Strategic Pak-China Economic Corridor, Connectivity and Maritime Cooperation

[Riaz Haq]

China's new Prime Minister Mr. Li KeQiang has just ended a two-day visit to Pakistan. Speaking to the Senate, Li declared that "the development of China cannot be separated from the friendship with Pakistan". To make it more concrete, the Chinese Premier brought with him a 5-points proposal which emphasizes "strategic and long-term planning", "connectivity and maritime sectors" and "China-Pakistan economic corridor project".

Source: China Daily

From L to R: Premier Lee, President Zardari and Prime Minister Khoso

Here's a recent report by  China's State-owned Xinhua News Agency that can help put the Chinese premier's speech in context:

“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, 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]

If enacted, that (Pak-China Corridor) plan would enable China’s naval vessels and merchants to bypass the Malacca Strait, long a haven for pirates and militants who prey on unsuspecting ships. The CPEC would allow the government and banks in the mainland to lend to Chinese companies operating in Pakistan, facilitating construction along the route. Some of the other line items in the deal aim to fix Pakistan’s failing energy infrastructure: the CPEC calls for $15.5 billion in investments ranging from coal to solar and hydroelectric power, scheduled to become part of Pakistan’s national electricity mix in 2017. That will follow a fiber optic cable linking Xinjiang and Rawalpindi, which will come at the cost of $44 million.

China has plenty of incentive to unleash a spigot of investment, despite fears that Pakistani radicals are stoking violence in Xinjiang among the 10 million Uyghur Muslims that live there. Beijing has already pushed heavily for other projects in the region, including the 1,240 km Karachi-Lahore motorway, a six-lane, high speed corridor expected to be completed in the fall of 2017, and orchestrating upgrades to public transportation, including metro and bus service, in six cities, including Lahore, Karachi, and Rawalpindi. Modernizing the Karakoram highway, which runs 1,300 km from Kashgar, the ancient silk road crossing in Xinjiang, all the way into the heart of the Punjab, Pakistan’s biggest province, will also prove critical.

All of that leads to Gwadar, which China hopes to transform into a free-trade zone on the order of a Singapore or a Hong Kong, another major focus for Chinese investors. That carries geopolitical weight. China’s aid to Pakistan now exceeds American spending, which has totaled $31 billion since 2002. Washington’s investments have slowed since counterterrorism funding authorized by Congress during the Afghan surge has dried up.

It’s not as though China isn’t interested in military issues. President Xi also used the occasion to finalize a deal to send eight submarines to Pakistan, in a long-promised deal. They’re also working to get on shared ideological ground: the Research and Development International think tank (RANDI), will be chaired by Pakistani and Chinese leaders. That unfortunate acronym became the butt of plenty of Twitter jokes on Monday. But the group could wield serious influence, especially in thinking up plans to help Pakistan fight terror and potentially determining the role of mediators in talks with the Taliban in neighboring Afghanistan.

China’s grand plan for Pakistan’s infrastructure has taken shape over the course of President Xi’s visit. It will have a major impact on what the future holds for Islamabad, and the entire Indian Ocean basin.

http://thediplomat.com/2015/04/chinas-grand-plan-for-pakistans-infr...

[Riaz Haq]

Chinese navy to focus on 'open seas', paper says

• 26 May 2015
•  
• From the sectionChina

China has focused on building up its navy, investing heavily in submarines and other warships

China is to focus on projecting its military presence beyond its borders at sea, according to a strategy document.

The navy will shift its focus to "open seas protection", rather than "offshore waters defence" alone.

It will also speed up developing its cyber force to tackle "grave security threats", the State Council said.

China has been accused of aggressively pursuing territorial claims in the South China Sea which has sparked concern in Washington.

The strategy document highlighted four areas of critical importance - the ocean, outer space, nuclear force and cyber space. Its recent naval policy has prompted the most controversy.

Satellite imagery showed China building an airstrip in the Spratlys

In recent years, China has focused on building up its navy. It has launched an aircraft carrier and invested heavily in submarines and other warships.

