Strategic China-Pakistan Economic Corridor

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 said…
Here's Xinhua report on Pak-China joint statement:

The statement said both sides are satisfied with their relationship, which contributed to peace and stability in the region and acquired growing strategic significance under the current complex and volatile regional and international situation.

To cement their partnership, the two countries decided to deepen practical cooperation in all sectors and strengthen coordination and cooperation on international and regional issues.

China reaffirmed that its relationship with Pakistan is always a priority in its foreign policy and appreciates Pakistan's long-term staunch support on issues concerning China's core interests.

Pakistan said it will continue to pursue this time-tested and all-weather friendship with China.

The two sides regard the terrorist East Turkestan Islamic Movement (ETIM) group as a common threat, and stand united in upholding China's sovereignty and territorial integrity, the statement said.

On economic front, the two nations agreed to link China's strategy to develop its western region with Pakistan's domestic economic development, with a view to translate their political partnership into results of pragmatic economic cooperation.

The two sides have also agreed to carry forward free trade negotiations, deepen energy cooperation, and continue the implementation of currency-swap agreement, among others.

To tap the potential of trade, logistics and flow of personnel between the two sides, China and Pakistan have agreed to enhance interconnectivity and jointly develop a long-term plan for China-Pakistan economic corridor.

To strengthen maritime cooperation, China and Pakistan agreed to build and develop a joint marine research center to tackle the growing non-traditional threats to maritime security and safeguard international sea routes.

On aviation and aerospace, the two sides welcomed the signing of an agreement on cooperation on the Beidou Satellite Navigation System in Pakistan and vowed to make continuous progress in the remote-sensing satellite system project.

To build strong public support for China-Pakistan ties, the two sides agreed on a series of measures to step up people-to-people exchanges, including expanding Chinese language training in Pakistan, opening more Confucius Institutes in the country, and designating 2015 as China-Pakistan Year of Friendly Exchanges.

On defense and security ties, the two sides agreed to further cooperate on defense technology and production, and continue cooperation to jointly combat the "three evil forces" of extremism, terrorism and separatism. China also expressed its appreciation and continued willingness to help Pakistan build up counter-terrorism capacity.

On international and regional affairs, China and Pakistan agreed that all countries in the Asia-Pacific region should make united efforts to tackle global and regional issues, maintain peace and stability, resolve disputes peacefully and promote regional development.

The two sides called for the establishment of an open, transparent, equal and inclusive security and cooperation framework in the Asia-Pacific region, based on the fundamental principles of international law.

The two nations also said they are committed to strengthening the solidarity and cooperation between developing countries and safeguarding their common interests.

As both sides are concerned about the situation in Afghanistan, they agreed that political reconciliation is a key step toward peace and stability in that country, and affirmed their support for the "Afghan-owned, Afghan-led" peace and reconciliation process.
Riaz Haq said…
Here's a BBC report on Chinese state media coverage of Premier Li's Pakistan visit:

State media promote Chinese premier Li Keqiang visit to "iron brother" and "all-weather friend" Pakistan, while speculation continues on a North Korean special envoy's visit to Beijing amid a recent rift.

People's Daily Online and other party-state media continue to highlight an unchanged "all-weather friendship and strategic partnership" with Pakistan.

Mr Li, who is now in Switzerland, spent three days in New Delhi and Mumbai as the first stop of his visit, followed by two days in Islamabad.

China Daily, a state newspaper aimed at a foreign readership, features commentaries on Pakistan's warm welcome to Mr Li surpassing scorching 40-degree temperatures in Islamabad, and how the "unbreakable friendship" between the two countries is "not just effusive words".

China Central Television and Southern Metropolis Daily lead with how Pakistani lawmakers rapped their tables 14 times in "strong endorsement" of Mr Li's speech, "let all-weather friendship bear new fruit", at the parliament yesterday.

"If you love China, love Pakistan too," Mr Li declared to the lawmakers.

Experts stress to China Daily how Beijing's increased investment in energy and infrastructure, construction of an "economic corridor" and lower agreed tariffs on Chinese imports will help resolve a massive trade imbalance with Pakistan.

JF-17 Thunder fighter jets jointly developed by Pakistan and China are attracting interest from many countries in the Middle East, Africa and South America, a Pakistan air force officer also tells China Daily.

Six of the fighter jets escorted Mr Li's plane as it entered Pakistani airspace on Tuesday.

Xinhua news agency emphasises Pakistan's pledge in a joint statement of continued co-operation with China against "terrorism, separatism and extremism" and the "East Turkestan Islamic Movement", a group outlawed as a terrorist organisation by Beijing.

In other security-related news, China Daily says the government is soliciting public views on a draft law banning fundraising for "terrorists"....
Riaz Haq said…
Here's a piece by a CFR Fellow Pir Zubair Shah on the significance of Chinese Premier's visit to Pakistan:

The first foreign leader to visit Pakistan following its recent elections was the prime minister of China, signifying the close relations between the two countries. During the visit, Pakistani president Asif Ali Zardari said, "Our top priority is to further strengthen economic linkages."

Historically, the relations between Pakistan and China have been confined to security and defense ties, but commercial relations have been increasing in the past two decades. Bilateral trade between the two countries has reached $12 billion, and both sides are committed to reaching $15 billion over the next two to three years.

An important milestone in this direction was achieved earlier this year when the Pakistanis handed over management of the Gwadar deep sea port to China. The port has important geostrategic and political implications for U.S. policy and interests in the region: it will connect China to the Arabian Sea and to the Strait of Hormuz, an important gateway for a third of the world's traded oil. If used as a Chinese naval base, the port will have new implications, not only for the United States but also for its primary ally in the region, India. China is also heavily investing in Pakistan's nuclear energy projects. Due to Pakistan's history of proliferation, the United States has serious concerns over this cooperation.

