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Govt misses deadlines to put CPEC projects on track

ISLAMABAD: 

The government has missed the deadlines set to put the delayed China-Pakistan Economic Corridor (CPEC) projects back on track despite the instructions given by Prime Minister Imran Khan but China has once again expressed the resolve to remain committed to the multibillion-dollar strategic initiative.

Pakistan and China on Friday jointly reviewed progress on all the ongoing projects in the 58th Progress Review Meeting, which was held after a gap of 10 months.

The last joint Progress Review Meeting was held in November 2018. During the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government, the review meetings were held on a monthly basis.

Chinese Ambassador Yao Jing and Planning Commission Deputy Chairman Jehanzeb Khan also attended the meeting.

The government had set the end-August deadline for giving approval to the revised PC-I of Eastbay Expressway project and signing a tripartite agreement for starting work on the delayed Kohala power project.

The prime minister had also instructed the planning ministry to approve PC-I of the multibillion-dollar Mainline-I (ML-I) project of CPEC by September 15. Meeting proceedings suggested that all these deadlines had been missed again.

The planning ministry also missed the September 15 deadline set for finalising the debt sustainability report of the ML-I project.

The meeting deliberated on the issues confronting different projects and it was decided to fast-track resolution of the issues for timely completion of all projects, according to a statement issued by the Ministry of Planning after the review meeting.

Minister for Planning Makhdoom Khusro Bakhtiar underlined the need for meeting timelines of the projects and called for further stepping up the momentum in CPEC projects, it added.

The Chinese ambassador stressed that CPEC projects would continue to progress at the expedited pace, as reiterated by PM Imran in his recent meeting with the Chinese foreign minister, for timely completion of all projects.

According to the statement, Yao said CPEC was heading in the right direction, adding that CPEC was quite different from other Belt and Road initiatives as this flagship project manifested the longstanding friendship between the two friendly countries and would bring prosperity and progress for Pakistan.

However, the critical projects have been facing years of delay. Last month, the prime minister directed authorities to expedite work on half a dozen CPEC projects that had been facing significant delays.

The strategic initiative came to an almost grinding halt in the past one year due to the reservations expressed by the cabinet ministers and enhanced fiscal controls under the $6-billion International Monetary Fund (IMF) loan programme. But lately PM Imran started showing interest in CPEC after returning from Washington.

The Planning Commission deputy chairman said the PM had set up a committee to resolve the ML-I project-related issues and the matter might not be discussed in the review committee meeting.

The PM had also directed that the tripartite agreement for the Kohala power plant should be finalised by August 30 and should be signed in the PM Office in the presence of Azad Jammu and Kashmir prime minister.

The review committee discussed the energy projects in detail. The power secretary informed the meeting that a synchronised demand-supply study of CPEC energy projects would be firmed up by October 2019.

The National Electric Power Regulatory Authority (Nepra) said all pending tariff issues including that of Port Qasim and Gwadar 300-megawatt coal-power project would be resolved soon. PM Imran had instructed last month to resolve tariff issues at the earliest.

It was informed that the Gwadar Development Authority, headed by the chief minister of Balochistan, had approved the Gwadar city master plan with some minor modifications. The communications secretary said the Multan-Sukkur motorway would be opened soon for general traffic as work was almost complete.

No date for the formal opening of the Multan-Sukkur motorway was finalised, although the motorway might be opened for traffic, except for freight cargo, next week.

The meeting also discussed the status of the Orange Line Train project and ongoing projects of Gwadar were also taken up in detail. It was once again reiterated that the Orange Line project would be ready for operations by December.

Progress on the Gwadar Airport was also reviewed and Chinese authorities informed the meeting that due to a lack of water and electricity supply there were serious hurdles in the way of executing the scheme.

The Eastbay Expressway project’s revised PC-I has also remained pending due to delay in finalising financing arrangements to the extent of the additional cost.

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China reaffirms full support to Pakistan

ISLAMABAD   –  Pakistan and China on Tuesday agreed to continue close bilateral consultations and coordination for the promotion of peace and stability in the region and maintenance of strategic balance following India’s unilateral action in the occupied Jammu and Kashmir.

This was agreed on the conclusion of series of high-level interactions between Vice Chairman, Central Military Commission (CMC) of China, General Xu Qiliang, and his team with Pakistan’s top civil and military leadership.

General Xu, who led a high-level delegation to Pakistan to discuss issues of mutual interest for Pakistan and China in the light of the latest developments in the region on the conclusion of his official visit, reaffirmed full support of his country to Pakistan, particularly at this critical junctureHe also conveyed the Chinese leadership’s commitment to the time-honoured tradition of both the countries supporting each other on issues of core national interest.

The Prime Minister appreciated China for supporting Pakistan’s approach to the UNSC, following India’s unilateral and illegal actions and the ongoing humanitarian crisis.

