With expanding relations between Pakistan and China, Washington and New Delhi seem to be perturbed. China is undertaking a number of significant mega development projects in Pakistan’s northern parts prompting India to oppose increasing presence of China in Pakistan Administered Kashmir known as Azad Jammu and Kashmir and Gilgit- Baltistan- a territory that is claimed by both India and Pakistan.   

Pakistan since its inception considers China as its most trusted friend and termed relationship with it as "higher than the Himalayas and deeper than see". Pakistan’s Prime Minister Nawaz Sharif during his visit to China in July this year signed many agreements including $18 billion economic corridor from Kashgar on China's western border to the Gwadar port in Pakistan’s trouble province of Balochistan.

China’s is interested in Pakistan’s trade and energy corridor, from the Gwadar port to Western regions of China, which would connect China with oil routes in Western Pakistan. Pakistan’s Karakoram highway provides the shortest possible route from Gwadar to the western regions of China. This route is short, secure and can serve as an alternative to the sea route through the pirate prone Straits of Malacca, where China currently transports most of its crude oil imports.

China is also helping Pakistan to overcome the energy crisis. Currently various Chinese firms and companies are working on over a dozen mega projects in the energy sector in Gilgit-Baltistan and Azad Kashmir. A very significant project in hand is the upraising of the Mangla Dam reservoir by sixty feet. As part of resettlement of the dam affectees, the Chinese firm, International Water and Electric Corporation (CIW&EC) is also working on the construction of a bridge over Jhelum River in the same area. Another very vital project is Neelum-Jhelum Hydroelectric Power Project which aims at diversion of the water of Neelum river through a tunnel into Jhelum River, at a cost of US$12.6 billion.

A Chinese company also awarded contract to build Kohala Power Project in Pakistan Administered Kashmir at a cost of US$ 2.155 billion with a capacity to generate 969 MW of electricity. China’s Three Gorges Project Corporation is constructing Diamir-Bhasha Dam on the Indus River with a total investment of US$ 12.6 billion.

The Chinese firms are also working on about half dozen mega power projects in Gilgit-Baltistan that include : US$7.8 billion Dasu Hydropower Project, US$ 70 million Phandar Project, US$ 40.01 million Bashu Hydropower Project, US$ 44.608 million Harpo Hydropower Project and US$ 6 billion Yulbo Hydropower Project. China is also investing an amount of US$ 300 million in housing, communication sectors.

India is quite wary of Chinese involvement in development projects in Gilgit-Baltistan and Azad Kashmir and views it as a calculated move to build Chinese influence in these areas, a charge vehemently dismissed by China. China is also helping Pakistan in the nuclear power sector too.

A nuclear power plant at Chashma with a power generating capacity of 330 MW of electricity has already been completed and integrated with the National Grid and two more similar plants are scheduled to be completed by 2016-17. The agreement for these projects was signed on June 8, 2010 during President Zardari’s visit to China, notwithstanding the fact that US raised objections on the nuclear cooperation between the two countries.