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Karakorum Highway: China spends billions of dollars to make business with Pak
24-10-2015

Khunjerab Pass (Pakistan): Up here on what is often referred to as the world’s highest paved border crossing, there still are not many signs that billions of dollars in investment - and goodwill - could soon flow across these peaks in the Karakorum Mountains.

At an elevation of more than 15,000 feet, yaks far outnumber cargo trucks crossing over Pakistan’s border with China. And just one border agent stands guard on the Pakistan side, when he hasn’t ducked into a steel shelter to avoid wind-whipped snow.

A few miles down the mountain into Pakistan, where the air is a bit thicker and the summer sun melts the snow, Mohammad Noor fulfills a generations-old family tradition: escorting more than 1,000 goats and sheep to summer pasture. This year, however, he keeps his footing by walking on a new section of Karakorum Highway, recently built by China. And with each step, Noor says, he feels as though he’s heading into the future.

“The young people now are more educated and don’t want to look after sheep and goats,” said Noor, 44. “The future is Pakistan and China.”

Noor was standing on China’s new gateway to the far-distant Arabian Sea, the spine of an ambitious project by Beijing in a country that has a history of frustrating the well-intentioned plans of others. Americans, disillusioned by decades of unfruitful involvement in Pakistan, are skeptical that China will have any more success here.

But Chinese President Xi Jinping is intent on extending China’s influence in Asia, confident that his country can avoid the old pitfalls and achieve a new economic and political predominance in the region.

Here, trucks carrying Chinese goods could soon begin a 1,700-mile descent through Pakistan, to a saltwater port where the freight will be put on ships bound for markets in Africa, the Middle East and Europe.

The journey will embody China’s efforts to re-create the old Silk Route that for centuries linked Asia to the Middle East, and brought wealth to both. And along the way, China will try to use its “Belt and Road” economic development strategy to lift Pakistan toward prosperity. It plans to spend $46 billion here on an array of projects.

“An old strategic partnership is graduating into an economic partnership,” said Ahsan Iqbal, Pakistan’s minister for planning and development. “China has a vision...  and Pakistan can be the corridor for a new regional bloc, comprising the engines of world growth where 3 billion people live.”

If China can ship more of its merchandise along this route instead of by way of the South China Sea, it will reduce transport times to some of the world’s fastest-growing markets. China also will be able to shift more of its manufacturing base to its rural, western provinces, with an eye toward weakening political unrest there while curbing pollution in its eastern cities.

In the process, China hopes to accomplish something the United States has largely been unable to do over the past decade: give Pakistan an ironclad, long-lasting incentive to keep cracking down on terrorist groups.

The new Pakistan-China Economic Corridor will move from here in the mountains down the Karakorum Highway into central Pakistan. From there, even more highways will be built to provide access to Gwadar Port in Baluchistan.

The initial outlines of that corridor already are visible here in northern Pakistan, where the highway snakes past mountains, glaciers and rocky gorges. At times, motorists can see the donkey trails from the original Silk Route, which traders travelled for more than 600 years before the 15th century.

China is spending hundreds of millions of dollars to upgrade the highway, one of the world’s most dangerous thoroughfares. To make it safer, Chinese engineers are smashing through mountains to build dozens of miles of tunnels, some of which are inscribed with the phrase “Pak-China Friendship Tunnel.” They are adding bridges, guardrails and concrete overhangs to funnel landslides and avalanches away from travel lanes.

“The Chinese can do anything,” Ramazan Ali, 32, said from a boat while travelling across Attabad Lake, created in 2010 when a landslide damned the Hunza River, flooding the Karakorum Highway and surrounding villages. China has just built four large tunnels on the south end of the 13-mile lake to reopen the highway. “Everything they develop benefits the people.”

But for many residents here in Gilgit-Baltistan, also referred to as Pakistan’s “northern areas,” the alliance also is generating fear. Living in sight of some of the world’s most stunning scenery, including five of the world’s 14 tallest mountains, residents worry about traffic and pollution.

“There will be a lot of environmental issues in the near future,” said Sahib Noor, a farmer in Karimabad, a scenic town in the Hunza Valley. “And if we don’t get anything out of it, our kids will just be collecting the garbage and rubbish from the trucks.”

For Pakistan, however, analysts say the Chinese investment represents a major opportunity to jump-start an economy thought to be primed for growth.

With an estimated population of more than 180 million, two-thirds of whom are younger than 30, Pakistan could one day become a top consumer of electronic goods and other costly products, many of them made in China.

To fully reach its economic potential, however, the country must overcome the continued threat of Islamist militancy as well as a severe electricity shortage that significantly increases the cost and difficulty of doing business here.

