Chinese government’s top diplomat says Beijing not saddling Pakistan with debt


Saad Sayeed September 8, 2018

State Councillor and Foreign Minister Wang Yi was in Pakistan for a three-day visit in the first high-level meetings between the neighbors since new Prime Minister Imran Khan took office.

Beijing has pledged $57 billion in loans for Pakistan as part of its vast Belt and Road initiative, deepening ties at a time when Islamabad’s relations with Washington are fraying over how to deal with Islamist militants waging war in Afghanistan.

Whether China was overburdening Pakistan with debt has become a sore point for both nations, who both say the loans are sustainable, after U.S. Secretary of State Mike Pompeo in July warned any potential International Monetary Fund bailout for Pakistan’s troubled economy should not provide funds to pay off Chinese lenders.

Wang said the Pakistani portion of the Belt and Road initiative, known as the China-Pakistan Economic Corridor (CPEC), has helped increase economic growth by 1-2 percent and has contributed 70,000 jobs.

“CPEC has not inflicted a debt burden on Pakistan, rather when these projects get completed and enter into operation, they will unleash huge economic benefits…and these will create considerable returns to the Pakistani economy,” Wang said during a news conference in the capital Islamabad.

Standing next to Pakistani Foreign Minister Shah Mehmood Qureshi, Wang said 47 percent of Pakistan’s debt comes from the IMF and the Asian Development Bank.

Wang said 22 operational CPEC projects, of which nine have been completed, have triggered investment worth $19 billion so far. He also rejected concerns about transparency of CPEC by saying those worries were “false” as all the projects had undergone necessary approvals.

Qureshi said CPEC remains the “top priority” of the new government, adding that the two governments would focus on projects with socio-economic development.

“They will be considering projects that have a livelihood connection to them, that means job creation. He has spoken about initiatives in health and education, vocational training, how do we want to make our people more productive if they want to export,” Qureshi said.

The two men did not mention whether China would give more loans to help Pakistan’s current account crisis. Pakistan is battling a worsening balance of payments crisis that may push it to seek a fresh bailout from the IMF, though officials have not ruled out other options such as a bailout from China.

Wang will also call on Prime Minister Khan and Chief of Army Staff General Qamar Javed Bajwa, the foreign office said.

Wang’s visit comes days after Pompeo’s trip to Pakistan last week along with the U.S. chairman of the joint chiefs of staff, the first high-level U.S. visit to the new government, with the secretary of state saying he was hopeful for “a reset of relations” between the two countries.

Reporting by Saad Sayeed; Writing by Drazen Jorgic; Editing by Clarence Fernandez and Jacqueline Wong

Source: Reuters “Chinese government’s top diplomat says Beijing not saddling Pakistan with debt”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

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Pakistan dismisses US concerns about IMF bailout and China


Drazen Jorgic August 1, 2018

ISLAMABAD (Reuters) – Pakistan on Wednesday dismissed U.S. concerns that any new International Monetary Fund bailout for the South Asian nation would be used to repay Chinese debt as “totally wrong”.

Pakistan’s economy has hit severe turbulence over the past year and most analysts expect the nuclear-armed nation to seek a bailout, either from the IMF or closest ally China, to avoid a currency crisis.

Beijing has pledged $57 billion in loans for Pakistan as part of China’s vast Belt and Road initiative, deepening economic and diplomatic ties between the neighbors at a time when relations between Islamabad and Washington are fraying over how to deal with Islamist militants waging war in Afghanistan.

U.S. Secretary of State Mike Pompeo on Monday warned that any potential IMF bailout for Pakistan’s incoming government should not provide funds to pay off Chinese lenders.

In response, Pakistan’s finance ministry sought to de-couple the link between any potential IMF bailout and Beijing’s loans for the China-Pakistan Economic Corridor (CPEC), which spans mostly energy and transport infrastructure.