He reiterated that the curfew in the IOJ&K must be immediately lifted and the international human rights NGOs allowed visiting IOJ&K to have an objective assessment of the humanitarian tragedy unfolding there.

The Prime Minister also underscored that the brutal suppression of human rights in IOJ&K had the potential to spark a wave of extremism and India’s reckless actions could destabilise the region immeasurably.

General Xu conveyed to the Pakistani leadership cordial greetings of President Xi Jinping, as well as that of Premier Li Keqiang, and reaffirmation of China’s full support to Pakistan, particularly at this crucial juncture.

Underscoring the importance of the time-tested China-Pakistan strategic partnership, he conveyed the Chinese leadership’s commitment to the time-honoured tradition of both the countries supporting each other on issues of core national interest.

He reiterated Beijing’s resolve to work for further strengthening the China-Pakistan ties in a broad range of areas.

General Xu underlined that the South Asia region needed stability and economic development and resolution of outstanding disputes and appreciated Pakistan’s efforts in advancing those goals.

The Prime Minister also underlined that India could stage a false flag operation to divert the world’s attention from its crimes.

General Xu also called on President Dr Arif Alvi at the presidency. During the meeting, the president said Pakistan deeply valued China’s defence cooperation and support on issues of its national security.

He acknowledged unique, the all-weather and time-tested China-Pakistan friendship and China’s support for Pakistan at multilateral forums, particularly at the United Nations Security Council in the wake of India’s illegal and unilateral steps in the Indian Occupied Kashmir (IOJ&K).

MEETINGS WITH AIR, NAVAL CHIEFS

General Xu Qiliang visited Air Headquarters Islamabad on Tuesday.

On his arrival, the distinguished guest was received by Air Chief Marshal Mujahid Anwar Khan, Chief of the Air Staff, Pakistan Air Force.

A smartly turned out contingent of Pakistan Air Force presented guard of honour to the worthy guest. The visiting dignitary laid floral wreath on the Martyrs Monument to pay homage to the martyrs of PAF.

Later on, the distinguished guest called on the Air Chief in his office. Various matters of mutual interest, bilateral cooperation and regional security were discussed in the meeting. Both the leaders showed their satisfaction on the existing enviable cooperation between PAF and PLAAF, and reiterated their resolve to take this cooperation to further heights, said a press release.

General Xu Qiliang and Chief of the Naval Staff Admiral Zafar Mahmood Abbasi discussed matters of mutual interest.

General Xu along with his delegation called on Chief of the Naval Staff Admiral Zafar Mahmood Abbasi in Islamabad. Upon arrival at the Naval Headquarters, General Xu was received by Admiral Zafar Mahmood Abbasi. A smartly turned out contingent of Pakistan Navy presented him Guard of Honour. Thereafter, the dignitary laid floral wreath at the Shuhada’s Monument and was then introduced to the Principal Staff Officers at Naval Headquarters.

General Xu called on Chief of the Naval Staff in his office. During the meeting, matters of mutual interest were discussed. Admiral Zafar Mahmood Abbasi highlighted that close relationships between the people and the armed forces of the two countries are time-tested and based on mutual respect and trust.

The Naval Chief expressed satisfaction over various ongoing naval projects between the two naval forces. The Admiral also thanked the General for whole hearted participation of PLA (Navy) with Ships and Special Forces/Marine Teams in Multinational Naval Exercise AMAN-19. Vice Chairman CMC highly appreciated the successful conduct of Exercise AMAN-19.

General Xu termed Pakistan China’s all-weather strategic partner. On CPEC which is a vital part of Belt & Road Initiative, both sides expressed their full confidence and termed it a project aimed at prosperity and economic empowerment of people of the region and beyond.

Both the dignitaries also agreed on further enhancing the bilateral cooperation in the domains of military collaboration.

A brief was given to the visiting dignitary on Pakistan Navy’s perspective on security situation in Indian Ocean Region and Pakistan Navy’s contributions towards peace and stability in the region. In the second leg of the visit, Vice Chairman of Chinese Central Military Commission is scheduled to visit Pakistan Navy Field Commands at Karachi. The visit is expected to greatly augment the bilateral cooperation between both the countries in general and defence forces in particular.

Source: The Nation

Date: 28/8/2019

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A train to CPEC

Firstly, the plan was about to take off in the mid of 2017. Then, it was declared a non-starter as many high-ups believed it would be abandoned by the new government. In fact, it was put on the back-burner. Now, this much delayed but strategically important scheme again comes into the limelight.

Yes, it is all about China-Pakistan Railways corridor. The incumbent government has changed all the previous plans pertaining to the proposed projects of Pakistan Railways planned to be executed under the China-Pakistan Economic Corridor (CPEC) in 2014, by the then Pakistan Muslim League-Nawaz (PML-N) government.