The United States can use the growing commercial relations and the increasing economic dependence between the two countries to address some of the concerns and goals that it shares with China in the region. For example, China can be helpful for the United States in Afghanistan, by asking Pakistan to bring the Taliban leadership operating out of the country to the negotiation table. Similarly, China and the United States can work on the issue of terrorism emanating from Pakistan, which is a threat to the security of both countries.
Riaz Haq said…
It was Kissinger who said "Nations Don't Have Friends, They Have Interests".

Both US and China have interests in South and West Asia.

China wants to build a Pak-China economic corridor through Pakistan from Gwadar to Xinjiang to assure its energy supplies in the events of hostilities with the US and resulting naval blockade in South China Sea.

As part of President Obama's "pivot to Asia" to check China's rise, the Americans have a strong competing interest in creating a new silk route in Asia that bypasses China. Americans envision such land route extending from resource rich Stans in Central Asia to resource hungry South Asia and Southeast Asia region via Afghanistan, Pakistan and India. The expected energy flow for energy-hungry Pakistan and the potential annual transit fees worth billions of dollars from this trade route are part of the US sponsored incentives for Pakistan to help stabilize the situation in Afghanistan. The first example of this effort is the American push for TAPI--Turkmenistan-Afghanistan-Pakistan-India gas pipeline.

Alliances are based on interests and change with changing interests.

With the changing geo-politics, it seems to me that China's interests are likely to be more aligned with Pakistan's than the US interests.

Pakistanis need to be prepared to respond to the unfolding dynamics of geopolitics in the region and do what best serves their national interest.
Riaz Haq said…
China emerged as the largest donor to Pakistan by disbursing $493.77 million in the first 10 months of FY 2012-13. Here's a BR report on foreign assistance received by Pakistan:

Pakistan has received foreign assistance of over $294 million in the month of April of the current fiscal year including $163.7 million from bilateral donors and $131.2 million from multilateral donors. According to the documents available with Business Recorder, the country received foreign assistance of $2.23 billion in the first 10 months (July-April) of the current fiscal year.

During this period, China remained the largest donor to Pakistan by disbursing $493.77 million. The country had estimated foreign assistance for the current fiscal years at $3.73 billion including $3.27 billion loan and $463.97 million grant from multilateral and bilateral donors.

China has emerged as the largest loan donor with disbursement of $77.44 million, UK second with $58.21 million and Asian Development Bank (ADB) with $44.26 million in the month of April. However, International Development Association (IDA) emerged as the second largest loan provider: it released $322.56 million, while the ADB was third with $321.34 million from July to April. Of the total $3.27 billion loan component estimated for the current fiscal year, Pakistan received $1.89 billion, while of the $463.9 million grant component; it received $340.14 million during the first 10 months of the current fiscal year.

Japan released $215.42 million, IDB [S-Term] $256 million while USA disbursed $78.4 million from July 2012 to April 30, 2013. In the month of April, Japan released $1.55 million, Saudi Arabia $14.16 million and USA $8.02 million. For the current year, it was estimated that Pakistan would receive $82.7 million from UK under the head of grant, however it exceeded the estimated target as $189.19 million was received so far under the head during the first 10 months of the current fiscal year with only $58.21 million in the month of April.

The country has not received any amount from Turkey, Australia and UNDP under the head of grant or loan till April 30, 2013. The government has estimated a total of $2.16 billion under project aid including loans of $1.8 billion and grants of $339.3 million; however it received $1.78 billion during first 10 months of the current year including 258.6 million in April. Further it was expecting $1.6 billion for non-project aid including $1.4 billion loans and $124.6 million grants; however by the end of April the government received $454.42 million including $36.29 million in April.
Riaz Haq said…
EXIM Bank China to provide $ 448 mln for 969 MW Neelum Jhelum project, reports APP:

ISLAMABAD, May 29 (APP): The EXIM Bank of China has signed an agreement with the Government of Pakistan to provide US $ 448 million for 969 MW-Neelum Jhelum Hydropower Project.An official sources told APP that the agreement was a significant development in the efforts to secure requisite financial resources for the remaining works of under-construction Neelum Jhelum Hydropower Project.Neelum Jhelum Hydropower Project is being constructed on River Neelum in Azad Jammu and Kashmir. They said that in addition to generating much-needed low-cost hydel electricity to help mitigate power shortages in the country, the project is also equally important for Pakistan to establish priority water rights. In view of its significance, WAPDA is making all possible efforts to complete Neelum Jhelum Hydropower Project by 2016 according to its construction schedule, they said.
The sources said construction work on all sites of the project was progressing satisfactorily. Out of total 67-kilometre (km) tunnels, 34.24 km long tunnels (51 percent) had so far been excavated, while excavation of under-ground power house stood at 75.24 percent and transformers hall at 96.33 percent.
They said 95 percent work on de-sander of the project had also completed while Nauseri Bridge over River Neelum was also constructed. Second stage diversion of the River Neelum had also been completed.
It is pertinent to mention that Neelum Jhelum Hydropower Project, on completion, will contribute 5.15 billion units of cheap electricity every year to the National Grid. Annual benefits of the project have been estimated at about Rs. 45 billion.
Riaz Haq said…
Here's a News report on Pak-China accords signed during Nawaz Sharif's visit:

The China Overseas Port Holding Company has offered to build an international-level airport as well as access roads in Gwadar, the site of the deep sea port on the Arabian Sea coastline in Balochistan, Prime Minister Nawaz Sharif told The News after a meeting with the head of the Chinese firm.

Sources in the prime minister’s entourage said the Chinese premier during talks with the Pakistani prime minister agreed to waive off insurance premium worth millions of dollars on sovereign guarantees related to bilateral contracts.

Prime Minister Nawaz Sharif said in an interview with the state-run television that an understanding has been reached with the Chinese for a planned Lahore-Karachi motorway project, terming the development a major achievement.

A feasibility study on the cross-country motorway project will be completed soon and followed up with concrete steps to start the work on its construction, the prime minister told the state-run television.

One of the accords inked in the presence of the two prime ministers envisages the establishment of an Economic Corridor between Gwadar and the historic Silk Road city in western region Xinjiang region of China, connected to Gilgit-Baltistan through the 15,397 feet altitude Khunjerab Pass.

