As appeared in www.saag.org
The visit of the Chinese President, Mr. Hu Jintao, to Pakistan from November 23 to 26, 2006, had mixed results—-some disappointingly negative for Pakistan and some positive as expected.
2. The most disappointing for Pakistan was the last-minute decision by the Chinese authorities not to initial a memorandum of understanding with Islamabad on Chinese assistance for the construction of two more nuclear power stations in Pakistan, with four more to follow later. This has been discussed in detail in Part II of my note on Mr. Hu’s visit to India, which is available at http://www.saag.org/papers21/paper2042.html.
3. The Chinese decision not to go ahead with the signing was conveyed by Chinese officials to the Pakistan Foreign Office from Hanoi, where Mr. Hu attended a summit of the Asia-Pacific Economic Co-operation (APEC) organisation on November 18 and 19,2006. This decision was communicated after a bilateral meeting between Mr. Hu and President George Bush in the margins of the Hanoi summit.
4. In fact, while he was in Pakistan, Mr. Hu observed a discreet silence on this entire issue, but Pakistani officials and analysts close to the Government tried to give the impression that the fact that no memorandum of understanding was signed did not mean that the Chinese were not going ahead with the project. But, the Chinese Foreign Office spokesperson was very clear on this point during a media briefing on November 20 at Beijing. He said: “As far as I know, there will be no new arrangement in this area.”
5. Interestingly, in reply to a question on this subject, Mr. Sean McCormack, a spokesperson of the US State Department, said in Washington as follows on November 27,2006: “The US welcomes strong ties between China and Pakistan and urges China to play a constructive role in world affairs. We encourage development of bilateral relations between Pakistan and its neighbours. China and Pakistan have a long history of relations. As for any sort of nuclear angle on this, I’m not aware of anything new that was announced or is allowed for by these agreements other than what was already grandfathered in by the Nuclear Suppliers Group. So I don’t think there’s anything new on that front.” What he apparently meant was that in addition to the Chashma I and Chashma II power stations given by China under an old agreement of 1985 for civilian nuclear co-operation between China and Pakistan, there is nothing new for the present till approved by the NSG.
6. As mentioned in my earlier note cited in Para 2, Mr. Bush is reported to have informed Mr. Hu at Hanoi that the supply of any new power stations by China to Pakistan would need the prior approval of the Nuclear Suppliers’ Group (NSG). What is significant is that China paid attention to the US reservations on this subject instead of going ahead with its assistance as it did in the past in matters such as the supply of M-9 and M-11 missiles and nuclear equipment to Pakistan. This new attention to US reservations is what the Americans welcome as China’s constructive role.
7. The second disappointment related to Gwadar in Balochistan. The Pakistani authorities were keen that Mr.Hu should visit Gwadar and formally inaugurate the new commercial port, which has been constructed there with Chinese assistance, but this was reportedly ruled out by the Chinese security officials on security grounds due to the disturbed situation in Balochistan following the murder of Nawab Akbar Bugti, the legendary Baloch leader, by the Pakistan Army in August,2006. Moreover, while the Chinese engineers have completed their part of the construction ahead of schedule and handed over the commercial port to the Pakistani authorities earlier this year, the Pakistani engineers are yet to complete their part of the construction relating to the port channel, roads, houses for the staff etc. They were saying that they hoped to be able to complete it by the end of this year, but latest reports are that they may not be able to complete it till April next year.
8. The Pakistani engineers are facing serious difficulties because the Balochs are not prepared to work for them and many of the Punjabi workers imported from Punjab have run away after the violent attacks on Punjabis in the wake of the murder of Bugti.
9. Gen. Pervez Musharraf has been making grandiose announcements about developing Balochistan into an energy hub of this region by constructing, with Chinese assistance, a petro-chemical complex in Gwadar, an oil/gas pipeline to the Xinjiang region of China and a railway line connecting Gwadar to Xinjiang. The Chinese, who are keen to reduce their dependence on the Malacca Straits for the transport of their energy supplies, continue to be interested in these ideas, but do not want to go ahead with them till the security situation improves in Balochistan. Thus, apart from going ahead with the construction of a naval base in Gwadar for which an agreement has already been signed with Pakistan, they have kept on hold decisions regarding their participation in the other projects proposed by Gen. Musharraf.
10. In the meanwhile, one could sense signs of misgivings in the business community of Pakistan regarding the viability of the commercial port at Gwadar as an outlet for the external trade of Xinjiang, Afghanistan and the Central Asian Republics (CARs). It is being pointed out that unless and until there is a noticeable improvement in political stability, internal security and economic development in Balochistan and the North-West Frontier Province (NWFP) of Pakistan and Afghanistan, the Gwadar commercial port will remain under-utilised, if not unutilised. Even Pakistani businessmen of Punjab say that they would prefer to continue to use the Karachi port. They feel that the money spent on the construction of the Gwadar port could have been better utilised for modernising the Karachi port and making it more efficient.
11. In a despatch from Gwadar dated November 28,2006, the AFP, the French news agency, has described Gwadar as a port with no ships. It is not only a port with no ships, but the town has hotels—one of them a five-star one personally inaugurated by Musharraf– with no clients. The AFP despatch said: “So far all there is to show from all the work, investment, disruption and, for some, forced relocation is the construction of an unused port, overlooked by an empty five-star hotel inaugurated earlier in November by President Pervez Musharraf.”
12. The construction of the port—-which has been projected by Musharraf as the future Dubai— has not created much excitement in international shipping and trading circles. In fact, the Pakistani authorities are yet to find a reputed international company to run the port.
