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Nov 5, 2018 | 21:29 GMT

4 mins read

China, Pakistan: How a Leadership Summit Bolstered Cooperation

(Stratfor)
Big Picture

China and Pakistan forged a strategic partnership during the Cold War to keep India off balance. Today, the economic component of their relationship has led to the China-Pakistan Economic Corridor, a flagship initiative from Beijing's vast Belt and Road Initiative that aims to deepen China's trade links with more than 65 countries stretching across the Eurasian landmass and its periphery. But while China's expansion into South Asia is creating opportunities for Pakistan, it threatens to upset India's hegemony in its intensifying contest for influence with China.

What Happened

A weekend summit between the leaders of China and Pakistan highlighted the strategic and economic drivers shaping one of Asia's strongest partnerships. On Nov. 2, Pakistani Prime Minister Imran Khan paid his first visit to Beijing since coming to power in August. While there, Khan met with several of China's key political leaders — including President Xi Jinping, Premier Li Keqiang, Vice President Wang Qishan and top legislator Li Zhanshu.

During the four-day trip, Khan's appeals for Beijing to extend his government billions of dollars worth of foreign aid to shore up Pakistan's diminishing foreign exchange reserves proved the most important topic of conversation. China did promise to offer Pakistan financial help, but stopped short of detailing the exact sum. Negotiations also touched on the China-Pakistan Economic Corridor (CPEC), and the two sides agreed to focus on socioeconomic development, jobs and accelerating progress on developing the port in Gwadar. Moreover, the two countries promised to hold the next meeting of the Joint Cooperation Committee — CPEC's key decision-making body — in Beijing by year's end.

Why It Matters

China is Pakistan's strongest global ally. Beijing's support is an important guarantor of Pakistan's stability, especially when it comes to ensuring the country maintains an environment conducive to partipating in CPEC. And as Khan prepares to request money from the International Monetary Fund (IMF), the assistance of international partners such as China will be key to lessening the amount the prime minister requests. Pakistan has gone to the IMF 21 times since 1958, and another bailout — reportedly to the tune of at least $7 billion — will come with strings attached. In exchange for its assistance, the IMF will likely require Khan's government to implement politically unpopular austerity measures to reduce Pakistan's fiscal and current account deficits. The tough measures are expected to hinder Khan's vision for an "Islamic welfare state" — in which the government focuses on development measures such as health care and education to improve the lives of those in poverty — by shaving up to one full percentage point off the country's economic growth rate. At 5.8 percent, the most recently reported growth rate is Pakistan's highest in over a decade.

Background

The strategic partnership between China and Pakistan stems from the Cold War and is aimed at keeping India, a mutual rival, off balance. In the 1980s, China helped Pakistan develop its nuclear weapons program to compensate for the inferiority of Pakistan's conventional military in comparison to India's. Pakistan views India as an existential threat, and the entirety of its army-dominated foreign policy is aimed at deterring an Indian military invasion. China, for its part, views India as a military rival near its disputed border, and Indian and Chinese troops engaged in a lengthy standoff on Bhutan's disputed Doklam Plateau in the summer of 2017.

Today, CPEC represents the high point of Beijing and Islamabad's shared desire to deepen their partnership both economically and strategically. CPEC aims to develop China's Xinjiang province by building trade corridors to link it to all of Pakistan's major cities. In addition, the project will give China alternative trade routes to the Strait of Malacca, a chokepoint for China's seaborne trade. These mutual benefits make it unlikely that China or Pakistan will abandon the project in the foreseeable future, Pakistan's domestic disagreements on the project's scope notwithstanding. 

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