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Pakistan China Economic

Cooperation and American

Regional Objectives 1998-2008

Zamurrad Awan & Zainab Mazhar

Pakistan and China has realized the missing
economic dimension in their strategic relationship
although China remained a steadfast friend and
helped Pakistan in building several important
projects related to defense and economic
development. Therefore in last few years, the two
governments have convened a number of high-level
conferences/forums, inaugurated by their respective
leadership in Pakistan and China, to promote
economic cooperation thereby exhibiting interest,
resolve and patronage to the private sector business
community of the two countries. However, United
States of America emerged as the only superpower
after its victory in Cold War and to extend its
influence US brought Japan deeper into the security
net by increasing its supply of weapons to Taiwan
and started building India as a counterweight to
List of Abbreviations
GDP Gross Domestic Product
US United States
PLA People's Liberation Army
U.N United Nation
MOU Memorandum of Understanding
MCC Metallurgical Construction Corporation of China
CMC China National Machinery Import and Export Corporation
CPECC China Petroleum Engineering Construction Corporation
EHP Early Harvest Programmed
PTCL Pakistan Telecommunication Company Limited
FME Free Market Economy
FTA Federal Transit Administration
FDI Foreign Direct Investment
MFN Most favored nation
SAARC South Asian Association for Regional Cooperation
NATO National Antarctic Treaty Organization
USSR Union of Soviet Socialist Republics
ISI Inter-Services Intelligence
USA United State of America
EU European Union
ETIM The East Turkistan Islamic Movement
ECO Economic Cooperation Organization
IAEA International Atomic Energy Agency
TMD Theatre Missile Defense
NMD National Missile Defense
BIT Bilateral Investment Treaty

The Statement of the problem
 The U.S economic policy toward China and
Pakistan has given rise to the perception that the
US wants to delay or even block China’s
emergence as a major economic power.
 The friendly relations between China and
Pakistan are not been liked by America.
 Although, the partnership of China and Pakistan
for prosperity cannot be ignored after keeping in
view, the geographical stature of both countries.
Background of the Problem
 Pakistan was the first Islamic country to recognize the
People Republic of China on January 4, 1950. Though
Pakistan established diplomatic relations with China in
1951 but the actual consolidation of relations had started
in the early 1960s, when Pakistan changed its previous
stance and supported China’s seating in the UN in 1961.
 Pakistan on its part sincerely helped China to end the
isolation by signing an air-transport agreement and trade
agreement and helping China to maintain its contact with
different of countries, especially with the Islamic world.
 But every time US rushed military and economic
assistance to India which caused a serious threat to
 The study is to high light the main trends
between the economic relations between
Pakistan and China and to analysis the
impact of these trends on the realization of
US objectives. Moreover, the suggestions
and recommendations for the neutralized
relation between China and Pakistan has
been given.
Hypothesis Formulation

The increasing Pakistan-China economic

co-operation is an impudent for the
realization of American regional
objectives. The study would limit a thought
and exhaustive analysis of the problem
emerged in Pakistan-China relations along
with the real perceptual climate of the
economic trends in between both

 Kornberg; Judith; Faust (2005) introduces the China's foreign policy--past
and present--and the factors that may influence the country's future policy

 Zhang;Yongjin; Austin (2001) has discussed that Power and Responsibility

in Chinese Foreign Policy provides a critical insight in to the critical issues
in China's international relations - China's regional and global diplomatic
and security problems, the changing role of the People's Liberation Army,
human rights, religious and democratic movements, and the concept of

 Kanishkan (2005) in their book Uneasy neighbors: India, Pakistan, and US

foreign policy, write in details the history of 'Partition', the critical event in
the modern history of the subcontinent and the fundamental catalyst for the
enduring rivalry between India and Pakistan. It provides a summary
description and analysis of the characteristics - demographic, social-
cultural, political, economic and military - of the three primary actors that
are party to the conflict: the sovereign states of India and Pakistan and the
territory of Kashmir.
 Yongjin ; Austin (2001) has discussed that Power and
Responsibility in Chinese Foreign Policy provides a
critical insight in to the critical issues in China's
international relations - China's regional and global
diplomatic and security problems, the changing role of
the People's Liberation Army, human rights, religious
and democratic movements, and the concept of

 Kornberg ; Faust (2005) in this book introduces the

China's foreign policy--past and present--and the factors
that may influence the country's future policy agenda
Aim and Objective of study
The objectives of the research are three fold:

 To highlight the economic trends in Pakistan-

China relations
 To analyze the impact of these trends on the
relations of U.S objective
 To give the recommendations for neutralized
relations of Pakistan and China.

