Fri, Oct 17, 2008 - Page 5 News List

Pakistani president travels to Beijing

NEEDED ASSISTANCE Pakistan will set up industrial zones for Chinese companies with incentives, including tax breaks to help the two nations reach trade targets

AP AND BLOOMBERG , BEIJING

Pakistan’s president met with Chinese Premier Wen Jiabao (溫家寶) yesterday, a day after clinching agreements boosting Chinese involvement in his country’s ailing economy.

Asif Ali Zardari was also scheduled to hold talks with top legislator Wu Bangguo (吳邦國) and other senior Chinese leaders, along with major figures in finance, infrastructure, energy and telecommunications.

On Wednesday, Zardari met with President Hu Jintao (胡錦濤) and highlighted the historic friendship between his country and China.

Such ties loom ever larger as Pakistan seeks assistance in alleviating an economic crisis brought on by higher food and energy prices.

Agreements signed between the sides included deals on economic and technical cooperation, minerals, environmental protection, agricultural research, and electricity.

Specifics on the deals were not immediately available, but the state-run China Daily newspaper said yesterday one of the agreements was for China to launch a telecommunications satellite for Pakistan in the first half of 2011 from a launch center in Sichuan Province.

A possible deal between the countries on civilian nuclear power was not mentioned. Such an agreement would have served as a counterpoint to a recent deal between India and the US that cleared the way for US businesses to sell nuclear fuel and technology to India for use in its civilian programs.

Ties between Pakistan and China have long been founded on mutual suspicion of joint neighbor India, against which both have fought bloody border wars.

In recent years, however, trade relations have moved to the fore as China’s economic influence in the region begins to overshadow political concerns.

Pakistan’s manufacturing sector has suffered from cheap Chinese imports while the economy as a whole has benefited from Chinese investment and cut-rate prices for infrastructure projects such as road building and telecommunications.

While Beijing has not promised any direct aid, its massive foreign currency holdings make it a prime candidate to inject much-needed cash into Pakistan’s economy, where inflation running at 25 percent has wrecked the government’s finances and exacerbated a trade gap that is fast eating up the country’s foreign currency reserves.

Meanwhile, Pakistan will set up industrial zones for Chinese companies with incentives including tax breaks to help the two countries reach their target of doubling trade by 2011.

Companies in the designated areas with at least 40 percent Chinese ownership will enjoy a five-year tax holiday on corporate income and the two countries may reduce or eliminate tariffs on goods produced in the zones, according to a copy of the agreement released on the Web site of China’s Ministry of Commerce.

The agreement “will further enhance the two countries’ bilateral economic and trade cooperation,” a statement accompanying the documents on the ministry Web site said.

Analysts said before the trip that Pakistan would seek financial and energy assistance as the country tries to avoid defaulting on its debt and to resolve electricity shortages.

“I am grateful for this honor that you bestow upon the people of Pakistan by allowing us to be here today,” Zardari told Hu on Wednesday.

“As a long friend of Pakistan, China understands it is facing some financial difficulties,” foreign ministry spokesman Qin Gang (秦剛) told reporters. “We’re ready to support and help Pakistan within our capability.”

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