It has also exercised its claims over islands in the South China Sea which the Philippines, Vietnam, Malaysia and Brunei variously dispute.

In one disputed area, the Spratly Islands, US officials say China has created about 800 hectares (2,000 acres) of dry land since 2014 that could be used as airstrips.

The strategy document warns of threats to China's maritime rights and interests.

It says China "will not attack unless [it is] attacked, but will counterattack" and mentions the "provocative actions of certain offshore neighbours" and "outside parties involving themselves in South China Sea affairs".

On the same day that the strategy document was released, state news agency Xinhua reported two 50-metre high lighthouses were to be built on a reefs in the Spratly Islands, which are claimed by Vietnam and the Philippines.

At a news conference to release the document, defence ministry spokesman Yang Yujun said: "Looking from the angle of sovereignty, China's development of construction on its islands is no different at all from all the other types of construction going on around the country."

He said island building was "beneficial to the whole of international society" because it aided China's search and rescue, and environmental protection work.

China criticised Washington after a US spy plane flew over areas near the Spratly Islands last week, with both sides accusing each other of stoking instability.

The strategy document also says China's air force will shift its focus from territorial air defence to both offence and defence, and building airspace defences with stronger military capabilities.

http://www.bbc.com/news/world-asia-china-32880477

[Riaz Haq]

Nuclear-armed rivals Pakistan and India will start the process of joining a security bloc led by China and Russia at a summit in Russia later this week, a senior Chinese diplomat said on Monday, the first time the grouping has expanded since it was set up in 2001.

The Shanghai Cooperation Organisation (SCO) groups China, Russia and the former Soviet republics of Tajikistan, Uzbekistan, Kazakhstan and Kyrgyzstan, while India, Pakistan, Iran, Afghanistan and Mongolia are observers.

"As the influence of the SCO's development has expanded, more and more countries in the region have brought up joining the SCO," Chinese Vice Foreign Minister Cheng Guoping told a news briefing."...India and Pakistan's admission to the SCO will play an important role in the SCO's development it will play a constructive role in pushing for the improvement of their bilateral relations."

India and Pakistan have fought three wars since 1947, two of them over the divided Muslim-majority region of Kashmir which they both claim in full but rule in part. Pakistan also believes India is supporting separatists in resource-rich Baluchistan province, as well as militants fighting the state.

The SCO was originally formed to fight threats posed by radical Islam and drug trafficking from neighboring Afghanistan.

Cheng said that the summit, to be attended by Chinese President Xi Jinping, would also discuss security in Afghanistan.

Beijing says separatist groups in the far western region of Xinjiang, home to the Muslim Uighur minority, are seeking to form their own state called East Turkestan and have links with militants in Central Asia as well as Pakistan and Afghanistan.

China says that Uighur militants, operating at the East Turkestan Islamic Movement (ETIM), has also been working with Islamic State.

"It can be said that ETIM certainly has links with the Islamic State, and has participated in relevant terrorist activities. China is paying close attention to this, and will have security cooperation with relevant countries," Cheng said.

http://www.reuters.com/article/2015/07/06/us-china-russia-pakistan-...

[Riaz Haq]

#Russia, #Australia, #NewZealand oppose #India's bid for sanctions against #Pakistan The Economic Times http://ecoti.ms/40o0yZ

There is unease in Delhi over recent stand that old ally Russia took at a recent anti-terror financing meet organised at Brisbane by opposing move by India to demand censure against Pakistan for its inaction against JuD & LeT.

While New Zealand and Australia also opposed the move, India is surprised with Russia's position which in the past has been very supportive of India's stand on Kashmir to the extent of vetoing resolutions in UN Security Council.

Official sources in ..

Read more at:
http://economictimes.indiatimes.com/articleshow/47952231.cms?utm_so...

[Riaz Haq]

#China's #Yuan joins #US $, #Euro #UK Pound, #Japan's Yen as #IMF Approves its Reserve-Currency status http://bloom.bg/1LIVdXQ via @business

The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan.

