Pakistan and China fires back at critics of CPEC debt trap

Muhammad Zamir Assadi

Pakistan and China have unanimously rejected the vicious propaganda of US administration and International Monetary Fund (     IMF) about China Pakistan Economic Corridor (CPEC), the flagship project of Belt and Road Initiative that it is causing a debt trap and economic woes for Pakistan. During the past few months the negative orientation about CPEC from specific countries and international financial institution has come to an era of intensifying. Such ill intended campaign is surfacing especially when on one side US has ignited trade tensions with China and on other side Pakistani Prime Minister Imran Khan has just completed his first successful China visit.

It has become obvious that western power corridors are now trying to play the political cards to prevent the wave of Chinese investment under BRI which has started producing tangible results in Pakistan and other nations.

Accusing CPEC as the debt trap for Pakistan is only a failed attempt of political trap for public who are the real beneficiaries of this flagship project and guarantor of all weather strategic relationship. The misleading campaign against the pure Chinese investment is another form of protectionism triggered by western institutions however it is not effecting the smooth implementation of CPEC projects. The figures released by China and Pakistan about the huge amounts invested in CPEC projects have shown the reality to the world and proved contrary to the claims of western mind set.

 The government of Pakistan committed to pursue the strategic relationship with China to the new heights has clarified that the country has only received US$6 billion as a concessional loan under CPEC with the interest rate of 2.29 percent along with a grace period of seven years and a repayment period of Twenty five years.

In must be noted that the debt repayments will start in 2021 with about $300-400 million annually and gradually peak to about $3.5 billion by fiscal year 2024-25.

As per the data released by Pakistani ministry of finance, 18 percent of the foreign debt belongs to Paris Club and 42 percent of the external debt was taken from multilateral financial institutions. The loans received under CPEC framework accounts to only 10 percent of the total foreign debts and it also offers lower interest rates than other commercial bank loans.

The same kind of figures were released by Chinese embassy in Islamabad who have reacted smoothly on the false and baseless claims of western mind set about the alleged debt trap for Pakistan regarding CPEC framework.

The statement of the Chinese embassy clearly identified that “ the misguided statements from western media does not reflect reality and even if Pakistan is facing  so called debt trap , the figures show that the initiator is not China.

The Chinese foreign minister Wang Yi also described the figures regarding debts during his visit to Pakistan by stating that “47 percent of Pakistan’s debt stemmed from the IMF and the Asian Development Bank (ADB).”

Pakistan has negotiated the projects with China under CPEC framework as per its financial capability of handling the repayments. Both countries are very well aware about the importance of their strategic relation which is vital for the development, peace and stability of the region. The negotiated CPEC framework falls under the real vision of Chinese president Xi Jinping describing that all projects carried forward under BRI reflect mutual and meaningful consultation for producing the win-win results.

The message originated from BRI shows that China as a 2nd largest economy of the world will never dominate its partners who are already exploited by the western powers under current global economic system.

The partner countries of BRI believe that China has emerged as an economic power and it will definitely alter the current global economic system through the vision of President Xi that has also tried to protect the legitimate rights of 3rd world countries.

As far as the implementation of CPEC projects is concerned, it has produced the tangible results for Pakistan. If we look into the performance of Pakistan in its GDP growth than it will be visible that country’s GDP has increased at a steady rate of 2.5% after the implementation of CPEC. Propaganda of debt trap comes at a time when CPEC has addressed the critical bottlenecks in energy and infrastructure and both nations have agreed to deepen the base of this initiative.

 Besides this more than 70,000 Pakistani citizens have been employed in CPEC projects and their real earning is the learning of Chinese work experience which has become a symbol of progress not only for China but the whole world.

China and Pakistan should do their best, together with their people to push forward implementation of CPEC with splendid collaboration. With geo economic eyes, all this is possible and both parties are on right path. Remains are hard work.

The author is a Pakistani journalist who graduated in China development studies from Renmin University of China. He is also a media fellow at the China South Asia and South East Asia press center. The author may be connected at zamirasadi@gmail.com