Pak-China Strategic Friendship

Pakistan and China share many similarities on important geo-political affairs and geo-strategic maneuverings. Both countries have also certain plans for regional socio-economic integration. This friendship is higher than Himalayas and deeper than Arab Sea. The friendship between Pakistan and China is a lush tree with deep roots and thick foliage full of vigour and vitality.

Both countries celebrated the “Year of China-Pakistan Friendship” with zeal and greater promise to excel in different strategic fields in the days to come during 2011. It marked the 60th anniversary of the establishment of diplomatic relations. Both sides arranged different meaningful interactions, dialogues, forums and conferences which further enhanced the brotherly spirits, business opportunities and political harmony throughout the year.

In this research study different aspects of Pak-China strategic friendship will be discussed. Milestone agreements in different fields will be studied. Strategic bilateral cooperation in different sectors and its geo-political and geo-strategic ramifications will also be highlighted.

Energy Cooperation
Pakistan is passing through a sever energy crisis which has already produced serious dints in its socio-economic spheres. It has lessened industrial productivity and deepened social chaos. According to official figures, it has energy deficit of more than 5,500 MW. Its present peak demand is 18,100 MW. The annual rate of growth in electricity consumption was 3 percent in 2003. It reached to 10 percent in 2008. In case of gas its daily gas requirement is 6.5 billion cubic feet (BCF), against its current supply of 4 BCF, a shortfall of 2.5 BCF. The major consumer of gas is the power sector, which consumes nearly 40 percent of the total production of gas.

The projects of hydropower i.e. 840MW Sukhi Kinari plant, 100MW Kotli plant, 157MW Madian plant and 1,200MW AES imported coal-based plant, Kohala Hydro Power (1100 MW), Bhunji (7100 MW), Bhasha, Dashu in Upper Indus Valley, and other Hydro Power projects in lower Indus valley were thoroughly discussed most recently with the Chinese representatives of public-private sector which would be instrumental to substantial decrease in our energy worries.

China Three Gorges Corp (CTGPC) the largest hydropower developer promised to invest $15 billion in Pakistan’s energy sector, an investment that could hopefully add 10,000 megawatts to Pakistan’s main grid over the next 10 years. The corporation also offered to develop multi purpose hydro electric projects through direct financing model based on 3Ps i.e. public private partnership.

It signed an agreement with a private Pakistani firm, Associate Technologies (Private) Limited to invest $1.2 billion in 720 MW Karot Hydropower Project. The Karot project would be completed in four years and help Pakistan to overcome load-shedding problem. It has also begun construction work on a 49.5MW wind farm at Jhimpir, Thatta in Sindh province at cost of $130 million.

China being Pakistan’s strategic partner extended lots of productive plans to lessen the ongoing energy crisis. In this connection, Pak-China Joint Energy Working Group (JEWG) was held in Beijing 2011 and different projects (19) were thoroughly discussed. Power generation possibilities were the central point of all the discussions. Bilateral relation in wind energy, coal powered units (Thar Coal) along with hydroelectricity projects Bhasha Dam and Indus Dam were labeled as “Flagship projects’.

The extended bilateral energy cooperation also consists of ongoing wind projects namely Karachi first wind farm, Karachi second wind farm and Punjab wind and solar projects are also at its advanced stages. The government of Pakistan also shows its intention to build a run of the river hydro project at Sukkur Barrage with China Three Gorges Project Corporation. Moreover, Joint Development agreement was due to be signed this month for the 120 Megawatt Taunsa Hydro electric projects where the discharge is 10,000 cusecs is ready for joint development agreement.

Government of Pakistan invited and encouraged Chinese government, companies, investors to participate in various initiatives of the Government of Pakistan undertaken for the development of power sector. The government facilitated and provided incentives to the Chinese for investment in the water, power, and other energy sector projects. Both countries deliberated upon possible avenues of Pakistan-China cooperation in following projects:

Goldwind will supply 33 GW77-1500. Goldwind is also offering a two-year operations and maintenance service. The project will be completed and connected to the grid in second quarter of 2013. It is also planning to expand the wind farm to 500MW by 2015 in two further stages.