“First and foremost it is totally wrong to link the IMF package with CPEC. It is affirmed that Pakistan Government is fully committed to undertake and complete CPEC projects in their totality,” the finance ministry said in a statement.

“Third parties cannot weaken our collective resolve to make CPEC a success story.”

CPEC is billed as Pakistan’s most important national project, while Beijing has touted CPEC as the “flagship” project in the vast Belt and Road initiative to build rail, road and maritime links across the globe.

Both countries are very sensitive of any criticism about CPEC.

The United States has been concerned that China is saddling smaller countries with debt as a way to gain influence and control around the globe.

Pakistan obtained a $6.7 billion IMF bailout in 2013 and near-identical balance of payments problems pose a major headache for the incoming government of Imran Khan, Pakistan’s former cricket hero who is seeking coalition partners to form a government.

“Make no mistake. We will be watching what the IMF does,” Pompeo said.

“There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” Pompeo added.

Asad Umar, widely tipped to become the new finance minister, told Reuters last month that Khan’s government would not rule out either Chinese or IMF support.

On Tuesday, Chinese Foreign Ministry spokesman Geng Shuang said the IMF had its own standards and operating rules when cooperating with countries.

“I believe they will handle it appropriately,” he told reporters, without elaborating.

 

30-YEAR LOANS

Miftah Ismail, Pakistan’s finance minister in the previous government until late May, said the Chinese debt repayments were nowhere near as big as Western nations imagine.

He told Reuters that ministry of finance calculations showed that for the next five years, Pakistan’s total annual debt repayments and profit expatriation by Chinese companies would be below $1 billion.

“All of those things combined will not go to $1 billion up until 2023,” he said.

Ismail added loans given by China to Pakistan had a 30-year length and a five-year grace period, meaning there were no repayments for the first five years.

The lending was a combination of zero-interest debt, concessionary and some market rate loans, Ismail said, adding that the “weighted average” interest rate for these loans was 2 percent

“These are not loans that will break our back,” he said.

Ismail said the problems hitting Pakistan’s economy were not linked to debt but rather to current account problems, which was not China’s fault.

Pakistan’s finance ministry said it was engaged in “technical discussions” with the IMF but the interim caretaker government did not have a mandate to decide on any IMF package, which will be down to the new administration.

Reporting by Drazen Jorgic; Editing by Nick Macfie

Source: Reuters “Pakistan dismisses U.S. concerns about IMF bailout and China”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Iran Vital to China’s Trade Lifelines to Europe, Africa, Middle East


In my post “The US Is Pushing Iran into China’s, Russia’s Arms” the day before yesterday, I asked: Does the US really need so many enemies?

According to my judgment, US President Trump wants to be China’s and Russia’s friends. He wants to exploit the friendship with them for US interests. So far his friendship with China has worked well. China has helped him solve the North Korean problem and promised to reduce US trade deficit by USD70 billion through purchase of more US goods.

Other US politicians and US media do not think so. They want Trump to be very hard on China as they regard China as America’s no. 1 enemy, an enemy trying to replace the US as the dominant world hegemon.

Trump’s withdraw from Iran nuclear deal aims at warning North Korea that if it fails to perform the agreement it has signed, he will take hard measures on it. Iran is his example for North Korea.

It is strange that US politicians and media are so arrogant that they advocate enmity against not only China but also Russia and Iran. Do they believe that the US is now strong enough to deal with the alliance of China, Russia and Iran.

The troubles that the US has in Ukraine, Syria and the South China Sea due to their the de facto alliance between China and Russia have not wakened up them from their arrogant dream.

Now, China will be much benefited by its close ties with Iran due to US pressure on Iran.

On June 10 Bloomberg published Hal Brands’ demonizing article “China’s Master Plan: A Global Military Threat” that shows how deep some Americans have fallen deep into Thucydides Trap. Brands says in the article “Chinese strategists have become acutely aware of the ‘Malacca Dilemma’ — the prospect that the U.S. could severely constrain China’s imports of oil and other critical commodities by interdicting shipping at a few crucial maritime chokepoints.

