Spearhead Analysis – 03.12.2018
By Shirin Naseer
Senior Research Analyst, Spearhead Research
In Foreign Minister Shah Mehmood Qureshi’s October visit to the United States he urged the United States to reconsider its stance on the resumption of military aid to Pakistan. This was of course to no avail. Relations with the United States continue to remain tense. Given the current state of Pakistan’s bilateral relationships, whether it is its ties with the US or its neighbors India and Afghanistan, China stands alone once again as perhaps Pakistan’s only trusted partner. Given that Pakistan presently has limited options, its economic dependence on China, it is safe to assume, will only likely increase.
Khan’s November trip to China further confirmed this idea.
Beijing agreed to bail Pakistan out of its current economic crisis. While Beijing has committed to providing financial assistance to Pakistan, it has yet to provide specifics over the agreed amount. Terming bilateral talks as “very successful”, Beijing has on several occasions declined when asked to quantify the financial assistance it has agreed to provide.
Furthermore, dismissing all criticism aimed at the China-Pakistan Economic Corridor (CPEC), Beijing has also reassured Pakistan that it stands to only benefit from CPEC. It seems China has taken special notice of the criticism surfacing from Pakistan which has targeted the conditions and terms of the project.
UK daily Financial Times (FT) reported that Pakistan has called its deals with China “unfair”. The UK Daily further revealed, the Khan government will review its role in the Belt and Road Initiative and renegotiate the trade agreement.
PM Imran Khan’s adviser on commerce, textiles, industry and production and investment, Abdul Razak Dawood for instance was recently quoted in the Financial Times as saying, “The previous government did a bad job negotiating with China on CPEC… they gave away a lot”. Soon after however, Dawood issued a denial.
Railway Minister Sheikh Rasheed also questioned whether Pakistan’s economy could in fact bear Chinese loans. It was also suggested that the cost of the Karachi-Peshawar rail line be reduced from $6.2 billion to $4.2 billion.
During Khan’s visit to China however it became clear that China has made its disapproval over criticism coming from Pakistan against the CPEC project clear.
PM Khan and Pakistani Finance Minister Asad Umar’s statements during Khan’s China visit had both of them clearing China’s name against all allegations in relation to the CPEC project.
In an interview to China Global Television Network (CGTN), Finance Minister Asad Umar said it was wrong to blame the CPEC for Pakistan’s current economic crisis. He admitted to Pakistan having a “debt problem”. He however held that what Pakistan does not have is a “China debt problem”, which he claimed was an important distinction the present critique on Pakistan’s economy is missing. He claimed Pakistan’s lack of exports and inability to generate enough foreign currency inflows are rather more responsible for the country’s current economic problem.
A day before the International Monetary Fund (IMF) delegation arrived in Pakistan to discuss loans to Pakistan, Asad Umar in talks with the press revealed that the country is now out of its balance of payment crisis.
Umar said “we had told you about the USD 12 billion financing gap, of which $6 billion have come from Saudi Arabia, and the rest has come from China. So the immediate balance of payments crisis of Pakistan has ended. I want to make that clear in unequivocal terms that we do not have any balance of payments crisis now.”
PM Khan too was quoted as calling Pakistan’s friendship with China a cornerstone of Pakistan’s foreign policy. Furthermore, Chinese Foreign Minister Wang Yi called on PM Khan and expressed the desire to further enhance the strategic partnership between China and Pakistan.
With the current state of Pakistan’s relations with its other neighbors and the US, presently it seems unlikely that PM Khan will voice any uncertainty with regards to CPEC or Chinese intentions. As Pakistan is running out of options, for now it seems Pakistan’s dependency on China will in all likelihood only increase, perhaps even regardless of the Pak-China relationship’s impact on Pakistan’s economy.