China, Pakistan To Ink Free Trade Deal

China's visiting President Hu Jintao will sign a free trade deal with Pakistan that will more than triple bilateral trade to $15 billion in five years, a Pakistani diplomat said Thursday.

Hu, who arrived in Islamabad on the first visit to Pakistan by a Chinese leader in 10 years, will sign a raft of economic and energy deals on Friday aimed at expanding a burgeoning bilateral trade relationship that grew 39 percent last year to $4.26 billion.

Salman Bashir, Pakistan's envoy to China, said a free trade agreement will be the most important document signed during Hu's four-day visit, the first by a Chinese leader to this Muslim nation in 10 years.

"We are expecting to take volume of bilateral trade to $15 billion within the next five years with the implementation of the FTA (free trade agreement)," Bashir told the state-run Associated Press of Pakistan.

The Chinese leader was greeted at Islamabad's international airport by Pakistani President Gen. Pervez Musharraf, Prime Minister Shaukat Aziz and the entire Cabinet as well as the heads of each of the defense services.

Artillery blasted a 21-round salute, a brass band played China's national anthem, drum-beating musicians performed traditional songs and scores of school children waved miniature Chinese and Pakistani flags. Hu was later driven in a heavily guarded convoy for a banquet at Pakistan's presidency building.

In an arrival statement, Hu said his visit was aimed at "deepening friendship, expanding cooperation and planning the future of our relationship."

China already provides Pakistan nuclear and defense industry assistance and is its third-largest trading partner, after the United States and the European Union.

Pakistan is expected to buy large-ticket weapons worth at least $10 billion in the next five years — at least 4 billion from China alone. The weapons include the Chinese-Pakistani produced JF-17 fighter planes, the F-22 Chinese frigates and Chinese components for the Pakistani military's new main battle tank known as "Al-Khalid," reported CBS' Farhan Bokhari from Islamabad.

In New Delhi, Hu offered his assistance, if asked, to help resolve lingering disputes between Pakistan and its nuclear-armed archrival India, but added that he would not choose sides between the neighbors, who have fought three wars since their 1947 independence, including two over the Himalayan Kashmir region.

"I look forward to having in-depth exchange of views with President Pervez Musharraf and other Pakistani leaders (on) bilateral relations as well as international and regional issues of mutual interest," state-run Pakistani TV quoted Hu as saying.

In what is expected to be the first of several economic deals made during Hu's trip, Pakistan and Chinese officials agreed to establish a joint investment company, involving the China Development Bank, to undertake urban and rural infrastructure projects in Pakistan.

Dr. Salman Shah, finance adviser to Pakistan's prime minister, said the agreement was reached during talks he held Thursday with the vice governor of the China Development Bank, the state-run agency reported.

China will provide "necessary financial support" in the industrial, services, agricultural, health care and education sectors, Shah said.

Pakistan is an impoverished country of 160 million people which has been seeking increased foreign investment to help boost its infrastructure and industry demands, as well as expand much-needed energy sources.

Bashir, the ambassador, said China and Pakistan have established a framework to expand energy cooperation. They will investigate building an energy corridor providing Beijing access to oil and gas resources of Central and Western Asia and developing oil refining and storage facilities in Pakistani coastal areas.

China's official Xinhua news agency has reported that China would conclude an accord with Pakistan in November to sell Islamabad reactors for six nuclear power plants to be built during the next 10 years.

Pakistan has been seeking U.S. support to boost its nuclear energy program, calling for a deal along the lines of one between Washington and New Delhi. That deal allows U.S. civilian nuclear trade with India in exchange for Indian safeguards, and inspections at its 14 civilian nuclear plants. Eight military plants would be off-limits.

But the Bush administration has rejected Pakistan's call amid lingering concerns about Islamabad's past suspect nuclear dealings led by disgraced atomic scientist and black market trader A.Q. Khan.

"Pakistan's track record arouses much concern in Washington. This is the bottom line," a U.S. official in Washington told CBS News on condition of anonymity.

China has already provided funding and expertise to help build a 300-megawatt nuclear power station in 1999 at Chashma in the eastern province of Punjab. In April last year, the two countries began building a second nuclear power plant near the old one.

On Friday, Hu holds talks with Musharraf and Aziz before delivering a live televised address to the nation. On Saturday, he travels to the eastern city of Lahore for further talks with political and business leaders.