The ambitious Pakistan-China Economic Corridor plan involves an estimated cost of 18 billion dollars, requiring construction of a string of tunnels in the mountainous terrain.Minister for Planning and Development Ahsan Iqbal and Chairman National Development and Reforms Commission of China Xu Shao signed the corridor accord, which the Chinese premier said was a project of strategic value. The two sides also concluded an agreement on the Economic and Technical Cooperation, Adviser to Prime Minister on Foreign Affairs Tariq Fatemi signing it with a senior Chinese official.

Besides cooperation in delegation by Pakistan’s prime minister.As both leaders reached the welcome dais, a contingent of People’s Liberation Army played national anthems of both the countries.

Following the welcome ceremony, both the dignitaries held bilateral talks.Briefing the media, Premier Li said he clearly remembered his visit to Pakistan in May the Prime Minister-in-waiting Nawaz Sharif participated in his meetings with the then leaders of Pakistan.

Premier Li greatly appreciated Nawaz Sharif’s warmth and deep affection for the people of China.

Nawaz Sharif thanked Premier Li for his remarks and said what he has been observing here during his visit to China, substantiates the fact that “our friendship is higher than the Himalayas and deeper than the oceans and sweeter than honey.”

Nawaz Sharif thanked the Chinese Premier for the hospitality extended to him and his entourage.

He recalled his meeting with Chinese President Xi Jinping held on Thursday and said, “He was very kind to invite us. We exchanged similar views last night as well.”

Nawaz Sharif also thanked Premier Li for inviting him to visit China and added that he felt proud to visit China as my maiden foreign visit after assuming office.

Meanwhile, talking to state-run television, Prime Minister Nawaz Sharif ordered completion of Lahore-Karachi Motorway within two and half years after finalising the feasibility study of the project in three months.

After an MoU signing ceremony between Pakistan and China for cooperation to construct Lahore-Karachi Motorway, the prime minister said the government was committed to provide comfortable and affordable transport facilities to its citizens within minimum possible time....
Riaz Haq said…
Here's a Bloomberg story on Pak-China deals signed recently:

China and Pakistan signed a deal to build a $44 million fiber-optic cable connecting their border region with the Pakistani military garrison city of Rawalpindi, and agreed to explore a strategic transport corridor.
The pacts were the highlights of talks between Pakistani and Chinese officials in Beijing as visiting Prime Minister Nawaz Sharif seeks to secure the investment his new government needs to repair a shattered economy. In a shot in the arm for Sharif, Pakistan and the International Monetary Fund yesterday agreed a $5.3 billion loan to boost the country’s depleted currency reserves.
By choosing Beijing for his first overseas trip since winning May 11 elections, Sharif signaled that securing Chinese funding ranks among his foreign policy priorities. Pakistan’s growing emphasis on ties with China follows years of strained relations with the U.S. amid the war in Afghanistan and American targeting of Pakistani guerrillas.
Meeting Premier Li Keqiang at the Great Hall of the People in the Chinese capital today, Sharif lauded bilateral ties, telling his host that the two countries’ friendship is “higher than the Himalayas and deeper than the deepest sea in the world, and sweeter than honey.”
Huawei Technologies Co., China’s largest maker of networking equipment, will build the fiber-optic link in three years, project director Waseem Ahmad said, adding that 85 percent of the funding will be provided via Chinese loans. The agreement will give Pakistan more connectivity to international communications networks, Ahmad said. Rawalpindi is home to the headquarters of Pakistan’s army.
Gwadar Pact
An initial pact on a transport corridor to link the western Chinese city of Kashgar with the Pakistani port of Gwadar, control of which was in February transferred to a state-run Chinese company, was also signed today. No details were given on what was described as a “long term” plan.
“China will encourage and support companies to invest in Pakistan and Pakistan will provide a good environment for China’s investment,” Foreign Ministry spokeswoman Hua Chunying said at a briefing in Beijing today.
While Sharif has called the road-and-rail project a “game changer” capable of generating revenue and jobs for Pakistan, financing and security concerns could prove hurdles. The route would run through Baluchistan province, where anger over exploitation of gas and minerals has spurred a separatist insurgency.
Touted Role
Aside from its touted role as a short cut for Chinese imports of Middle Eastern oil, officials in India and the U.S. have seen Gwadar as part of China’s strategic ambition to project its growing naval power into the Indian Ocean.
Unrest in the western Chinese province of Xinjiang which authorities have in the past linked to Islamist training camps in Pakistan may also be on the agenda for Sharif’s visit which ends on July 8.
Pakistan’s government presented a “very robust reform” agenda to secure the IMF assistance, Finance Minister Ishaq Dar said at a briefing with officials from the multilateral lender in Islamabad yesterday. The program of credit needs approval from the IMF board, Pakistan mission head Jeffrey Franks said.
A plunge of about 40 percent in the reserves in the past year to $6 billion has left Pakistan with enough to cover only about two months of imports, central bank data shows. The slide has weighed on the rupee and adds to other challenges facing Sharif, which include energy shortages and a Taliban insurgency in the northwest. The currency touched a record low this week.
Riaz Haq said…
Here's a AFP report on planned oil pipeline from Persian Gulf to Western China through Pakistan:

