By Matthew Green for The Financial Times
Pakistan is poised to approve an application by Industrial and Commercial Bank of China to start operating in the country, a move that Islamabad hopes will herald closer commercial ties with Beijing.
Pakistani officials see a visit by Wen Jiabao, the Chinese premier, this month as a chance to strengthen a long-standing alliance at a time when Islamabad’s relations with the US are under strain.
Shahid Kardar, Pakistan’s central bank governor, said he would grant ICBC, China’s biggest bank, a licence to open a branch in Pakistan ahead of Mr Wen’s arrival on December 17.
“I would see a greater increase in economic activity in terms of China and Pakistan,” he told the Financial Times in Karachi, Pakistan’s commercial capital. “The signal that goes out is that Pakistan is open for business.”
Mr Kardar said ICBC applied for the licence several months ago to exploit opportunities in trade and project finance generated by a growing number of Chinese companies working in Pakistan.
ICBC, which has a market capitalisation of $300bn, is pursuing an ambitious expansion drive in the Middle East and in big cities across Europe. The bank declined to comment on Mr Kardar’s remarks.
Security concerns may weigh on the company’s thinking over how much exposure it seeks in Pakistan. Karachi, home of the country’s banking sector, has witnessed an increase in politically-motivated murders and suicide bombings this year, including an attack on a police compound by Taliban insurgents last month that killed at least 15 people.
China’s activities in Pakistan, including increasing military sales and civilian nuclear co-operation, are being watched warily by India, which views both countries with suspicion.
Mr Kardar believes ICBC will act as a catalyst for greater activity by Chinese companies who are already investing in infrastructure, energy, telecommunications and mining. Bilateral trade is worth some $6.2bn a year, dominated by $5bn of Chinese exports, Pakistani officials say.