Pakistan owes Billions Of American Dollars to China
The CPEC is the corridor that links the city of Karachi on the Coast and the city of Peshawar in the Northwest and then runs through the Pakistan’s densely populated provinces of West Punjab and Sindh.
Then a road links it With China while passing through parts of Kashmir which belongs to India but is presently under illegal occupation of Pakistan.
The CPEC has infrastructures pertaining to energy, transport, manufacturing industries and finally the Gwadar port under construction. The Corridor seeks to expand economic ties between China and Pakistan.
However these ties may become so close and tight that it may start suffocating Pakistan itself.
A Pakistan newspaper The Express Tribune has reported last week that Pakistan will need to pay $40 billion of debt and dividends to China over 20 years for infrastructure and development projects under CPEC.
Chinese themselves say that over 60 billion American dollars have been sunk into CPEC. It has already drawn heavy objections from India because of violations of Indian Sovereignty in Kashmir, as a part of the OBOR passes through Indian territory, under Pak Occupation. Hence there is no chance of any trilateral or bilateral trade through this route with India.
Next Gwadar Port is likely to be a non starter as it will be facing very stiff competition from the Port of Chabahar in Iran which has already been operationalized by India.
Third, the Indian resolve to eradicate terrorism from Pakistan, in case Pakistan itself refuses to do so, will turn the entire CPEC a non performing asset as there will be hardly any worthwhile foreign investment coming to Pakistan in the foreseeable future. No Country will like to trade with Pakistan whose ports will be under constant threat of an Indian Naval blockade.
Coming to CPEC m the Chinese companies have invested $12.8 billion in energy projects in Pakistan, including $9.8 billion from commercial banks with an interest rate of about 5 percent.
These are purely business activities between companies and do not involve the Pakistani government, as per a Chinese statement. However how will the Chinese recover this investment ? or is it pure charity ?
The 8th Joint Cooperation Committee meeting of the CPEC was held in Beijing on 20December. China and Pakistan signed a memorandum of understanding at the meeting on industrial cooperation, and agreed to jointly promote the construction of special economic zones.
Another 22 projects under CPEC have been preliminarily finished or are under construction with a gross investment of $18.9 billion. This means another 28 billions have been swallowed up by the Road itself and various infrastructure including security along the road.
Though the Chinese Embassy in Pakistan has been quick to refute the Pakistani media reports that Pakistan has to pay billions of dollars to China in the next 20 years, stating that Islamabad only needs to pay $6.017 billion to Beijing for relevant projects under the China-Pakistan Economic Corridor (CPEC).
The Embassy emphasized that CPEC is the significant economic cooperative project between the two countries and all projects are based on consensus and relevant laws.
China, as per the Embassy, has offered these loans to Pakistan for major transportation infrastructure projects, at a composite interest rate of about 2 percent on 20 to 25 years loans.
China also provided some interest-free loans for the construction of the Expressway East Bay in Gwadar and free aid for some livelihood projects.
Well, the next generation of Pakistan have to learn to live under the shadow of this “friendly “ loan for the coming 25 years.
