Sinomania!

According to Reuters Pakistan admiral Noman Bashir, head of Pakistan's Navy, told reporters at a televised news briefing that Pakistan should review the multi-decade contract for Gwadar Port's operations awarded to state-owned PSA International of Singapore. The report says Pakistan is frustrated that the port is largely unused but makes no mention of Gwadar's security problem. Between nativist demands that the port be handed over to Baluchistan tribal leaders, attacks from insurgents perhaps backed by India or even the USA, and the withdrawal of Chinese investment cash it is not a surprise that Gwadar has failed to take off as a new Karachi. If China is put in direct control of the port expect plenty of opposition from Indian and American interests....

Pakistan papers say that a delegation from a Chinese entity called Asia International Development signed an agreement with the Punjab Industrial Estates Development & Management Company to build a giant industrial city of 100,000 acres or more outside Lahore, capital of Punjab in Pakistan.

Exactly where the special economic zone (SEZ) will be located is unknown but word is it will be near important transport corridors such as the Lahore Ring Road begun five years ago. From there it is not far to connect with the Karakoram Highway and railway projects currently planned or under construction by Chinese business and government interests or connect to the port at Karachi or perhaps in the future Gwadar. China builds industrial zones with an eye to finished processing and as a form of export substitution. A developed deep water port at Gwadar may some day ship containers filled with China origin goods finished in Pakistan....

The Iran-China Chamber of Commerce says that China is Iran's top trading partner over the EU when factoring in transhipments from China via the UAE. Using that calculation Iran-China trade is valued at over $36 billion (US dollars). Officials in Tehran and Islamabad are openly seeking Chinese involvement in the delayed "IPI" gas pipeline project that would deliver Iranian gas from the South Pars fields to Islamabad, Pakistan, and on to New Delhi, India. India has backed off the deal and for nearly 2 years Pakistan's president Pervez Musharraf has said why not make it the "IPC" pipeline where the C stands for China. Islamabad is only 400 kilometers or so (less than 250 miles) from Pakistan-China border and it might be possible to link the pipeline with the Karakoram Highway transit corridor currently under expansion by Chinese investment....

Pakistan's National Economic Council approved nearly $4 billion (US dollars) worth of mega projects last week including New Gwadar International Airport. The projects are financed by the Pakistani federal government, the export-import banks of China and the USA, Oman, and others. The Gwadar airport anticipates 300,000 passengers per day with capacity for cargo and 50 flights and hour. Once again there is big talk of pipelines and power plants. Meanwhile Indian interests are speculating that Beijing wants a military base in Pakistan. An op-ed by prominent Fudan University (Shanghai) professor Shen Dingli (an expert in international security matters) raised a lot of eyebrows late last week with its call for Chinese overseas bases. Many interpret the editiorial as proof that Beijing is building a 'string of pearls' of Navy bases around India to gain independent control over trade lanes across the Indian Ocean and into the South and East China Seas.

Of course the idea that a Chinese Navy base or two in support of Chinese shipping could alter America's military supremacy is absurd. As the map pictures, China is ringed by US military installations. And all Chinese traffic in the seas around China are at the mercy of US Navy ships, carriers, and submarines. More probably Dr. Shen's editorial is more a salvo in the war of words over Obama's arms sales to Taiwan.....

China will complete a 3 lane highway in 2010 from Gilgit in the Gilgit-Baltistan area of Pakistan to Sost a town near the Pakistan-China border and the Karakoram Highway. And two new air routes will run from Gilgit and Skardu to Kashgar, Xinjiang. Skardu is a valley town on the headwaters of the Indus River with great agricultural potential. Chinese companies are also busy with several hydroelectric projects in the region. These projects were discussed with reporters by Pakistan's Information Minister Qamar Zaman Kaira who is also governor of Gilgit-Baltistan. A trade show sponsored by the Lahore Chamber of Commerce will open January 4 to showcase the investment possibilities of Gilgit-Baltistan.....

The 8th heads of government meeting of the Shanghai Cooperation Organization (SCO) opens in Beijing this week. Already in town is Russian PM Vladimir Putin and on the way a delegation including first VP from Iran. Iran remains in observor status. Afghanistan is also an observor but no word on whether President Karzai will be in Beijing. Pakistani PM Gilani will be present but is cutting short his stay due to the spate of terrorist attacks in the past few days. The SCO began as a security group and even conducted war games but has devolved into an economic coordinating session. Putin will talk gas deals, Pakistan has its annual list of investment projects seeking Chinese support, Iran will talk gas too. The situation in Afghanistan will also be discussed....

Speaking to reporters in Gilgit-Baltistan last week, Pakistan Prime Minister Gilani said improvements to the Karakorum Highway would be done by 2011. No mention of the Chinese railway along the route which is still in planning. Meanwhile, the USA is expressing its support of infrastructure projects in Pakistan with language in the Kerry-Lugar Senate bill to invest in "cross-border infrastructure projects with Afghanistan"....

The contest between American and Chinese interests is now heating up in north Pakistan. Completely ignored by Anglo-American mainstream media, the Chinese Ambassador to Pakistan Luo Zhaohui expressed Beijing's concern over the expansion plans for the USA embassy in Islamabad over the weekend. Ambassador Luo said also that China opposes the use of "AF-PAK" to refer to the region, pointing out Pakistan's sovereignty. It is an interesting point to make considering that the recent rename of Pakistan's volatile Northern Areas to Gilgit-Baltistan some commenters believe is to ensure the safety of Chinese development in the region specifically the rail/road improvements along the Karakoram Highway and hydrolectric dam projects in the works.

Ambassador Luo also revealed that China will assist Pakistan in launching a satellite....

Pakistan Railways Minister Haji Ghulam Ahmad Bilour says the government of Pakistan has awarded a 72 million rupee (just under $1 million US dollars) contract to an "international consortium" for a feasibility study of the China-Pakistan railway connection project. Minister Bilour's predecessor said much the same thing back in 2007. But no progress was made.

The Pakistan-China rail link envisioned will connect Havelian north of Islamabad, the northern limit of Pakistan's railways, 750 kilometers (approximately 466 miles) to the Chinese border. The railway would roughly follow the Karakorum Highway through territories plagued by separatist violence.

A bigger hurdle may be on China's side as the railway must go through the Khunjerab Pass at 4,693 meters or over 15,000 feet. But China accomplished a similar engineering feat when it built the world's highest railroad - the Qinghai-Tibet passage. To complete the connection to the Chinese railway network will require approximately 350 kilometers or 218 miles of track from Kashgar - the fabled "gateway" to China - to the border.

Pakistan's railways are now connected to Europe through Iran. A freight train carrying 20 containers left Islamabad on August 14 - the inauguration of the Islamabad-Tehran-Istanbul rail service. The train arrived in Turkey yesterday (August 25). With the Pakistan-China border connection, Chinese exporters could use the route as a land bridge for goods from western China as an alternative to loading containers onto ships at Gwadar Port. Such a scenario may explain Beijing's decision to shelve development at Gwadar for the time being.

According to the Associated Press of Pakistan, the Dong Fang Electric conglomerate headquartered in Chengdu, Sichuan, has an agreement to build the rail link with Pakistan Railways. Dong Fang already has two branch offices in the country....