Sorry, Pakistan: China Is No Sugar Daddy

China may be in no hurry to replace $800 million in suspended US aid to the Pakistani military. After the decision from the US president, Pakistani generals anticipated that China, an ally and the country’s largest defense supplier, would be willing to counter US influence and step in with funding. In exchange, Pakistani generals could help combat Islamic militant activity along China’s border and also smooth its access to $1 trillion in minerals discovered Afghanistan. Despite such potential exchanges, “Pakistan is not central to Beijing's wider ambitions,” explains analyst Urmila Venugopalan for Foreign Policy. “As a world power, Chinese interests are global in scope and require a more considered approach.” China has gained from the US bearing security costs in the region and does not want to antagonize India, driving it closer to the US, notes Venugopalan. China is not an ATM machine, and instead drives hard bargains with long-term goals in mind. – YaleGlobal

Sorry, Pakistan: China Is No Sugar Daddy

Just because Washington and Islamabad are at odds doesn't mean Beijing is looking to step in to provide military funding
Urmila Venugopalan
Friday, July 22, 2011

With the Obama administration's recent decision to suspend some $800 million in U.S. aid to the Pakistani military, the generals in Rawalpindi are once again turning to their "all-weather" friends in Beijing. Although the White House's action is unlikely to lead to a total cutoff of military assistance, the figure is significant, representing more than one-third of the United States' annual commitment to Pakistan.

Reflecting his government's displeasure at the move, Islamabad's ambassador to Beijing, Masood Khan, pointedly announced that "China will stand by us in difficult times as it has been doing for the past years." His statement was designed to show Washington that Pakistan has other powerful friends. Implicit in Khan's message was also an expectation that Beijing would indeed provide enhanced military, and perhaps other, assistance.

Are Pakistani leaders unduly optimistic about Chinese largesse? Or does Washington's loss of influence provide Beijing an opportunity to deepen its ties with Islamabad?

On the face of it, there are ample historic and strategic reasons for China to increase military aid to Pakistan. After all, Islamabad is Beijing's closest ally in South Asia, and both are keen to limit Indian influence.

Pakistan has also benefited from substantial trade and economic ties with China, particularly in infrastructure and mining. Beijing is Pakistan's largest trading partner, a relationship that was worth almost $9 billion last year.

Military ties have been a key feature of Sino-Pakistani relations; Beijing is now Islamabad's largest defense supplier. China has helped build elements of Pakistan's conventional and nuclear forces. It has participated in joint aircraft manufacturing programs, as well as helped Islamabad acquire tactical ballistic missiles, according to Jane's, and sensitive nuclear technology.

China's worries over its internal security provide a further motivation to bolster Pakistan's stability. Concerns about Islamist militancy on its western border have grown since the 2009 Uighur riots in the Xinjiang autonomous region, which left nearly 200 people dead. Violence once again broke out in the restive region this week, though not on the same scale as two years ago. In the remote town of Hotan, state media claimed that police shot dead 14 rioters, heightening tensions between the central government and the Uighur community.

The Turkistan Islamic Party (TIP), a Uighur separatist group that Beijing often blames for terrorist attacks within China, appears to have a sanctuary in the borderlands of Afghanistan and Pakistan. TIP leaders were killed in South Waziristan and North Waziristan, in September 2003 and February 2010, respectively. Chinese leaders fear that the reduction in U.S. military aid to Pakistan -- coupled with the impending drawdown of American troops from Afghanistan -- could afford the Uighurs a safe haven outside Beijing's control.

Indeed, Afghanistan looms large in China's strategic calculus. Media reports highlighting the discovery of nearly $1 trillion in untapped mineral deposits in Afghanistan surely have piqued Chinese interest in bolstering relations with Kabul. With its export-oriented economy heavily dependent on raw material imports, the prospect of cheap resources on China's periphery is understandably appealing. Acutely aware that Pakistan's generals will play an integral role in Afghanistan's future, Beijing will be keen to leverage its close ties with Rawalpindi.