Many Chinese companies such as Harbin Power Engineering Company Ltd., Dongfang Electric Corp., CWE, Sinohydro Corp., Zhongyuan Engineering Group, Gezhouba Group, CMEC, and CMC are currently working to overcome the energy crisis in many parts of Pakistan. These private companies are engaged with 40 projects amounting $5 billion of hydropower, thermal power, nuclear power, and electricity transmission and transformation. Chashma Nuclear Power Plant II, the Neelum-Jhelum Hydropower Station and the Sardhi wind power project are the prime examples of Pak-China bilateral energy cooperation.

The Chinese companies showed their keenness to invest $10 to $15 billion for the development of power sector in Pakistan which has around 175 billion tonnes of coal deposits in Thar. It will extend its expertise to construct 1100MW Hydropower project at Kohala, 120MW Hydropower project at Taunsa barrage and flood mitigation project at Sukkur Barrage had already been signed to kick-start this master plan.

Opportunities are great in bilateral energy cooperation between both the countries. China has also offered to start construction of 50 MW wind power project in Jhampir (Sindh) and which will be completed in 2012. Furthermore it has also planned to install 2000 MW wind power. China has also planned to invest in the 300 MW solar power projects in Pakistan.

A project to generate 2,300MW of electricity through wind turbines and solar panels has turned out to be the most important agreement reached with China during the recent times. The project would involve an investment of $6.5 billion and wind power projects of 1,000MW each would be set up in Punjab and Sindh. In addition, a 200MW solar power project would be set up in Punjab and another of 100MW in Sindh.

Moreover, according to the federal ministry of finance, Pakistan with the technical and financial support of China launched six different projects worth $ 2757.400 million during 2005-2010. Another five projects worth $409.292 million are under process for implementation. The projects included nuclear power plants, construction of national highways, satellite communication and rehabilitation of earthquake affected areas.

The Punjab government and China’s state company Sinotec agreed to cooperate in the energy sector which would add a new chapter to Pak-China friendship. Sinotec decided to work on hydle power project at two places, and the Punjab government would welcome joint ventures in this regard.

Extended Space Cooperation
China and Pakistan have enjoyed more than 20 years of cooperation in space sciences, technologies and applications. China launched a communication satellite PAKSAT-1R for its closest ally Pakistan which enhanced bilateral space collaboration. Pakistan’s first Communications Satellite PAKSAT-1R is the important part of its Space Programme-2040. The launch of Paksat-1R Satellite is a major milestone for both countries towards strengthening of this cooperation. SUPARCO will continue its efforts for launching of other satellites including Remote Sensing Satellites, to ensure that the space technology applications fully contribute to socio-economic development and national security in Pakistan.

By launching its Paksat-IR Pakistan has achieved several strategic objectives not confined to broadening of client base. Pakistan has entered into a long term relationship with China towards acquiring the know how to produce satellites in the future, with the ultimate aim of achieving self reliance. Now it is also able to establish and maintain ground control stations for operating Paksat-1R from Pakistan.

PAKSAT-1R had a total of 30 transponders, 12 in C-band and 18 in Ku-band. The satellite will be deployed at 380E in the eo-stationary orbit and it will replace the existing satellite PAKSAT-1. It is designed and manufactured by China Academy of Space Technology (CAST), a subsidiary of China Aerospace Science and Technology Corporation (CASC).

PAKSAT-1R has a design life of 15 years and will provide TV broadcasting, Internet and data communication services across South and Central Asia, Eastern Europe, East Africa and the Far East. This satellite now enables extending of communication services to all areas of Pakistan.

It would refine and enhance Pakistan’s capabilities for the use of broadband internet, digital broadcasting, mobile telephony, disaster prevention and management. The satellite would provide a variety of benefits including high power communication and weather monitoring facilities, besides strategic defence applications.
The development of PAKSAT-1R was signed between Pakistan Space and Upper Atmosphere Research Commission (SUPARCO) and China Great Wall Industry Corporation (CGWIC) in October 2008 during the visit of the President of Pakistan to China. Pakistani engineers worked closely with their Chinese counterparts during all stages of development of the satellite in China. Some experimental units developed at SUPARCO have also been integrated on the satellite for technology evaluation.