The International Monetary Fund’s executive board, which represents the fund’s 188 member nations, decided the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in its Special Drawing Rights basket, the organization said Monday in a statement. Approval was expected after IMF Managing Director Christine Lagarde announced Nov. 13 that her staff recommended inclusion, a position she supported.
It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010, saying it didn’t meet the necessary criteria.
“The renminbi’s inclusion in the SDR is a clear indication of the reforms that
have been implemented and will continue to be implemented and is a clear,
stronger representation of the global economy,” Lagarde said Monday during a press briefing at the IMF’s headquarters in Washington. Renminbi is the currency’s official name and means “the people’s currency” in Mandarin; yuan is the unit.
The Chinese Yuan’s Journey to Global Reserve Status: A Timeline
The addition will take effect Oct. 1, 2016, with the yuan having a 10.92 percent weighting in the basket, the IMF said. Weightings will be 41.73 percent for the dollar, 30.93 percent for the euro, 8.33 percent for the yen and 8.09 percent for the British pound. The dollar currently accounts for 41.9 percent of the basket, while the euro accounts for 37.4 percent, the pound 11.3 percent and the yen 9.4 percent.
The yuan weakened in offshore trading Tuesday amid speculation China’s central bank will rein in intervention now that the IMF vote on reserve-currency status is out of the way. The long-term goal is for very few interventions, People’s Bank of China Deputy Governor Yi Gang said at a briefing, adding that bigger two-way fluctuations are normal.

In a preliminary report in July, IMF staff estimated the yuan would have a weight of about 14 percent to 16 percent. The weighting will affect the interest countries pay when they borrow from the IMF. It may also affect the scale of inflows the Chinese currency receives in the coming months.
Monetary System
The decision establishes the yuan as a fixture in the very international monetary system Chinese leaders criticized following the global financial crisis. In a landmark 2009 speech, PBOC Governor Zhou Xiaochuan argued a global system so reliant on a single currency -- the U.S. dollar -- was inherently prone to shocks. That conviction set off a global push by China’s leaders, including now-President Xi Jinping, to have the yuan included in the SDR, which countries can use to supplement their currency reserves.

[Riaz Haq]

#Pakistan is "the only all-weather strategic partner" of #China - Global Times. #CPEC 

http://www.globaltimes.cn/content/960904.shtml#.VoKzAasXjJs.twitter …


In April when President Xi Jinping visited Pakistan, China and Pakistan elevated the bilateral relations to "all-weather strategic cooperation partners." China has established partnerships with a lot of countries in the world, but Pakistan is the only one that is called an "all-weather strategic cooperation partner." 

For countries with different social systems and ideologies that want to collaborate with each other, the China-Pakistan relationship has become a model to follow. This type of relationship is not based on common values and systems, but on same or similar strategic and security interests. Today common security concerns still exist, and some new concerns like global terrorism and maritime security have arisen for both sides in recent years. 

Since the beginning of the 21st century, the basis of China-Pakistan cooperation has expanded. The "One Belt, One Road" initiative and China-Pakistan Economic Corridor has enlarged bilateral strategic and cooperative partnership to a more comprehensive framework. 

Before, the basis of the all-weather partnership mainly included political, strategic and security cooperation, now the closer economic ties have become a part of this basis, which makes two countries form a "community of shared destiny." The two sides not only have common economic interest and common security concerns, but also share the dream of national peace, stability, and prosperity. "Shared destiny" is the solid foundation for our cooperation in international affairs. 

China-Pakistan international cooperation has some key features as follows: First, China and Pakistan respect principles, value friendship, and "share weal and woe." When dealing with international affairs, both sides take the Five Principles of Peaceful Coexistence as the basic principle; when facing international affairs, both sides advocate justice and fairness, protect the common interests of developing countries, and have the courage to speak up. 

In addition, China-Pakistan cooperation is always based on close communication and coordination, deep understanding of the other side's situation and interest, and full consideration of the other side's feeling. Pakistan always gives China full support on the Taiwan, Tibet, Xinjiang, and South China Sea issues. China is also a strong supporter of the independence, sovereignty, territorial integrity, and national dignity of Pakistan. 

