Pakistan's Prime Minister visits China during the crisis in the financial crisis

Pakistan's Prime Minister visits China during the crisis in the financial crisis

Pakistan's new prime minister, Imran Khan, is on a four-day visit to China, his first trip to the country since taking office in mid-August. The visit comes as the Pakistani government struggles with a financial crisis and foreign aid seeks to negotiate a bailout package with the International Monetary Fund.

On Friday, Khan met with China's President Xi Jinping and told him that his country was in a "very difficult" economic situation.

Pakistani Prime Minister Imran Khan with Chinese President Xi Jinping ahead of their meeting on November 2, 2018 in Beijing, China. (Office of the Prime Minister of Pakistan about Ayaz Gul)

Pakistani Prime Minister Imran Khan with Chinese President Xi Jinping ahead of their meeting on November 2, 2018 in Beijing, China. (Office of the Prime Minister of Pakistan about Ayaz Gul)

Neither Xi nor Khan have told reporters about possible aid to Pakistan, but China's leader talked about his commitment to China-Pakistan relations and his "strategic all-weather partnership."

Pakistan has dealt with bailout issues before, but this time the situation is dramatically more complex as it seeks a $ 8 billion bailout from the International Monetary Fund.

Questions about the country's ability to repay loans are related to China's massive infrastructure and the trade plan known as the Belt and Road. One of the initiative's largest projects is the China-Pakistan Economic Corridor (CPEC), worth $ 60 billion.

At the same time, however, Washington has stressed that the US-backed IMF should not provide Islamabad with funds to repay loans to China.

Khan, a former cricketer and opposition politician, has asked questions about the benefits CPEC brings to Pakistan.

Khans PTI party, an abbreviation for their name in the Urdu language, said the project was too extensive for infrastructure, too many projects in the Indian Punjab state and too much corruption.

No irregularities have been reported in a new government review, and Khan has somewhat eased his criticism, but the visit could force Islamabad to choose between the CPEC and the IMF.

Speaking to Xi on Friday, the Prime Minister expressed confidence in the Belt and Road project and what he called the Chinese president's vision of connectivity.

According to a statement by the Khan office in Islamabad, the Prime Minister said the Belt and Road initiative will lead to a win-win situation for shared prosperity in the region and beyond.

Map with the projects summarized under the program One Belt, One Road of China.

Map with the projects summarized under the program One Belt, One Road of China.

The statement also states that the two reviewed CPEC's progress, expressing their satisfaction and looking forward to its early completion.

It remains unclear what adjustments the two leaders could make.

Andrew Small, a senior transatlantic fellow of the US George Marshall Fund's Asia program, said he believes China is ready to make adjustments, but Beijing needs to know what position the government has before it can make offers.

"Apart from the contractually agreed contracts and the $ 19 billion worth of local projects, basically everything else is available for them (China)," said Small. "They can hold back a number of the other projects, they can prioritize new projects."

In recent weeks, Pakistan has reduced the size of a rail project, cutting the final price by $ 2 billion.

Small adds that neither side is likely to see the cancellation of projects and will work for the narrative to move in a positive direction. Beijing will not want to do so if more projects are dropped that feed into wider concerns about China's belt and street and debt diplomacy.

Delegations headed by Chinese President Xi Jinping and Pakistani Prime Minister Imran Khan will meet China on 2 November 2018 in Beijing. (Source: Office of the Pakistani Prime Minister on Ayaz Gul)

Delegations headed by Chinese President Xi Jinping and Pakistani Prime Minister Imran Khan will meet China on 2 November 2018 in Beijing. (Source: Office of the Pakistani Prime Minister on Ayaz Gul)

Jon Hillman, Senior Fellow at the Center for Strategic and International Studies, said both sides would benefit from renegotiating some existing commitments.

"I think it's in China's best long-term interest to be able to show some flexibility and be able to break off some projects that fail, frankly," Hillman said. "However, there is some reluctance due to the belt and road mark and its connection with the Chinese leadership."

In China, scholars and analysts are questioning the enormous funds that Beijing is also investing in the Belt and Road Initiative. In particular, given the multiple challenges faced by China from economic slowdown to trade disputes with other countries and the massive domestic debt of local governments.

Online columnist Wei Jia warns that the debt crisis in Pakistan is similar to the sovereign debt crisis in Greece at the end of 2009.

FILE – Demonstrators who want to drop the debt of Pakistan, meeting of the "Friends of Democratic Pakistan" in Brussels, Belgium.

"If such a debt crisis also happens to other countries along the road and the street and is not addressed, it will cause major political and economic headaches for China and the entire Eurasian continent," she said recently in an article on Guancha.cn. a Chinese news and analysis website.

Others, such as Wang Yiwei, a professor of political science at Renmin University, said Pakistan may be forced to lift CPEC in return for the IMF's rescue operation.

In a recent article in Singapore's Lianhe Zaobao newspaper, Wang noted that China is still in the process of court-awarding loans for belt projects and road projects, and "it seems there are some missteps gives."

He added, "China should not be blamed for some governments whose debt crisis has emerged as a result of domestic corruption and abuse of Chinese credit."

Prior to his visit to China, Khan already traveled to five other countries, an unprecedented move for a Pakistani leader. In the past, leaders first visited China, analysts said. However, Khan made several trips, including stops in Saudi Arabia and the United Arab Emirates, to obviously diversify the country's external funding channels.

Saudi Arabia has already pledged $ 3 billion to help Pakistan avert its financial crisis and agreed to postpone oil payments.

After meeting in Beijing on Friday and Saturday, Khan flies to Shanghai, where he will attend the first China International Import Expo, where he will be the keynote speaker.

Joyce Huang contributed to this report.

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