Pakistan Muslim League-Nawaz (PML-N) led government has decided to offer China to lay oil pipeline from Gwadar to Western China - a move that will allow the latter to diversify and safeguard its crude oil import routes, sources said.
Prime Minister Nawaz Sharif would make a formal offer to his Chinese counterpart during his current visit to China. The government is expected to sign within a month an operational agreement with China to hand over Gwadar Port to a Chinese company.
Officials said Pak-China oil pipeline could later be linked with Iran that had already offered to lay oil pipeline from its territory to Gwadar to transport crude oil. During the PPP era, Iran had also announced to set up oil refinery at Gwadar Port with 400,000 barrels per day oil production capacity.
“So, this proposal may become feasible after Chinese company takes operational control of Gwadar Port,” official said adding that Gwadar Port is quite near to Persian Gulf through which nearly 40% of world’s oil supply flow is maintained.
Officials maintained that 50% of total oil demand of China is met from imports that come from Middle East. At present supply line to China runs over 10,000km Dubai-Shanghai-Urumqi ocean route.
“The crude oil processed and refined at Gwadar Oil Refinery can be exported and transported to Urumqi through the shortest possible route to China via Dubai-Gwadar-Urumqi which is about 3,600km. For this a oil pipeline will be laid through the envisaged Energy Corridor up to Western China via KKH/Khunjrab bypass,” officials said.
They said that impediments like high altitude, freezing temperature and difficult terrain could be overcome through certain technological advancements since many countries had successfully completed such pipeline projects under extreme conditions and high altitude such as ATACAMA gas pipeline, Trans-Alkaska Pipeline, Trans-Asia Gas pipeline etc.
Meanwhile, in a related development, Punjab Chief Minister Shahbaz Sharif has succeeded in persuading Dong Fong Electricity Company of China to resume work on Nandipur power project.
In this connection, a lengthy meeting was held between Chief Minister Shahbaz, Dong Fong Electricity Company Chairman Si Zefu and senior officials of the company in Beijing in which the Dong Fong Electricity Company expressed willingness to restart work on the Nandipur power project.
The company has also directed its engineers to reach Pakistan next Monday for this purpose.
The Nandipur power project would generate 450 megawatts of electricity.
It is noteworthy that due to the undue delay by the PPP government, the Chinese experts had returned to their country, while the machinery for the project worth millions of rupees is rusting at the Karachi port.
Chief Minister Shahbaz has been strongly criticising the federal government over non-implementation of the project. Dong Fong Electricity Company Chairman Si Zefu said that during a meeting with President Asif Ali Zardari in June 2011 he had told him that injustice was being done by delaying the project as it would cause heavy losses to both the sides.
The chief minister assured the Chinese authorities that they would find the present government completely transparent and determined.
Expressing his views during his meetings with the Chinese investors in Beijing, the chief minister said that Pakistan has a bright future and there are vast opportunities of investment in the country.
He said that the existing problems are temporary and would be overcome soon. Shahbaz Sharif said that he would personally play host to the Chinese investors in Pakistan. He said that priority would be given to joint collaboration and co-operation with Chinese investors in infrastructure and energy sectors.
Riaz Haq said…
Here's a VOA report on China's growing footprint in Pakistan:

China is one of Pakistan’s largest business partners, and more than 120 Chinese companies are doing business in Pakistan. This is despite the serious security risks Chinese nationals face in Pakistan.

During Pakistani Prime Minister Nawaz Sharif’s visit last month to China, the two countries signed several economic agreements that give Pakistan much-needed foreign investment. China will also benefit, says Derek Scissors of the Heritage Foundation.

"China gains two things. Employment for its workers for a while on these projects and revenue from the projects for the companies. That’s the commercial side. On the political side, Pakistan does need power. It does need a more consistent power supply that will help Pakistan’s economy and social stability," said Scissors.

China is also seeking Pakistan’s cooperation in curbing the militants that China says use Pakistani territory to launch attacks in its restive Xinjiang, or East Turkestan, region.

Aqab Malik is with Johns Hopkins School of Advanced International Studies.

"I think one of the foremost elements of this agreement is the understanding that Pakistan must combat, as far as China is concerned, the threat that is imposed from the East Turkestan Islamic Movement," said Malik.

Malik also says, in order to sustain long term economic growth, Pakistan must crack down on radicalism and extremism.

"Now [that] it has made economic agreements with China, there has to be some progress towards real counter-radicalization, counter-extremism programs, and there must be an off-the-fence, direct, stated goal that they are going to confront it. but actually implement it also," he said.

Anti-U.S. sentiments are high in Pakistan, and many see China as a counterweight to the United States as a trading partner. But relying too heavily on any one country may not be a good option for Pakistan. Derek Scissors:

"Diversification is good. It applies to the United States for Pakistan and it also applies to China. Being too heavily dependent on China would be a mistake," he said.

China-Pakistan bilateral trade was over $12 billion last year, and the leaders of the two countries have promised to increase it in years to come.
Riaz Haq said…
Here's a UPI report on Iran-Pakistan gas pipeline extension to China:

The Pakistani government said it expects to discuss the possible extension of a natural gas pipeline from Iran during talks this week with Chinese officials.

Pakistani Petroleum Secretary Abid Saeed said the project could be completed by the end of next year. He said Pakistan will receive 750 million cubic feet of natural gas from Iran each day through the pipeline once all operations are completed.

India has been included as potential partner in the pipeline. The U.S. government favors a rival project planned from Turkmenistan through Afghanistan, Pakistan and India.

Pakistan hosted Chinese delegates Monday to discuss extending the Iranian pipeline through to western China, the Press Trust of India reported.

Both sides are expected to review options for oil links as well, the Indian newspaper said. Pakistan's aging infrastructure and energy sector mismanagement has left most the country without a reliable source of electricity.

Islamabad said a looming energy crisis in the country is a greater threat than terrorism. India, meanwhile, relies on natural gas imports because it lacks the infrastructure necessary to take advantage of its own reserves.

Chinese economic expansion is such that its energy demands are outpacing the rest of the world.

Read more:
Riaz Haq said…
Here's an FT report on how Pakistan's top central banker used Chinese line of credit to stabilize economy:

In May, with Pakistan’s rupee looking particularly weak, its balance of payments parlous and election jitters increasing, Yaseen Anwar, the head of State Bank of Pakistan, quietly took advantage of a little-known clause in the bank’s central currency swap agreement with the People’s Bank of China and borrowed almost $600m. By drawing down on part of a $1.5bn line of credit, the government was able to report that far from showing a big deficit, Pakistan’s balance of payments were positive at the end of the month.
By the end of June the rupee was under less pressure and by early September the new government of Nawaz Sharif had signed an agreement with the International Monetary Fund that further stabilised the ailing currency.

