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As much as 98 percent of China’s development funding for its all-weather ally Pakistan came in the form of less-than-generous loans, with only two percent coming in the form of grants between 2000 and 2021, according to a research report.
The China-Pakistan Economic Corridor (CPEC), a global infrastructure and investment initiative by Beijing, was launched in 2013. It is thought to be the largest partnership of China’s Belt and Road Initiative (BRI). It increased to over USD 62 billion over time, and at least USD 25 billion was invested in cash-strapped Pakistan.
Out of the total Chinese development finance portfolio of USD 70.3 billion, committed between 2000 and 2021 in Pakistan, eight percent was official development assistance (grants and highly concessional loans) and 89 percent was other official sector loans, said a report in The News International, quoting AidData, a US-based research lab.
With USD 14.0 billion in finance commitments, 2017 was the top year for Pakistan; following a decline in 2018, the amount increased again in 2019 and 2020, even with the pandemic. With a 9.84-year maturity and a 3.74-year grace period, the average interest rate on loans is 3.72 percent, the AidData said.
Long history of economic collaboration
Stating that Pakistan and China have a long history of economic collaboration, and this year marks ten years of such ties and it has helped Pakistan through all of its tough economic downturns and crises, the report pointed out that (But) it’s worrying that Chinese less-than-generous loans coupled with Pakistan’s mismanagement have made Pakistan’s debt load even higher. AidData estimates that Pakistan’s outstanding public and publicly guaranteed debt to China stands at USD 67.22 billion, which is 19.6 percent of the GDP, and USD 21.2 billion more than what Pakistan has officially reported to the World Bank’s Debtor Reporting System, the media report said.
Quoting Dr Ammar A. Malik, who is a senior research scientist at AidData, the newspaper said, In terms of the composition of debt from China, since 2018 China has pivoted away from infrastructure lending toward emergency lending in Pakistan, ensuring that the earlier debts taken on by Pakistan for energy, transport, and other CPEC projects can be repaid on time and with interest. Of the USD 62 billion projected investments in the China-Pakistan Economic Corridor (CPEC), an infrastructure and investment initiative launched in 2013 and considered the largest partnership of Beijing’s Belt and Road Initiative (BRI), at least USD 25 billion was invested in Pakistan, it said.
Pakistan and China have a long history of economic collaboration, and this year marks 10 years of such ties. China has helped Pakistan through all of its tough economic downturns and crises. Last month, Chinese President Xi Jinping proposed to step up bilateral cooperation with Pakistan during his meeting with visiting caretaker Prime Minister Anwar-ul-Haq Kakar in Beijing to celebrate the 10 years of the CPEC.
In Pakistan, the top three sectors from 2000 to 2021 were energy (40 percent, or USD 28.4 billion), general budget support (30 percent, or USD 21.3 billion), and transportation and storage (14 percent, or USD 9.7 billion). The top three industries throughout the (BRI) era (20142021) were transportation and storage (13 percent, USD 7.2 billion), general budget support (30 percent, USD 16.08 billion), and energy (43 percent, USD 23.29 billion). Quoting AidData’s research, it further said that the data indicates that China is investing more in Pakistan than the US.
China has surpassed the United States in foreign development financing more times than any other country since 2012, outspending it by 1.6 times in 2013, 7.7 times in 2016, and 22.4 times in 2021, it reported. In Beijing, in response to a question about the AidData’s research, Chinese Foreign Ministry Spokesperson Wang Wenbin said he has not seen the relevant report.
However, Wang said that the question points to the perspective long shared by some Western media that China creates debt traps for developing countries. China-made debt-traps are nothing but a narrative trap created by some forces to disrupt and jeopardise China’s cooperation with other developing countries,” Wang said on Tuesday.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)
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