Zardari draws a blank from China visit

Posted in China , Pakistan | 25-Feb-09 | Author: Syed Fazl-e-Haider| Source: Asia Times

Pakistani President Asif Ali Zardari (L) shakes hands with Shanghai Mayor Han Zheng at a meeting in Shanghai February 23, 2009.

QUETTA, Pakistan - Asif Ali Zardari, president of cash-strapped Pakistan, has returned home from Beijing for the second time in a few months virtually empty-handed, without any commitment from China for aid.

During his first visit as president last October, Zardari failed to secure financial support from Beijing to stave off a balance of payments crisis, with the Chinese government rebuffing a request for concessional loans.

This time, the two countries signed cooperation agreements for hydropower generation and agriculture development, but there was no firm commitment from Beijing about writing off some of Islamabad's debt or extending additional aid.

Zardari's four-day visit, which included trips to Hubei province and Shanghai, overlapped with and was overshadowed by US Secretary of State Hillary Clinton's visit to the Chinese capital.

After China's rebuff in October, Pakistan reluctantly reached agreement with the International Monetary Fund on a US$7.6 billion loan facility, which in turn paved the way for Beijing to grant $500 million in loans. That compares with the estimated $14 billion some economists say is needed to get Pakistan back on its feet.

"China has been providing help, within its own capability, to Pakistan's economic and social development," AP quoted Chinese Foreign Ministry spokeswoman Jiang Yu as saying last week.

Even so, Pakistan's financial distress and worsening internal security may be cooling China's perception of its neighbor.

"Instead of increasing assistance to its old ally, Beijing has apparently been keeping a distance from Islamabad," Time magazine reported last week.

"Pakistan today needs China more than China needs Pakistan - that is why there is more enthusiasm in Pakistan about its relations with China than vice-versa," the magazine quoted Shabbir Cheema, director of the Asia-Pacific Governance and Democracy Initiative, as saying.

While economic issues were at the heart of Zardari's visit, it took place in the shadow of the intensifying US "war on terror" in Afghanistan, also involving Pakistan's western border areas, and amid continuing questions on Pakistan's involvement in terrorist attacks in India's financial center, Mumbai, last November.

In a telephone conversation with President Hu Jintao on Tuesday, Zardari thanked him for China's support to Pakistan's stance on the Mumbai incident, over which Islamabad has had to fend of Indian charges of complicity. The two leaders agreed to work together to build a strong economic and political partnership.

"The visit assumes significance as Islamabad had given a blank check to China to intercede on its behalf with India on the Mumbai terror attacks," Press Trust of India reported.

Zardari sought during his latest visit to highlight the benefits his country offered China. In an interview with Chinese media, he said companies based in central China would gain from trading through Pakistani ports, which are nearer to the sea than their own country's ports such as Shanghai and Hong Kong.

"We will encourage Chinese companies to come to Pakistan as Pakistan is geo-strategically located and provides them access to the rest of the world through our warm waters," Associated Press of Pakistan quoted Zardari as saying.

The two sides agreed that establishing trans-border economic zones and a Pakistan-China rail link would go a long way in strengthening the relationship between the two countries.

Pakistan wants "to initiate rail links as well in addition to existing road and sea links". Pakistan Press International quoted Zardari as saying. Addressing Chinese heads of major financial institutions and banks, he said the government would also provide maximum support to Chinese investors to enhance links between the two countries. The opening of branches by Chinese banks in Pakistan, would further expand financial interaction.

"We also have a free-trade agreement with China and hope to finalize a trade agreement in services shortly", China Daily reported Zardari as saying. "Once we get our economic fundamentals right we can be a useful economic partner, a significant market and a profitable destination for investment." Pakistan is the first country with which China has signed a free trade agreement (FTA). The first phase of an FTA in goods and investment was completed last July.

Investment by China and provision of easier access for Pakistani goods into the Chinese market could help boost trade between the two countries. Last year, bilateral trade volume rose a mere 1.3% to $6.9 billion.

Zardari acknowledged the assistance China has already given to his country.

"China has helped Pakistan's economic development. Chinese assistance and enterprise has been invaluable in areas as diverse as construction of nuclear power plants to dams, roads and industrial estates. The port of Gwadar on Pakistan's Arabian Sea coast is a testament to China's friendship with Pakistan," he said.

At the mouth of the Persian Gulf and opposite the Strait of Hormuz, Gwadar port is being funded and built by China and is intended to serve as a corridor for energy, cargo and services between Central Asia, the Gulf and other surrounding regions. Islamabad has awarded the US$70 million construction contract for an international airport at Gwadar to China Harbour Engineering Company. Under a memorandum of understanding signed during Zardari's latest visit, the Chinese company is to support the National Dredging Corporation of Pakistan in its dredging work - silting is a considerable problem at, for example, Gwadar.

Over 3,000 Chinese nationals have their presence in Pakistan, and concern is rising over their safety given the increased numbers of terrorist incidents in the country, which has included the deaths of Chinese engineers involved in the Gwadar port project.

"Terrorists have specifically targeted some of our Chinese friends who were working in Pakistan to drive a wedge between the two countries and peoples," China Daily quoted Zardari as saying. "The sacrifice of these Chinese citizens for Pakistan's cause is an abiding reminder to us Pakistanis of China's friendship with our country."

Zardari identified possible areas of co-operation between Pakistan and China in hybrid seed development and other agriculture technology such as water management and use of solar technology, Business Recorder reported, citing a statement by the Pakistan Embassy in China.

Under a joint breeding programme, China's Hubei Seed Group will transfer germplasm technology to boost productivity of hybrid rice. Pakistani scientists will also be trained in agronomy and oilseed production.

The two sides also signed an agreement under which China will provide technical assistance to Pakistan in hydro-power generation. Zardari visited the Three Gorges Dam, the world's largest dam.

"Pakistan has not benefited to the extent that it should from its relations with China. We would like China to help us in the construction of a dam similar to this one," Associated Press of Pakistan quoted the Pakistani president as saying.

Syed Fazl-e-Haider,, is a Quetta-based development analyst in Pakistan. He is the author of six books, including The Economic Development of Balochistan, published in May 2004.