China Watch

China Watch [May 30 – June 5] – China Reassures CPEC will address Pakistan’s Energy Problems

Summary:

China has said that the energy projects under the CPEC will greatly reduce Pakistan’s energy shortage problem. The government of Baluchistan has revealed its plans of opening up the mining sector of the province to Chinese firms under the China-Pakistan Economic Corridor (CPEC). Beijing has revealed it hopes that Islamabad and New Delhi would utilise the full membership of Shanghai Cooperation Organisation (SCO) to improve their bilateral relations. Chairman Joint Chiefs of Staff Committee General Zubair Mahmoud Hayat has said that CPEC can help resolve conflicts in the region. A retired Indian military commander, Lt Gen Deependra Singh Hooda, has warned that because of the CPEC, China’s neutrality in case of India-Pakistan war can not be taken for granted. A Chinese firm has got the initial approval for setting up a 300MW imported coal-based power plant.

China Reassures CPEC will address Pakistan’s Energy Problems:

China’s Foreign Affairs spokesperson Hua Chunying has reckoned that the energy projects under the CPEC will greatly reduce Pakistan’s energy shortage problem.[iii] The spokesperson shared her views while talking about the formal commissioning of Sahiwal (coal-powered) power plant. With the largest installed capacity of generation, 9 billion kWh, of electricity per year, the plant will provide for the energy needs of nearly 10 million people. While the first unit of the plant with a capacity of 660 megawatts was connected to the national grid last month, the second unit (660MW) has been put on trial and will be formally inaugurated by the end of this month. Ms Hua said that Sahiwal plant is an important energy project being built under the CPEC. She added that 11 out of the 17 priority energy projects planned by the two countries were under construction and most of them would be completed by the end of 2019. Energy projects hold a prioritised position under the CPEC and has been allocated the largest chunk – $36 billion – of funding under the corridor funding. There is a great potential that CPEC might not only resolve the energy woes of the country but also earn generous goodwill from the people. With the unbearably sweltering summer already on, load shedding and power crisis has intensified. Pakistan’s energy deficit is estimated to be more than 6,000MW.[iv] Resolving the energy crisis was the top election slogan of the incumbent political government during 2013 elections campaign. Hence, the government is in rush to add more and more electricity to national grid before the next general elections. This approach seems parochial and is highly prone to economically unfeasible decision-making regarding the energy projects under the CPEC.

Mining in Baluchistan:

The government of Baluchistan has revealed its plans of opening up the mining sector of the province to Chinese firms under the ongoing “Belt and Road Initiative”.[i] The province is considered to be sitting on some of the largest deposits of precious mining resources. Saleh Muhammad Baloch, top mining official, told Reuters news agency that a group of Chinese companies selected by Beijing will work with local firms to mine marble, chromite, limestone, coal and other minerals and set up steel mills and other plants. He added, however, that extraction of precious metals, such as gold  and copper, will not fall under the CPEC and will instead be put “for competitive bidding internationally”. A Chinese company, China Metallurgical Group Corporation, already operates Sandak copper and gold mine in Balochistan. Even if both Pakistan and China agree to make the better use of Balochistan’s mineral resources, there are some reasons to be cautious about the decision. First, Baluchistan at the moment is anything but secure enough for industrial level of mining by foreign firms. It is home-ground to the complex forces of multiple militants and terrorist outfits which the central government has struggled at large to keep at bay. The recent hostage of two Chinese nationals who have yet to be recovered exemplifies the security issue. Second, Baloch, who by some estimates are the largest ethnicity of the province, have vehemently opposed the extraction of minerals by foreign firms. So there is an ethnic disgruntlement factor to this subject. Finally, when it comes to exploitation of resources in the third world countries like those in Africa, Chinese firms do not bear a good record. Last month, in an eye-opening essay[ii], New York Times, highlighted the unflattering aspects of Chinese investment expansions in Africa.