China’s Belt and Road initiative aims first of all at secure connection to Europe, Africa and especially the Middle East. China has set up rail links with the Middle East and Europe, but the rail transport is of small capacity and much more expensive.

China’s China-Pakistan Economic Corridor provides link with Iran. The pipelines between China’s west and Iran through Pakistan will be a shortcut to replace the shipping from Iran to China’s east through Malacca Strait.

However the shipping from Pakistani port to the Middle East, Europe and Africa may be cut by US Navy. China needs Iran’s air force to protect the shipping. As Iran also needs the smooth shipping for its trade to Europe and Africa and as it regards the US as its dead enemy, Iran will gladly protect Chinese shipping along its coast and through the Suez. China will provide Iran with advanced weapons. Russia will also do so as it has common interests with Iran in the Middle East.

With the Russia, China and Iran iron triangle that the US has helped to establish, there will be no “Malacca dilemma” for China.

Comment by Chan Kai Yee on Bloomberg’s article, full text of which can be viewed at http://www.scmp.com/news/china/diplomacy-defence/article/2149991/xi-jinping-vladimir-putin-hail-all-time-high-ties-sign.


Iran says it has offered Pakistan and China participation in India’s Chabahar project


Shailaja Neelakantan
Updated: Mar 13, 2018, 15:28 IST

NEW DELHI: In what may come as a shock to India, Iran said yesterday it offered Pakistan and China participation in the Chabahar project, a port that is being built by India for the express purpose of bypassing Pakistan.

Pakistan’s Dawn newspaper reported today that Iranian Foreign Minister Javad Zarif yesterday invited Pakistan to participate in Chabahar seaport project + and in the development of its link with the Gwadar Port “as he sought to allay concerns here (in Pakistan) over Indian involvement in the Iranian port.”

“We offered to participate in the China-Pakistan Economic Corridor (CPEC). We have also offered Pakistan and China to participate in Chabahar,” said Zarif, who is on a three-day visit to Pakistan, while delivering a lecture at the Institute of Strategic Studies Islamabad, said Dawn.

Chabahar is said to be becoming a success story in the India-Iran relationship. The first phase of the Chabahar port in south-east Iran, which India is developing, was inaugurated in December last year. The port opened a new strategic transit route between India, Iran and Afghanistan that bypassed Pakistan. It is expected to cut transport costs/time for Indian goods by a third and likely to ramp up trade among India, Afghanistan and Iran in the wake of Pakistan denying transit access to New Delhi for trade with the two countries.

Given this context, India’s not likely to be pleased with the Iranian foreign minister’s comments. It’s possible though that Zarif was merely making conciliatory remarks. That’s because he went out of his way to assure Pakistan that its ties with India are not in conflict with Islamabad.

Zarif drew a comparison with Pakistan’s ties with Saudi Arabia and said that just like that relationship does not tarnish Islamabad’s ties with Tehran, India’s and Iran’s relationship isn’t going to affect Pakistan negatively, reported Mehr News, an Iranian news agency. He added that the Gwadar port city in Pakistan and Chabahar transit agreement between India, Iran and Afghanistan are “complementary” and not “competitive”.

Source: TIMESOFINDIA.COM “Iran says it has offered Pakistan and China participation in India’s Chabahar project”

Note: This is TIMESOFINDIA.COM’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


The Conundrum of the Importance China Attaches to Afghanistan


Afghnistan is not needed for China’s Belt and Road for connections to Europe, the Middle East and Africa. The connections through Central Asia are better. Why does China want to include Afghanistan in its major Belt and Road project the China-Pakistan Economic Corridor?

In CCP General Secretary Xi Jinping’s 19th congress speech on Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, he says, “As socialism with Chinese characteristics has entered a new era, the principal contradiction facing Chinese society has evolved. What we now face is the contradiction between unbalanced and inadequate development and the people’s ever-growing needs for a better life. Only when China has resolved that principal contradiction can it attain the goals of building China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful by the middle of the century.”

