China Watch [February 14-20] – China Offers Support to Fight Terrorism

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Highlights:

China has condemned the Sehwan terrorist attack and offered its support against the terrorism and extremism to Pakistan. Pakistan has said that India was openly opposing the China Pakistan Economic Corridor (CPEC). China and India will hold strategic talks this week to discuss the banning of Pakistan-based Jaish-e-Muhammad (JeM), Masood Azhar, and India’s inclusion in the Nuclear Supplier Group (NSG). Ministry of Water and Power shared the details of terms and conditions of financing and tariff structure of energy projects with National Assembly’s Standing Committee on Planning, Development and Reforms. Pakistan and China have revised the ‘priority list’ of the energy projects to be completed within the next two years under the CPEC. Pakistan’s Board of Investment (BOI) has identified 41 sites to establish SEZs as part of the CPEC. KP government will establish a force of 2,600 personnel for the security of CPEC and Swat Motorway.

China Offers Support to Fight Terrorism:

China condemned the Sehwan terrorist attack and offered its support against terrorism and extremism.[1] Chinese Foreign Affairs Spokesperson Geng Shuang said that “[W]e express deep condolences to victims and sincere sympathies to the injured and bereaved.” The statement came in the aftermath of a gory terrorist attack on the shrine of Sufi Lal Shahbaz in Sindh that took the lives of more than 80 people. During the last week, Pakistan saw a sudden surge in terror attacks that seriously undermined the stability and order that had been achieved after relatively successful implementation of the Operation Zarb-e-Azb and the National Action Plan. Above all, the attacks have exposed the limitations of Pakistan’s counter-terrorism strategy and refreshed the questions whether the country is ready to provide foolproof security to the multi-billion dollar CPEC project.

India Threat to CPEC:

Pakistan’s Ministry of Foreign Affairs spokesman, Nafees Zakaria, said in his weekly briefing that India was openly opposing CPEC. Mr. Nafees said that “[W]e are aware of Indian (government’s) plans to sabotage CPEC.”[2] He also added that “India’s interference in Pakistan is not concealed.” The spokesman said that Kulbhushan Yadav had confessed to India’s malicious designs regarding CPEC.[3] Yadav is an Indian intelligence official who was arrested by Pakistan’s security agencies in Balochistan last year. Pakistan has repeatedly accused India of being involved in activities to undermine the CPEC. Islamabad has even invited New Delhi to become part of this economic venture but India has categorically rebuffed all such calls. India says that CPEC not only poses a security threat but also passes through the territory that belongs to India.

India and China to Discuss Azhar:

China’s Executive Vice Foreign Minister Zhang Yesui and Indian Foreign Secretary S Jaishankar will hold strategic talks this week to discuss important issues such as the banning of Pakistan-based JeM, Masood Azhar and India’s joining of the NSG.[4] China said on Friday that India has not provided “solid evidence” against the JeM leader so that Beijing could support the move to sanction him at the United Nations. China, purportedly to back its ‘all-weather’ friend Pakistan, has repeatedly blocked the move to ban Azhar at the UN. It has riled New Delhi which accuses Azhar to be behind the multiple attacks against India. It seems that China wants to assuage the Indian apprehensions to an extent but without conceding any major shift in its policy on the issue.

Costs of Coal-fired Projects:

Ministry of Water and Power shared the details of terms and conditions of financing and tariff structure of energy projects with National Assembly’s Standing Committee on Planning, Development and Reforms.[5] The details showed that the deals regarding coal-fired power projects were highly favorable towards China. The 34.5 percent annual profit on equity for China, the costs of insurance (to be paid to Chinese insurance company) and the exemption of the income of Chinese financial institutions from dividend income tax are some of the major sources of concern. Transparency in the deals signed under the CPEC has already been subjected to questions and doubts. If costs of the projects, to be paid back to China, outweigh the gains and income, then the investment can hardly be justified on the basis of economic wisdom.

‘Priority List’ of CPEC Energy Projects to be revised:

Taking all the ground realities into consideration, Pakistan and China have revised the ‘priority list’ of the energy projects to be completed within the next two years under the CPEC.[6] Now the list will first be presented before the Joint Working Group and then Joint Cooperation Committee for final approval. The ‘priority list’ includes the energy projects that are supposed to be completed by 2018. Another category is that of ‘actively promoted projects’ which are planned to be made operational by 2022. The two sides have agreed to downgrade 1,320 megawatt (MW) Rahim Yar Khan coal-fired power plant to the ‘actively promoted projects’ list and upgrade 660 MW Hubco coal-fired power plant to the prioritized list. Energy projects sits atop of the CPEC agenda and have been earmarked the largest chunk, i.e. $36 billion, of the whole funding. With different hurdles and issues coming up to the fore, the two countries have to revisit the energy-related targets so as to make them compatible with the facts on ground.