13. Among the positive aspects of the outcome of the visit, one could mention the reiteration by Mr. Hu of the importance attached by China to its relations with Pakistan, his assurance that the developing relations with India would not come in the way of this, the agreements for strengthening bilateral economic relations, including trade and investment flows, the formalised agreement for Chinese assistance in the upgradation of the strategic Karakoram highway and in the re-construction of Muzzaffarabad, the capital of Pakistan-Occupied Kashmir (POK), which was practically destroyed by the earthquake of October,2005. and a joint project for the development and production of aircraft equipped with long-range early warning radars. According to reliable Pakistani sources, another agreement reached, but not announced in public was for Chinese assistance in the setting up of a Pakistani technical intelligence agency similar to the National Security Agency of the US.
14. “We want to work with Pakistan to raise our strategic ties to a new level,” Mr. Hu said while jointly addressing the media along with Gen. Musharraf. The Pakistanis—particularly the armed forces—had reasons to be gratified by this reassurance. Right from the days of Field Marshal Ayub Khan, who laid the foundation for the Sino-Pakistani strategic relationship, Pakistani military officers had always looked upon this relationship as the Great Wall of Pakistan to protect it against India. Pakistan’s relationship with China is not one between equals as is the case between India and China. It had always been a protector–protectee relationship and the Pakistanis continue to have an unidimensional perception of the relationship, as meant to protect them from India.
15. Speaking at a reception hosted by the Government of Punjab in honour of the Chinese Prime Minister, Mr. Wen Jiabo, at Lahore in April,2005. Chaudhury Pervaiz Elahi, the Chief Minister of Punjab, had said: ““The people of this city (Lahore) cannot forget the day when Lahore was attacked forty years ago. It was their friendship with China that stood between Lahore and the enemy as the Great Wall of China.” He was referring to the entry of Indian troops into Pakistani territory in the Lahore area during the Indo-Pakistani war of 1965. Many Pakistanis believe that it was the fear of a possible Chinese intervention which dissuaded India from trying to occuply Lahore in 1965 and from attempting to break up the then West Pakistan after the liberation of Bangladesh in December,1971.
16. Even though Pakistan now claims to have an equality of status with India as a result of its military nuclear capability, it still feels it would continue to need the support of China in order to face India in any military confrontation.
17. The Chinese view of this relationship also used to be unidimensional—with the focus almost on the military-strategic aspect as an alliance to checkmate India, but this unidimensional perception is slowly giving way to a multidimensional one. The military-strategic focus of a protector–protectee relationship remains strong and even dominant, but other dimensions are assuming importance too for the Chinese —- such as Pakistan as a manufacturing base for the new class of Chinese entrepreneurs, seeking to compete with the Japanese and South Korean designers and producers of consumer goods, using Pakistan as a contact point for engagement with the Islamic Ummah in order to make them exercise their restraining influence on the Uighurs and other Muslim youth of China etc. While maintaining the military-strategic dimension of this relationship, China is trying to remove perceptions in India that this dimension is directed against India.
18. Balochistan was the major hub of Chinese presence and activities from 2002 till now. The POK and Punjab are set to become the new hubs in future— with nearly 300 Chinese engineers deployed on the upgradation of the Karakoram Highway from next year and another 100 on the re-construction of Muzzaffarabad. Punjab is set to become the manufacturing hub of the new class of Chinese entrepreneurs seeking to compete with their counterparts in Japan and South Korea. Consumer goods of Chinese design and make have found an attractive market in Pakistan—particularly in Punjab, with its prosperous middle class with growing purchasing power. Special economic zones, exclusively meant for Chinese manufacturers, are being set up in Punjab to cater to the requirements of the Pakistani consumers and for export to Africa through Gwadar.
19. Mr. Hu visited a home appliance factory of Haier established in collaboration with China to manufacture air conditioners, refrigerators and other electronic items, some 40km from Lahore on November 26,2006. He also inaugurated a special economic zone of Haier. He said that the establishment of the Chinese factory would herald an industrial network in the country. He said Chinese investors were investing in Pakistan in a big way for the mutual benefit of both the countries to set up factories in various sectors of the economy which would make Pakistan economically strong. He added that such industrial units would create huge employment opportunities and that Punjab would become a major centre for the manufacture of Chinese home appliances.
20. More than 50 Chinese companies are already present in Pakistan’s oil and gas, telecom, power generation, engineering, automobiles, infrastructure and mining sectors. Under MoUs signed coinciding with Mr. Hu’s visit, 13 more are expected to start operating in Pakistan, including the China International Industry and Commerce Company Limited, Ningxia Building Material Group China, the China National Chemical Engineering Group Corporation, the International Business Incubator of China, the Tianin Renong Pesticides Industries Company Limited, the CETC International Compnay Limited, the Great United Petroleum Holdings Company Limited and the Ginko Petroleum and Chemical Company Limited. These MoUs are expected to bring Chinese investments worth US $ three billion during the next five years—if they do materialise.
21. After Chile, Pakistan has become the second country to sign a free trade agreement with China, but this agreement covers only goods and not services. Amongst other projects for which China has agreed to provide assistance are: the development of information and communications, a joint software industrial park in Pakistan, a feasibility study on laying fibre optic cables between China and Pakistan, the establishment of a University of Science and Technology and a University of Media and Communications in Pakistan and a joint modern electronics complex.
22. The upgradation of the Karakoram Highway is estimated to cost US $ 794 million, of which a sum of US $ 325 million is to be provided by China. (2-12-06)
(The writer, Mr.B.Raman, is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. e-mail: email@example.com )