How can China attain that goal? It has to make its development balanced and adequate. Where is its development unbalanced and inadequate? It is its vast west.

China’s vast Xinjiang has an area of 1.6 million square kilometers but has only a population of over 20 million with the population density of 13 per square kilometer. Jiangsu, a very small province of 104,000 square kilometers in China’s eastern coast, however, has a population of more than 55 million with a population density of 526 per square kilometer. Though very small compared with Xinjiang, Jiangsu’s GDP of nearly $700 billion is much bigger than Xinjiang’s $150b in spite of Xinjiang’s rich natural resources.

Xinjiang’s problem is its large deserts. There is the Tarim River in its vast Taklamakan desert of 330,000 square kilometers, but the river cannot provide enough water for farming and people’s livelihood there. However, in history the Tarim River made the Kingdom of Loulan in the now desert area prosperous. Loulan was extinct when it had used up the river’s water. We still can see the good irrigation system in the relics of the Kingdom.

That gives China the idea that if it brings water from Tibet’s Yarlung Zangbo River to Taklamakan desert to greatly increase the water in the Tarim, it can turn the desert soon into habitable farmland and urban areas. People and industries will soon move there to make Xinjiang as prosperous as coastal China.

China’s coastal areas quickly become prosperous due to their access to overseas markets and resources. With express ways, railways and oil and gas pipes through China-Pakistan Economic Corridor and Pakistan’s port of Gwadar, Xinjiang will have better access to the markets and resources in Europe, the Middle East and Africa than China’s coastal areas.

Therefore, for balanced and adequate development in China’s west, Pakistan and Afghanistan are very important in preventing the spread of Islamic extremism to Xinjiang. That is why China has tried hard to improve the relations between Pakistan and Afghanistan in order that they can better tackle the violence in their respective countries. In addition, China has been making efforts to broker peace talks between Afghan government and Taliban militants. For China’s such efforts, including Afghanistan in China-Pakistan Economic Corridor will certainly help as Afghanistan is very poor and needs Chinese investment to help its development.

Article by Chan Kai Yee


Why China and Pakistan Want to Include Afghanistan in China-Pakistan Economic Corridor?


(L to R) Afghan Foreign Minister Salahuddin Rabbani, Chinese Foreign Minister Wang Yi and Pakistani Foreign Minister Khawaja Asif attend a joint news conference after the 1st China-Afghanistan-Pakistan Foreign Ministers’ Dialogue in Beijing, China, December 26, 2017. REUTERS/Jason Lee

Afghanistan is not needed for China’s connection to the Middle East and Europe. Why then do China and Pakistan want to include it in their CPEC?

China, Afghanistan and Pakistan held their first tripartite dialogue in Beijing on December 26, 2017. The three foreign ministers’ joint press release says, “The three sides reaffirmed their commitment to improving their relations, deepening mutually beneficial cooperation, advancing connectivity under the Belt and Road Initiative, and fighting terrorism in all its forms and manifestations without any distinction. The three Foreign Ministers agreed to jointly work together on political mutual trust and reconciliation, development cooperation and connectivity, security cooperation and counter-terrorism as three topics of the trilateral cooperation.”

In addition, it says, “The three sides agreed to conduct win-win trilateral economic cooperation, with an incremental approach, starting from the easier initiatives to the more difficult ones. The three sides agreed to continue economic development cooperation in areas of mutual interest, and expressed willingness to strengthen people-to-people contacts.”

Chinese Foreign Minister Wang Yi said after the first trilateral meeting that China and Pakistan would look at extending their $57 billion China-Pakistan Economic Corridor (CPEC) to Afghanistan and that he hoped CPEC could benefit the whole region and act as an impetus for development.

