CHINA TOWARD THE WORLD'S ECONOMIC CROWN

KANWAL SALEEM
(feedback@pgeconomist.com)
Jan 17 - 23, 20
11

China has become one of the world's economic super powers due to rapid advancement in all spheres. The foreign exchange reserves of China hit a record high at the end of 2010 as new loans topped an official target, highlighting Beijing's difficult task of stemming a flood of liquidity.

Media reports said the stockpile of foreign currencies in China, already the world's largest, expanded 18.7 per cent from a year earlier to US$2.847 trillion at the end of December. New loans issued by state-owned banks in 2010 reached 7.95 trillion yuan (US$1.2 trillion), exceeding the government's full-year target of 7.5 trillion yuan but less than the previous year's explosion of lending.

M2, the broadest measure of money, washing around the world's second-largest economy, reached 72.58 trillion yuan at the end of last year, up 19.7 per cent from a year earlier.

Despite having multi-dimensional and deep-rooted relationship with China, Pakistan still needs to tap long-standing ties in economic terms through investment in key sectors like energy, agriculture, and science and technology.

Pakistan is celebrating year 2011 as "Year of Friendship" to mark 60th anniversary of the establishment of diplomatic relationships between the two countries.

During recent visit of Chinese Premier Wen Jiabao to Pakistan, 37 agreements between the two countries were signed in order to expand economic ties. These agreements raised the total volume of expected trade to around US$25 billion. The agreements pertain to cooperation in space and upper atmosphere research, chambers of federations, agro chemicals, food, seafood, agriculture, seed research and import export of machinery.

As many as 13 agreements were aimed at boosting cooperation in agriculture, energy, security, science and technology and banking sectors.

A US$6.5 billion MoU was signed between China Three Gorges Corporation and Alternative Energy Development Board for the wind power projects and solar energy projects. Both the countries signed framework agreement in relation to Development Finance Cooperation agreement besides inking agreement of purchasing seafood, guar products, cotton yarn purchase and yarn import contract.

Experts told PAGE that businesspersons of both the countries have great opportunities to explore investment and trade potential between the two countries for the overall economic development.

According to President FPCCI, Sultan Ahmed Chawala, people of Pakistan, particularly business community would never forget the cooperation extended by the Chinese businesspersons for the economic development of the country. He said that Pak-China business cooperation summit would be helpful for further enhancing trade ties. Business leaders are optimistic that the recent visit of Chinese Premier to Pakistan would build the confidence of foreign investors for investment in different sector of national economy. "Chinese Premier has come with a large business delegation comprising about 250 top businessmen, hence providing an opportunity to the business persons to explore ways for developing trade relations with their Chinese counterparts," they added.

According to them, establishment of industrial facilities and up gradation of communication infrastructure, besides boosting trade between the two countries, will also enhance regional connectivity.

China needs to help resolve Pakistan's energy crisis through development of hydel, thermal and solar energy projects, they said, adding: "Resumption of Chasma project as a cooperative project between Pakistan and the China Nuclear Energy Industry Corporation is a significant development."

Analysts believe that China and Pakistan have witnessed steady growth in mutual investments in recent years, adding investment of more than $1.3 billion was made by China in Pakistan in the last few years.

A Chinese firm AMLONG has shown interest in setting up a steel mill of one million tons at Kalabagh based on local iron ore deposits. AMLONG was also part of the delegation of the Chinese Prime Minister during his recent visit to Pakistan.

The officials of AMLONG held meetings with various government organizations including ministry of industries and production. A spokesperson of Engineering Development Board (EDB) told this scribe that EDB gave a detailed presentation on the iron-ore deposits available at Makarwal and Chichali and other raw materials available in the same vicinity.

The delegation showed keen interest in the project and requested CEO, EDB Aitzaz A. Niazi to arrange a visit to the site. Accordingly, a seven-member delegation led by S.M. Adil Shah, General Manager, EDB visited Makarwal and Chichali ore deposits on January 10-11.

The officials of AMLONG expressed satisfaction on the iron ore deposits available at Kalabagh, the infrastructure and the proposed site for establishment of the steel mill.

S.H. Farooqi, a leading geologist, briefed the delegation about the iron ore deposits in the area and the prospects of establishing a steel mill based on local iron ore.

The delegation was provided all the necessary information including maps, composition of the ores, quantum of deposits and reports prepared in the past.

The proven reserves at the Kalabagh iron ore deposit, which is the largest one in Pakistan, are around 350 million tones. In addition, the iron ore deposits in Makarwal range which are spread over 83 Km long belt up to Pezu district Bannu are estimated to be around 600 million tons. Iron (Fe) content varies between 32 to 38.6 per cent.

Kalabagh is considered to be a natural site for setting up of a steel mill by virtue of the fact that all necessary raw materials like dolomite, lime stone, clay etc. are abundantly available in the same vicinity.

Presently, Pakistan Steel Mills (PSM) is the only integrated mill in the country with a capacity of 1.1 million tones per annum, which is based on 100 per cent imported ore and coke.

The EDB is making efforts for utilization of local raw materials to save valuable foreign exchange. The setting up of a steel mill in the backward area of Kalabagh will not only help generate employment for thousands of locals but will also result in development of the infrastructure which in turn will improve the quality of life of the people of that area.

If things move ahead smoothly and agreements are given practical shape, days are not far when Pakistan would be able to help rebuild its economy with the cooperation of China.