Yet another China’s big game

April-May 2014 | Global

Sadika Hameed, CSIS fellow, Program on Crisis, Conflict and Cooperation spoke with WEJ on the future of the Pakistan-China relations and its impact on the regional geopolitical and economic stability.

Ms. Hameed, how would assess the current state of Pakistan-China relations?
Relations between China and Pakistan are certainly close and continue to grow especially with regard to military and economic ties. These ties could possibly expand even further if China grows closer to Central Asia and wants overland access to the Arabian Sea. However, this must be viewed in a wider context with a pragmatic China and its ambitions regionally and globally to understand potential implications for the United States. China will continue to view Pakistan as a strategic ally but will carefully balance it with a growing India which is a major trading partner for them. For example, China-India trade is larger than India’s trade with the United States. Similarly, India will balance its relationship with the United States, now a close partner and ally, for economic and security reasons as well. While China and India may both also compete with each other, regional stability is vital for their regional and global ambitions.

Considering the implementation for the US, should it be concerned with the growing China-Pakistan ties?
There are three other aspects to keep in mind: First, if Pakistan destabilizes further, fears of contagion and the actual spread of extremism to support the Uigher separatist movement could actually result in relations with China worsening. Second, the implications of the state of relations with Pakistan, whether good or bad, for the United States will depend on the state of a key relationship – that between the United States itself and China. Third, if China’s role in Pakistan provides at least some stabilization, this will be beneficial for the United States regardless of whether the U.S.-China relationship is good or bad. Given that China wants regional stability, it will not engage in Pakistan in any way to destabilize it further.

What other nations could benefit from the Pakistan-China strengthening ties: Afghanistan, Central Asian Republics (CAR)?
As China seeks to increase ties with Central Asian Republics (which are members of the Shanghai Cooperation Organization), so is Pakistan and in recent years there has been improvement with the CARs. From Pakistan’s side, this is partially driven by fears of expanding Indian influence and largely by potential economic gains in the future for trade and more importantly, possibly for energy. Pakistan does provide a convenient gateway to Central Asia (but there are also others, for example via Iran or Turkey). With the exception of Turkmenistan and Southern Uzbekistan, for the rest of the CARs the shortest routes to sea access is through Pakistan. For Pakistan with its large energy deficit, the energy rich especially CARs provide opportunities for collaboration.

That said, growing China-Pakistan ties, even those that promote stability, will not yield any dividends to Afghanistan, Central Asia and other neighboring countries, as it will take time for Pakistan to stabilize. In the medium to long run, a stable Pakistan with significant Chinese investments could benefit a number of countries. Pakistan is a natural trade and transit trade partner for landlocked Afghanistan. A stable Pakistan that also grows economically will pave the way for greater trade with Afghanistan and Central Asia. At the moment, the ability to capitalize on energy opportunities in the CARs is limited not only due to security constraints but also because the linking infrastructure is missing, which requires large outlays of capital. In a stable Pakistan, China is the natural partner to develop and invest in such infrastructure from which it too will benefit.

One of the most promising and potentially influential projects is the port of Gwadar Pakistan-China collaboration effort. How would you evaluate its importance?
Because of its location, the port of Gwadar could become a regional (and in a stable Pakistan international) hub for transit trade especially to landlocked countries in the CARs and Afghanistan, providing both China and Pakistan increased opportunities for trade in untapped areas. Gwadar is also close to the Persian Gulf through which nearly 40% of world’s oil supply flows. 50 percent of China’s oil demand is met through Middle Eastern imports. Gwadar and the connecting infrastructure that is being planned  will give China direct access to the Indian Ocean, giving it a strategic advantage to project itself strategically into the mineral and oil rich regions of Western Asia and Africa (and beyond). Pakistan has handed over the development of Gwadar to China, with China investing up to 12 billion dollars and in giving China special status with the port as well as control over the security while the port is being built due to security threats from extremists as well as Baloch insurgents in Gwadar. This move has upset U.S. and Indian policy makers as it increases China’s influence over the water ways, especially in lieu of the simmering tensions in the South China seas and the Indian Ocean. India, to a certain extent, also fears Chinese military presence in Gwadar – but at this time it seems unlikely that Gwadar could be used in such a way given the state of its development and the time it will take to develop it. Also, while Chinese and Pakistani officials have expressed the possibility of allowing China a naval base in Gwadar, the special status given to China at the moment is purely economic versus military.

How would than China proceed with the Gwadar project, are the any clear plans of connecting Gwadar to mainland China?
In the long run, Gwadar is intended to be linked by rail and air to China and other areas, along with energy projects tapping resources in the CARs and Afghanistan for Pakistan and China. The development of the deep ocean port will be accompanied by an international airport, as well as the creation of a transport corridor connecting Gwadar to China’s easternmost province of Xinjiang. While this seemed ambitious and completely unviable, some skeptics now believe that this may actually bear some fruits in light of China’s recent announcement to invest 4 billion dollars in Pakistan’s outdated railways. That said, with the current state of affairs and the trajectory Pakistan is on, tapping the full potential of Gwadar will not happen in the short to medium term, despite countries like Iran expressing a willingness not just to collaborate but also help finance oil and gas projects.

It is important to note that China generally is investing in Pakistan for infrastructure and energy projects beyond Gwadar and railways. For example, to reduce the Pakistani energy deficit, China is building two nuclear energy plants near Karachi (costing approximately 9.6 billion). This is not the first nuclear energy plant that Pakistan and China have collaborated on but it is the largest.

Text: Anton Barbashin