In 1972, the People's Republic of China used its veto power for the first time to support Pakistan at the UN Security Council by refusing to admit Bangladesh, the former East Pakistan, to the UN. After 1989, every time when China was blamed by the US and other Western countries at the UN Commission on Human Rights, Pakistan was always the first one to stand up and speak for China. 

China and Pakistan conform to trends of the times, expand scope of cooperation, and jointly resolve challenges. After the Cold War, especially in the 21st century, the world has seen a trend toward peace, development, and cooperation. 

Apart from traditional security issues, more and more non-traditional challenges arise. As a result, China-Pakistan cooperation has expanded from political and security fields to economy and trade, climate change, food and energy security. China takes the interests of Pakistan and other developing countries into careful consideration when it negotiates with Western countries. 

[Riaz Haq]

#Chinese prefer #Pakistan, want to move away #India as neighbour: #China Global Times Survey #CPEC http://toi.in/b67Q1Z 

Majority of Chinese would like to move India away along with Japan and a host of other neighbouring countries with whom Beijing has territorial disputes and would prefer Pakistan and Nepal as neighbours, if given a chance to 'play God' to redraw China's map.
A total of 13,196 people wanted to "move away" Japan, the highest number of votes polled in a survey seeking their views to select neighbours, if they can 'play God' and rearrange the countries at China's borders.
More than 200,000 internet users took part in the survey conducted by the Chinese edition of the state-run tabloid Global Times known for its nationalistic postures.
Other countries that were "moved away" include the Philippines (11,671), Vietnam (11,620), North Korea (11,024), India (10,416), Afghanistan (8,506), and Indonesia (8,167), the results published in the daily on Friday said.

While historical disputes including the second world war atrocities by Japanese forces may have weighed in Chinese people's minds to move Japan away, the border dispute and "protection" to Dalai Lama and his associates whom China regards as separatists led to adverse view of India, Chinese analysts said.
"China and India have disputes over 120,000 square kms of land and the two have not signed treaty to settle the border disputes," Sun Lizhou, deputy director of the Academy of the World and China Agendas, Southwest University of Political Science and Law, told the Global Times.
India-China have a disputed border stretching up to 3448km. China claims Arunachal Pradesh as part of southern Tibet. The recent initiatives by India and China to improve relations had little effect on Chinese perceptions.
Unsurprisingly majority wants Pakistan often referred as all-weather ally by Chinese leaders and media to remain as a neighbour.
"Net users used their votes to show the bond shared by China and Pakistan, with 11,831 people wanting the country to 'stay as a neighbour'," the report said.
Considering the fast developing ties with Nepal, the Chinese wants it too to remain as a neighbour.
The news paper gave 36 countries to choose from as options for "new neighbours".
Sweden earned 9,776 votes, accounting for 5.8 per cent.

[Riaz Haq]

#China-#Pakistan railroad will help curb extremism: Ex-Pakistan PM Shaukat Aziz. #CPEC

http://www.cnbc.com/2016/05/18/china-pakistan-railroad-will-help-cu...

The China Pakistan Economic Corridor (CPEC), a railroad which will traverse western China through Pakistan, will help job creation as well as help to curb terrorism as people grow more prosperous, Pakistan's former prime minister told CNBC on Wednesday.

The $46B deal agreed upon between China and Pakistan will allow China to avoid its current maritime sea routes to bring products into the Middle East and Europe.

It will develop connectivity and create economic activity in Pakistan, former Pakistani Prime Minister Shaukat Aziz said.

"When you build a road or a highway through an area where there is none, you create economic activity, you create jobs, secondly new cities come up along that route , thirdly you have industrial estates coming so a lot of job creation takes place," said Aziz.

Despite a warning from the Pentagon that China is looking to set up a naval base in the country, the Pakistani army chief visited Beijing earlier this week to further discuss the project and the Pakistani army's involvement. 

The Pakistani army will provide 15,000 special security forces to protect the investment in Pakistan, which has suffered greatly over the years due to security and terrorism issue.