To address that problem, China is promising Pakistan 18 new energy projects, including nine coal-fired power plants, five wind farms, three hydroelectric dams and one solar park. When completed, the projects will add 16,600 megawatts to Pakistan’s national grid, more than offsetting the electricity shortage, even with a projected annual growth rate of 7 per cent by 2018, said Iqbal, the minister for planning and development.

Still, Pakistani economists disagree as to whether their country can fully take advantage of the opportunity. Some note that it is unclear whether the agreement will help Pakistan overcome a 50 per cent trade imbalance with China. Pakistanis are eager to ship more medicinal herbs, textiles, gemstones and yak meat to China.

“A long highway passing just through vast land connecting one strategically important point with another, thousands of miles away, will not be an economic corridor,” said Sakib Sherani, a prominent Pakistani economist. “But if it also links Pakistani businessmen and traders to markets in China, that would be huge.”

Since becoming China’s president, Xi has been increasingly worried about the domestic threat posed by the East Turkestan Islamic Movement (ETIM), a Muslim separatist group trying to create an independent state in the western part of the country. The group had found havens in Pakistan’s tribal belt and is blamed by China for fomenting violence in the province of Xinjiang.

Ma Jiali, executive deputy director of the Center for Strategic Studies at the China Reform Forum in Beijing, said Pakistani transport routes will allow China to expand its economy in Xinjiang, where violent attacks by ethnic Uighurs have risen sharply in recent years. Such investment could lead to a job boom in that region, spawning a more diverse population that China hopes could make it more difficult for groups such as ETIM to thrive.

Western analysts also see the potential for China to become the dominant influence in keeping Pakistan focused on its struggle against terrorist groups.

“For a very long time, people were asking why don’t the Chinese get more engaged with Pakistan” to try to guarantee security, said Vali R Nasr, dean of the School of Advanced International Studies at Johns Hopkins University. “Well, now they have a reason to be. They are putting $46 billion on the table, and they will be looking to protect that $46 billion.”

In that way, China is stepping into a void left by the United States when it declined to heavily invest in Pakistan, despite the strategic alliance between the two countries during the Cold War as well as after the September 11, 2001, terrorist attacks, Nasr said.

Over the past 13 years, the United States has given Pakistan about $10.5 billion in economic assistance and $7.6 billion in security-related aid. The US military also reimbursed Pakistan $13 billion in counterterrorism support related to the war in Afghanistan, according to the Congressional Research Service.

The United States “was just not interested in building dams, electrical power plants, railways, roads and bridges and ports” in Pakistan, Nasr said.

China, by comparison, views its relationship with allies through a prism that is “geopolitical, geo-strategic” but also “geoeconomic,” Ma said. “According to Chinese philosophy, if you want to achieve some goal, you have to take a comprehensive approach, political, economic, military and social.”

Robert Hathaway, former director of the Asia Programme at the Woodrow Wilson Centre in Washington, said that US officials appear content to let China become the dominant influence over Pakistan. But Hathaway said US policymakers were skeptical that China’s $46 billion aid package would ever fully materialise.

A major terrorist attack or Pakistani political crisis, common in a country that has witnessed three successful military coups since its founding in 1947, could quickly cause the Chinese to reassess their relationship, he said.

“Much of the skepticism reflects the rather dismal American experience in Pakistan over the years,” Hathaway said. “You almost never get results commensurate with the effort or money you put into it.”

The doubts here in Gilgit-Baltistan also are rooted in history. For too long, some residents say, the region’s vast mineral deposits and lucrative timber fields have been looted by Pakistani businessmen and politicians from the southern part of the country.

“We will not get anything,” said Ghulam Hassan, 32, who digs gemstones out of the mountains. “They will just load the gems up in containers and go down to the Arabian Sea, or go take them to China where they will polish, finish them there.”

Muhammad Ali, 39, a customs clearing agent in Sost, the northernmost Pakistani city before the Karakorum Highway begins a 35-mile, 7,000-foot ascent to Khunjerab Pass, said foreign investors are the only ones likely to benefit from the project.

But Ali and other residents of the area don’t have to travel far to see some of what China can offer Pakistan.

Within 100 miles of the border, for example, cellphone coverage is sparse. But when motorists reach the top of Khunjerab Pass, 3G service from a Chinese cellular provider bleeds across the frontier.

That’s the sort of modern convenience that Ameer Ullah Baig, a 60-year-old yak farmer who sleeps outside with his herds in the summer, is looking forward to.

Before the original Karakorum Highway opened in the 1970s, Baig said, his family relied on ponies and mules to get around and had to make wool overcoats to stay warm. Now, however, he rides a motorcycle to round up his herd and sleeps in a sub-zero, synthetic sleeping bag that he thinks was made in China.

“The highway was a blessing in disguise,” he said. “And I expect the same thing from the economic corridor.” (Courtesy: The Washington Post)