According to a monographic study, “Pakistan Railways Transport Planning 2014-2030” the PML-N government planned to execute Main-Line-I Project of the Pakistan Railways from Karachi to Peshawar in three different phases which covered around 1872km long route in 2015-16. But the current Pakistan Tehreek-e- Insaaf (PTI) government amended/reviewed the previous plans with the Chinese partners, ultimately splitting the multi-billion projects into many parts; which were otherwise some of the largest projects under the CPEC. The projects will now take about six years to complete if the plan goes ahead.

Railways authorities say a PC-I of ML-I Project plan has been sent to Ministry of Planning Commission under which the federal government pledged to release around $8.2 billion for the execution of this plan. But key details of the proposed projects, if there are any, are being kept confidential. It is not clear yet what goods would Railways be carrying under the CPEC route instruments and how much of a source it would be for big revenue. What is the exact Memorandum of Understanding (MoU), if there is any, for CPEC-Railways? No one knows about any of this.

TNS got some exclusive details about ML-I according to which the scope of the project envisages laying of a brand new double track from Karachi to Hyderabad on a new alignment, induction of 50 locomotives, induction of 300 passenger coaches, 2,000 freight wagons and establishment of a dry port near Havelian.

Informed officials say that on the completion of ML-1, Railways will reap up the advantages of increase in speed from 65-105 km/h to 120-160 km/h, increase in line capacity from 34 to 171 trains each way per day, increase in freight volumes from 6 to 35 million tons per annum by 2025, increase in passenger trains (ex-Karachi) from 20 to 40 per day and an increase in railways share of freight transport volume from 4 to 20 percent.

“A part of the new Railways line from Gwadar to Jacobabad and Quetta via Besima, 1,328km, with an estimated cost of $4.5 billion was also planned by the government.”

The feasibility study of the project was carried out under a framework agreement signed between the governments of China and Pakistan on April 20, 2015. “The second framework agreement for the implementation of the project was signed on May 15, 2017, whereby the said project was declared as a “Strategic Project” and provision of loan from the Chinese side on favourable terms,” officials tell TNS. For the execution of the project, a contractor will be hired through competitive bidding amongst Chinese firms.

Officials engaged in CPEC-Railways proposed projects say the previous government planned projects worth US$12 billion estimated expenses for the execution of harvest projects, namely Lahore Mass Transit System, Quetta Mass Transit and Greater Peshawar Transit System. Implementation of planning for massive projects related to CPEC-Railways was about to take off but the government changed in July 2018. The brain behind these proposed projects was the then Railways Minister, Khawaja Saad Rafiq, and the then head of the projects Ishfaq Khattak, removed by the present government.

Muhammad Hanif Gul, an official who was looking after the Mass Transit Projects of Quetta and Peshawar was removed by Railways Minister Sheikh Rashid. “Abdar Khan, Railways traffic specialist was also removed from the project responsibilities earlier this year,” adds the official TNS spoke to.

Among other projects linked to Railways is Havelian Dry Port for the purpose of customs clearance with an estimated cost of $40 million, officials tell TNS. The Havelian Dry Port is being built in the vicinity of Baldhair Railways Station, about five kilometres from Haripur city.

The project has been designed, officials say, to meet the demand of the containerised future freight traffic between China and Pakistan under CPEC projects. Construction of new Railways lines from Peshawar to Torkham and up-gradation of Walton Academy Lahore was also a part of this project. It includes the Landikotal/Torkham route connecting Peshawar with Attock City. “Reconstruction of existing ML-2 short and long term with water hazard treatment, the overhaul of track and Kundian, Layyah, Mianwali, Indus Highway Railways stations are also included to these plans,” added the officials.

New Railways line, 560km, from Quetta to Kotla Jam on ML-2 via Zhob and DI Khan and reconstruction/up-gradation of Quetta-Taftan Railways Line, 633km, are also part of the proposed projects.

A part of new Railways line from Gwadar to Jacobabad and Quetta via Besima, 1,328km, with an estimated cost of $4.5 billion was also planned by the government, officials informed. Credible sources tell this correspondent that the new government was contemplating to exclude the component of building a new 163km long double line between Karachi and Hyderabad and the Havelian-Textile rail track from the ML-I project due to the scarcity of funds.

Minister for Railways, Sheikh Rashid, however, claims that Railways projects under CPEC will continue. “We would execute all the proposed Railways projects under CPEC. Even though the estimated cost of the projects has been reduced from $8 billion to $6 billion,” he told the media in Lahore.