"Whenever you have empty bellies, people get more vulnerable and subject to extreme behavior. If you create economic activity and give them a reason to live, if you give them a better tomorrow than yesterday, people tend to be more peaceful," said Aziz. 

"We have seen over the years that in areas that have grown fast and where economic growth is strong, extremism and terrorism reduces," Aziz told CNBC. 

"This is a serious initiative and we will do all what it takes to provide security and leverage this linkage between the warm waters of the Arabian sea all the way up to China." 

[Riaz Haq]

Pro-#India legislators seeking aid cut to #Pakistan defeated in #US House - The Economic Times

http://economictimes.indiatimes.com/news/international/world-news/l...

Congressman Rodney Frelinghuysen of Coalition Support Fund said it remained a critical tool to enable Pakistan to effectively deal with future challenges emerging from the US drawdown. 

"It also remains a cost-effective tool for the US to remain engaged in the region and with Pakistan. We shouldn't be abandoning Pakistan, because we might actually have something even worse than what the gentleman describes if we turn our back on Pakistan," he said. 

Read more at:
http://economictimes.indiatimes.com/articleshow/52807141.cms?utm_so...

[Riaz Haq]

#China makes worldwide ports' investments as great maritime power. #CPEC #Gwadar #Pakistan https://ig.ft.com/sites/china-ports … … via @F

Pakistan’s Arabian Sea port of Gwadar is perched on the world’s energy jugular. Sea lanes nearby carry most of China’s oil imports; any disruption could choke the world’s second-largest economy.

Owned, financed and built by China, Gwadar occupies a strategic location. Yet Islamabad and Beijing for years denied any military plans for the harbour, insisting it was a purely commercial project to boost trade. Now the mask is slipping.

“As Gwadar becomes more active as a port, Chinese traffic both commercial and naval will grow to this region,” says a senior foreign ministry official in Islamabad. “There are no plans for a permanent Chinese naval base. But the relationship is stretching out to the sea.”

Gwadar is part of a much bigger ambition, driven by President Xi Jinping, for China to become a maritime superpower. An FT investigation reveals how far Beijing has already come in achieving that objective over the past six years.

Investments into a vast network of harbours across the globe have made Chinese port operators the world leaders. Its shipping companies carry more cargo than those of any other nation — five of the top 10 container ports in the world are in mainland China with another in Hong Kong. Its coastguard has the globe’s largest maritime law enforcement fleet, its navy is the world’s fastest growing among major powers and its fishing armada numbers some 200,000 seagoing vessels.

The emergence of China as a maritime superpower is set to challenge a US command of the seas that has underwritten a crucial element of Pax Americana, the relative period of peace enjoyed in the west since the second world war. As US President-elect Donald Trump prepares to take power, strategic tensions between China and the US are already evident in the South China Sea, where Beijing has pledged to enforce its claim to disputed islands and atolls. Rex Tillerson, the Trump nominee for US secretary of state, said on Wednesday that Washington should block Beijing’s access to the islands. Relations were also dented over Mr Trump’s warm overtures toward Taiwan, which China regards as a breakaway province.

China understands maritime influence in the same way as Alfred Thayer Mahan, the 19th century American strategist. “Control of the sea,” Mr Mahan wrote, “by maritime commerce and naval supremacy, means predominant influence in the world; because, however great the wealth of the land, nothing facilitates the necessary exchanges as does the sea.”

Drummed into military service

The Gwadar template, where Beijing used its commercial know-how and financial muscle to secure ownership over a strategic trading base, only to enlist it later into military service, has been replicated in other key locations.

In Sri Lanka, Greece and Djibouti in the Horn of Africa, Chinese investment in civilian ports has been followed by deployments or visits of People’s Liberation Army Navy vessels and in some cases announcements of longer term military contingencies.

“There is an inherent duality in the facilities that China is establishing in foreign ports, which are ostensibly commercial but quickly upgradeable to carry out essential military missions,” says Abhijit Singh, senior fellow at the Observer Research Foundation in New Delhi. “They are great for the soft projection of hard power.”

Data compiled or commissioned by the Financial Times from third-party sources show the extent of China’s dominance in most maritime domains.