Home »Business and Economy » Pakistan » CPEC LTP envisages greater cooperation between SBP, PBoC

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  • Dec 19th, 2017
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The key cooperation areas under Long Term Plan for China-Pakistan Economic Corridor (2017-2030) include promoting monetary cooperation between central banks, implementing existing bilateral currency swap arrangements, exploring use of bilateral currencies for the settlement of bilateral trade/investments, Cross-Border Inter-Bank Payment System (CIPS), promoting free flow of capital, financial cooperation between Free Trade Zones (FTZs) and strengthening cooperation between stock exchanges of Pakistan and China.

The government officially launched Long-Term Plan for China-Pakistan Economic Corridor (2017-2030) here on Monday. Long-Term Plan for China-Pakistan Economic Corridor (2017-2030) revealed that China and Pakistan should strengthen cooperation in the fields of oil, gas, electricity and power grids, and focus on promoting the construction of major projects of thermal power, hydropower, coal gasification and renewable power generation, and supporting power transmission networks, in order to enhance power transmission and supply reliability.

According to the Long-Term Plan, the two countries should explore the establishment of multi-level cooperation mechanisms and strengthen policy co-ordination. They should also strengthen their own financial reforms, innovate their own financial products and financial services, and control financial risks to create a good financial environment for the construction of the CPEC.

Pakistan and China will strengthen cooperation in financial regulations. The two countries should promote monetary cooperation between the central banks, implement existing bilateral currency swap arrangements, research to expand the amount of currency swap and explore to enrich the use scope of bilateral currency swap; assign the foreign currency to domestic banks through credit-based bids to support the financing for projects along the CPEC; promote the settlement in domestic currencies (RMB and rupees) to reduce the demand for third-party currency; and strengthen the cooperation between the central banks and financial regulatory agencies of the two countries. The two sides will actively explore to use bilateral currencies for the settlement of bilateral trade and investment under the relevant arrangements. The two countries encourage clearing and settlement of the financial institutions from both sides through Cross-Border Inter-Bank Payment System (CIPS), promote the free flow of capital in an orderly manner, and enhance the facilitation in cross-border transfer of legitimate funds.

The plan said China supports Pakistan to cooperate with the Asian Infrastructure Investment Bank (AIIB). Both countries shall promote the mutual opening of their financial sectors and the establishment of financial institutions in each other's countries; encourage financial institutions of the two countries to support the financing, including the loans from international consortium of banks, for the projects along the CPEC; establish and improve a cross-border credit system, and promote financial services such as export credit, project financing, syndicated loan, trade finance, investment bank, cross-border RMB business, financial market, assets management, e-bank, and financial lease; support the project financing by RMB loans, and establish the evaluation model of power bill in RMB.

The plan highlighted cooperation between financial markets of Pakistan and China. The two countries shall promote the opening and development of the securities markets, support the multi-currency direct financing of Pakistan's central and local governments, enterprises and financial institutions in China, strengthen the cooperation between stock exchanges of the two countries, and support the two countries' enterprises and financial institutions in carrying out direct financing for projects along the CPEC in each other's capital markets.

Both the sides would promote the cooperation in the development of oil and gas resources, research on the integrated vision and demand of China and Pakistan oil and gas cooperation so as to improve the cooperation between the two countries and diversify oil supplies. The opinions of establishing oil refineries and storages along the CPEC route will also be considered.

China and Pakistan should strengthen cooperation in trade and industrial areas, expand bilateral economic and trade relations, and enhance the level of bilateral trade liberalization. They should cooperate in key areas, enhance the effectiveness of cooperation and strive to achieve the synchronization, co-ordination and reciprocity of economic development.

Both the sides should optimize the sourcing and use of coal, and research on development and utilization of Pakistan's own coal for power plant and developing technologies for surface coal gasification, expansion and augmentation of coal mining sector, actively promote river planning and preparatory work of major projects to accelerate the hydropower development process and develop wind and solar energy based on local conditions, and establish diversified energy supply channels. They would strengthen the construction of high voltage-class power grids and power transmission and distribution networks to fulfill the electricity demand and ensure the reliability of electricity supply in Pakistan and develop the industry for manufacturing of energy sector equipments required for generation, transmission and distribution including renewable energy technologies.

Under the area of information network infrastructure, the plan said that China and Pakistan should boost information connectivity and promote pragmatic cooperation through construction and operation of local communication networks and broadcast & TV networks; besides strengthening information and communication industries in both countries and synchronous construction of information, road and railway infrastructure.

Long-Term Plan for China Pakistan Economic Corridor (2017-2030) further disclosed that through joint planning and development of highways, railways, ports, aviation and other infrastructure, a convenient, efficient and integrated transport corridor that includes a variety of modes of transport can be formed, mainly drawing from Monographic Study on Transport Planning, to achieve the transition from lagging behind to adaptation and then to moderate advancement in the transport infrastructure of the main nodes along the CPEC. In order to meet the needs of trade and personnel exchanges between China and Pakistan for the socio-economic development of regions along the CPEC, following initiatives have been planned to achieve the aforementioned objectives:

Construction and development of Kashgar-Islamabad, Peshawar-Islamabad-Karachi, Sukkur-Gwadar Port and Dera Ismail Khan-Quetta-Sohrab-Gwadar road infrastructure will enhance road safety and service levels and expand traffic capacity, capacity expansion of existing railway lines (specifically ML-1 that is of strategic nature under CPEC), and construction of new projects, and promoting the modernization of the railway and building an integrated transport corridor, and construction and development of Gwadar city and port, building a consolidation and distribution transport system, continuously improving the infrastructure of the port, accelerate the construction of East Bay Expressway and the new international airport and enhance the competitiveness of the Free Zone to promote the social progress and economic development of the region, it added.

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