Pakistani Prime Minister Shehbaz Sharif addresses the 77th session of the United Nations General Assembly at U.N. headquarters in New York City on Sept. 23, 2022. (Bryan R. Smith/AFP via Getty Images)
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Chinese leader Xi Jinping has assured Pakistan’s leader that his government will continue to support Pakistan in stabilizing its financial situation and inject “new impetus” into their strategic partnership.
Xi made the remarks during a meeting with visiting Pakistani Prime Minister Shehbaz Sharif on Nov. 2. The two leaders issued a joint statement pledging to expand their socio-economic cooperation.
Xi urged to advance the China-Pakistan Economic Corridor (CPEC) and make it “an exemplar of high-quality Belt and Road cooperation,” according to a statement issued by China’s Ministry of Foreign Affairs.
Both sides agreed to expedite the construction of the Gwadar seaport in Pakistan’s Balochistan province, as well as the development of Pakistan’s Main Line-1 (ML-1) project and Karachi Circular Railway project.
“China supports its provinces with a strong industry in pairing up with Pakistani partners to advance industrial cooperation, and hopes the Pakistani side will provide a sound business environment,” Xi said.
For his part, Sharif said that Pakistan would stand ready to work with China, saying that “the world cannot operate without China and China’s development cannot be isolated or contained by any force.”
The $60 billion CPEC is part of the Belt and Road Initiative (BRI, also known as “One Belt, One Road”) launched by Xi in 2013. Other countries, including the United States, have criticized the BRI infrastructure program as a “debt trap” for smaller nations.
China Offers Financial Bailout
Pakistani Finance Minister Ishaq Dar said that China has agreed to roll over $4 billion in sovereign loans, refinance $3.3 billion in commercial bank loans, and increase currency swap by about $1.45 billion following the leaders’ meeting.
Dar said that Pakistan would also receive $4.2 billion from Saudi Arabia, which would include a $3 billion financial package and a $1.2 billion deferred oil facility, ARY News reported.
“China and Saudi Arabia have given assurances to Pakistani delegations under Prime Minister Shehbaz Sharif during recent visits that they will take care of Islamabad’s financial requirements till June 2023,” he told reporters on Nov. 5.
Commenting on Dar’s claims, Chinese Foreign Ministry spokesman Zhao Lijian said that China has supported Pakistan’s efforts to achieve financial stability “within the scope of our capability” and will continue to do so.
Pakistan has an external debt of over $130 billion, $30 billion of which is owed to China. Pakistan has asked China to roll over its $6.3 billion debt that is due to mature in the next eight months, The Indian Express reported.
The country was hit by unprecedented floods last month, triggered by heavier-than-usual monsoon rains that began in June. More than 30 million people were affected, while crops and bridges were destroyed.
During an interview with Financial Times on Oct. 19, Sharif said that Pakistan requires “huge sums of money” to reconstruct infrastructure damaged by floods and that his nation was not seeking a debt rescheduling but “additional funds.”
“There is a gap—and a very serious gap—which is widening by the day between our demands and what we have received,” he told the news outlet.