China, Pakistan and Free Trade Agreements

China has just inked agreements and an Memorandum of Understanding with Pakistan that could triple bilateral trade to $15 billion, including strategic (and expensive) weapons systems. Besides the obvious that our own military industrial complex lost a ton of potential cash, this does nothing to help our relations with Pakistan.

The Bush Administration has been pushing for bilateral trade agreements itself, so it’ll be hard to argue against China doing the same.

The US media will probably pick up on the plan to develop a joint AWACS-like long-range airborne radar and the co-dev and co-production of fighters.

Central to new deal is heavy Chinese investment inside Pakistan, which the US media is unlikely to pick up on:

  • Establishment of China-Pakistan joint investment company
  • Construction of a China-Pakistan friendship centre in Islamabad
  • Financing for China-Pakistan bilateral cooperation
  • Construction of schools and hospitals in the earthquake-hit areas of Pakistan
  • Financial support for upgrading and rehabilitating Karakoram Highway
  • Financing of the Gwadar port phase-I
  • Framework agreement between China’s Northern Industries Corporation and Heavy Engineering Complex Taxila, Huawei-TML-GSM phase-5 expansion project agreement (telecommunications)
  • MoU between China-Zhenhua oil company and Pakistan’s Ministry of Petroleum and Natural Resources
  • Exploration and development of Saindak East Ore Body in Pakistan
  • Collaboration in Engro-Asahi Polymer and Chemical Limited of Pakistan (PVC producer).

On the public diplomacy front, President Hu Jintao offered steps to further bilateral relations:

  1. Expand exchanges at various levels concerning high-level contacts, between government departments, legislative bodies, political parties, and armed forces; as well as bilateral consultation mechanisms covering strategy, economy, trade, science, technology, security and defense.
  2. Expand economic and trade cooperation “of mutual benefit”, better implementation of the bilateral free trade agreement and the development program on bilateral economic and trade cooperation.
  3. Pay “due attention” to key projects covering nuclear power station and port construction, and expand cooperation in investment, agriculture, communications, energy, finance and information.
  4. Promote exchanges in such fields as culture, health, sports, education, tourism, press, human resources development and vocational training; China will invite 500 Pakistani young people to visit China in the next five years.
  5. Deepen cooperation in the non-traditional security fields, explore and set up regular channels for cooperation, and jointly push for more substantial results of anti-terrorism cooperation.
  6. Strengthen coordination and cooperation in multi-lateral areas such as in the United Nations, Shanghai Cooperation Organization, and Asia-Europe Meeting.