The topics of study is historical descriptive
therefore the secondary sources have
been used for research. The data has
been collected from the main library of
Government College University, and the
library of Kinnaird College.
 Pakistan’s relations with China in the next
five years and beyond will continue to
expand because the relationship is based on
principles of peace and prosperity and both
shared the 55 years of relationship which
built the strong foundation. But America is
not satisfied over this Pak-China
Relationship and has adopted a different
policy to counter it by signing US-India
nuclear deal.
 In May 1998, on Indian nuclear tests, the Indian
defense minister and Prime Minister stated
China as a long-term security threat. And China
supported Pakistan in establishing the strategic
balance in South Asia by conducting its own
nuclear tests.
 On August 6, 2004, China and Pakistan
conducted their first joint anti-terrorism military
exercise named “Friendship 2004,” in Xinjiang.
In April 2005, during Premier Wen Jiabao’s visit
to Islamabad, the two sides signed a treaty of
friendship, cooperation and good neighborly
relations as well as an agreement on combating
terrorism, separatism and extremism.
 Pakistan and China are cooperating closely in the
development of the Gwadar deep seaport
 The Chinese Prime Minister, Zhu Rongji, during his visit
to Pakistan in May 2001, urged the two sides to “boost
cooperation in agriculture, infrastructure, information
technology and other fields under the principle of
reciprocity and mutual benefit for achieving common
 The two countries signed a Preferential Trade
Arrangement (PTA) in November2003
 The main items of Pakistan’s imports from China
are machinery and parts, iron and steel
manufactures, sugar, chemical materials,
chemical elements and medical and
pharmaceutical products. The main items of
Pakistan’s exports to China are cotton fabrics,
cotton yarn, petroleum and its products, fish and
its preparations, leather, fruits and vegetables.
Unfortunately, mix of Pakistan’s products
exported to China is very narrow. Almost around
80% of its exports consist of cotton yarn and
 Pakistan and China instituted a Joint
Study Group to negotiate a Free Trade
Agreement between the two countries and
have simultaneously negotiated an Early
Harvest Programme (EHP), which has
become operational from January 1, 2006.
Table 4.2: Sector-wise Chinese investment in US $
Sectors FDI from China
1. Metal Products 5,214
2. Transport Equipment 151,068
(Motorcycles &
3.Construction 189,000
4.Communications 22,287
5.Others 76,194
TOTAL 443,763
 The overall geo-strategic environment for
regional cooperation is also gradually becoming
more favorable for Pak-China relations.
Pakistan’s entry into the Shanghai Cooperation
Organization as an observer and China’s entry
into the South Asian Association for Regional
Cooperation (SAARC) as an observer would
allow Pakistan-China bilateral economic
relations to grow from a regional perspective.
 . People-to-people contact is increasing at all
levels of the two civil societies. All these
indicators point to the fact that Pakistan-China
relations will remain on the track of constant
growth in all areas of mutual benefit.
 Today, US presence is everywhere. It is present in Central Asia,
South Asia, Japan, Australia, and Saudi Arabia. After the terrorist
attack on US Trade Centre in 9/11,2001brought a sea change in
international politics. The National Security Strategy of USA,
included the doctrine of pre-emptive strikes and the right to station
US troops in any part of the world.
 After finding the militants in South Asian, US is more critical towards
the China’s statement of opposing the concept of a uni-polar world
and its friendly relations with China.
 By joining the war against terrorism, Pakistan once again became a
US ally and its hard for Pakistan to have friendly relations with both
countries simultaneously when they contradict each other in their
 As for as the relations between Pakistan and China are concerned,
both countries wish to develop peace and want to focus on
developing social and economic welfare with out being pressurize
by any external force.
 Pakistan’s new democratically elected government
should continue to support the US in the War on Terror.
 Pakistan would adopt a middle-of-the-road foreign policy
aimed at accommodating the needs and requirements of
both, China and the United States. Under the present
circumstances, Pakistan cannot afford to distance itself
from any one of them.
 Since financial constraints dictate that Pakistan resort to
a suitable quality-quantity mix in its military weapons, it
would continue to rely on the US for quality while
depending on China for quantity.
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