To meet the coverage requirements, Paksat-1R has advance communication antennas, covering South Asian Sub-continent, the Middle East, east Africa and part of Western European areas and cities.

Pakistan’s space programme is a diversified program which spans from climate science, clean energy technologies, clean water technologies, cyber security and basic space, to atmospheric, Earth and marine sciences. China helped Pakistan to launch its first low orbit satellite Badr-A in July 1990. In 2006, China committed to work with Pakistan to launch three earth resource satellites. Pakistan sought more than US$200 million financing from China for Paksat-1’s replacement.

It is hoped that the satellite would provide high power communication and weather monitoring facilities, besides strategic defence applications. The Space and Upper Atmosphere Research Commission will operate it from its ground control stations in Karachi and Lahore. It will facilitate the introduction of new services including broadband internet, digital TV broadcasting, rural telephony, emergency communications, tele education and telemedicine. Government of Pakistan is also making serious efforts to get space technology from China. It plans to launch the Pakistan Remote Sensing Satellite (PRSS) in the near future with the technical and financial assistance of China.

Bilateral Defence Cooperation
Bilateral defence cooperation between Pakistan and China is peaceful and China always extends support to Pakistan’s sovereignty, territorial integrity and national dignity. Strong Pakistan-China ties, including between the two Armed Forces, have remained a constant factor for decades despite changes in the domestic and international situations.

China has been supporting Pakistan to enhance its defence capability and indigenization drive. China has been eager to provided transfer of technology, soft loans and even technical expertise in the diversified fields of defence production. Whether it was tanks and field guns, destroyers and frigates or the aviation industry, Chinese support has been commendable.

Pak-China joint ventures has already produced JF-17 Thunder fighter aircraft, K-8 Trainer aircraft, Al-Khalid Tank, F-22 Naval Frigates which further strengthened our cooperation in the field of defense. Heavy Rebuild Factory (HRF) at Taxila, Pakistan Aeronautical Complex at Kamra was also established with Chinese assistance too. The Karakoram Highway, the strategic port of Gawadar are a manifestation of China’s sustained interest in Pakistan.

The last year witnessed many interactive sessions between the two armies at different levels which proved to be vital, effective and productive. Pak-China Joint Military Exercise” Friendship-IV-2011 was also held in Pakistan which further boosted bilateral defence cooperation. The Chinese People’s Liberation Army (PLA) sent a 50 member medical team carrying 50 tons of flood relief aid to Pakistan for the most affected people from the devastating flood.

General Ashfaq Parvez Kayani, Chief of the Army Staff (COAS) visited China and met with Premier Wen Jiabao. The COAS thanked Premier Wen Jiabao and the Chinese government and people for their consistent support to Pakistan in its efforts to uphold its sovereignty and territorial integrity as well as foster economic development and social stability. He added that development of China-Pakistan strategic partnership is the cornerstone of the two countries’ policies and shared aspiration of their people. He held talks with General Ma Xiaotian, PLA’s Deputy Chief of General Staff, on a wide range of bilateral defense cooperation issues covering defense and security dialogue, joint exercises, training of personnel, defense coproduction, and defense trade.
Chinese Premier Wen Jiabao said that in view of the complex and evolving regional and global situation, closer and strengthened coordination between Pakistan and China is imperative in order to meet common challenges. He said Chinese Government and PLA would continue to support stronger defense cooperation between the two countries and more frequent military to military exchanges. The Chinese Premier said Pakistani armed forces have made important contributions toward maintaining bilateral relations and boosting the China-Pakistan strategic cooperative partnership. Premier Wen said that Pakistan is at the forefront of the fight against terrorism and has given enormous sacrifices which ought to be duly recognized by the international community.