Sources say that ministries of Planning and Railways have a different viewpoint on the proposed projects, ML-I in particular. Railways ministry wants to execute works on the said project into two phases at an estimated cost of $3.4 billion for Phase-I and $4.8 billion for Phase-II while Planning Commission has recently suggested that the project may be implemented in three phases, instead of two, due to budgetary constraints and the estimated cost of Phase-1 should be curtailed to absorb its budgetary impact on the PSDP (Public Service Development Project).

“The new phasing, on the request of Planning Commission, may be presented to the Cabinet for approval after taking views of all stakeholders,” sources add. The ministry of Railways, however, proposes that the Cabinet Committee on CPEC may decide the modalities and terms of financing for the project to treat the loan as Central Loan or any other mode of financing. Loan negotiations may be initiated with the Chinese side after the approval of PC-I of Phase-I of the project, the ministry’s proposal further states.

On the dismal progress on Railways-CPEC proposed projects, Mushahid Hussain, who has done research on this issue says Railways, with the proposed $8.2 billion ML-1 project of up-gradation and dualisation of the railway track from Karachi to Peshawar could be the backbone of CPEC, since it would be the biggest modernisation programme in our Railways’ history since Independence. “The biggest impediment is the mess in our Railways and the capacity to undertake this project on such a scale. Railways transportation is the cheapest for cargo and China today leads the world in running Railways with unmatched quality, scale and speed,” he tells TNS. This ML-1 project would kick off industrial development, generate jobs and promote connectivity,” says Hussain.

Neither officials of the ministries of Railways nor Planning Commission responded to queries pertaining to CPEC and Railways projects. Till the filing of this story, Railways Minister, Sheikh Rashid, and Planning Minister, Khusro Bakhtiar, did not respond to this correspondent’s queries.

Source: The News

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Close Pakistan-China cooperation a factor of peace, stability in region: PM

ISLAMABAD: Prime Minister Imran Khan Tuesday underlined that close Pakistan-China cooperation was a factor of peace and stability in the region and expressed appreciation for China’s support for Pakistan’s role on international and regional issues.

The prime minister also underlined the importance of mutual support by China and Pakistan to each other on their respective issues of core interest.

He said this while talking to General Han Weiguo, Commander, People’s Liberation Army (PLA) Ground Forces, China, who called on him here at the Prime Minister Office. The prime minister congratulated General Han Weiguo on the conferment of the Nishan-i-Imtiaz (Military).

The prime minister recalled his wide-ranging exchange of views with President Xi Jinping in their two recent meetings in Beijing in April 2019 and Bishkek this month. He underscored that China Pakistan Economic Corridor (CPEC) was a flagship project of President Xi’s visionary Belt and Road Initiative and added Pakistan looked forward to also deepening cooperation in socio-economic development between the two countries in Phase-II of CPEC.

General Han Weiguo thanked the prime minister for receiving him and said the conferment of the award was an honour for him.

He lauded Pakistan’s successful efforts against terrorism and steps to promote regional peace and stability.

General Han also underscored the importance of the time-tested Pakistan-China All Weather Strategic Cooperation Partnership and reaffirmed China’s resolve to deepen bilateral cooperation in all fields and further fortify the China-Pakistan relationship.

Source: Business Recorder

Date: 19/6/2019

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China rejects NYT report about building military equipment under CPEC

Source: The News

Date: 21 December 2018

BEIJING: The Chinese foreign ministry Friday rejected a media report that it was planning to build military equipment including fighter jets under China-Pakistan Economic Corridor (CPEC) framework.

“According to our information, the relevant report is not true,” Chinese foreign ministry’s spokesperson Hua Chunying said during her regular briefing held here.

She remarked that the CPEC was an important framework for cooperation bearing long-term interests for both sides.

The New York Times reported Thursday in a long dispatch claiming that Beijing’s “Belt and Road” plan was taking a “military turn” as Pakistani Air Force and Chinese officials are putting the final touches on a plan to expand Pakistan’s building of Chinese fighter jets, weaponry and other hardware.

The dispatch said that the newspaper had “reviewed” the confidential plan which it says also envisages the cooperation between China and Pakistan in space.

“All those military projects were designated as part of China’s Belt and Road Initiative, a $1 trillion chain of infrastructure development programmes stretching across some 70 countries, built and financed by Beijing,” NYT’s correspondent Maria Abi-Habib wrote from Islamabad.

– Joint Coordination Committee meeting –

Referring to the meeting of Joint Coordination Committee (JCC) on CPEC held on December 20 in Beijing, the FO spokesperson observed that the two sides would continue to implement the consensus reached between the leadership of the two countries to cement the early harvest projects and to extend the CPEC to industrial parks and social livelihood.

To a question regarding reports of withdrawal of the US troops from Afghanistan and Syria, she said that China’s position on these two issues was consistent.

Hua Chunying said that as the close neighbour of Afghanistan, China stood for the Afghan-led and Afghan-owned inclusive reconciliation process.