“China helped us weather the storm,” Mr Anwar says.
Drawing down the Chinese line of credit, of course, was cosmetic: it did not change the underlying economic and financial realities. But since most market participants, including virtually every foreign banker in Karachi, had no idea that the improvement was essentially technical, it contributed to more positive sentiment.
China is quietly but steadily increasing its footprint both in Asia and in emerging markets across the globe. It is especially effective in places such as Pakistan, which are desperately short of capital and in dire need of foreign assistance to tackle the shortcomings of their infrastructure, from telecoms equipment to turbines. The line of credit from the PBoC is largely symbolic, a small part of the billions of dollars from banks such as China Development Bank and China Export Import Bank. China’s vendor financing model has become a principal engine for the development of Pakistan at a time when few foreigners will even get on a flight to visit it.
For example, one of the biggest obstacles to growth in this country of almost 200m people – soon to be the world’s fourth most populous nation – is energy. Pakistan has recently decided to develop its vast reserves of low- quality coal in the Thar desert of Sindh province to fuel its power plants. That is not exactly the fashionable choice in many parts of the world, but Pakistani executives say they rely on coal for less than 1 per cent of their power today, in contrast to say India or China, where the figure is more like 80 per cent.
China is promising to develop some of the Thar tracts and provide financing and equipment to help private Pakistani companies such as Engro develop other tracts.
The Chinese are also taking over management of Pakistan’s newest port, Gwadar, in the west, and will help construct a road that leads from to its border and then on to the oil-rich “stans” of central Asia. That will give China access to yet another warm-water port in Asia and cut by half the time taken by Chinese exports to reach many parts of the world from its western regions. Like so much of what China does, that combines the strategic interests of Beijing with the ability to help its best geopolitical friends develop.
For the Pakistanis, isolated from the west, that sort of self-interest is not a problem: it means that they have leverage with Beijing. Today less than 10 per cent of Pakistani exports go to China and virtually all are priced in dollars. But its biggest lender, Habib Bank, has a China desk in its Islamabad branch and a rep office in Beijing. When executives went to China for a symposium, they were courted by senior banking officials. For Pakistanis who feel that many parts of the world have turned their backs on their country, such courtship is almost painfully welcome.
Riaz Haq said…
Here's a South China Post story on China's western land route thru Pakistan:

..."We want to open to the west and use your country to help us develop a corridor for trade and tourism," Zhu Rongji said, pointing to the giant map of China on the wall behind his desk.

It was 1993, and Shahid Javed Burki, then director of the World Bank's China operations and later Pakistan's caretaker finance minister, was calling on the then vice-premier in Beijing.

China, Zhu told him, was different from other big countries in that it had sea access only on one side. That was where Pakistan came in.

China's "all-weather friend" is an integral part of its "look west" policy to find economic sustenance for landlocked western provinces. This is why China in 1986 started working on a 600-kilometre highway across the Karakoram mountain range connecting Kashgar in Xinjiang province with Pakistan's northeast.

Nearly three decades on, Burki is on a mission to expand the highway into an ambitious 2,000km China-Pakistan Economic Corridor. It will connect the deepwater Pakistani port of Gwadar on the Arabian Sea with Xinjiang, providing China easy access to fuel imports from the Middle East and Africa while creating a cheap overland export route to a maritime exit port for interior provinces such as Gansu and Qinghai.

"The idea is to develop the Karakoram Highway into a motorway network all the way to Gwadar, establish a railway line and two pipelines for oil and gas, and create industrial hubs along the way," Burki said.

The corridor is conceived and planned at the cost of India's interests S.D. MUNI, FORMER AMBASSADOR
Largely financed and built by Beijing, Gwadar is strategically located near the Strait of Hormuz that channels a third of the world's oil trade. It could play a major role in China's energy security by providing a much shorter alternative to the current, circuitous 12,900km route from the Persian Gulf through the Strait of Malacca to China's eastern seaboard.

But the port and the corridor are not without their problems. Baluchistan province, where Gwadar is located, has been grappling with a low-intensity separatist insurgency. Many Chinese workers have been attacked and killed amid the violence, often making Beijing wary of the venture.

Shahid Javed Burki
The ascent of a new leadership in Beijing, however, seems to have given the China-Pakistan corridor plan a new impetus just as it has done to a proposed Bangladesh China India Myanmar corridor that would provide landlocked Yunnan province access to the Bay of Bengal.

In February, the Pakistani government transferred the contract for running Gwadar from the Port of Singapore Authority to China Overseas Port. During the Pakistan leg of his first overseas trip as premier in May, Li Keqiang vowed to "speed up" the project. An agreement was signed in July when Pakistani Prime Minister Nawaz Sharif visited China within a month of returning to power.

Burki estimates the corridor will take five to 10 years to set up and cost up to US$15 billion. Efforts are being made to raise the money through structured finance instruments with the help of the countries, donor agencies and industrial sectors that will gain from the corridor.

"There is an active South Asian diaspora in the world of structured finance who we hope to rope in," Burki said.

To do that, he is chairing a special session on the economic corridor at the South Asian Diaspora Convention in Singapore this week, hosted by the National University of Singapore's Institute of South Asian Studies....
Riaz Haq said…
Following is the text of 2014 US-Pak Strategic Dialogue Ministerial Joint Statement:

Secretary of State John Kerry and Pakistan Advisor to the Prime Minister on National Security and Foreign Affairs Sartaj Aziz, accompanied by a high-level delegation, met in Washington on January 27, 2014, for the ministerial meeting of the US-Pakistan Strategic Dialogue.
Reaffirming the strong relationship and enduring partnership between the two countries, the Strategic Dialogue Ministerial marked the commitment of both countries to strengthen the bilateral relationship and advance their shared interests in a stable, secure, and prosperous Pakistan and region. Both sides expressed their conviction that an enduring US-Pakistan partnership is vital to regional and international security. They recognised their shared interest in Pakistan’s economic growth, increased trade, regional stability, and mutually determined measures to counter extremism and terrorism.
Kerry and Aziz reaffirmed the importance of the US-Pakistan Strategic Dialogue and reviewed the progress of the Dialogue’s five working groups: 1) Energy; 2) Security, Strategic Stability, and Nonproliferation; 3) the Defence Consultative Group; 4) Law Enforcement and Counterterrorism; and 5) Economics and Finance. Meetings of the first three working groups convened in late 2013.
Kerry and Aziz reaffirmed their commitment to expanding bilateral trade and business links and welcomed the upcoming US-Pakistan Trade and Investment Framework Agreement (TIFA) Council meeting in March 2014 in Washington. The Secretary underscored the US commitment to supporting private sector-led growth in Pakistan and welcomed the proposal by Advisor Aziz to regularly convene a Joint Business and Investment Forum, involving the private sector. Both sides also look forward to convening a follow-on conference to the successful US-Pakistan Business Opportunities Conferences held in Dubai in June 2013, and to a US-convened conference in April 2014 in Islamabad that will link Pakistani and Central Asian businesses to encourage increased regional trade. They also look forward to the forthcoming announcement of a third fund of the Pakistan Private Investment Initiative (PPII) to leverage private equity for small and medium enterprises. Additionally, they reaffirmed the agenda for the upcoming Economics and Finance Working Group, to be held in April 2014 in Washington, where the United States and Pakistan will discuss trade and investment promotion, economic assistance, and regional economic integration. They further proposed that the working groups continue to refine the benchmarks used to realise these goals.
Strategic Dialogue participants, including Minister of Water and Power Khawaja Asif, reviewed concrete next steps from the Energy Working Group, which was held in Washington in November 2013, as well as a subsequent trade delegation to Houston, Texas. The two sides expressed satisfaction with discussions held in November 2013 on a range of options to enable Pakistan to overcome its energy deficiencies. The two sides noted progress in developing a US technical assistance programme to support the development of Pakistan’s domestic natural gas reserves. Secretary Kerry highlighted that US assistance in the energy sector has added over 1,000 megawatts of power to Pakistan’s national grid, helping provide power to over 16 million Pakistanis. In addition, the Overseas Private Investment Corporation (OPIC), the development finance institution of the US government, is currently working on financing up to 300 MW of wind power generation projects that will deploy US-based investment in Pakistan.
The United States and Pakistan also underscored the importance of intensifying efforts to facilitate regional energy connectivity and continuing to upgrade Pakistan’s transmission infrastructure....
Riaz Haq said…
Here's an AP story on China's investment in projects in Pakistan:

BEIJING (AP) — Longtime allies Pakistan and China signed agreements Wednesday to build a new airport and upgrade the fabled Karakorum Highway as part of efforts to build an "economic corridor" through rugged mountains and regions torn by insurgent violence.

The signings followed a summit in Beijing between Pakistani President Mamnoon Hussain and Chinese leader Xi Jinping that underscored close ties between the neighbors.

"Friendship with China is the most important pillar of our foreign policy and security policy," Hussain said in brief comments at the start of their meeting, which followed a formal welcoming ceremony at Beijing's Great Hall of the People.

VIDEO: The Conflict in Pakistan That’s Never Discussed
Xi said "the Chinese people cherish a profound friendship with the people of Pakistan."

While Islamabad and Beijing have long found common cause in opposing mutual rival India and cooperate closely in military and diplomatic affairs, economic ties have lagged. That's largely a result of Pakistan's poorly functioning government and lack of basic infrastructure such as power plants for generating electricity, something Pakistan is looking to China for help improving. Two-way trade exceeded $12 billion for the first time in 2012, a tiny fraction of China's overall commerce with the world.

The planned economic corridor will incorporate a 2,000-kilometer (1,200-mile) transport link connecting Kashgar in northwestern China to the little-used Pakistani port of Gwadar on the Arabian Sea near the border with Iran. That could at some point include a railway and oil pipeline.

VIDEO: How Does China Impact the Global Economy?
The project received a major boost when control of Gwadar was transferred to China's state-owned China Overseas Ports Holding Co. Ltd. in February 2013. Built by Chinese workers and opened in 2007, Gwadar is undergoing a major expansion to turn it into a full-fledged, deep-water commercial port.

One of the agreements signed Wednesday was a preliminary accord for constructing an international airport at Gwadar. Another was for upgrading a section of the 1,300-kilometer (800-mile) Karakorum Highway connecting to Islamabad.

The sides last year already agreed to build a fiber-optic cable to be laid from the Chinese border to the Pakistani city of Rawalpindi which will boost Pakistan's access to international communications networks. China is to provide 85 percent of the financing for the three-year project's $44 million budget, with Pakistan covering the rest.

VIDEO: China Chanels Resources in Wrong Direction: Beamish
If the corridor project takes off, oil from the Middle East could be offloaded at Gwadar, which is located just outside the mouth of the Persian Gulf, and transported to China through the lawless Baluchistan province in Pakistan and over the towering Karakoram mountains. Such a link would vastly cut the 12,000-kilometer (7,500-mile) route that Mideast oil supplies must now take to reach Chinese ports.
Riaz Haq said…
Here's a PV-Tech report on $20 billion investment in Pakistan:

China has agreed to invest US$20 billion in Pakistan's energy infrastructure.

On a three day visit to China, Pakistan president Manmoon Hussain and minister for Punjab, Shahbaz Sharif met with financial and development companies and banks in Beijing, and signed MoUs for continued investment in solar projects in Pakistan.

An estimated US$20 billion in energy investment has been promised; in return China will take ownership of coal plants, a document issued on Wednesday stated.

The investment will go towards solar, hydropower and coal power plants.

Sharif informed Chinese delegates on the trip that a solar plant in South Punjab is to be operational by the end of this year.

The investment will make a significant contribution to combating energy shortages in Pakistan.

According to the Associated Press of Pakistan, the MoUs signed included progress for the Pakistan-China Economic Corridor, an MoU co-establishing national joint research centres for small-scale hydro power technology, and cooperation on other construction projects.