General Liang Guanglie, China’s Minister for Defence visited Pakistan and the two countries inked three Memoranda of Understanding aimed at enhancing Pakistan’s capabilities to fight terror. Under the agreements the three services of the two countries would hold joint military exercises, while China would provide four trainer aircraft for PAF and 60 million Yuan for Armed Forces training. Both sides agreed to strengthen the military cooperation and strategic communication at all levels to overcome challenges being faced by the two countries. Both sides agreed to share intelligence gathering which was essential for defeating terrorists. Gen Liang assured that China would continue to provide military and economic assistance to Pakistan and support its stance on different issues.

Lt. General Waheed Arshad, Chief of General Staff of Pakistan Army was also visited China and met with important senior Chinese government officials. The Chief of General Staff of Pakistan Army visit helped further strengthen defence cooperation and strategic relationship between the two countries. Pakistan Navy deeply values the support provided by People’s Liberation Army (PLA) Navy and expressed the confidence that the lasting association between the two navies would be taken to new heights in future. Two Pakistan Navy ships, PNS Shamsheer and PNS Nasr visited Qingdao port on 19th July and joined the celebrations.

Currency Swap Agreement/Arrangement
It has been desire of government of Pakistan to reach an agreement of currency swap arrangement with China. Pakistan and China signed currency swap agreement (CSA) for promoting bilateral trade and enhancing financing of direct investment between the two sides in their respective local currencies. The CSA has been executed for a tenor of three years in respect of local currencies, Rs. 140 billion and 10 billion yuan.

SBP governor hoped that swap is to promote the use of regional currencies for trade settlement purposes and specifically in the case of China because the agreement will enhance the role of the yuan in international trade and investment. It is a bilateral financial transaction, all terms and conditions apply equally to both countries and the pricing is based on standard market benchmarks, which are widely acceptable in the respective domestic markets of the two countries.

Moreover, both central banks will have the ability to draw on the swap line any time during the tenor of the swap. SBP can purchase yuan from PBC against its local currency, and repurchase its local currency with the same Chinese currency on a predetermined maturity date and exchange rate. Similarly PBC can also purchase rupee against Chinese currency but standard market pricing will apply on the date of utilisation. Like any swap, the pricing is linked to interest rates differentials between the two currencies. The CSA between the two central banks gave a positive signal to the market on the availability of liquidity of the other country’s currency in the onshore market.

At maturity, the importer/exporter will repay the foreign currency to the lending bank; and the bank will repay to the respective central bank. The trade financing regulations in foreign currencies are already available in Pakistan for providing liquidity and facilitating trade. The same concept will also apply in the case of PBC borrowing rupees for trade or investment in Pakistan.

On the maturity date of the letter of credit (LC), the importer will pay off the overseas supplier by borrowing in yuan. Assuming borrowing is for six months, the importer will save on the rupee cost and after six months the importer will buy yuan against rupee and pay off the yuan loan. Availability of onshore yuan financing will encourage importers to open yuan denominated LCs.

Once the contract is established, the exporter will borrow in yuan, sell yuan against rupee and utilise rupee for its local operations. On the maturity date of the contract, the exporter will receive yuan from the overseas buyer and payoff the yuan loan locally.

Concurrently with the arrival in Pakistan of the Industrial Commercial Bank of China (ICBC), the largest bank in China and the world in terms of capital, the CSA provides a strong boost towards building offshore investor confidence that will encourage other investors to capitalise on the economic opportunities in Pakistan.

Enhanced Finance and Banking Cooperation
Banking and financial mutual cooperation always speeds-up the prospects of high volumes of bilateral trade, joint ventures and promotes tourism spells. It instruments to reduce poverty and generates opportunities of employment. It also increase capacity building and supports better/qualitative HRM. The government of Pakistan has been rigorously pursuing further enhancing of financial and banking cooperation with China, one of its largest trade partners.