Pakistani Foreign Minister Khawaja Asif make it clearer by saying, “The successful implementation of CPEC projects will serve as a model for enhancing connectivity and cooperation through similar projects with neighboring countries, including Afghanistan, Iran and with central and west Asia.”

Iran and central and west Asia are what China wants to include in its Belt and Road initiative. Chinese trade will go through CPEC to Iran on land and go through sea route from Pakistani port of Gwadar along coast of Iran to the Arabian Peninsula and then cross the Red Sea, the Suez Canal and the Mediterranean to Europe.

Moreover, extending CPEC to Afghanistan is very important to prevent the spread of Islamist terrorism from Pakistan and Afghanistan to China’s underdeveloped western region of Xinjiang.

Article by Chan Kai Yee


China, Pakistan to look at including Afghanistan in $57 billion economic corridor


(L to R) Afghan Foreign Minister Salahuddin Rabbani, Chinese Foreign Minister Wang Yi and Pakistani Foreign Minister Khawaja Asif attend a joint news conference after the 1st China-Afghanistan-Pakistan Foreign Ministers’ Dialogue in Beijing, China, December 26, 2017. REUTERS/Jason Lee

Ben Blanchard December 26, 2017

BEIJING (Reuters) – China and Pakistan will look at extending their $57 billion China-Pakistan Economic Corridor to Afghanistan, Chinese Foreign Minister Wang Yi said on Tuesday, part of China’s ambitious Belt and Road plan linking China with Asia, Europe and beyond.

China has tried to position itself as a helpful party to promote talks between Pakistan and Afghanistan, both uneasy neighbors ever since Pakistan’s independence in 1947.

Their ties have been poisoned in recent years by Afghan accusations that Pakistan is supporting Taliban insurgents fighting the U.S.-backed Kabul in order to limit the influence of its old rival, India, in Afghanistan.

Pakistan denies that and says it wants to see a peaceful, stable Afghanistan.

Speaking after the first trilateral meeting between the foreign ministers of China, Pakistan and Afghanistan, Wang said China hoped the economic corridor could benefit the whole region and act as an impetus for development.

Afghanistan has urgent need to develop and improve people’s lives and hopes it can join inter-connectivity initiatives, Wang told reporters, as he announced that Pakistan and Afghanistan had agreed to mend their strained relations.

“So China and Pakistan are willing to look at with Afghanistan, on the basis of win-win, mutually beneficial principles, using an appropriate means to extend the China-Pakistan Economic Corridor to Afghanistan,” he added.

How that could happen needs the three countries to reach a gradual consensus, tackling easier, smaller projects first, Wang said, without giving details.

Pakistani Foreign Minister Khawaja Asif said his country and China were “iron brothers”, but did not directly mention the prospect of Afghanistan joining the corridor.

“The successful implementation of CPEC (China-Pakistan Economic Corridor) projects will serve as a model for enhancing connectivity and cooperation through similar projects with neighboring countries, including Afghanistan, Iran and with central and west Asia,” he said.

India has looked askance at the project as parts of it run through Pakistan-administered Kashmir that India considers its own territory, though Wang said the plan had nothing to do with territorial disputes.

China has sought to bring Kabul and Islamabad together partly due to Chinese fears about the spread of Islamist militancy from Pakistan and Afghanistan to the unrest-prone far western Chinese region of Xinjiang.

As such, China has pushed for Pakistan and Afghanistan to improve their own ties so they can better tackle the violence in their respective countries, and has also tried to broker peace talks with Afghan Taliban militants, to limited effect.

A tentative talks process collapsed in 2015.

Wang said China fully supported peace talks between the Afghan government and Taliban and would continue to provide “necessary facilitation”.

The Belt and Road infrastructure drive aims to build a modern-day “Silk Road” connecting China to economies in Southeast and Central Asia by land and the Middle East and Europe by sea.

Reporting by Ben Blanchard; Editing by Nick Macfie

Source: Reuters “China, Pakistan to look at including Afghanistan in $57 billion economic corridor”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.