1800 Km Long Gwadar-Karachi-Islamabad-China Rail Line Planned

[Riaz Haq]

China has funded a study to build an international rail link from the city of Kashgar in the Xinjiang Uygur autonomous region in Western China to Pakistan's deep-sea Gwadar Port on the Arabian Sea, according to Zhang Chunlin, director of Xinjiang's regional development and reform commission.

"The 1,800-kilometer China-Pakistan railway is planned to also pass through Pakistan's capital of Islamabad and Karachi," Zhang Chunlin said at the two-day International Seminar on the Silk Road Economic Belt in Urumqi, Xinjiang's capital, according to China Daily. "Although the cost of constructing the railway is expected to be high due to the hostile environment and complicated geographic conditions, the study of the project has already started," Zhang said. "China and Pakistan will co-fund the railway construction. Building oil and gas pipelines between Gwadar Port and China is also on the agenda," Zhang added.

Source: China Daily

The Pak-China link announcement was part of the discussion on China's broader effort to revive the historic Silk Route by building three main corridors through southern, central and northern Xinjiang to connect China with Russia, Europe and Pakistan. The Silk Road Economic Belt International seminar which concluded on Friday in Urumqi, Xinjinag was jointly sponsored by the State Council Information Office, China International Publishing Group (CIPG), China Academy of Social Sciences (CASS) and Xinjiang Academy of Social Sciences.

In a report last year, China's State-owned Xinhua News Agency articulated China's motivation to expand land trade in addition to building its navy to protect its sea trade. Here's what it said:

“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."

The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:

1. Frequent US statements to "check" China's rise.  For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."

Source: The Guardian

2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could  block Chinese sea lanes and cripple its economy, business and industry.

Karakoram Highway-World's Highest Paved International Road at 15000 ft.

Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and  to build land routes (motorways, rail links, pipelines)  from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.

Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz

As to the benefits for Pakistanis, expanded trade and the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.

Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the  Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".

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[Riaz Haq]

Pakistan taps Chinese credit for railway upgrade despite debt crisis
Islamabad says $10bn revamp of colonial-era line is essential even as it faces risk of default and forex reserves plunge

https://www.ft.com/content/44c26d5c-97d2-4181-b5a4-9ef66ce776db

Ahsan Iqbal, Pakistan’s planning minister, said the ML1 upgrade was vital to keep trains running and an example of the transformative work that Chinese credit had made possible.

“If we do not undertake this project, in a couple of years Pakistan will lose its railway logistics,” Iqbal told the Financial Times.

“The whole railway system will break down, this main line will break down. It will be very risky to run commercial operations on this track. It is no longer a choice. It is an imperative.”


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Iqbal, who oversees Pakistan’s involvement in the Belt and Road Initiative, China’s international infrastructure scheme, said it would take six to nine years to complete the ML1 upgrade. The work will include replacing track, modernising signalling, converting level crossings into underpasses or flyovers and building fences to stop cattle crossing the line.

The planning minister said the project would proceed in phases “to make it more manageable”, with an initial cost of $3bn. The loan from China would be repayable over 20 to 25 years and would be “concessional”, he said, without providing further details.

Chinese lending to Pakistan goes back years, part of an effort to forge economic and military ties that will help to counter their mutual rival India. The ML1 upgrade is part of the China-Pakistan Economic Corridor, a BRI centrepiece with an estimated total cost of $60bn.

The CPEC also includes Chinese development of a deep-sea port at Gwadar in south-western Pakistan, among other projects. Beijing is separately supplying Pakistan’s military with eight submarines and advanced J-10 C fighter jets.

A western diplomat in Islamabad said that for such projects to have continued even as Beijing saw growing financial distress in BRI recipient countries pointed to the importance it put on ties with Pakistan.

“Even if the rest [of BRI] lags behind, China wants to stay the course with Pakistan,” the diplomat said, adding that the relationship had “important military aspects developed over the long term”.

The projects — and Chinese financing — have also stoked domestic tensions. Police in Gwadar last month imposed emergency measures and dismantled a protest camp that had obstructed operations at the port with demands, among others, for Chinese nationals to leave.


Projects such as ML1 have also fuelled analyst concerns over whether excessive Chinese lending is exacerbating strains on Pakistan’s precarious finances. Chinese state lenders are together among the largest creditors to Islamabad, accounting for about $30bn of its outstanding debt.