Currently, the EXIM Bank is rigorously engaged with many mega projects in Pakistan, including Chashma Nuclear Power Plant, Karakoram Highway and Saindak Gold and Copper Mining Project. Now, the chairman of EXIM Bank showed his intentions to financing of Karachi-Gwadar motorway which would be another shining example of Pak-China friendship. According government’s officials the Export-Import Bank of China will loan Pakistan $1.7 billion to develop a city-wide train system in Lahore. The 15-year loan will be disbursed in the next five years, and negotiations with Eximbank are under way to finalise other details. Most recently, the Punjab government recently agreed to award the 27 km (16.7 mile) train line contract project to the Chinese company China North Industries Corp (Norinco). The project is likely to begin by the end of 2011. It is hoped that completion of this project will substantially decrease road traffic.

Bank of China (BOC) agreed to expand its operations in Pakistan and will facilitate and encourage the Chinese entrepreneurs to invest in Pakistan’s energy and telecom sectors. The China Development Bank (CDB) had announced $ 7.67 billion financing for development projects in Pakistan. The Chairman of CDB reaffirmed his bank’s contribution in major energy related projects including Bhasha and Bunji dams. Industrial and Commercial Bank of China (ICBC), one of the leading Chinese banks, began operations in Pakistan with the opening of two branches in the country”. The ICBC had business correspondence with 17 banks in Pakistan including the National Bank of Pakistan and HBL Bank. The State Bank of Pakistan has declared ICBC as a scheduled bank.

A prominent businessman of China has become chairman of KASB Bank Ltd after approval from the SBP and promised for more investment in various sectors of the economy. Mr. Li has already made an investment of $40 million in KASB Finance, a holding company of KASB Bank. Chinese investors would also make further investments in the Bank. This big investment is first ever in any private bank in Pakistan from China which also illustrates the confidence of investors in the financial institutions of Pakistan.

Trade and Commerce Cooperation
President Asif Ali Zardari has called for further enhancing bilateral trade and investment cooperation between Pakistan and china in various fields. Pak-China cooperation and low cost Pakistan labour force could help develop the region as a manufacturing hub for the benefit of both countries. Economic and technical cooperation for the development and exploration of the Saindak Gold and Copper Mining Project up to year 2017 is highly appreciated in Pakistan.

Bilateral trade is on the rise between the two countries. Pakistan exported different commodities to China of worth $228.63 million, $244.59 million, $288.259 million, $354.092 million, $463.967 million and $575.903 million in 2001-2006. Whereas, Pakistan imports from China was $ 5 75.37 million, $839.00 million, $1,153.514 million and $1,842.270.

According to Pakistan Institute of Trade and Development (PITAD) conducted study, ‘Evaluation of Pakistan-China FTA’ imports from China have been persistently rising even in the no concession category whereas Pakistan has been able to increase its exports only in the first two categories. The marginal tariff concessions provided by Chinese authorities would not help Pakistan make inroads in the Chinese market unless tariff concessions granted to Pakistani exporters place them at par with other countries with which China has preferential trading arrangements.

Products in which Pakistan’s exports to China increased in the post-FTA period include cotton products of chapter 52, chromium ores and concentrates of chapter 26, fish prepared or preserved and fish fillet of chapter 16, copper wire of chapter 74, frozen flat fish of chapter 03, waste, parings and scrap of plastics of chapter 39 and marble and travertine of chapter 25. the lack of export diversification and concentration in raw material and intermediate product exports to China even in the post-FTA period. Imports from China were valued at around $1 billion in 2003, which rose to around $3.7 billion in 2009.

It is concluded in the study that China’s specific provision of low tariffs and other exemptions to the ASEAN and APTA countries has to some extent eroded the FTA preferences of Pakistani exporters in the Chinese market.

During 2011, many business groups from both sides had different spells of negotiations and finalized many mega projects. Different important organs/departments of both the countries had different meetings at different forums during 2011 due to which many MOUs were inked. Trade fair in Kashgar was a great success and a accord number of businessmen from Pakistan actively participated in it.