“We are willing to make concerted efforts to achieve long-term peace and stability in Afghanistan helping the Afghan people to enjoy peace and stability at an early date.

To another question about Syrian issue, she said that the Chinese side always believed that sovereignty, independence and territorial integrity of Syria should be respected and the future of Syria should be determined by its own people.

The spokesperson said that China would like to work with the international community and continue to play a positive and constructive role in the early settlement of Syrian issue.

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China will likely speed up its Belt and Road projects amid US tensions: Citi

Source:CNBC
Writer:Kelly Olsen
Date: December 12, 2018

China will likely speed up infrastructure projects in its ambitious Belt and Road Initiative amid trade tensions with the United States, Citi said in a report Tuesday.

Several Chinese companies and various sectors, including mining and transportation, are poised to benefit from that development, the report said.

The Asian giant announced the BRI in 2013, aimed at recreating and modernizing ancient Silk Road trade routes. It has become the signature foreign policy program of Chinese President Xi Jinping’s government.

 The program is an ambitious infrastructure project aimed at connecting more than 60 countries in Asia, Europe, Africa and the Middle East through overland and maritime routes.

But it has been widely criticized, amid concerns that the high debt incurred for projects might become unsustainable for countries such as Sri Lanka, and others could face risks due to political changes, including those in Malaysia.

China has elevated the program to a top national strategy, Citi said, adding that tensions with the U.S. mean Beijing is prepared to take a different approach in the construction projects in order to expand its influence in countries that are part of the initiative.

 China will likely “escalate the loan and shorten the project approval” process to quicken the pace of infrastructure building “so as to diversify trade and economic activities there away from the U.S.,” Citi analysts said in the report.

“We believe the BRI will primarily benefit the railway sector, given China’s distinct advantages globally in terms of technology and cost in railway infrastructure,” they said, noting that building of power plants, telecommunications facilities and ports should also increase.

‘Kinder, gentler’

Some Chinese firms stand to benefit from this, the report said, stating the examples of China Railway Group and China Railway Construction.

Others include Chinese train manufacturer CRRC — which produces rolling stock such as railroad cars, wagons and coaches — as well as equipment maker China Railway Signal & Communication, Citi said in its report. All are listed in Hong Kong.

Some industries are also set to make inroads.

“We see near-term opportunities for sectors such as commodity and mining, transportation and logistics, as well as finance,” Citi said, citing specific firms such as Chinese oil and gas company PetroChina and the Bank of China, both listed in Hong Kong. Shanghai-listed Conch Cement is also “well positioned to benefit from the initiative,” it said.

In a separate Citi report assessing the progress of the Belt and Road Initiative after its first five years, the U.S. bank suggested that China may be forced to modify the BRI into a “kinder, gentler” version that would sit better with its critics.

Some challenges include the heavy reliance on the U.S. dollar in order to fund the infrastructure projects, Citi said. Other pressures China continues to face include criticisms from recipient countries that projects are too favorable to China and “explicit opposition” from the U.S., the report said.

However, all that could contribute to Beijing becoming more open to changes, as seen in China’s “growing interest” in working with multilateral development banks to jointly finance projects, the report said.

But whatever modifications are made, the program is here to stay.

“Though it might change shape, the BRI is certainly not going away,” Citi noted.

 

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CPEC is Pakistan’s national priority, China told

Source: DAWN
Date: December 11, 2018.

ISLAMABAD: Pakistan on Monday reaffirmed its commitment to the China-Pakistan Economic Corridor (CPEC) by pledging to complete it as a national priority.

The assurance was conveyed to the Chinese side by the Foreign Office at the inaugural round of bilateral political consultations. Foreign Secretary Tehmina Janjua led the Pakistani delegation at the meeting, while the Chinese side was headed by Vice Foreign Minister Kong Xuanyou.

“Pakistan side conveyed that CPEC is a national priority for the government and Pakistan remains committed to the successful implementation of CPEC,” the FO said in a statement on the meeting.

“The two sides also resolved to work together towards completion of the ongoing projects and agreed to expand CPEC to new areas of cooperation in line with the vision of the leadership of Pakistan,” it added.

The reiteration comes ahead of the upcoming meeting of the Joint Coordination Committee (JCC) of the CPEC in Beijing next week.

Prime Minister Imran Khan had last month paid his maiden visit to China. During the trip, which analysts say reinforced Pak-China bond, the two countries showed “complete consensus on the future trajectory of CPEC, timely completion of its ongoing projects and joint efforts for realisation of its full potential with a focus on socio-economic development, job creation and livelihoods and accelerating cooperation in industrial development, industrial parks and agriculture”.

However, there is speculation that despite the positivity exhibited during Mr Khan’s Beijing trip, the Chinese have concerns about the future of the CPEC.

