China-Pakistan to sign US$28 billion in projects during Xi visit

[ISLAMABAD] Pakistan and China will sign agreements for energy and infrastructure projects valued at US$28 billion during President Xi Jinping's visit to Islamabad that starts Monday, Planning Minister Ahsan Iqbal said Sunday.

The contracts will be part of the US$45 billion China- Pakistan Economic Corridor.

The 3,000 km route will start in China's western Xinjiang region and run to the Chinese-funded Gwadar port on the Arabian Sea in Pakistan. If it develops as planned, it will give China access to the Indian Ocean - and the Mideast, Africa and Europe - and improve the transport networks and power supply of Pakistan.

"It's very significant," said Mohammed Sohail, chief executive officer of Topline Securities in Karachi. "It can bring a big change for all our economic fundamentals, in particular in energy."

Under the plan for the Corridor, Chinese companies will invest US$22.5 billion in coal-fired, hydro, wind and solar energy projects in Pakistan, while China will provide concessional loans for infrastructure projects, Mr Iqbal said.

"We can see some progress on the energy side because some local companies are involved and government looks serious about the issue," Mr Sohail said. "Though the plan is to build 8,000 to 10,000 megawatts of capacity, if they are initially able to add 3,000 to 4,000, that would be a big development."

Mr Xi, whose visit to Islamabad will last two days, wants China and Pakistan to deepen their cooperation in areas beyond defense, the official Xinhua news agency reported Sunday. The two nations, which both are rivals of India, have long had close security ties.

"We have market of 200 million people, a strategic location to connect various region, so we're trying to make it attractive for foreign investment," Mr Iqbal said.

BLOOMBERG