The assumption of management control of Pakistan’s prized Gwadar Port represents a milestone in Pakistan-China relations and a decisive sign of China’s growing power in the region. The port will remain the property of Pakistan and will be operated by the state-run Chinese firm China Overseas Port Holding Company.
A voracious energy consumer, Gwadar’s ideal location in close range of 60% of the world’s oil trade will be of great value as a transit terminal for China’s Gulf oil supplies.
Growing Chinese influence in the region is just one indicator of the country’s tremendous economic ascent. Once an imperial possession of Britain, China’s economic fortunes changed with Chinese leader Deng Xiaoping, one of China’s most important politicians. Deng Xiaoping had survived the searing experience of the Cultural Revolution and began the process of economic reform in China.
A deft negotiator, the reversion of Hong Kong to the People’s Republic of China in 1997 was another defining moment in China’s history and a sign of the country’s imminent rise. A significant colony of the British Empire, Hong Kong reverted to China after 150 years of British rule. Through the Joint Declaration signed by the formidable British Prime Minister Margaret Thatcher and Chinese Premier Zhao Ziyan, the framework for handing Hong Kong back to China was established predicated on Deng Xiaoping’s formula of ‘One Country Two Systems’.
China’s steady ascent has been informed by another of Deng Xiapoing’s dictums of “crossing the river by touching the stones.” This cautious approach has extended to the development of its financial sector and the management of its prodigious reserves which also include $1.2 trillion in US Treasuries. In order to move away from the export-oriented economic model, the Chinese government has steadily introduced significant financial liberalization.
Moreover, the renminbi is set to become a major global reserve currency rivaling the dollar. Over the last two years, China has signed renminbi trade settlement agreements with several countries including Pakistan. In 2011, China settled 10% of its total trade, which amounted to 2.6 trillion yuan, in its own currency. This figure is expected to rise and by 2030 analysts predict that the vast majority of China’s trade will be settled in yuan.