why the Kingo Group, one of China’s largest coal mining concerns, pulled out of a proposed $19 billion investment in Pakistan’s Sind province.
President Zardari, keen to please his ‘all weather friend’, has promised China that the security services will do all they can to protect Chinese interests in the country. To retain the confidence of Chinese investors, Pakistan has also aligned its finance regulations to match those of China, and a free trade agreement was signed in 2006. It has also given Chinese investors privileges and access to opportunities to keep them satisfied. Effectively these are special economic zones for the Chinese. Gwadar is a noticeable example, being a part of China’s ‘string of pearls’, which are strategic ports connecting China to the oil supplies of the Middle East. Zulfiqarabad is potentially an even bigger opportunity for China. It is an ambitious plan for a new city that will be a regional economic hub, with the Chinese being priority investors. With such efforts being made by Pakistan, China is likely to continue being its favoured source of foreign capital.