Board of Investment (BoI) and M/s Foton Chinais a commercial vehicle manufacturer ranking first in Asia and second all over the world, and a first brand among the China commercial vehicles and manufacturing 50 percent of the commercial vehicles in the world penned a memorandum of understanding (MoU) for the export of (200 to 300 CNG/LPG buses) for Sialkot Chamber of Commerce & Industry. Lahore Transport Company has also made an agreement with Foton Transport Company Beijing for getting CNG buses under which the company will provide 111 CNG buses within next few months.

One of the largest companies of China has already showed its interests in setting up a new industrial zone in Zulfikarabad and which would further boost investors’ confidence for investment in Pakistan, besides generating employment for the people of the area.

China has emerged as top importer of Pakistani marble by importing about 70,790 metric ton (MT) marble during the period from July to March 2010-11 as against the import of 31,921 metric ton during the same period last year.

Infrastructure plays very important role in the socio-economic development of any country and Pakistan is not any exception. Railways connect the different sectors of the economy and integrate its productive role in the national economy. In order to initiate different infrastructural projects in the country, the government has already sought the assistance of China. Some Chinese companies have already shown interest in infrastructure development in Pakistan including construction of Karakorum Motorway and the Railways.

According to Pakistan Agricultural Scientists Association (PASA), Pakistan can take advantage of Chinese experience to ensure food security as China is feeding around 21 percent of the world population by just bringing four percent of the total global area under crops. They are producing 400 kilograms of grains per capita as against the 170 kilograms per capita available in Pakistan.

Pakistan should join hands with China for increasing its agriculture productive and efficiency as both countries had similar land holdings and farming practices, except in research. China has developed an effective agriculture research system, which has helped it in increasing its farm output. It is hope that if Pakistan cooperates with China it can take the benefit of the huge Chinese market.

China is currently developing one of the biggest economic zones in the world which will also benefit Pakistan’s economy. Pakistan can help China in its plans to tap the vast potential of export market of Islamic countries and help tap a trillion dollar ‘halal’ food.

Significance of Pak-China Strategic Partnership and Regional Geo-Politics & Geo-Strategic Scenarios

Stability in Afghanistan
Durable regional peace is heavily dependent on Afghanistan. It is very complicated and complex due to too many stake holders of “End Game”. Pakistan and China share lots of similarities on that particular issue. Both countries do not want to have increase of the NATO troops in South and East Afghanistan creating counterproductive terrorism. On the issue of Osama Bin Laden China wholeheartedly supported the government of Pakistan and stood with it and assured the protection of its national integrity and sovereignty. Most recently, the state-owned CNPC signed the agreement to develop three blocks in Afghanistan’s Amu Darya Basin after outbidding international rivals in an auction and proposing to build a refinery.

The deal makes China the largest foreign investor in Afghanistan, after Metallurgical Corporation of China in 2007 won the rights to develop the biggest Afghan copper deposit. CNPC will work in a joint venture with Afghan Oil and Gas Company. Northern Afghanistan could hold more than 1.6 billion barrels of crude, 16 trillion cubic feet of natural gas and 500 million barrels of natural gas liquids. Therefore, it high time for Pakistan to actively collaborate with its Chinese counterparts in the fields of energy and may initiate some joint ventures in Afghanistan.

Uzbekistan one of the largest countries in the Central Asian States has already constructed a world class Railway Track up to Mazar Sharif to be extended up to Balochistan. Uzbekistan has already framed a workable regional solution for Afghanistan (6+3 formula) which would be considered to bring peace in the truculent land of Afghanistan.

Moreover, there are lots of Chinese companies are rigorously engaged in Uzbekistan. Pakistan also wants to have easy and smooth supply of TAPI and other mega projects which may be jointly collaborated with the help of China in the days to come.

Gwadar Port
China has already built the Gwadar Port, the gateway to the Middle East and Indian Ocean economies. Pakistan need to develop supporting transport rail, road, air and communication networks in Gwadar. It is hope that when this network develops and is fully operational from Gwadar to Khunjerab to Urumqi to Beijing to Shanghai, it would give alternative choices to China for its trade with the Middle East and Europe. This alternative route would be much shorter than the one passing through the Malacca Straits. So, the further development of Gwadar Port would open a new chapter in the bilateral relations of both the countries.

