Pakistan as Hong Kong West: China’s New Silk Road & US Failure

By Juan Cole | (Informed Comment) –

Chinese President Xi Jinping made a state visit, full of pomp and circumstance, to Pakistan on Monday, but its centerpiece was a $46 billion investment in the country, dwarfing the US Congress’s $7.5 bn. program initiated in 2008. Whereas the US likes to sell useless weapons systems that either rust in warehouses or foment wars like that in Yemen, China’s investment is divided between $11 bn. in infrastructure and $35 bn. in energy.

President Xi underscored that Pakistan had been his country’s friend back in the 1960s when China was isolated on the world stage, and called Pakistan China’s “Iron Brother.” (In the 1960s India and China had had a brief border dispute, and Pakistan and India have had a long term set of struggles over Kashmir, so Pakistan and China allied, in part against India).

But the China-Pakistan Economic Corridor (CPEC) is less about India and more about regional development for China and stabilization for Pakistan. The northwestern Xinjiang Province (pop. 22 mn.) has faced marginalization and a small separatist movement by the Uygur Muslim minority, which China sees as stirred up by the US CIA. Some Uygurs went to Afghanistan to join the Taliban. Beijing has dealt with that separatism in part by settling Han Chinese there in large numbers and in part by crackdowns. But the Communist Party now seems to hope that new forms of economic advance with bring prosperity and tranquillity. Xi said, “Our cooperation in the security and economic fields reinforce each other, and they must be advanced simultaneously.”

China’s enormous northwest is much closer to the Arabian Sea than to the port of Shanghai. It is about 2800 km. from Urumqi (pop. 4 million, the size of Los Angeles inside city limits) to Karachi, but twice as far to Shanghai. China has decided to develop its northwest by turning Pakistan into a sort of Hong Kong West. Hong Kong played, and perhaps still plays an important role as a gateway for certain kinds of foreign investment into China. In the same way, Pakistan can be a window on the world and a conduit for oil and trade into northwestern cities such as Urumqi and the smaller Kashgar (pop. 1 mn.)

New rail lines will be built to Karachi and to the new port of Gwadar on the Arabian Sea near Iran. Some will go through Baluchistan, tying that restive province, which has seen a separatist movement, more tightly to Islamabad. For its part, China will be at the mouth of the Persian Gulf, and appears to hope for pipelines bringing oil across Pakistan and the Himalayas up to Xinjiang. (In my own view, by the time all those pipelines and deals are done, China will have largely transitioned to electric cars fueled by renewables).

Since last June, Pakistan’s army has somewhat inexplicably turned on its former allies among the Pakistani Taliban with a big aerial bombing campaign (“Zarb-e Azb”) aimed at disrupting the Haqqani and other terrorist networks that had been targeting US troops and the Afghanistan National Army across the border. Haqqani leaders are said to have scattered. China appears to have made a defeat of the Pakistani Taliban insurgency a prerequisite for the CPEC, perhaps because of their links to Uygur fundamentalists. And, obviously, Pakistan can’t be Hong Kong West if it is routinely blown up by Taliban.

China will also build a solar electricity plant (yay!) and a coal plant (boo!) for Pakistan, which suffers from a massive shortfall in electricity. That shortfall is a big brake on economic development, since factories can’t run efficiently if the electricity keeps going out (Pakistanis call these brown-outs “load shedding.”

Because the Chinese plan involves a great deal of transit trade for Pakistan, and because China is wisely attending to energy and infrastructure, the CPEC could have a tremendous impact on the Pakistani economy, which has been lethargic in comparison to India’s in recent years.

That China views its role in Pakistan as that of an agent of vast economic progress likely makes it a more attractive partner for Islamabad than the US. A majority of Washington’s aid (and often a vast majority) has been arms and “security-related” according to the Center for Global Development:

“Between FY2002 and FY2009, only 30 percent of US foreign assistance to Pakistan was appropriated for economic-related needs; the remaining 70 percent was allocated to security-related assistance. In the period since the KLB authorization (FY2010 through the FY2014 budget request), 41 percent of assistance has been allocated for economic-related assistance.” But 100% of the CPEC is development aid and loans, which in turn are aimed at increasing trade and manufacturing. If the $31 bn. the US has spent there since 9/11 had been structured more like the Chinese plan, the US might have won in Pakistan. As it is, it is relinquishing that sphere of influence to China.

Related video:

Reuters: Chinese president to launch economic corridor link in Pakistan

22 Responses

  1. Note that China already has lots of engineering experience with building at very high altitudes, so building rail lines from western China to ports in Pakistan should be fairly “easy.” Note also that the new “Silk Road” rail system from China to Europe could also connect with the China to Pakistan route in western China giving Pakistan access to Europe via land as well as sea.

    Over time, China’s “Silk Road” rail system is going to be a major game changer for both China and all of Asia.

