With the plan, known as the China Pakistan Economic Corridor (CPEC), Beijing hopes to ramp up investment in Pakistan as part of its ambitions to expand its trade and transport footprint across Central and South Asia, while countering US and Indian influence.
Pakistan, a Muslim-majority country of 200 million that has been battling an Islamist insurgency for over a decade, hopes the investment will spur its long-underperforming economy, which the IMF projects to grow 4.3 percent this year.
The two allies have enjoyed close diplomatic and military relations for decades, though economic ties have only grown more recently. Bilateral trade crossed $12 billion dollars last year, compared to only $2 billion a decade earlier.
“The real opportunity of this China Pakistan Economic Corridor is that it changes the scope of the relationship from geopolitics to geoeconomics,” Ahsan Iqbal, the minister overseeing the projects, told AFP.
The two countries are set to cooperate in gas, coal, and solar energy projects to provide 16,400 megawatts of electricity — roughly equivalent to the country’s entire current capacity, said Iqbal.
Pakistan has wrestled with chronic power shortages in recent years that have scrubbed several points off GDP growth and inflicted misery on the everyday lives of its citizens.
“These are very substantial and tangible projects which will have a significant transformative effect on Pakistan’s economy,” Iqbal said.