Wen Moves Pakistan Closer to China with US$35 Billion Deal

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Dec. 21 – Chinese Premier Wen Jiabao has signed US$35 billion worth of deals with Pakistan, much of it in infrastructure deals designed to better connect the country with Xinjiang Province.

China has a border with Northeast Pakistan at Taxkorgan, with trade crossing the Karokoram Highway through from Kashgar to Gilgit and beyond. Roughly US$20 billion was signed in government-to-government contracts and a further US$15 billion in private sector deals. The amounts outstrip those signed a few days earlier with India by some US$19 billion.

China is looking to recalibrate its trade partnership with Pakistan – currently much of it based on arms and weapons – to infrastructure development. Pakistan has a southern coast line with the Arabian Sea, and China has already committed billions of dollars of investment at Gwadar Port there, giving it access to sizable Middle Eastern markets. The Karokoram Highway will also be upgraded with an ultimate aim of being to provide road and rail links from Xinjiang all the way through to Gilgit, Islamabad and on to Gwadar.

The deals are certain to impact upon Kashgar and Taxkorgan. Kashgar is mooted to become an economic zone in its own right and possesses China’s most westerly rail stop. China has long been looking at plans to extend that south through to Islamabad, with technology developed in constructing the Golmud-Lhasa railway. An upgrading of Pakistan’s rail network, presumably to allow high speed rail would also potentially be in the pipeline. Kashgar’s airport, which has weekly connections to Gilgit and Islamabad, will need upgrading, while the Karokoram Highway, which passes through some of the most spectacular scenery along the old silk road, will need massive amounts of work to secure its constantly collapsing roads and ultimately lead to a year-round passageway.

The terrain of the Pamir Mountains here is shale, and is extraordinarily difficult to secure for permanent roads. China employs full-time work crews permanently mending the Karokoram Highway, which currently closes in winter due to heavy snow and ice falls. The route can be highly dangerous. Nevertheless, opening up and developing this will have significant impacts on the economies of both Kashgar and Gilgit, and may lead to a more peaceful trading environment than that currently available on the Pakistan side. Mortars, Kalashnikov rifles, grenades and rocket launchers are available for sale in Gilgit; that type of trade will need to move on in this spectacular, still dangerous, but strategically important part of Asia if these ancient trade routes can be redeveloped.

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