ISLAMABAD, (Reuters) – The Chinese government’s top diplomat defended Beijing’s Belt and Road infrastructure initiative during a visit to Pakistan yesterday, rejecting criticism the project has saddled Pakistan with expensive debt.
State Councillor and Foreign Minister Wang Yi was in Pakistan for a three-day visit in the first high-level meetings between the neighbours since new Prime Minister Imran Khan took office.
Beijing has pledged $57 billion in loans for Pakistan as part of its vast Belt and Road initiative, deepening ties at a time when Islamabad’s relations with Washington are fraying over how to deal with Islamist militants waging war in Afghanistan.
Whether China was overburdening Pakistan with debt has become a sore point for both nations, who both say the loans are sustainable, after U.S. Secretary of State Mike Pompeo in July warned any potential International Monetary Fund bailout for Pakistan’s troubled economy should not provide funds to pay off Chinese lenders.
Wang said the Pakistani portion of the Belt and Road initiative, known as the China-Pakistan Economic Corridor (CPEC), has helped increase economic growth by 1-2 percent and has contributed 70,000 jobs.
“CPEC has not inflicted a debt burden on Pakistan, rather when these projects get completed and enter into operation, they will unleash huge economic benefits…and these will create considerable returns to the Pakistani economy,” Wang said during a news conference in the capital Islamabad.
Standing next to Pakistani Foreign Minister Shah Mehmood Qureshi, Wang said 47 percent of Pakistan’s debt comes from the IMF and the Asian Development Bank.
Wang said 22 operational CPEC projects, of which nine have been completed, have triggered investment worth $19 billion so far. He also rejected concerns about transparency of CPEC by saying those worries were “false” as all the projects had undergone necessary approvals.
Qureshi said CPEC remains the “top priority” of the new government, adding that the two governments would focus on projects with socio-economic development.
“They will be considering projects that have a livelihood connection to them, that means job creation. He has spoken about initiatives in health and education, vocational training, how do we want to make our people more productive if they want to export,” Qureshi said.
The two men did not mention whether China would give more loans to help Pakistan’s current account crisis. Pakistan is battling a worsening balance of payments crisis that may push it to seek a fresh bailout from the IMF, though officials have not ruled out other options such as a bailout from China.
Wang will also call on Prime Minister Khan and Chief of Army Staff General Qamar Javed Bajwa, the foreign office said.
Wang’s visit comes days after Pompeo’s trip to Pakistan last week along with the U.S. chairman of the joint chiefs of staff, the first high-level U.S. visit to the new government, with the secretary of state saying he was hopeful for “a reset of relations” between the two countries.