China says will help Pakistan overcome foreign debt challenges

KARACHI: A senior Chinese diplomat this week said Beijing had never pressured Islamabad to repay loans and had recently rolled over $2 billion in debt as the payment date neared, adding that China would help Pakistan overcome its foreign debt challenges. 

International financial institutions and China’s rivals like the US have raised concerns that the large-scale borrowing required for massive energy and infrastructure projects undertaken in Pakistan by Chinese authorities could potentially put the South Asian nation in a debt trap.

There are also concerns about the transparency and terms of the loans, including interest rates and repayment schedules, and their long-term impact on Pakistan. 

Since 2013, CPEC, a flagship project under China’s Belt and Road Initiative, has seen Beijing pledge more than $65 billion for road, rail and other infrastructure developments in the South Asian nation of 241 million people.

“Chinese debt is only 13 percent of the total foreign payable debt and its basic objective is to drag out Pakistan from the debt trap by extending necessary financial assistance,” Chinese Consul General Zhao Shiren told business leaders while addressing the Faisalabad Chamber of Commerce and Industry (FCCI) this week.

“China is helping Pakistan to overcome its financial constraints,” he added.

The Chinese diplomat said Pakistan could easily enhance its exports to Saudi Arabia, the United Arab Emirates and China, adding that Beijing had recently allowed the import of red chili and beef from Pakistan.

“China is providing technology for the production of hybrid rice and corporate farming,” he said, adding that Pakistan work to bridge its trade deficit.

Zhao said Pakistani exports to China had recorded a reasonable increase in recent years, though commercial exchanges between the two countries were still nominal against the backdrop of Beijing’s overall $6 trillion trade.