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Zhou Rong: CPEC aims to boost trade between two countries


Source: Global Times    Published: 2017-2-12


For the first time, the residents of Northwest China`s Xinjiang Uyghur Autonomous Region were able to eat seafood imported from Pakistan by container cars through the Khunjerab Pass in January. This successful trial is expected to improve overland trade between China and Pakistan via the China-Pakistan Economic Corridor, which accounts for 2 percent of the overall trade between the two countries. Meanwhile, the Xinjiang government has decided to invest more than 170 billion yuan ($24.72 billion) in a road network between China and Pakistan to improve transportation capability. However, experts noted that there remain challenges to the growth of bilateral trade, such as a lack of infrastructure and insufficient consumer demand in western China.


The first batch of Indian Ocean seafood shipped by container cars arrived in Northwest China`s ­Xinjiang Uyghur Autonomous Region through the Khunjerab Pass on January 13, marking the first time that ­Taxkorgan Tajik Autonomous county, ­Kashgar prefecture, has received imported seafood.

"We imported 7.46 tons of seafood, including prawns, cuttlefish and squid, worth $26,700. It was sold mainly in western China," said Chen Hai`ou, president of Kashgar Mufeng Biotechnology Co.

The frozen seafood was shipped from the port of Karachi in southern Pakistan to the port of Sost in northern Pakistan, and then transported to China via the Karakoram Highway.

The highway, also known as China-Pakistan Friendship Highway, which connects Xinjiang and northern Pakistan, stretches more than 1,000 kilometers across the Karakoram, Himalayas and Hindu Kush mountains.

Chen said that the container cars started from Pakistan in November 2016 and entered the Khunjerab Pass before the Karakoram Highway closed for the winter. The closure lasts from December to April each year.

This trial shipment is meaningful because it illustrates the growth of overland trade between the two countries since the highway was rebuilt and extended in 2013, said Zhou Rong, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China.

The highway greatly reduced the transnational transportation time.

"It used to take 30 to 40 days to ship goods to Xinjiang [from Pakistan], but we can now receive goods in about 10 days through the China-Pakistan Economic Corridor (CPEC)," Chen told the Global Times on Wednesday.

It was also 10 percent cheaper than transporting seafood from coastal cities in China, Chen noted.

Chinese Premier Li Keqiang proposed the 3,000-kilometer CPEC, which links Xinjiang and Pakistan`s Gwadar port, during his visit to Pakistan in May 2013.

As part of China`s "One Belt and One Road" initiative, the project aims to strengthen economic cooperation in transportation, energy and other industries.

Revitalized trade

The first shipment of seafood imported via the overland channel will invigorate bilateral trade and will have a demonstration effect on other companies, said Cao Lei, chief of Khunjerab Pass.

China imports an average of 3.9 million to 4.1 million tons of seafood each year, though a small proportion comes from Pakistan, said Cui He, vice chairman of the China Aquatic Products Processing and Marketing Association. The South Asian country doesn`t rank among the top 20 seafood importers to China.

However, given that Pakistan doesn`t consume a lot of seafood and its seafood resources remain well preserved, it is likely to boost overland shipments to Xinjiang, Cui told the Global Times on Saturday.

Currently, 98 percent of trade between the two countries is by sea, Cao was quoted as saying in a report of domestic news portal on February 4. Bilateral trade across Khunjerab Pass accounts for the remaining 2 percent.

For their part, Chinese companies will likely increase overland exports of large mechanical equipment and construction materials such as cement and steel to Pakistan as they contract more infrastructure projects under the CPEC, Zhou said.

In addition, the CPEC has made it more convenient for domestic companies to transport goods to Pakistan, where they can arrive in the northern city of Sost, he said. In the past, containers were shipped through the port of Karachi, where they had to go through customs.

Chen is also optimistic about the prospects that the CPEC will revitalize overland trade.  "Besides seafood, we will import fruit and other agricultural products in line with domestic needs," he said, noting he is discussing importing fruit with Pakistani companies.

Eddie Wong, CEO of Shenzhen Hezhengyuan Group, the parent company of Kashgar Mufeng Biotechnology Co, told the Global Times on Sunday that the company will continue to import cotton and sugar in the second phase.

Meanwhile, his firm is negotiating with their Pakistani counterparts to export reasonable cost  garments to the country.

Meanwhile, Xinjiang will devote a huge amount of funding in 2017 to building up a highway network to further improve transportation between the two countries, the Associated Press of Pakistan reported on Tuesday.

This year, the region will invest 170 billion yuan ($24.72 billion) in building new roads, 8.1 billion yuan into railway construction and 4.8 billion yuan in civil aviation projects, the report said, noting the total will surpass the combined investment in transportation infrastructure from 2011 to 2015.

Demanding challenges

The CPEC is supposed to bring earth-shaking changes to Pakistan`s economy, but has yet to do so due to factors including lack of necessary infrastructure and low consumer demand in western China, Zhou said.

For example, an oil and gas pipeline in Pakistan linking the Middle East and China has not been connected, and thus the country can`t get oil transit fees, he explained.

Although the Karakoram Highway is expected to boost overland trade between the two neighbors, objective factors make it hard to measure to what extent the corridor will contribute to its bilateral trade.

The highway`s width of roughly six to 10 meters, which may not be able to handle enough traffic, and landslides may occur due to the complex topography, Zhou said. Most important of all, the highway is closed during winter, directly limiting the volume of transported goods.

Pakistan`s supply level and western China`s consumption demand is another problem that needs to be worked out, Cui told the Global Times on Saturday.

To increase bilateral trade, Xinjiang and western China need to boost their demand for goods from South Asia and the Middle East, Zhou noted.


Zhou Rong is a senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.

Key Words: China   Pakistan   trade   Zhou Rong  

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