Chinese investment a boon for Pakistan.
Historically close relations between Pakistan and China have been solidified as a result of the continuing progress of the China Pakistan Economic Corridor. Trade between the two countries, already at a high owing to the countries` close relations, will go up significantly, and will add to Pakistan`s GDP, as a sea port at Gwadar is established and the fabled `Karakoram Highway` is resurrected by Chinese investment. The investment will open up both extremes of the country, in the southern province of Balochistan which lacks capital infrastructure to develop its vastness of resources, and the far north, where the geopolitical situation of recent times has prevented much development there. Economists argue over the real value of the investment to Pakistan, as they say the loans owed to China will add too much to Pakistan`s already burgeoning negative balance of payments, but hope in the country is high, especially given China is Pakistan`s major economic partner and ties between the two countries are as strong as ever. Foreign investment is also bound to increase in the region, especially at Gwadar, which the Pakistani government hopes will be able to match Hong Kong and Singapore in size, though that remains to be seen with past investments in the country being wasted and continued political instability and security threats in parts of the country undermining development efforts. For China, and the asian market as a whole, CPEC will open up the region, offer more trade options, and help develop the region more as a whole.
https://www.economist.com/news/asia/21728619-china-pakistan-economic-corridor-project-carries-risks-massive-chinese-investment-boon
It will be interesting to see if the policy of Chinese foreign investment will contiinue to help increase its sphere of influence in the region. The karakorum highway revival and the building of the port of Gwadar will be important as it will allow parts of western china to have a stornger link to shipping in the arabian sea and won't require overland shipping from China's pacific coast thus reudcing its energy dependence on foreign oil.
ReplyDeleteI'm curious to see as to how quickly the new Pakistani trade assets, the Gwadar port and Karakoram Highway, impact the repayment to China. It seems like a stretch to see Gwadar as matching up to bustling economic hubs like Hong Kong and Singapore, but only time will tell I guess. The Pakistani government seems to be heading in the right direction with this initiative.
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DeleteA part of the problem is that Pakistan has never undertaken a project of such scale before, but Chinese investment in Pakistan has generally been sound, and the new highway has already made trade increase significantly in the northern parts of Pakistan, bordering China. It remains to be seen how much, and how fast, the benefits of the project, will be seen, especially given the fact that just to make up the national spend will take a long time.
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Historically in term of political relationship China and Pakistan are very close and this would benefit both countries. Pakistan has China investing in its infrastructure and the Pakistani government must work to ensure security of both nations. China would acquire a new port and would open new shipping routes for the Chinese.
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