China’s road to West is paved with bold intention

April 20, 2015

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China is paving a new, shorter route to Europe with bold intention. During his two-day visit to Islamabad this week, President Xi Jinping is expected to give the go-ahead to $46 billion of investment in an energy and transport corridor between the restive western Chinese region of Xinjiang and the deep sea port of Gwadar on Pakistan’s southern coast.

The plan is both ambitious and risky. The 2,000-kilometre rail-and-road pathway would halve the distance between poorer regions in western China and wealthy consumers in Europe compared with transporting goods by boat. But it could be a security nightmare. Xinjiang, home to the Muslim Uighur minority group, has been plagued by unrest in recent years. Pakistan’s Baluchistan province, where the Gwadar port is situated, has been in the grips of a long-drawn separatist movement.

The gigantic investment will need China’s financing muscle. Companies like China’s Three Gorges Corp and China Power International Development are expected to tap the likes of China Development Bank to set up $34 billion worth of energy projects. Separately, Chinese government and lenders will provide soft loans for $12 billion of transportation infrastructure, Reuters reported, citing Pakistani officials.

Both Pakistan and China are pressing on because the prize is enormous. Assuming that a safe corridor can be carved, Middle East oil that reaches Shanghai by a circuitous sea route would instead do a shorter overland journey. Pakistan would be able to use some of that energy to solve its own power crisis. Gwadar would also facilitate easy shipping access for Pakistani and Western Chinese-made goods to North Africa and Europe.

Then there is the added attraction – for both partners – of reducing India’s clout in South Asia. India’s $1.8 trillion economy was roughly seven times larger than Pakistan’s last year. Washington’s growing ties with New Delhi are making both Islamabad and Beijing uneasy.

China is investing in India too. But the People’s Republic and Pakistan enjoy a historically deep friendship. Prime Minister Nawaz Sharif is hoping that by playing host to at least one of China’s several new roads to the West, Pakistan can modernize its industry and keep the economic gap with India from getting any wider.

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