Source: Asia Times

BEIJING – When President Asif Ali Zardari appeared at a Pakistan-China renewable energy forum in Shanghai on July 10, he rekindled a vision of his assassinated wife and former prime minister, Benazir Bhutto, who had envisaged gas pipelines, railway tracks and highways connecting China and Pakistan. Zardari said that he, as the first businessman president of Pakistan, was going to work to make that dream a reality.

Zardari’s five-day trip to China, his fifth since coming to power in 2008, was deemed so successful by Chinese and wary Indian observers that Beijing felt the need to defend its growing investment and trade links with Pakistan.

“New Delhi does not need to fidget each time it sees signs of intimacy between Beijing and Islamabad,” said a commentary in the China Daily, the state-run English-language newspaper. “Instead, it should look to the larger picture of the India-China relationship and deepen its political trust with Beijing.”

Chinese analysts have noted that New Delhi dispatched National Security Adviser Shiv Shankar Menon, a man from a family of diplomats with Chinese links, just a day before the president of Pakistan arrived in Beijing.

“Sending Menon, whom we regard as an ‘old China friend’, means that New Delhi was hoping to achieve as much as possible,” Han Hua, a South Asia expert at Beijing University, told the 21st Century Business Herald newspaper. “India has all along been very uneasy about Pakistan and China exchanges in the nuclear energy field.”

Yet the prospect of expanded nuclear cooperation between China and India’s arch-rival is only one of the factors to have caused disquiet in New Delhi this time. Zardari and Chinese leaders reportedly discussed investment opportunities in numerous sectors, including port development, hydropower, roads, railways, mining and others.

Zardari said in Beijing that Pakistan could be a “force multiplier” for China’s development. “We want to learn and recreate your success,” he stated.

As the United States and European Union hesitate over allowing trade concessions to Pakistan, China has moved aggressively, promising liberalization of trade and offering soft loans along with investment. Beijing is quickly becoming Pakistan’s main trading partner and has ambitions of doubling bilateral trade from the current annual US$7 billion to $15 billion in the next couple of years.

“The US sees India as a counterweight to contain Chinese influence, while China wants Pakistan to emerge as a power to counter India’s ambitions for regional hegemony,” says Syed Fazl-e-Haider, a development analyst in Pakistan. “Whether it is the issue of transferring nuclear technology or Iran gas pipeline project, China has always supported Pakistan against US and India.”

To Indian observers, the prospect of snowballing Chinese investment and an increased Chinese presence in Pakistan reinforces a suspicion that China is using soft power and cash to embed itself on India’s borders.

China is already the biggest investor and the largest aid donor in terns of commitment in Sri Lanka. There, as in Pakistan, China has challenged traditional trade partners like the EU and the United States, choosing not to ask questions or impose conditions over human rights and labor concerns.

In Chinese eyes, both countries provide ready markets for Chinese consumer goods, services and labor. As Beijing tries to rebalance the country’s economy moving away from being dependent on exports to recession-hit markets like the United States and the EU, developing countries in the region are becoming more important by the day.

These countries are also seen as launchpads for China’s ambitions in strategic industries like the nuclear sector and railway infrastructure. China’s aspirations of becoming a global player in the nuclear energy sector have underpinned Beijing’s decision to deploy nuclear know-how and investment to energy-starved Pakistan.

Indian concerns are not likely to stand in the way of agreements between Islamabad and Beijing to proceed with plans to add another two nuclear reactors to Pakistan’s modest fleet of modern reactors, Chashma 1 and Chashma 2, also designed and built with China’s help in the province of Punjab.

Although China is a member of the Nuclear Suppliers’ Group (NSG) and thus subject to rules that forbid the sale and export of nuclear technology to Pakistan, Beijing has insisted that the new deal is an “extension” of the old cooperation over Chashma 1 and Chashma 2, which has been under safeguards of the International Atomic Energy Agency.

Chinese leaders can argue they have their own domestic reasons for pursuing accelerated economic development in the region. Beijing has just announced a new multi-billion US dollar investment package to boost the development of its laggard western regions. The decision comes in the wake of violent unrest in the restive minority areas.

The $100 billion package includes railways, roads, airports and hydropower projects and shows Beijing is intent on pursuing stability by infrastructure investment in both Buddhist Tibet and Muslim Xinjiang.

Kashgar – the southern hub of Xinjiang – long eclipsed by the more developed and resource-rich cities in the region’s north, is being given a new lease of life as an important center to spread China’s influence in Central and South Asia.

Among the projects discussed between Beijing and Islamabad is a proposed railway to link Kashgar to the southern Pakistan port of Gwadar. If realized, it would give China direct access to the Arabian Sea and provide an alternative route should a naval blockade cut oil supplies from the Middle East. The problem for Beijing is that the proposed line is to pass through Gilgit-Baltistan – an area seen by both India and Pakistan as part of the larger Jammu and Kashmir issue, which has not yet been resolved.

“All Chinese plans for gaining access to resource-rich Central Asia and building energy pipelines pass through Gilgit-Baltistan,” said Syed. “Gilgit, the northern areas capital, has acquired the status of gateway to Central Asia after Pakistan-China barter trade agreement and accords with Central Asian States.”

It is easy to read China’s actions as intent on infuriating India, but Gao Heng, researcher with the Institute of World Economics and Politics of the Chinese Academy of Social Sciences (CASS), said this is misleading.

“One should not view everything China does in the region through ideology or geopolitics,” he says. “A lot is driven by the market. The country’s national interests are those that dictate the direction of China’s relations with countries in South Asia.”

Antoaneta Becker has more than 10 years of field reporting in China, writing for Inter Press Service, USA Today, The Economist Intelligence Unit, Outlook Magazine and others. Fluent in Mandarin, Antoaneta has travelled extensively in greater China.

(Copyright 2010 Asia Times Online (Holdings) Ltd.

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