Pakistan is the world's biggest recipient of Chinese aid

Pakistan is the world's biggest recipient of Chinese aid

By Kaleem Omar

Like star-struck neophytes mesmerised by visions of an imagined El Dorado, some government planners and economic managers in Islamabad tend to look obsessively to the United States for aid, as if Washington were the only source of development assistance in the world.

All the hullabaloo notwithstanding, the fact of the matter is that it is not the United States but China that has emerged as by far the biggest aid donor to Pakistan in the last five years. This is not to say that assistance from the US is not welcome, but only to underline the fact that the aid train doesn't only run from Washington to Islamabad; it runs much more frequently, and much more smoothly, from Beijing to Islamabad.

China's total financial commitments and aid offers to Pakistan since 2001 now total more than $ 9 billion, including about $ 6 billion for a whole clutch of development schemes and an estimated $ 3 billion for defence equipment, making Pakistan the world's biggest recipient of Chinese aid.

What's more, these billions of dollars in aid offers and commitments have all come our way from Beijing in a low-key fashion, without any of the sort of hoopla and media hype that usually accompanies offers of US assistance. As a true friend of Pakistan, China doesn't trumpet its aid; it just goes ahead and offers it.

Moreover, unlike the United States and several other western countries, China has never gone back on its aid commitments to Pakistan, even when it has been under pressure from Washington to do so.

The defence component of Chinese aid since 2001 includes 80 F-7 jet fighter aircrafts delivered to Pakistan in two batches of 40 each, in December 2001 and December 2002, and four frigates for the navy (one to be built in China and three at the Karachi Naval Dockyard under a technology transfer agreement).

The economic component includes an offer of $ 1.5 billion for doubling the capacity of the state-owned Pakistan Steel Mills to three million tons a year (though it is not clear what the status of this offer will be if PSM is privatised, as the government says it still plans to do); $ 200 million for Phase I of the Gwadar deepwater port (which is nearly ready; an agreement in principle to provide $ 500 million worth of funding for Gwadar's second phase (on which work is due to begin early next year); $ 350 million for the further development and expansion of the Saindak copper and gold project; an offer of $ 950 million for building a 450 MW hydel power project on the Jhelum-Neelam; $ 500 million for building a second 350 MW nuclear power plant at Chashma for the Pakistan Atomic Energy Commission (on which work is now well underway); $ 396 million for three hydropower projects in northern Punjab and NWFP; and $ 600 million for small hydropower projects at Pakpattan and Machai, a grid station at Muzaffargarh-Kati and a transmission line.

In addition to these projects, China has also pledged assistance for a white oil pipeline from Karachi to Punjab. China is also supplying 500 airconditioned buses to Pakistan to improve public transport services in Karachi. The first batch of 100 buses is already on the road. China has now offered to supply a fleet of buses for Lahore and other cities.

Projects involving another $ 3 billion worth of funding are in various stages of negotiation with China. These include the long-delayed revival of the Karachi Circular Railway, the Thar coal mining project in Sindh, the Dudar zinc mining project in Balochistan, and the setting up of a telecommunications university and an information technology park.

More than a dozen Chinese companies have started making direct investments in Pakistan. About 50 Chinese companies are engaged in contracted or joint venture projects in Pakistan, while nearly a hundred companies have business links with Pakistani companies in various commercial fields.

China has repeatedly offered to promote the setting up of joint ventures in Pakistan between Chinese companies and Pakistani entrepreneurs in the value-added textile sector. A minister heading a delegation of Chinese textile manufacturers said on a visit to Pakistan last year that China did not want to compete with Pakistan in textile exports because Pakistan was its friend.

Pakistani businessmen have been invited to attend the Urumqi fair, which is rated the biggest trade fair in western China. The annual fair is part of a new development plan designed to promote China's opening to its West Asian neighbours.

The significance of this move has to be viewed in the context of the fact that Beijing has announced a $ 500 billion plan for boosting western China's economy, with half the money allocated for infrastructure projects and half for bank loans to local entrepreneurs to set up industries and commercial enterprises.

The new deep water port at Gwadar is expected to play a key role as a gateway port for western China and as an energy corridor aimed at trans-shipping Chinese oil imports from Saudi Arabia and other Gulf countries to energy-deficient western China.

The Pakistan government has also announced plans to build a highway link and a Rs 50 billion railway line from Gwadar to western China, in order to provide a land route for western China's imports and exports. The new highway will link up with the Karakoram Highway connecting Pakistan to Kashgar in western China. The scheme also calls for the widening and upgrading of the KKH to make it an all-weather road capable of handling heavy truck traffic. China recently offered $ 350 million in aid for the project, including financing for the realignment of a 100-km section of the KKH that will be submerged by the Bhasha Dam reservoir. Work on the dam began last month, following a ground-breaking ceremony performed by President Pervez Musharraf in May this year.

China's growing interest in the development of Gwadar port was underscored in 2003 when Beijing held joint naval exercises with Pakistan in the Arabian Sea for the first time ever. Maintaining security in the region's sea lanes has become of vital concern to China in recent years because of its increasing dependence on Middle Eastern oil. A Chinese naval presence in the Arabian Sea will also help to strengthen Pakistan's maritime security.

China has also offered Pakistan a special low-cost desalination package to tackle water shortages caused by periodic dry spells in the region. The offer, which was sent to Pakistan through its embassy in Beijing, incorporates low-cost desalination technology developed by China's Tianjin Institute of Seawater Desalination. "This technology can bring about a revolution in overcoming the water shortage problem in Pakistan," said Runo Guo, a senior official at the Tianjin Institute.

He said that sea water could be used as a more sustainable resource to overcome water shortages on a long-term basis. Referring to the cost of the desalination technology developed by China, he said, "It is very cheap and reasonable compared to other technologies."

However, a Pakistani-owned company based in California, which is building a 25 million-gallons-a-day desalination plant for the Karachi Port Trust, says that the technology developed by it is even cheaper than the Chinese technology in per-gallon-cost terms.