GWADAR PORT

Poised to boost development of Xinjiang & Balochistan

SYED FAZL-E-HAIDER, Quetta
July 09 - 15, 2007

The operations of Gwadar port on southwest coast of Pakistan is expected to provide an impetus for the fast track development of the most backward Pakistani southwestern province of Balochistan and the least developed northwestern Chinese province of Xinjiang. Urumqi, the capital of Xinjiang is located at least at a distance of 4,000 km from various ports of China but it is only 2500-km away from the Gwadar port in Balochistan. Proximity of Xinjiang to Gwadar makes it feasible and cost-effective for china to carry out trade through the port. It also makes business sense to make goods for Middle East and EU in western China and then export it through Gwadar.

Gwadar is likely to emerge as a gateway port for Central Asia and the western Chinese province of Xingjiang, which is also called as Eastern Turkestan. Xinjiang is a Muslim majority province. The Uighurs are the native people of Xinjiang Uighur Autonomous Region. The latest Chinese census gives the present population of the Uighurs as slightly over 6 million. There are also 500,000 Uighurs in Western Turkestan, known as Uzbekistan, Kazakistan, Kyrgyzstan, Turkmenistan and Tajikistan.

Xinjiang, close to Pakistan's border, envisages rich lucrative business opportunities for foreign entrepreneurs. Pakistan's entry into the Shanghai Cooperation Organization (SCO) has also opened new avenues of economic interaction with China and Central Asia, especially through the land route. Xinjiang expects more trade with Pakistan after implementation of special tariff package. The economic activities between the two stepped up after the recent visit of Premier Wen Jibao to Pakistan and signing of the Early Harvest Program. Pakistan and Xinjiang that have distinction of enjoying land route communication link through Khunjrab Pass have bright prospects to further develop their economic ties through Gwadar Port.

Balochistan and Xinjiang share common features in geography, socio-economic conditions and political economy. With an area of 1.6 million square kilometers, Xinjiang has various types of geographical conditions. Surrounded by lofty mountains, it has three huge mountains and two enormous basins: the Zhunkeer basin between the Tianshan Mountain and the Kunlun Mountain where the vast Takla Makan desert is found. Balochistan is the largest province of Pakistan with an area of about 347,182 square kilometers. The province comprises of four distinct climate regions - tropical coastal region, sub tropical continental plateau, sub tropical continental low lands and sub tropical continental high lands. It has four geological regions- the Central Mountain Ranges, Chaghi hills and Raskoh Ranges, Mekran Mountain Ranges and the Kharan Basin.

The huge economic potential of Xinjiang is yet to be tapped. It is one of the least developed regions in western China. Scarce financial resources, negligence and dissatisfactory security environment have been the root-causes of underdevelopment of Xinjiang. Balochistan is also the least developed province of Pakistan with no development infrastructure and industrial base and hence no employment opportunities for its people. Balochistan lacks the investment opportunities for having a very small size of market. Lack of capital, low investment, and low productivity have led to the low income of the province, and hence it is caught up in the vicious circle of poverty.

Both the provinces, Xinjiang and Balochistan, have been the victim of negligence and discrimination for a long time from their respective governments in Beijing and Islamabad. A policy of appeasement is currently being pursued toward both the provinces by their respective central governments in Beijing and Islamabad. China will reportedly spend $90 billion for speedy development of its western regions in next 10 to 15 years. $200 billion had already been loaned to western regions including Xinjiang for infrastructure development. China has offered new trade opportunities to foreign businessmen to undertake joint ventures in its western region.

Islamabad launched mega development projects costing Rs.140 billion during last three years in Balochistan. The province is currently facing an insurgency like situation and a military operation is also underway to quell the insurgency of Baloch militants. Similarly, the Chinese government is in a state of war with the anti-Beijing Uighar extremists in Xinjiang. Chinese government launched extensive crackdown on Uighurs extremists to counter terrorism after 9/11 tragedy in US. As apart of its appeasement policy toward Xinjiang, China is currently working on a strategy to put the troubled region on fast track development in order to assuage the feelings of deprivation and alienation among Uighur Muslims. The development of Gwadar seaport simultaneously reflects the China's policy of appeasement toward Xinjiang's masses and the policy of containment against the separatists and extremists in Xinjiang.

