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BEIJING – Seeking to maintain equilibrium in a relationship that strongly affects Chinese President Xi Jinping assured Pakistani Prime Minister Imran Khan on Friday that China considers its neighbor a "diplomatic priority."
Pakistan's growing fiscal crisis has been raised by Xi's "Belt and Road" infrastructure initiative.
Pakistan has taken out billions of dollars in loans from China in recent years for infrastructure projects, the terms of which remain largely undisclosed. China has pledged a total of $ 60 billion to Pakistan in the form of loans and investments for roads, harbors, power plants and industrial parks.
In response to the debt crisis, Pakistan is seeking an international debt relief loan of $ 8 billion from the International Monetary Fund, which plans to send a team to Pakistan to assess the situation. It is also seeking new loans from Saudi Arabia and China. Discussions of the new funding were expected to dominate Khan's visit.
Further complicating matters, the United States, which strongly influences the IMF, has said it will not finance the repayment of Pakistan's Chinese loans.
Pakistan's government has "inherited a very difficult economic situation," Khan told Xi. "Unfortunately we are going through a lot of debt, we have a deficit and a current account deficit."
Xi sought to dispel concerns in his opening remarks, referring to the decades of warming between the two countries.
"Pakistan has a diplomatic priority for China, supported Pakistan's national independence, sovereignty, and territorial integrity, and supported the new Pakistani government's smooth running of the government and advancement of national construction," Xi said.
Li Keqiang will be meeting with Chinese Premier Li Keqiang on Saturday, after which the two leaders will oversee the signing of a series of agreements, possibly including new loans.
China and Pakistan refer to themselves as "all-weather friends," united in their rivalry against mutual neighbor India and in a web of military, political and economic links. Pakistan has been among the most enthusiastic supporters of the trillion-dollar Belt and Road initiative, which seeks to re-establish China's role as the Asian center of global trade by binding to Europe, African, Southeast Asia and elsewhere through Chinese-financed projects.
However, the fiscal crisis has resulted in an increase in the cost of public goods. Khan had initially traveled to the United States, but had done so with the help of the United States and had predicted that Pakistan would soon overcome its economic woes.
As an opposition politician, the former cricket star had questioned whether the partnership with China benefited Pakistan and promised the contracts would be made public.
While in Pakistan, the Pakistan-Pakistan Economic Corridor, including scaling back the development of Pakistan's Arabian Sea port of Gwadar. Agreements with Chinese power companies to supply much-needed electricity to energy-starved Pakistan have also been heavily criticized over the revolving debt costs to Pakistan.
Other countries, including Malaysia, have also been pulled back on Chinese-funded projects related to the Belt and Road Initiative, and much more concerned about Sri Lanka. That Indian Ocean island nation's government borrowed trillions to China, but when it was unable to make payments, signed an agreement giving a Chinese company an 80 percent stake and a 99-year lease on the failing port.
Since taking office, Khan has softened his criticisms of the Chinese-backed projects and the Finance Minister Asad Umar has said a review of contracts signed by the previous government has so far turned up no irregularities.
Pakistan said the project is not a major contributor to the country's 'debt or a cause of the financial difficulties it faces currently faces,' said Lu, adding that discussions will focus on "how to better drive forward the building of the project. "
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