40 Economic Zones:

Pakistan’s Board of Investment has identified 41 sites to establish SEZs as part of the CPEC.[7] National Assembly’s Standing Committee on Planning, Development and Reform was informed that seven SEZs had been notified by the BOI so far. The committee was told that all the sites had been selected after consultations with the provincial, Azad Jammu and Kashmir and Gligit-Baltistan governments and the Federally Administered Tribal Areas secretariat. Though SEZs compose one of the key pillars of CPEC, little progress has so far been made on this plan. However, all such industrial zones need to be preceded by, and facilitated with, roads and energy infrastructure that for now is the priority of the two countries.

Miscellaneous:

KP government will establish a force of 2,600 personnel for the security of CPEC and Swat Motorway.[8] Sixteen JF-17 Thunder aircraft – produced in collaboration with China- were inducted into fleet of PAF.[9]  KP’s Chief Minister Pervez Khattak has said that the western route was an integral part of the CPEC.[10] Pakistan will start exporting seafood to China via land route in April.[11]

 

This report is compiled and written by Abdur Rehman Shah, Research Associate at the Center for Research and Security Studies (CRSS), Islamabad.  

[1] Dawn. (2017, February 18). China offers support to fight terrorism in Pakistan. Retrieved February 19, 2017, from http://www.dawn.com/news/1315516/china-offers-support-to-fight-terrorism-in-pakistan

[2] A. (2017, February 16). Pak accuses India of planning to sabotage CPEC, endangering regional peace. Retrieved February 17, 2017, from http://www.hindustantimes.com/world-news/pak-accuses-india-of-planning-to-sabotage-cpec-endangering-regional-peace/story-E0ysqhT77YD2Lw6RoIgllM.html

[3] Geo News.(2017, February 16). India is openly opposing CPEC: FO spokesperson. Retrieved February 17, 2017, from https://www.geo.tv/latest/131342-India-is-openly-opposing-CPEC-FO-spokesperson

[4] Patranobis, S. (2017, February 17). India-China talks next week, Beijing says no ‘solid evidence’ against Azhar. Retrieved February 19, 2017, from http://www.hindustantimes.com/world-news/sino-india-talks-next-week-china-says-no-solid-evidence-against-masood-azhar/story-lXYCG08vApFiiELCH2gKjN.html

[5]Rana, Shahbaz. (2017, February 14).  Windfall for Chinese on coal fired projects. Retrieved February 20, 2017, from https://tribune.com.pk/story/1327172/windfall-chinese-coal-fired-projects/

[6] Rana, Shahbaz. (2017, February 18).  Pakistan, China revise ‘priority list’ of CPEC energy projects. Retrieved February 20, 2017, from https://tribune.com.pk/story/1330482/cpec-energy-projects-pakistan-china-revise-priority-list/

[7] Staff Reporter. (2017, February 15). Over 40 economic zones to boost CPEC projects. Retrieved February 20, 2017, from http://www.dawn.com/news/1314859/over-40-economic-zones-to-boost-cpec-projects

[8] Radio Pakistan. (2017, February 15). Force of 2600 personnel to be set up for CPEC security. Retrieved February 20, 2017, from http://www.radio.gov.pk/15-Feb-2017/force-of-2600-personnel-to-be-set-up-for-cpec-security

[9] Webmaster. (2017, February 16). 16 more JF-17 aircraft handed over to PAF. Retrieved February 20, 2017, from http://pakobserver.net/16-more-jf-17-aircraft-handed-over-to-paf/

[10] Bureau Report. (2017, February 15). Western route integral part of CPEC: Khattak. Retrieved February 20, 2017, from https://www.thenews.com.pk/print/186436-Western-route-integral-part-of-CPEC-Khattak

[11] APP. (2017, February 17). Pakistan to export seafood to China via land route. Retrieved February 20, 2017, from https://tribune.com.pk/story/1330540/trade-enhancement-pakistan-export-seafood-china-via-land-route/

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