The Pakistani and Chinese delegations at their political consultations “agreed to build on the consensus developed during Mr Khan’s visit”, the FO said.

“They reaffirmed ‘all-weather strategic cooperative partnership’ between the two countries and expressed their satisfaction at the strong bilateral ties in political, economic, security, cultural and other spheres,” the statement said.

Chinese Vice Foreign Minister Kong Xuanyou also called on Foreign Minister Shah Mehmood Qureshi after the political consultations.

Mr Qureshi said the prime minister’s visit to China marked “a milestone in the history of bilateral relations and has deepened the bond of trust and friendship between two nations”. Reassuring the Chinese delegation about the CPEC, he said Pakistan would complete this project as envisaged by the leadership of both countries.

Mr Qureshi confirmed Pakistan’s participation in the 2nd meeting of China-Afghanistan-Pakistan foreign ministers’ trilateral mechanism to be held in Kabul on Dec 15.

The Chinese vice foreign minister also visited the General Headquarters for a meeting with Army Chief Gen Qamar Javed Bajwa.

“During the meeting matters of mutual interest, regional security and enhanced bilateral cooperation came under discussion,” the Inter-Services Public Relations (ISPR) said.

Gen Bajwa underscored that Pak-China relations were all-weather and based on mutual trust and confidence. “The visiting dignitary commended the sacrifices and resilience of the people and armed forces of Pakistan and appreciated the role Pakistan Army has played in battling the scourge of terrorism,” the ISPR said.

Last month security forces had foiled a terrorist attack on the Chinese consulate in Karachi. The Chinese government had on that occasion praised Pakistani security forces for their timely action and emphasised on ensuring the safety of Chinese institutions and personnel in Pakistan.

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How A Growing U.S.-China Rivalry Is Reshaping The Global Tech Landscape

Source: Forbes
Writer: Alex Capri
Date: December 09, 2018

For observers of the U.S.-China geopolitical rivalry, the arrest of Huawei’s CFO, Meng Wanzhou, in Canada, should serve as a wakeup call for the rest of the tech sector. The allegations against China’s telecom giant for breaching U.S. sanctions highlights the escalating technology race and hybrid cold war between the world’s two superpowers.

Washington and Beijing are now at a historical tipping point, and national security priorities are driving policies that will lead to further decoupling of American and Chinese interests. This, in turn, will lead to further fragmentation of global value chains in the tech sector.

Tech companies—or any firms that depend on cutting edge technology—will need to gauge their risk environment around two key factors: First, how to react to a wave of disruptive policy measures such as export controls, sanctions, blocked acquisitions and blocked technology transfers. Second, how to minimize the damage that will come as a result of disentanglement from existing technology ecosystems.

 Beijing’s provocative tech agenda

At the heart of this competition is the Made in China 2025 plan, Beijing’s strategy to lead the world in AI, robotics, aerospace and other industries.

China’s rapid advancement in technological capability has in many ways caught Washington and its allies flatfooted. Since 2017, For example, Beijing has been creating a navigational satellite constellation to rival America’s GPS. In 2018 alone, it launched 11 BeiDou satellites, some as few as 17 days apart.

 Beijing can now offer its partners an alternate version of America’s GPS, thereby undermining Washington’s geopolitical monopoly in this area, and it can  leverage the BeiDou program to extract concessions from its client states, such as agreements to buy more Chinese digital infrastructure and equipment.In the competition to win the battle of 5G standards— the technology that provides lightning-fast connectivity and better bandwidth in the internet of things (IOT)—China is leveraging its 650 million mobile internet users and its planned infrastructure along the digital Belt and Road to expand its global influence.

In a bid to become self-sufficient and cut its reliance on foreign semiconductor technology, Beijing is reportedly investing $31.5 billion in a National Integrated Circuit Industry Investment Fund, among other funds.

Lately, Beijing’s focus has increasingly turned to what it calls “civil-military fusion.” Recently, a series of state-backed venture capital funds have brought together tech startups and other private companies with the Peoples Liberation Army. In 2017, for example, the Foshan Civil-Military Innovation Industries Fund was launched to the tune of $28.75 billion.

Washington’s technology counter-offensive

The U.S. Department of Defence (DOD) now officially lists China as an “adversary.” A recent DOD report list key areas of strategic focus including Beijing’s efforts to leverage technology to modernize its military, and its plans to harness the Belt and Road Initiative to further enhance its economic clout. This has fed a popular narrative in Washington and beyond that China’s strategic ambitions need to be confronted and contained. Thus, firms should expect to see fewer technology transfers to Chinese companies, the blocking of deals (such as Huawei getting locked out of the U.S., Australia and possibly the U.K. and Japan) and the placement of targeted individuals and firms on sanctions lists. Whether all of this will produce the desired outcome by Washington and its allies is, of course, debatable.