    BTW – The Chinese “Silk Road” rail system could also be extended to Iran , allowing Iranian trade with most of the world via China. That is, European and American goods can be “laundered” in China for transfer to Iranian customers and Iranian products could become “Chinese” and sold to the world. Of course, China profits from all this trade (as does most of the rest of the world for that matter). The only group that does not profit is the USA because of its super weird global policies.

    Note that most of China’s passenger rail and freight rail systems will be fully electric by 2030. Only some lines such as the Himalaya line that is difficult to electrify will remain as diesel powered.

  2. Their $46 billion dollar investment is one half of the amount of money squandered by this country in Afghanistan…..IN ONE YEAR!!! And what do we have to show for 13 years of our investments in that war torn, drug infested goat farm? A lot of warlords now have Swiss bank accounts.

  3. In one of its lapses into intelligent and civilized behavior Washington instituted the Marshall Plan for Europe. It was a win-win arrangement. China’s arrangement with Pakistan will very likely prove to be a win-win policy for China and Pakistan. Militarism has never been a winner in the long run, but that seems to not be appreciated in Washington.

  4. And in another diplomatic step in the right direction for China: “U.S. leaders along with its foreign “vassals” – as Russian President Vladimir Putin has called them – have responded to the Kremlin’s invitations to the V-E celebration with “regrets.” Not so Chinese President Xi Jinping , whose plan to come for the anniversary observance was announced in January. The President of India, Pranab Mukherjee, will also take part. Signs of the times.” link to consortiumnews.com

  5. This one’s going on our gravestone.

    The Marshall Plan and its Japanese adjunct worked, so why are they so forgotten in American political discourse? Is it for the same reason that conservatives like Nixon were willing to spend money on social programs when blacks seemed ready to disrupt his rule? Is it the American Way that trouble caused by the poor at home and abroad is met with tons of guns and butter, but no genuine sense of humanity and compassion that will last past an imminent strategic crisis?

    Do we Americans simply reduce all non-us to “problems” to be bought off or killed to silence them as quickly as possible? And then they’re ignored by every part of us except the Wall Street exploitation machine, which moves in to pervert their politics and culture as it has America’s.

    Is this incredible short-sightedness and dismissiveness about the the potential value of non-us people racism, or simply capitalism taken to its logical attention span? Recall how Washington labored hard to break the Left in Latin America under a flood of juntas in the ’70s and neoliberal saviors in the ’80s… all that trouble setting it up to be a giant sweatshop for those union-busting factories that had already moved south of the Mason-Dixon line, creating a region of regimes that would follow orders. And what happened? China paraded itself and its combination of rock-bottom wages and decent education in front of Wal-Mart and the mad rush was on. Corporations finished off America’s industrial economy to sign contracts with a regime they couldn’t control, one that had long-term plans to develop its population, not to keep it starving and terrorized like El Salvador’s.

    So now our model is retreating back to our own borders, the Shock Doctrine transferred from Chile to Wisconsin, breaking the middle class for a few more months of stock speculation, while China’s clever kung fu over Wall Street goes on a global offensive.

    • “The Marshall Plan and its Japanese adjunct worked, so why are they so forgotten in American political discourse?”

      Maybe for the same reason the reigning politicians have “forgetten” Econ 101 and how Keynesian deficit spending, not austerity, is what it takes to lift a country out of recession. That’s a “Democrat policy.” Like WWII was a “Democrat war” and the Marshall Plan a “crazy Democrat idea.”

      These days, not even the elected Democrats want to identify with the party’s big successes of the 20th century.

  6. The laissez-faire capitalism of Hong Kong was inherited from the British. The Chinese didn’t mess with Hong Kong’s economy because they learnd something from what they had done to Shanghai. We’ll see if they can create a Hong Kong on their own..
    As China’s economy continues to grow, its’ largest companies may become like other transnationals which are not loyal to any state. The world economy will make nation-states less relevant.
    If the Chinese investment led to the disruption of terrorist networks, it has already benefitted the US. If they create a thriving trade center on the sea, US firms can get in on that trade. Chinese money invested in the US has increased to 14 billion. We should be encouraging China to invest more here. We shouldn’t try to out-invest China in any particular region. The stronger economies should divide the labor in the work of uplifting the world.

    • I think that the point of articles like this is that the Wall Street/Pentagon oligarchies don’t want to “uplift” anyone. A few years ago Paul Volcker himself expressed fear that the global financial system was meant to have rich countries invest in the productivity of poor countries – not for poor countries to lend to rich countries to protract the wasteful consumption of the latter. This system has become backwards and dysfunctional.

      And I will never kneel to your damned corporate tyrannies, and neither will anyone of character in the world. Build a world of whores, then don’t be surprised that it is full of short-sighted, self-destructive pathologies. A gonorrhea of the soul.

