Sharif heads to China, eyes investment

AFP/Islamabad

Pakistan’s Prime Minister Nawaz Sharif heads to China this week on his first foreign tour, eyeing high-impact Chinese infrastructure projects as an answer to economic malaise and an energy crisis.

Weak growth, inflation, dwindling foreign exchange reserves and power cuts of up to 20 hours a day ruining industry are some of the biggest problems that Sharif faces as head of government.

He made fixing Pakistan’s woeful economy and energy crisis the mantra of his election campaign and since winning a comfortable majority in May, has sought to strengthen economic ties with Beijing, arguably Islamabad’s closest ally.

During his July 4-8 visit, Sharif is due to meet Chinese President Xi Jinping, Premier Li Keqiang, financial and corporate leaders, and visit major industrial centres and special economic zones.

Before even being sworn into office, Sharif hosted Li as the first foreign head of government to visit since his election victory.

In June, Sharif asked state-owned China North Industries Corp (NORINCO) to install solar power plants, look into mining and explore iron ore, and he discussed the building of underground train networks in Pakistan’s largest cities.

Sharif said on Saturday that plans to build a trade corridor from the Chinese border to the Arabian Sea would be a “game changer” that would bring development and prosperity to 3bn people.

“Pakistan has to come out of its difficulties and we want to co-operate with each other on... infrastructure and in the field of energy,” Sharif added.

Chinese investment is popular in Pakistan where Sharif, himself one of the richest businessmen in the country, won plaudits for pulling off high-impact infrastructure projects such as a high-speed motorway during his two previous tenures in office.

“A trade corridor really could be transformative in parts of our ailing economy and it is here that the technocrats and business acumen of the new government are going to be shaping future foreign policy for Pakistan,” wrote newspaper The News on Monday.

China-Pakistan trade last year reached $12bn and is targeted to rise to $15bn in the next two to three years.

During his visit to Islamabad, Li said Beijing was ready to speed up work to upgrade the Karakoram Highway, a vital link to any future economic corridor into Pakistan from the Chinese border.

China this year acquired Pakistan’s Gwadar port, which through an expanded Karakoram Highway could connect it to the Arabian Sea and Strait of Hormuz, a gateway for a third of the world’s traded oil.

On Monday, China’s foreign ministry spokeswoman Hua Chunying told reporters that Beijing attaches great importance to Sharif’s visit and welcomed the agreement on an economic corridor.

“I believe that such a cooperation project will help both countries as well as the development of the whole region,” she told reporters.

Analyst Andrew Small of the German Marshall Fund of the US said Pakistan was hoping for “substantive agreements”.

He said the most important areas were the economic corridor to Gwadar, particularly proposed new infrastructure links, an extension of co-operation on hydropower projects and nuclear co-operation, which he said looks like moving into the 1000MW range, China’s first such reactors overseas.