 

SCO to Help Improve India Pakistan Ties: China

China has revealed it hopes Pakistan and India would utilise the full SCO membership during the upcoming Astana Summit on June 8-9 to improve their bilateral relations.[v] Spokesperson for Chinese Ministry of Foreign Affairs, Hua Chunying said “[W]e hope Pakistan and India will strictly follow the charter of SCO and the idea of good neighbourliness, uphold the Shanghai spirit to improve their relations and inject new impetus to the development of SCO.” She added that “[W]e also expect the Astana summit will fulfil the admission procedures of the two countries.” SCO is a political and military organisation – mainly focused on counter-terrorism – formulated in 2001 and is membered by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Pakistan and India have been enjoying the observer status but applied for full membership last year. It has yet to be seen how the inclusion of two all-time-warring neighbours reshapes the SCO dynamics. Bilateral rivalry between the two countries has almost brought the functioning of the biggest regional forum of South Asian Association for Regional Cooperation to a standstill. It should be remembered that SCO was founded and has been dominated by China and Russia. The two countries even played the role of patron for each: China supported Pakistan’s case at the SCO and Russia that of India. In other words, instead of altering the geopolitics of SCO, Pakistan and India might be urged by Russia and China to enhance cooperation and lessen animosities. Lately, the circumstances related to SCO seem to be favouring Pakistan more than India: With China card already in pocket, Pakistan has cozied up to Russia and that is not going down well with India. Despite all these ground realities, the bilateral Indo-Pak disputes run deeper than the scope of an organisation like SCO.

Miscellaneous:

Chairman Joint Chiefs of Staff Committee General Zubair Mahmoud Hayat has said that CPEC can help resolve conflicts in the region.[vi] A retired Indian military commander, Lt Gen Deependra Singh Hooda, has warned that because of the CPEC, China’s neutrality in case of India-Pakistan war can not be taken for granted and a two-front war was a reality.[vii] A Chinese firm has got the initial approval for setting up a 300MW imported coal-based power plant.[viii]

This report is compiled and written by Abdur Rehman Shah, Research Associate at the Centre for Research and Security Studies (CRSS), Islamabad. He tweets @abdur_shah

[i] Yousafzai, Gul and Drazen Jorgic. (2017, June 2). Pakistan to open up mineral rich Baluchistan to China ‘Silk Road’ firms. Retrieved on June 4, 2017 from http://www.reuters.com/article/us-china-silkroad-pakistan-idUSKBN18T1TE

[ii] Larmer, Brook. (2017, May 2). Is China the world’s new colonial power? Retrieved on June 4, 2017, from https://www.nytimes.com/2017/05/02/magazine/is-china-the-worlds-new-colonial-power.html?_r=0

[iii] APP. (2017, June 5). CPEC projects to address energy problem: China. Retrieved on June 5, 2017, from https://www.dawn.com/news/1337453/cpec-projects-to-address-energy-problem-china

[iv] Khan, Faraz Ahmad. (2016, 21 May). Power shortfall beyond 6,000Mw. Retrieved on June 5, 2017, from https://www.dawn.com/news/1259756

[v] The News International. (2017, June 2). China expects Pakistan, India to improve ties through SCO. Retrieved on June 5, 2017, from https://www.thenews.com.pk/print/208174-China-expects-Pakistan-India-to-improve-ties-through-SCO

[vi] Geo News. (2017, June 3). CPEC can help resolve regional conflicts, says Gen Zubair Hayat. Retrieved on June 5, 2017, from https://www.geo.tv/latest/144412-cpec-will-resolve-regional-conflicts-says-gen-zubair-hayat

[vii] Singh, Vikram Jit. (2017, June 3). China-Pak Corridor a factor, 2-front war a reality: Northern Army ex-commander. Retrieved on June 5, 2017, from http://timesofindia.indiatimes.com/city/chandigarh/china-pak-corridor-a-factor-2-front-war-a-reality-northern-army-ex-commander/articleshow/58970928.cms

[viii] Our Correspondent. (2017, June 5). Chinese firm gets nod for setting up power plant. Retrieved on June 5, 2017, from https://tribune.com.pk/story/1423301/chinese-firm-gets-nod-setting-power-plant/

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