Opportunities and Challenges in Current China–Pakistan Economic and Trade Relations

Abstract

In April 2015, Chinese President Xi Jinping visited Pakistan, elevating the bilateral ties to a new height of “all-weather strategic partnership”. Both parties agreed to promote a ‘1 + 4’ pattern of economic cooperation featuring a leading role of the China–Pakistan Economic Corridor (CPEC) and four key areas including the Gwadar Port, Energy, Transportation Infrastructure and Industrial Cooperation. China and Pakistan converge in developmental strategies and urgent need of bilateral trade upgrading, and have a broad prospect for economic and trade cooperation, including the highway and railway construction and relevant logistics sector in field of transport infrastructure, the power generation project, power transmission and distribution infrastructure, natural gas and coal sector in field of energy, and the automobile industry, textile industry and small and medium-sized enterprises (SME) cooperation in field of investment and industrial cooperation. However, China–Pakistan economic and trade relations also face some challenges. In politics, the domestic political disputes in Pakistan and geopolitical games around Pakistan have exerted a great influence on the relations; in economics, Pakistan has fragile macro-economy, prominent policy risks, systematic risk in power sector and some specific difficulties in project implementation; in security, China–Pakistan cooperation has also been directly or indirectly threatened by violent separatist forces and extreme or terror groups. The Chinese side may take appropriate measures accordingly to prevent and hedge relevant political, economic and security risks in a positive and sound manner to fully promote China–Pakistan economic and trade relations. Under the political guarantee of bilateral strategic relations, the bright prospect for China–Pakistan economic and trade relations can be expected.