Pakistan and China share a rare unanimity of views on regional and international issues and the two countries enjoy a robust relationship in the defence, political and diplomatic fields. However, the extent of relationship in these areas is not reflected in economic and commercial ties.
Realizing the need to expand trade and economic relations, the two countries have taken initiatives to promote cooperation through investment and joint projects. As a result, economic cooperation between Pakistan and China has shown spectacular progress during the last 10-15 years. Between 2000 and 2010 the volume of bilateral trade grew sevenfold. The two sides plan to increase trade to $10 billion within five years. But that is still far below the potential figure. Currently Chinese companies are working on 250 projects in Pakistan. Some of these are mega projects jointly undertaken by Pakistan and China, including the Thar coal project, the Bhasha Dam, the widening of Karakoram Highway, the Gwader deep sea port and the Saindak gold and copper project.
During Chinese Premier Wen Jiabao's recent visit to Pakistan, he was accompanied by 260 Chinese business executives. During the visit the two sides concluded deals worth $35 billion. The agreements covered the energy sector, bilateral trade, exploration of natural resources and development of the agriculture, livestock, finance and banking sectors. An important achievement of Premier Wen's visit was the signing of a MoU between China's Three Gorges Corporation and Pakistan's Alternative Energy Development Board for a joint venture on wind power and solar energy projects. The Joint Statement issued at the end of Premier Wen's visit talked of the determination to "enhance their strategic coordination, advance pragmatic cooperation and work together to meet challenges in pursuit of common development."
One of the most significant signals of long term strategic partnership is the Gwader deep sea port built with Chinese technical and financial help. Gwader lies at the mouth of the Persian Gulf – the source of 40 percent of the world's oil. The port will allow China to secure oil and gas supplies from the Persian Gulf and project its power in the Indian Ocean. China has financed 80 percent of the $300 million cost, and is also funding the construction of a rail-road network connecting China with the port through Central Asia and Pakistan, turning Pakistan into an energy and trade corridor for China. The oil and gas supply line through Pakistan is a safer, shorter and cheaper alternative route to the Malacca Straits, which is vulnerable to attacks by pirates and passes through a region dominated by the United States. The importance of Gwader for China can be gauged from the fact that China is the largest consumer of oil after the United States. Its consumption is expected to double by 2025 with 70 percent coming from the Middle East and the Persian Gulf. Gwader offers the closest access point to these regions for China. Gwader will provide an overland energy corridor to the western Chinese region of Xinjiang, shortening the journey by 12000 miles. The route will also bring substantial benefits to Pakistan, making it one of the region's largest energy players. According to one estimate, Pakistan will be earning $60 billion a year in transit fees in 20 years time.
There is vast potential for deepening the Pakistan-China strategic partnership. The current trends in relations show a greater focus on promoting cultural exchanges, people-to-people contacts, and expanding trade and investment ties and economic cooperation. This will, in turn, further strengthen the security and defence links between the two countries, which are a firm guarantee for peace and security in the region.
Dr. Rashid Ahmad Khan is a professor and chairman of the Department of International Relations/Political Science and also dean, Faculty of Arts, Social Sciences and Law, University of Sargodha-Pakistan.