    • Read Richard Rosecrance’s “The Rise of the Trading State”. This has all happened before, and it will happen again.

  7. There is an old saying attributable to the Chinese that suggests that people who resort to violence to gain a point or resolve a problem do so because they lack the intelligence to use non-violent/diplomatic means. Seems like that philosophy still applies in China.

  8. Prosperity works, China’s President has it right. With energy (hopefully more solar than coal) and development Pakistan’s economy will flower, and with a flowering economy extremism will look less attractive to anyone, saving us all from a bad mind virus. I think it is excellent that the China takes the lead in doing the right thing for the region, for with prosperity will come peace. Maybe this will goad the US into offering more help towards peaceful development in Pakistan?

    • Many of Pakistan’s pathologies may be traceable to the last rich country to throw its money around there – the Kingdom of Saudi Arabia, and its jihadi psychopaths dating back to the war against the Soviets in Afghanistan. Wahhabism fit the imperialist agenda of the Pakistani Army. Well, we see after 35 years where this has gotten them. Maybe they see that it’s time to try something different, and the US has failed or lost the ability to take on that role.

      However, we must recall that the Saudis and Reagan used this Islamist extremism in order to block socialism in the region – thereby keeping it under the thumb of a sort of capitalism. Yet the Islamists have moved further on their own, because the discontents of capitalism have never been solved. China hasn’t solved them either. Prosperity for a few, and meaningless consumption for the rest, may not end religious fundamentalism – it sure hasn’t in the United States.

      • Thank you for revealing some of the history, I wasn’t aware of the effect of Saudi influence in Pakistan. I understand the pessimism given the recent history, but with increased prosperity a growing middle class usually diminishes the drive toward extremism and ushers in a more progressive era. Socialism integrated with a market system makes sense, and when the average citizens see improvements in their lives, there ought to be less extremes in either direction. It all looks impossible right now, but look at the progress China has made in the past few decades, and along with that comes progress in the societal realm. We all need to see hope in the future, and I believe it will happen – the other choice looks more like the Ancient Greek version of Hades, and I’d rather opt for the hopes of progress for the Pakistani citizens.

        • … but with increased prosperity a growing middle class usually diminishes the drive toward extremism and ushers in a more progressive era.

          That’s one possible scenario. Unfortunately, there is the potential opposite for people with power to siphon the increases in prosperity into their own (and Swiss bank) accounts.

  9. A 3000 km enormously expensive railway line running through mountains and areas under the control of separatist forces fighting the Pakistani governments. A good plan?

    What will go back and forth on this railway? Neither Urumqi nor Karachi are renowned for their international trade

    A ship from Shanghai can now deliver 20,000 20 foot containers in a single sailing. How long would a train have to be to deliver that quantity?

  10. A ship from Shanghai can now deliver 20,000 20 foot containers in a single sailing. How long would a train have to be to deliver that quantity?

    On the other hand, as other observers have noted, the Chinese rail system could include another line north of Pakistan through the other ‘stans into southern and central Europe as far as Lisbon. Perhaps solar power could eventually become sufficiently efficient to power a train, something that is much less likely in the case of a container ship.

  11. Great insight. The US with its ‘aid’ never understood the ‘trade’ part. The Gwadar port dream is almost being realized now. China is now Pak’s saviour…or master…brings hope for the future than it is now. Not without risks though…

  12. Gavin Menzies writes in his book “1421 The Year China Discovered America”, that not only America but also China has discovered all the continents by that time. China was the maritime power unrivalled by anyone. China had the biggest navel armada that world has never seen before.
    China could have colonized the world but it did not. China has already drawn the maps of the world, later used by the Europeans to rediscover the world.
    Instead of grabbing the world resources by colonizing as the Europeans did later on, China established trade routes, The Silk Route & sea routes.
    Even now, China has the same philosophy. China is going to infuse $46 billion in Pakistan for its infrastructure, Railways, Super Highways, bridges & energy that Pakistan badly needs.
    China is not bribing the Pakistan army with $$$’s and supplying the old unused arms & ammunition.
    When all regions of Pakistan will reap the economic benefits, the local separatist insurgencies and fueled by foreign elements like California congressman, Dana Rohrabacher, from 46th district who has a bill in the congress for Baluchistan to defect & be a separate country, will disappear by uplifting the standard of living of these & other people.
    China is adding new names to the old silk route like Gawadar, Pasni, Khuzdr, Quetta & others up to Urumchi in Sinkinag.
    It is not the guns & Bombs but the commerce, industry & prosperity that brings the peace that is what China is doing with its soft power by infusing $46 billion in Pakistan infrastructure.
    Love to see whole Pakistan becomes another Hong Kong of the west as Professor Cole has envisioned.

  13. However the Chinese accomplish this feat, it seems that they can make it happen. True, solar trains would make sense in a changing world, but even ships could be powered with solar and wind, and energy storage devices charged with either.

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