The U.S. Export Control Reform Act, passed in August, will lead to the expansion of an export controls list. There will be new export licensing requirements for a broad range of so-called dual-use technologies–defined as technologies that can be use for commercial and military purposes. In the digital economy, this will impact a wide range of industries: robotics, AI, autonomous vehicles, even facial recognition technology. The effects could be widespread, with collateral damage to foreign firms.

Chinese smartphone maker ZTE serves as a cautionary tale. Its reliance on U.S. technology for both components like microchips and software from the Android operating system highlights China’s dependence on foreign suppliers.

Hikvision, China’s largest maker of facial recognition surveillance equipment, may suffer a fate similar to ZTE, as the U.S. government is threatening to ban Silicon Valley chipmakers from selling it American technology. Unlike ZTE, however, which avoided a likely collapse when Washington agreed to waive the technology ban, Hikvision may not be so lucky.

China’s major Achilles heel continues to be its dependence on foreign semiconductor technology. Every area of Beijing’s Made in China 2025 plan relies on foreign-owned integrated circuit technology, with much of it coming from five American manufacturers: AMD, Intel, Micron, Nvidia and Qualcomm.

Even Yangtze Memory, Beijing’s state-funded national champion, which recently announced that it had developed a state-of-the-art 64-layer 3D NAND flash memory chip, will depend entirely on critical early-stage equipment—needed for mass production—from foreign firms. Primary partners are Applied Materials and KLA-Tencor, both American companies.

The Scale of disentanglement

All of this leaves the global tech sector in a highly vulnerable position. Increasing U.S. export controls that restrict or block access to American technology could cause major damage to Beijing’s geopolitical aims. But foreign firms will suffer collateral damage as well, as they will be penalized for being imbedded with denied parties.

Over the past three decades, for example, the American companies named above have invested billions of dollars in collaborative ventures and production facilities in China. For all the world’s leading semiconductor firms, China will soon become their largest market.

According to PWC’s Global Strategy group, 80% of the corporate research and development (R&D) money spent in China in 2017 came from non-Chinese multinationals. Disentangling these ecosystems will require dismantling complex, intertwined relationships, with potentially heavy economic and financial consequences across global value chains.

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PN celebrates 60th Gwadar Day

Source: The Express Tribune
Date: December 09, 2018

KARACHI.: Pakistan Navy celebrated 60th Gwadar Day with zeal and fervor on Saturday.

Various ceremonies were held in Gwadar under the auspices of Pakistan Navy to celebrate the day and to rejuvenate the spirit of nationalism amongst the local populace.

The main ceremony of the day was held at PN establishment PNS Akram where former naval chief Iftikhar Ahmed Sirohey was the chief guest.

Flag hoisting ceremony was held at PNS Akram followed by boat race, boat rallies and friendly football matches amongst the locals under the auspices of Pakistan Navy.

The celebrations were aimed at revival of history among locals, creating healthy environment and enhancement of national harmony among various local communities.

Gwadar Day is celebrated on December 8th every year to mark annexation of Gwadar with Pakistan in 1958. Gwadar was in possession of Oman since 1783 and was formally handed over to Pakistan in 1958. A naval platoon led by then Lt Iftikhar Ahmed Sirohey was the first to land at Gwadar and raise Pakistan’s flag there.

Being one of the first government organisations at Gwadar, Pakistan Navy has always been cognisant of its responsibilities pertaining to the area and its people and has always been committed to the development of the region.

Pakistan Navy’s role in health and education sector of coastal areas of Balochistan specially Gwadar and its efforts for making China-Pakistan Economic Corridor a reality are a manifestation of its commitment towards the region.

A huge number of locals participated in events arranged by PN while a number of local notables also attended the ceremonies.

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China’s real endgame in the trade war runs through Europe

Source: CNBC
Date: December 08, 2018

SCHLOSS ELMAU, GERMANY – Hungarian Prime Minister Viktor Orban recently shared some history with a friend, explaining why he reached out to China’s then-Premier Wen Jiabao in 2011, seeking urgent financial support and providing Beijing one of several European inroads in the wake of the 2008 financial crisis.

Orban’s reason was a simple one: survival. Facing a potential debt crisis and unwilling to accept austere loan conditions from Western institutions, Beijing offered a lifeline. For his part, Orban convened some Central European leaders with Beijing, and they laid the groundwork for the “16-plus-one” initiative based in Budapest that since then has provided China unprecedented regional influence.

It didn’t take long for China’s investment to bear fruit. In March 2017, Hungary took the rare step to break European Union consensus on human rights violations, refusing to sign a joint letter denouncing the alleged torture of detailed lawyers. In July of the same year, Hungary joined Greece – another distressed European target of Chinese largesse – in blocking reference to Beijing in a Brussels statement on the illegality of Chinese claims in the South China Sea.