But only up to a point.

The relationship is more asymmetric than Pakistan would like to admit. For this reason, it makes perfect sense for Islamabad to "foster the impression that new tensions with America might nudge it even closer towards China," as the Economist recently observed.

Beijing does not necessarily feel the same way. While Islamabad may be an ally, its utility is confined to South Asia; Pakistan is not central to Beijing's wider ambitions. As a world power, Chinese interests are global in scope and require a more considered approach. Consequently, the Chinese are rightly wary of getting drawn into the acrimonious marriage between Islamabad and Washington. And acrimonious it is. The chief of Pakistan's top intelligence service is, for example, reported to have told lawmakers that "America is an unreliable ally," presumably in sharp contrast with China. But Beijing has benefited from U.S. involvement in Pakistan. As Daniel Markey of the Council on Foreign Relations told me, the Chinese have thus far been content to "free-ride on U.S. efforts to stabilize Pakistan." The mainland may well share Washington's concerns about Pakistan's future, but it has preferred to let Americans bear the costs of improving the country's security.

From Beijing's perspective, being seen to take a provocative stand alongside Pakistan comes at a substantial cost but provides little strategic benefit. An escalation in Chinese aid to Pakistan would surely antagonize India, creating a new point of friction in the triangular relationship between Beijing, New Delhi, and Washington. While keen to maintain pressure on certain issues, such as Indian support for the Dalai Lama and its various territorial claims, leaders in Beijing have no desire to push New Delhi further into Washington's open arms.

In any case, expanding its relationship with Pakistan out of short-term opportunism or a desire to one-up the United States is not in keeping with China's style. Beijing prefers to play the long game, and the open-ended nature of any prospective financial commitment to Islamabad is enough to sharpen the minds of Chinese leaders. The risk of instability within Pakistan is simply too high for Beijing to willingly step in and become the country's main patron. At the end of 2008, according to a 2010 Brookings Institution report, Pakistan-- on the verge of default -- sought China's support to avoid having to meet the restrictive terms of a $7.5 billion IMF loan. But Beijing offered only tough love, sending a token commitment of $500 million, which was read as "a clear message to Pakistan that it is no longer willing to be Islamabad's lender of last resort."

According to China expert June Teufel Dreyer of the University of Miami, despite Pakistan's desire to show Washington that it has other partners, "it is impossible for Islamabad to replace U.S. aid with Chinese aid dollar for dollar, renminbi for renminbi." One reason, according to unnamed U.S. officials cited in a recent Financial Times report, is that "Beijing does not 'do' assistance in the same way as Washington and that Pakistan is made to pay for the help that it receives from China." Generous credit terms from China have clearly helped Pakistan, the newspaper notes, as evidenced by the 8,000-odd Chinese citizens involved in various Beijing-backed infrastructure investments in the country. These range from rebuilding and expanding roads to constructing dams and ports.

A financially constrained Pakistan has also approached China for soft loans to pay for orders of jointly developed JF-17 fighter aircraft, according to a recent Jane's Defence Weekly article. Other major acquisitions that could be funded through Chinese loans are on the horizon: up to six Chinese submarines, two 500-ton missile boats, and two squadrons of Chengdu J-10 fighter aircraft, according to Jane's. Pakistan is also considering acquiring at least another four Chinese frigates, either larger and improved F-22P ships or another design, Jane's reports. Such defense assistance might well be increased in direct response to the reduction in U.S. military, and other, aid to Pakistan. To this end, Beijing will continue to feature among Islamabad's strongest supporters.

But these steps hardly add up to a fundamental realignment of Chinese aid policy. For all its emotive rhetoric, Pakistan is not in a position to effectively play Beijing off against Washington. As a result, China is unlikely to institutionalize the kind of financial commitment that the United States has made -- even as Washington's influence over Islamabad continues to wane.


Urmila Venugopalan is an independent analyst and former Asia editor at Jane’s Intelligence Review.
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