China And Pakistan Set To Ink $46 Billion In Investment Deals, Launch Economic Corridor

China is set to finalize investment deals worth $46 billion with its old ally of Pakistan during Chinese President Xi Jinping’s rare visit to the nation on Monday.

The visit by Xi is aimed at ending Pakistan’s chronic energy crisis and to transform the nation into a regional economic hub.

The two nations are looking to establish a Pakistan-China Economic Corridor (CPEC) between Pakistan’s southern Gwadar port on the Arabian Sea and China’s western Xinjiang region, where Beijing is hoping to ramp up infrastructure and energy investments as part of its ambitions to broaden its trade and transport footprint across Central and South Asia, while countering U.S. and Indian influence.

“The real opportunity of this China Pakistan Economic Corridor is that it changes the scope of the relationship from geopolitics to geoeconomics,” said Ahsan Iqbal, Pakistan’s minister for planning and development.

“These are very substantial and tangible projects which will have a significant transformative effect on Pakistan’s economy,” Iqbal said.

The plan reflects a shift of economic power in the region from the West to China, said Mushahid Hussain Sayed, chairman of the Pakistani parliament’s defense committee.

“Pakistan, for China, is now of pivotal importance. This has to succeed and be seen to succeed,” he said.

China will provide around $34 billion in investment for the energy projects with nearly $12 billion in concessional loans to cover infrastructure projects, Iqbal said.

The economic corridor is set to run through Pakistan’s poor Baluchistan province, which has been long plagued by a separatist insurgency, criminal gangs, and Islamist militants. Aside from economic matters, key questions during the discussions between the two nations with focus on regional security.

The project envisions the creation of road, rail, and pipeline links that will cut several thousand kilometres off the route to transport oil from the Middle East to China, while bypassing their mutual rival, India.

Two weeks ago, the Wall Street Journal (WSJ) reported that China was set to build a natural gas pipeline from Iran to Pakistan in a deal worth up to $2 billion that was not part of the economic corridor.

China’s $46 billion in investment deals compares to $31 billion in investment that the U.S. has given to Pakistan since 2002, according to the Congressional Research Service.