Red Lines
Kashgar terrible episode and militant activities in Xinjiang are the red lines in our extended relations. It is strategically located and has boards with Pakistan, Afghanistan and the Central Asian Republics, has 17 per cent of China’s land mass producing roughly 40 per cent of its oil, coal and gas. Policy makers must realize its significance in the ongoing hot pursuits of end game in the region and initiate concrete steps to eliminate these red lines as soon as possible.

China has already announced launching of $100 billion economic development package for Xinjiang having border with Pakistan and many Central Asian Countries. China has already started to construct a special economic zone in it which would be useful to generate employment and social equilibrium. On its part the government of Pakistan reassured that all necessary steps must be taken to curb the offspring of these organizations (the al-Qaeda-linked East Turkestan Islamic Movement (ETIM). Moreover, Taiwan and Tibet are also very sensitive for China which should be further respected and government of Pakistan has already showed its commitment in this regard.

Arab Spring
Stakes are high for Pakistan and China towards so-called ongoing Arab Spring in many countries of the Middle East. Most recently, China and Russia used veto power against UN Resolution’s about Syria. China has initiated many mega projects of oil and gas, infrastructure, telecommunication and real estate in the Gulf Cooperation Council and Middle East and African Countries and ongoing political instability and deteriorating law and order situation is hurting its long term strategic interests. Government of Pakistan is also showed its concerns in unpleasing situation in Syria, Bahrain, Egypt, Libya, Tunisia and other countries where millions of Pakistanis work and send billions of worker remittances in the country. Pakistan may help China to build a bridge to the Middle East and West Europe. We are also a conduit for China to reach out to the Muslim world. Both countries should develop a common strategy to resolve these conflicting realities in this region and work together for peace, stability and development.

The Shanghai Cooperation Organization (SCO)
The Shanghai Cooperation Organization is emerging as yet another player in a crowded web of diplomatic and military ties. It will be an economic powerhouse and a major global force throughout the 21th century. Emerging economy like India and roaring economic might China, as well as such resource-rich states as Russia, Uzbekistan, Tajikistan and Kazakhstan, will be a powerhouse of economic activity and a major global force throughout the century.

Its six full members account for 60 percent of the land mass of Eurasia and its population is a third of the world, while when seen with its affiliates, the SCO accounts for half of the human race. New regional security architecture, influenced by the Shanghai Cooperation Organization (SCO), is emerging in which China is the most important country and it has been strong desire of Pakistan to become full member of it. Paramount status of China and support of Uzbekistan and Russia could help Pakistan to achieve it.

Concluding Remarks
Our friendship and brotherly ties with China are not only time tested but China has always stood by Pakistan in its hour of need, whether it was war or a natural calamity. Both countries have been helping each other in overcoming their geo-political isolation. Regional stability, socio-economic prosperity, sustainable development and respect for ones territorial sovereignty are the mantra of both the countries.

The pervious year further strengthened our bilateral relations in diversified fields for the benefits of both the countries. Our friendship has crossed stars and deep occasions in the 2011. It was indeed a remarkable year of mutual celebrations, cherished memories, dialogues, meetings, forums, conferences, fairs, delegations and above all consultations on the matters of regional security and pace between the two countries.

Pakistan and China is the cornerstone of regional emerging security architecture and ongoing war against terrorism can not be won with out the support of Armed Forces of Pakistan. Ill designs of “End Game” could be disastrous for the region and the world and it can only be countered with the cooperation of Pakistan and China. Alternative centers of power have already emerged and contributing good things in socio-economic (BRICS i.e. Brazil, Russia, India, China and South Africa), SCO (Shanghai Cooperation Organization) spheres due to which global economy has already been shifted/drifted from the West to South/Asia which strongly stress the need for a “Paradigm Shift” in our foreign policy preferences, socio-economic priorities, geo-political engagements and the last but not the least geo-strategic maneuverings.