Shahbaz Sharif’s official Facebook page stated yesterday the “mutually agreed China-Pakistan Economic Corridor is a gigantic development project which would prove to be a game changer in transforming the whole region by generating massive trade and economic activity”.

In a meeting between China and Pakistan’s Joint Cooperation Committee (JCC) to finalise projects to be part of the Economic Corridor, Sharif said thanks to a comprehensive framework of the JCC, Economic Cooperation Group, Joint Energy Working Group, Joint Investment Committee and several other mechanisms, the volume of trade had almost exceeded US$12 billion, with Pakistan’s exports increasing by 48%.

Punjab minister Sharif told The Guardian "security agencies" in Pakistan and India are acting as "blockages" to free trade between China and Pakistan. He said: "Unless you have economic security then you can't have general security."

The Punjab ministry said in a statement this January: “Shahbaz Sharif has said that resolving of energy crisis is the top priority of the government as it is essential for economic development and strengthening of economy.”

China’s Foreign Ministry spokesperson Hua Chunying said in a press conference yesterday that President Xi Jinping and President Hussain spoke “highly of the development of bilateral relations, the two presidents agreed to jointly uphold and develop the traditional friendship and translate that into more tangible results of cooperation”, with both countries working towards “steering cooperation in energy”.

The China-Pakistan meeting prioritised projects and practical cooperation in energy infrastructure, with the two sides reaching “extensive consensus” Chunying said.

A statement published yesterday from the Foreign Ministry said “The two sides will speed up the second phase of negotiations on China-Pakistan Free Trade Area and push forward a balanced growth of trade between the two countries. The Chinese government encourages Chinese enterprises to invest and develop in Pakistan"..

It added that an “advance [in] cooperation in the fields of energy” will be pursued.

In October Sharif visited China to discuss solar energy projects and China offered Punjab 32GW of exported electricity.

In September last year the Punjab government finalised plans for 700MW of solar power.

Pakistan’s government separately signed MoUs for 150MW with a consortium of European countries and another with China North Industries Corporation (NORINCO) as well as 400 smaller solar projects in the pipeline.

Pakistan also finally announced FiT rates for large-scale solar projects last month.
Riaz Haq said…
Here's an excerpt of a report on the importance of Pak-China economic corridor:

A study on “A Socio-Political study of Gilgit-Baltistan” conducted by Omar Farooq Zain stated that northern areas are geo-strategic as well as trade because of its borders with China, Afghanistan and India. As a potential gateway to Central Asia, the northern area location becomes unique.

In addition to the trading importance of Gilgit-Baltistan and its environs, its site at the doorstep of China and Central Asia, with Afghanistan and India close by, makes it a very important cultural region.

K. Warikoo in his book Himalayan Studies in India pointed out that the British used Ladakh and adjoining areas in Gilgit, Skardu, Hunza and Chitral as “frontier listening posts” to check the developments in Central Asia and Xinjiang throughout the Dogra period.

The leadership of both Pakistan and China in the recent past had thought it advisable to build up an economic corridor that can open up the underdeveloped areas of the region to a new era of economic development and prosperity.

The elites of both countries have termed Pakistan-China Economic Corridor as “future of the world,” as almost 3 billion people, which is almost half of the world’s population, from China, South Asia, Central Asia could benefit from this economic corridor.

The official data provided by Pakistan’s Federal Ministry of Planning and Development showed that being one of the biggest transit trade routes in the world, it would link China to the Middle East, Central Asia, Africa and other regions and give access to the landlocked countries to the world biggest markets, India and China.

It stated that the Pakistan-China Economic Corridor would be of high economic value as about the 3 billion people at both sides of the border would be its direct beneficiary while the overall bilateral trade volume would be increased to 7 billion dollars.

The data further showed that Pakistan intends to get the greatest benefit out of this project and for that it has planned to establish industrial parks and economic zones along the Kashgar-Gwadar trade corridor.

Pakistan’s central government’s seriousness to get maximum benefits from the Pakistan-China Economic Corridor can be judged with the fact that it has already approved the projects worth 52 billion to be started in the economic zones.

Dr. Zafar Mehmod, a prominent economist, opined that the poverty rate would be reduced to the minimum while the unemployment would almost come to an end.

Talking about the economic corridor, Javed Shahzad Malik, the high official of Ministry of Kashmir Affairs and Gilgit-Baltistan, said the dream of building up economic corridor is being translated into reality and work is under way to upgrade KKH, motorways, and railway lines, fiber optic, and oil and gas pipe lines.

He said a number of tunnels with overall length of 200 km would be constructed on different locations to maintain the vehicular speed on KKH at 80 km per hour.

Speaking with a Kabul-based Journalist, writer and political activist who worked as an advisor in the Hamid Karzai government, Azam Beg Tajik hoped that such a trade route would become a profitable hub and economic activity center, serving as a lifeline to the economy of the country in the near future.

Given the future economic prospects highlighted by the experts, government officials and local people, it is expected the Pakistan-China Economic Corridor would not only help boost economic activities but also bring the socioeconomic conditions and living standard in this region at par with other developed regions of the world.
Riaz Haq said…
Here's China Daily report on China's plans to build Pak-China economic corridor:

China has allocated funds to do preliminary research on building an international railway connecting the westernmost city of Kashgar in the Xinjiang Uygur autonomous region with Pakistan's deep-sea Gwadar Port on the Arabian Sea, according to the 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 as the two-day International Seminar on the Silk Road Economic Belt commenced on Thursday in Urumqi, Xinjiang's capital.
"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.

