Pakistan-China Economic Relations and Its Geo-Political Implications: A Study with Special Focus On China-Pakistan Economic Coridor (CPEC)

Abstract

The Pakistan-China relations date back to 1950. Pakistan is the third country to recognize China when it appeared as a state in 1948. Many Pakistani leaders have underscored the importance of the Chinese ties with Pakistan. In 2006, President Pervez Musharraf gracefully described China-Pakistan relationship as “deeper than the ocean and higher than the mountain”. Notwithstanding this statement, bilateral relations have not been void of challenges. There have been some challenges resulting from periodic changes between military and democratic governments in Pakistan, and a number of domestic uprisings in China. The Cold War dynamics in the 1960s till the 1980s and Pakistan border dispute with colonial-cousin India had made the China- Pakistan relations even more significant. While bilateral relations have always had a geo-political outlook, economic relations have become vital and plays a more pivotal role in the last two decades of relations. Although China is Pakistan’s biggest trading partner, trade volumes still remained meager, with trade balance notoriously favouring China. Pakistan’s trade deficit with China widened to $6.223 billion in 2015. The volume of Pakistan’s overall trade with China was $10.029 billion in the fiscal year 2015-16, including $1.903bn exports and $8.126bn imports. While these figures suggest enormous trade lethargy, China, in recent years, has shown heighten interests in investment in Pakistan. In early 2015, China revealed a $46 billion infrastructure-spending blueprint for Pakistan, which will serve as a cornerstone to Beijing’s motivation to open new trade and transport routes connecting Asia. In this paper, the author examines the trajectories of China-Pakistan economic relations and will attempt to draw analysis on how these trajectories impact the regional geopolitics of the region.