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China is defending its billions of dollars worth of investment in Pakistan, rejecting allegations that the economic development agenda is pushing South Asia's ally to run out of cash in a "Chinese debt trap."
Chinese State Counsel and Foreign Minister Wang Yi, who is visiting China, made the remarks Saturday in Islamabad after talks with his Pakistani counterpart Shah Mehmood Qureshi.
This massive bilateral program, known as the China-Pakistan Economic Corridor (CPEC), is the fastest and most influential part of President Xi Jinping's Global Belt and Road Initiative.
The CPEC aims to build and modernize the transportation network, energy projects, a deepwater port in Gwadar and special economic zones to support Pakistan's industrial development as a production center by 2030.
In the past four years, Wang said the CPEC had provided about $ 19 billion in Chinese investment to Pakistan and that 22 "early harvest" projects had been or were being completed.
The Chinese Foreign Minister explained that 18 projects were financed by Chinese direct investment or with Chinese aid. He also rejected concerns over the transparency of CPEC projects
"Only four [projects] used concessional loans [of roughly $6 billion] on the part of the Chinese to ensure that the CPEC does not put a heavy burden on Pakistan, by the time these projects are completed and come into force, they will generate huge economic benefits … and bring benefits considerable to the Pakistani economy "Wang said.
He noted that Chinese investment has already boosted Pakistan's annual economic growth by 1 to 2 percent, and created more than 70,000 jobs for Pakistanis. Power plants upgraded or built as part of the CPEC added approximately 12,000 megawatts of electricity to the national grid, effectively overcoming outages
"These are real and tangible results. Our two sides agreed that under the cooperation of the CPEC, cooperation will gradually focus on industrial cooperation and priority to help Pakistan to develop local manufacturing, strengthen the capacity for self-development, "Wang said.
Wang noted that 47 percent of Pakistan's foreign debt came from the International Monetary Fund (IMF) and the Asian Development Bank.
He shared the details, apparently in response to US criticism that Islamabad planned to seek a new IMF bailout only to pay Chinese lenders, claims rejected by Beijing and Islamabad.
On Pakistan's external debt of more than $ 69 billion, Beijing's share amounts to about $ 8.4 billion, including 6 billion CPEC, according to figures released by Pakistan's Finance Minister Asad Umar.
Pakistan pays two percent interest on CPEC loans until they are completed, according to Pakistani and Chinese officials. The total interest owed by 2022 will be about $ 1 billion, they say.
Islamabad is facing a debt crisis and Finance Minister Umar recently told parliament that the government would decide by the end of September if the IMF bailout program would be needed.
Wang arrived in Pakistan a few days after US Secretary of State Mike Pompeo visited the country to meet with Prime Minister Imran Khan's government to try to re-establish bilateral relations that plunged him low of the year.
While Islamabad's ties with Washington have deteriorated, Beijing has deepened bilateral economic and military relations with its South Asian partner.
Wang's delegation is also expected to meet with Khan and army chief General Qamar Javed Bajwa during his three-day official visit, the first since the new Pakistani government took office.
Tensions between Pakistan and the United States stem from allegations that the country is harboring terrorist sanctuaries used to carry out attacks on US and local forces in Afghanistan, charges denied by the Pakistani authorities.
Foreign Minister Wang reaffirmed Beijing's unwavering support for Islamabad's counterterrorism efforts and welcomed the recent US engagement with Pakistan.
"China also supports the United States in developing a mutually beneficial relationship with Pakistan on the basis of mutual respect. We believe that China and the United States and the international community as a whole should support the new Pakistani government in putting in place governance. "