The railway, which cannot avoid running through the Pamir Plateau and Karakoram Mountains, will be one of the hardest to build but most vital transportation infrastructures on the China-Pakistan corridor along China's newly proposed Silk Road Economic Belt, he added.
"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 said.
Control of Gwadar Port was given to China and an agreement was signed with China Overseas Ports Holding Co on May 16, 2013, to transfer operational rights from the Port Authority of Singapore.
The move means China now is running a port just opposite the Gulf of Oman, an important route for oil tankers.
The speed of road and railway construction in Xinjiang was significantly increased after September 2013, when President Xi Jinping raised the idea of the economic belt, Zhang said.
Xi proposed reviving the ancient trade routes connecting China, Central Asia and Europe.
To become a transportation hub and China's core area on the economic belt, the government has decided to develop three main corridors through southern, central and northern Xinjiang, which connects China with Russia, Europe and Pakistan.
Work is also due to begin soon on the long-planned China-Kyrgyzstan-Uzbekistan railway.
The region, which borders eight countries, also plans to open three new land ports to Kyrgyzstan, Kazakhstan and Russia.
"We will consider opening the ports to Afghanistan and India once social stability can be ensured. After all, openness is the foundation of boosting trade," Zhang said.
Riaz Haq said…
China and Pakistan make an oddball but enduring couple

We tend not to see things through Beijing’s eyes. If we are to make sense of shifting realities, we will have to try. From Beijing, the world can seem a hostile place. The US, with its unshakeable faith in liberal democracy, may not be actively seeking regime change in China but it would surely welcome the collapse of the Communist party.
In conjunction with other countries, including India, Australia and Japan, Washington is trying to contain China’s regional military ambitions. Neighbouring countries like the Philippines and Vietnam, which until recently had been reassured by Beijing’s “smile diplomacy”, have grown wary. Even North Korea, almost wholly dependent on Chinese largesse, has grown defiant.
Pakistan looks like Beijing’s one true friend. One of the first countries to recognise the People’s Republic in the early 1950s, Islamabad was a bridge between China and the US. When Henry Kissinger, who later became US secretary of state, made his secret visit to China in 1971 to prepare for normalisation of US-China relations, he sneaked in from Pakistan. And for Beijing, Pakistan has been a way to keep India off balance.
In return, Beijing has kept Pakistan’s military equipped when supplies dried up from elsewhere. Beijing also provided information and enriched uranium for Pakistan’s nuclear bomb. When a US stealth helicopter crashed during the 2011 operation to kill Osama bin Laden, the Pakistanis showed the wreckage first to the Chinese. China built Pakistan a deepwater port at Gwadar on the Indian Ocean.
Andrew Small, author of a book on the relationship, says Beijing has earned real leverage. In 2007, under Chinese pressure, Islamabad raided the Lal Masjid “Red Mosque” after militants kidnapped several Chinese citizens. Chinese pressure has been one factor behind Pakistan’s offensive against militant groups in North Waziristan. For years, the US pushed for the same thing without success. The China-Pakistan axis is worth watching if only because it shows the limits of Beijing’s non-interventionist policy. As it gets sucked into the global whirlpool, it faces the risk of blowback. China now has to deal with attacks by members of the Uighur, a Muslim minority ethnic group. Some may be ideologically inspired — if not planned — in Pakistan’s lawless tribal belt. Like the US, Beijing worries Pakistan may not always crack down as hard on terrorists as it pretends.
Despite all this, China has stayed the course while Washington has blown hot and cold. That raises the intriguing notion of whether the US and China could work more closely in Pakistan. While there is much that divides their strategic interests, a surprising amount unites them. Beijing and Washington want a stable, viable Pakistan, not a viper’s nest of terrorist export. Both want to ensure the Pakistani military keeps a firm hold on nuclear weapons. Both want Pakistan to rein in support for the Afghan Taliban in the wake of US troop withdrawal from Afghanistan.
Some detect signs that Beijing has become more open to the idea. Wang Jisi, a Chinese foreign policy expert, has said that China’s “western periphery” offers a rare opportunity. In east Asia, the US pivot is seen as containment and the two are locked in what he says is a zero-sum game. In Pakistan and Afghanistan, however, Beijing and Washington have “significant scope for co-operation”. It is in neither’s interests for Pakistan to fail. If they could work together in that cause, it would be the oddest thing of all.
Riaz Haq said…
#Chinese prefer #Pakistan, want to move away #India as neighbour: #China Global Times Survey #CPEC

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 said…
The road that's the 'Eighth World Wonder'

The 1,300km Karakoram Highway cuts through some of the most astounding rock faces on the planet. It's a road trip of dreams, yet few have ever heard of it or how it came to be.

Crisp mountain air rushed in through the car window as I drove past jagged mountain landscapes. Despite summer being in full swing, massive amounts of snowpack still clung to the 7,000m peaks. Glacial waterfalls dripped down to feed the aquamarine river below, through Pakistan's high-altitude Hunza Valley that was aptly termed "Shangri La" by British novelist James Hilton.

I was driving the Karakoram Highway (KKH), which cuts through some of the most astounding rock faces on the planet. Often coined the "Eighth Wonder of the World", it's a road trip of dreams, yet few have ever heard of it, or how it came to be.

The KKH was once a leg of the Silk Road, with its foundations built by locals centuries ago. However, it wasn't until 1978 – after nearly 20 years of construction by more than 24,000 Pakistani and Chinese workers – that it was officially inaugurated for vehicles, which brought trade, tourism and ease of travel to this remote part of the world.

The 1,300km highway extends from the small city of Hasan Abdal near Pakistan's capital of Islamabad to Kashgar in China's autonomous Xinjiang region via Khunjerab, the highest paved border crossing in the world at about 4,700m. But I was drawn to the 194km stretch of the highway that runs through the Hunza Valley, a region surrounded by the Karakoram Mountains that give the highway its name. This impossibly beautiful section is where you can see pristine glaciers, alpine lakes and snow-capped peaks right from the comfort of your ride. However, as alluring as the journey is, it's the incredible people and traditions of the Hunza Valley that make this part of the highway so special.

Nestled in the Gilgit Baltistan territory between Xinjiang and Afghanistan's Wakhan Corridor, Hunza was mostly cut off from the world until the 20th Century due to the formidable geography. Primarily home to the Burusho and Wakhi people, the remote region has its own languages, music and culture that's unlike anything you'd find in Pakistan – or anywhere else in the world.

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