Like Balochistan, Xinjiang is also rich in mineral and energy resources. It has enormous resources of coal, iron, petroleum, salt, gold and nonferrous metals. It ranks first in China for being rich in beryllium, lithium, white mica, albite, serpentines resources. Balochistan produces more than 40 percent of the primary energy of the country in the form of natural gas, coal and electricity. A large number of metallic and non-metallic minerals occur in Balochistan. Among non-metallic minerals inexhaustive reserves of limestone occur in Balochistan. Other mineral deposits include barite, fluorite, gypsum/anhydrite, limestone/dolomite, magnesite, marble and sulphur. A number of prospects of copper mining have already been identified, including the Saindak deposit in Chaghi.

Xinjiiang's chief agricultural produce includes wheat, corn, cotton, silk-cocoons, melon and fruit etc. The five ecological zones in Balochistan provide it added importance and diversity in agriculture production. It is also considered the fruit garden of Pakistan and has got fame for its taint-free and superb quality cotton production in recent years. While Xingjiang is one of China's five major pastoral areas, Balochistan is also a pastoral economy contributing about 40 per cent of Pakistan's total livestock population.

For their geographical position, Xinjiang and Balochistan will bring China and Pakistan in the regional as well as global mainstream of politics and economics. Both the provinces can serve as energy corridor for the booming provinces of eastern China. Xinjiang is going to emerge as gateway to Central Asia for China. The proposed energy corridor would provide a boost to the economy of western China and Pakistan. President Musharraf has already pledged that Islamabad would do all to turn Pakistan into an energy corridor for China.. The feasibility study of laying a gas pipeline from Iran or Saudi Arab to China is underway. Another proposal under consideration in this regard is to establish a rail link and transfer LPG from Middle East to China by using railway carriages.

China is expected to finance a highway-link from Gwadar to the central Balochistan town of Khuzdar, on the RCD Highway connecting Karachi and Quetta. Moreover, Beijing and Islamabad have signed a memorandum of understanding (MOU) under which China would build a 90-kilometre highway-link connecting the Chinese side of the Karakoram Highway to the Russian-built highway network that already connects all the five Central Asian Republics (CARs). This regional highway network will directly be linking Gwadar to Xinjiang and the landlocked CARs. The trade of western China and Central Asia flowing through Gwadar, will take place from this overland trade route. The development of road links between Gwadar and the Central Asian States and China's Xinjiang province will give distinction to Gwadar Port of becoming the nearest mother port in the region

Pakistan suffers from regional disparities, as its southwestern regions (Balochistan and rural Sindh) are lagging behind while northern regions ( Punjab and NWFP) are steaming ahead. Similarly, in China most of the less developed areas, with GDP per capita around 4000 yuan, are in the West while most of the developed areas, with GDP per capita five to 10 times higher are in the East. While eastern seaboard of China is currently the hub of economic activities, the Western seaboard (Xinjiang) is poor and has been caught up in the underdevelopment trap.

The western region is more than 70 per cent of Chinese territory. In 2001, Chinese government launched major infrastructure projects and capital construction investment became higher in western than eastern China. In 2002, Beijing announced its new economic plan to develop its Western region listing 50 new projects for economic and technical cooperation and assured that the foreign investors would be provided all possible incentives to exploit Xinjiang's development potential.

Xinjiang and Balochistan are going to be the primary beneficiary of the Mega seaport project at Gwadar and would become the hub of economic and trade activities in the region. Xinjiang may emerge as hub of Sino-Pak economic cooperation, with new opening establishing joint ventures in the fields of agriculture, light industry, foodstuff, textile, and medicines and petrochemical industry. Gwadar port will act as an economic and trade nexus between the two least developed provinces of China and Pakistan. The port will open new vistas of economic development and new avenues for trade and business in the two least developed provinces.

Syed Fazl-e-Haider, sfazlehaider05@yahoo.com, is a Quetta-based development analyst in Pakistan. He is the author of six books, including The Economic Development of Balochistan, published in May 2004.