China commits $45.6 billion for economic corridor with Pakistan

The Chinese government and banks will finance Chinese companies to build $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to new details of the deal seen by Reuters on Friday. The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by Prime Minister Nawaz Sharif during a visit to China earlier this month.
At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).
The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning US support as troops pull out of Afghanistan.
Pakistan and China, both nuclear-armed nations, consider each other close friends. Their ties are underpinned by common wariness of India and a desire to hedge against U.S. influence in South Asia.
Documents seen by Reuters show that China has promised to invest around $33.8 billion in various energy projects and $11.8 billion in infrastructure projects.
Two members of Pakistan's planning commission, the focal ministry for the CPEC, and a senior official at the ministry of water and power shared the details of the projects.
The deal says the Chinese government and banks, including China Development Bank[CHDB.UL], and the Industrial and Commercial Bank of China Ltd, one of China's 'Big Four' state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.
"Pakistan will not be taking on any more debt through these projects," said Pakistan's minister for water and power Khawaja Asif.
Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp, which built the world's biggest hydro power scheme, and China Power International Development Ltd.
Sharif signed more than 20 agreements during his trip to China earlier this month, including $622 million for projects related to the deepwater, strategically important Gwadar port, which China is developing.
The port is close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China that could be used by the Chinese Navy - potentially upsetting rival India.
Pakistan sees the latest round of Chinese investments as key to its efforts to solve power shortages that have crippled its economy.
Blackouts lasting more than half a day in some areas have sparked violent protests and undermined an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.
Under the CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid, officials said.
An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.
"In total we will add 16,000 MW of electricity through coal, wind, solar and hydel plants in the next seven years and reduce power shortage by 4,000 to 7,000 megawatts," said Asif.
"This will take care of a growing demand for power by a growing economy."
The CPEC deal also includes $5.9 billion for road projects and $3.7 billion for railway projects, all to be developed by 2017. A $44 million optical fiber cable between China and Pakistan is due to be built.
Meanwhile, another report adds: China on Monday hit back at "irresponsible remarks" from the United States which has called on Beijing to stop a land reclamation project in the disputed South China Sea that could be large enough to accommodate an airstrip.
China lays claim to almost all of the entire South China Sea, believed to be rich with minerals and oil-and-gas deposits and one of Asia's biggest possible flashpoints. Brunei, Malaysia, the Philippines, Vietnam and Taiwan also have claims.
The comments by China's foreign ministry signal that Beijing would firmly reject proposals by any country to freeze any activity that may raise tension.
Media reports over the weekend cited U.S. military spokesman Lieutenant Colonel Jeffrey Pool as urging China "to stop its land reclamation program and engage in diplomatic initiatives to encourage all sides to restrain themselves in these sorts of activities".
China reiterated that Beijing had "indisputable sovereignty" over the Spratly Islands, where most of the overlapping claims lie, especially between China and the Philippines.
"I think anyone in the outside world has no right to make irresponsible remarks on China-related activities," Foreign Ministry spokeswoman Hua Chunying told a daily news briefing.
"The construction-related activities undertaken by China on the islands are primarily to improve the living conditions of personnel stationed there and to better fulfill our international responsibilities and obligations in terms of search and rescue and the provision of public services."
A leading defense publication said on Friday that satellite images showed China was building an island on a reef in the Spratly Islands large enough to accommodate what could be its first offshore airstrip in the South China Sea.
The construction has stoked concern that China may be converting disputed territory in the archipelago into military installations.
"Vietnam and the Philippines should get used to China's island-construction in the South China Sea," said the Global Times, a nationalist tabloid owned by the Chinese Communist Party's official newspaper, the People's Daily, in an editorial.
"We hope that the U.S. can also get used to China's more frequent presence in the seas."
A Philippine court on Monday fined nine Chinese fishermen $102,000 each for poaching after they were caught with hundreds of sea turtles in a disputed shoal in the Spratlys.