Xi Jinping to unveil $45 billion investments in Pakistan

Chinese President Xi Jinping, who is in Islamabad on a two-day state visit, will unveil a $45 billion investment plan that can help Pakistan end its chronic energy crisis and help transform it into a regional economic hub.

The investments offer a real opportunity to change the scope Sino-Pakistan relationship "from geo-politics to geo-economics," said Federal Minister for Planning and Development Ahsan Iqbal.

The projects for which the whopping investments are expected constitute the China-Pakistan Economic Corridor, and foresee the creation of road, rail and pipeline links that would cut several thousand km off the route to transport oil from the Middle East to China, while bypassing India.

"These are very substantial and tangible projects which will have a significant transformative effect on Pakistan's economy," Iqbal said.

Beijing hopes to increase investments in Pakistan as part of its ambitions to expand its trade and transport footprint across Central and South Asia, while countering US and Indian influence in the region.

The two allies have enjoyed close diplomatic and military relations for decades, though economic ties have only grown more recently. Bilateral trade crossed $12 billion last year compared to only $2 billion a decade earlier, Geo News reported.

"The real opportunity of China-Pakistan Economic Corridor is that it changes the scope of the relationship from geopolitics to geo economics," said Ahsan Iqbal, who is overseeing the projects that constitute the economic corridor.

The upgrade will stretch 3,000 km from the port of Gwadar on the Arabian Sea to China's western city of Kashgar. Pakistan transferred control of the Gwadar port to a Chinese public company in 2013, giving China warm-water access.

Iqbal said $11 billion has been set aside for the corridor.

The two countries are also set to cooperate in gas, coal and solar energy projects to provide 16,400 MW of electricity - roughly equivalent to Pakistan's entire current capacity, said Iqbal.

Pakistan has wrestled with chronic power shortages in recent years that have scrubbed several points off GDP growth and inflicted misery on the everyday lives of its citizens.

The projected investments, $28 billion of which are ready to be signed during Xi's visit, dwarf a US assistance package to Pakistan of $5 billion that began in 2010 but has not made as great an impact as hoped.

Referring to the US aid, signed under the Kerry-Lugar-Berman Act (KLB), Iqbal said: "KLB was $1.5 billion per year, out of which only $600-700 million went to government. Most of it went to non-government sectors and the bulk went to American companies."

"That is a problem with assistance that comes through the aid mode."

Iqbal was more optimistic about Beijing's investment, saying it would integrate three engines of growth in the continent: South Asia, Central Asia and China.