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Sakib Sherani of advisory firm Macro Economic Insights said it was unfair to single out China’s role in Pakistan’s debt woes, with the largest repayments in the current financial year actually due to multilateral lenders.

But Chinese loans tend to carry higher interest rates than multilateral or other bilateral creditors, according to the AidData research lab at William & Mary college in the US. Chinese annual interest is typically 3-4 per cent compared with 1-2 per cent from OECD lenders, AidData said.



Even as it taps Beijing for the ML1 project, Pakistan is looking elsewhere for funds to help stabilise its shrinking reserves. The finance ministry is in talks with the IMF to secure the next tranche of a $7bn assistance programme, and has said it will approach “friendly” countries such as Saudi Arabia for more loans.

Sharif’s government is betting it can steady the economy in time for parliamentary elections that must be held before the end of this year.

Iqbal said he was confident the country would pull through. “Pakistan is facing economic [and] fiscal difficulties, but it is not in the range that it is a default economy yet. We are managing very prudently.”

[Riaz Haq]

ML-1, KCR (Karachi Circular Railway) upgrade projects to start in March

https://www.thenews.com.pk/print/1026277-ml-1-kcr-upgrade-projects-...

He (Ambassador Non Rong) recalled that under the CPEC, 192,000 jobs were created, 6000MW of electricity was generated, 510 km of highway was constructed and 886 km of transmission was set up, which laid a solid foundation for Pakistan’s socio-economic development. “In fact, Pakistan’s trade surplus of agricultural products is expected to exceed a record high of $1 billion in 2022,” the ambassador said.

The Chinese sources said the ML-1 is the largest infrastructure project of CPEC worth $6.86 billion. The project involves the up-gradation and dualization of ML-1 to increase the operating speed from the current 60 km/h and 105 km/h to a proposed 160 km/h. The project also involves the establishment of a dry port near Havelian. ML-1, the Karachi to Peshawar line, is one of four main railway lines in Pakistan, operated and maintained by Pakistan Railways. The line begins from Karachi City Station or Kiamari station and ends at Peshawar Cantonment Station. The total length of this railway line is 1,687 kilometers. There are 184 railway stations from Kiamari to Peshawar Cantonment on this line. The line serves as the main passenger and freight line of the country. 75 percent of the country’s cargo and passenger traffic uses the ML-1. The existing timeline for the completion of ML-1 extends to December 2024. Under the umbrella of this project, level crossing will be converted into flyovers or underpasses so that the speed can be increased by getting rid of the obstacles.

The project could not be started during the PTI government due to China’s concerns over debt repayment plan, the sources pointed out. ML-I railway line project is very important to achieve connectivity between Gwadar (Pakistan) and Kashgar (China) through a train track that will provide the easiest and safest way to transport oil between China and the Middle East, saving China travel costs. The railway line upgrade will provide faster travel facilities to the people of Pakistan and commercial benefits like bringing raw materials to the Special Economic Zone (SEZ) and faster delivery of finished goods to remote areas of the country as well Gwadar port. Another great benefit is that coal will be delivered for fuel to the power plants through the railway track, which will also generate good revenue for the railways. Due to unnecessary delays, the cost of this historic project has increased. The Imran’s PTI government failed to convince the IMF and the Chinese government to start the project. Another reason for the increase is the recent floods in Pakistan, which has destroyed the railway lines of most parts of the country. As soon as the new government was formed in April, 2022, Pakistan’s Minister for Planning Ahsan Iqbal restarted the discussion with the Chinese authorities on revival of the project.

The revived KCR operation is intended to become an inter-regional public transit system in Karachi, with an aim to connect the city centre with several industrial and commercial districts within the city and the outlying localities. In May 2017, the then government approved Rs27.9 billion ($120 million) restoration package for the KCR. However, delays and disputes with the Sindh provincial government ultimately led to cancellation of the funding. KCR would be constructed with the cost of Rs294 billion and used by 500,000 passengers/day, which would increase to 1 million in later years. KCR will have 250 modern driverless electric bullet trains, which would run 17-hours a day throughout a week. The KCR project would be run by the Sindh government through Karachi Urban Transport Corporation (KUTC) and likely to be completed by 2025.