 The Bavarian Alps might seem an unusual place to reflect on China’s growing global influence, in a week that begin with U.S. President Donald Trump and Chinese President Xi Jinping working to avoid a trade war in Argentina and advanced to Canadian authorities arrest of Chinese tech company Huawei’s CFO in Vancouver, at US request on suspicion of Iran sanctions violations.

Transatlantic strategy experts – convened at this breath-taking resort by the Munich Security Conference – were left to reflect on Europe’s unique vulnerability to this major power conflict in a world where they are absorbing the unanticipated shocks of greater US unpredictability, greater Chinese assertiveness and deeper European divisions about how to navigate it all.

“China already has shown it can have a veto power over European Union policy,” said Wolfgang Ischinger, chairman of the Munich Security Conference, on the margins of the off-record gathering he convened. He notes that while West European companies are driven by profit, their Chinese counterparts invariably also represent Chinese state interests. “That doesn’t have to be malign, but it can also be malign.”

European Union officials concede that China already has exercised veto power it has over policies that require unanimity, and because some officials are pushing privately for a change to majority voting. Concerns are growing as Beijing’s influence has grown more rapidly than anyone anticipated. Chinese foreign direct investment in the EU has risen to $30 billion in 2017 from 700 million before 2008.

That influence has grown more rapidly than anyone anticipated. Since the 2008 financial crisis, Chinese foreign direct investment in the EU has risen from 700 million Euro to 30 billion Euro in 2017.

A report by two German think tanks, the GPPI and Mercator Institute for China Studies, found that Beijing has taken full advantage of Europe’s openness and has been “rapidly increasing political influencing efforts in Europe.”

Political warfare

Some call it political warfare, using a nonmilitary toolbox of overt and covert means to exert its influence on political and economic elites, academia and public opinion. With these efforts, it weakens Western unity (and US attraction) and improves its image as an alternative to liberal democracy, the report concluded.

Growing Sino-US tensions have brought Europe new export chances in China but at the same time China has shifted considerable export and foreign investment efforts to Europe to replace lost American markets. In the first six months of this year, newly announced Chinese mergers and acquisitions into Europe were nine-fold the North America number at $20 billion compared to $2.5 billion and completed investments were six times higher at $12 billion compare to $2 billion.

At the same time, a new Trump-Xi trade deal could shake Europe as well, as China’s state driven economy could decide overnight to replace European products with US goods for political purposes.

The potential for an escalated Beijing-US struggle has left European experts scratching their heads over how they would choose sides or navigate the perils, particularly in the case where some countries and industries have much more at stake in China.

Some European officials speak of the need for “strategic autonomy” in the face of US sanctions extraterritorial reach on Iran and Secretary of State Mike Pompeo’s speech in Brussels this week where he questioned multilateralism and the European Union. At the same time, they worry more about what some call China’s “political warfare” of gathering economic, financial and thus also diplomatic influence.

The European Union hasn’t yet applied anything as restrictive on foreign investment as the US Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews the impact of foreign investments on US national security. However, the EU this month passed a bill creating an unprecedented, if non-binding, screening scheme aimed at predatory Chinese investments.

Germans this week increased their focus on questions regarding a company called KUKA Robotics, which has become the poster child for the perils of high tech sales to the Chinese. With its industrial robotics production, KUKA was one of the nation’s greatest innovators for the 21st century economy until it was taken over by the Chinese company Midea in 2016.

Just last month, Midea was reversing previous assurances that it would not remove KUKA’s highly respected and long-time CEO, underscoring China’s ultimate control over cutting-edge robotics technology.

Despite facing new scrutiny, China is undeterred in its European strategy, taking advantage of European divisions, America’s trade strains with Europe and the urgent investment needs of particularly Southern and Eastern European countries.

Xi’s first state visits Spain and Portugal

Tellingly, President Xi made a stop in Spain on his way to Argentina and then again in Portugal for a two-day stint on his way back from the G-20 meeting, his first state visits to both countries.

Even before Xi’s visit, China had invested $12 billion in Portuguese projects ranging from energy, to transport, to insurance, financial services and media. During Xi’s visit, China and Portugal further deepened their economic partnership, with Lisbon agreeing to cooperate in China’s Belt and Road Initiative as it hopes to garner increased Chinese infrastructure and energy investments. China is also poised to take over a majority stake in EDP, Portugal’s largest business and a major EU energy provider.

In short, global markets and news reports miss the real story with their single-minded focus on whether or not President Trump and President Xi can reduce tensions and close a trade deal over the next 90 days. The bigger game, increasingly apparent in Europe, is whether China can replace the United States over time or at the very least significantly reduce its influence.