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China says willing to help Pakistan over fiscal crisis but more talks needed

Updated November 03, 2018

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Prime Minister Imran Khan and China's Premier Li Keqiang attend a welcome ceremony at the Great Hall of the People in Beijing on Saturday. — AFP
Prime Minister Imran Khan and China's Premier Li Keqiang attend a welcome ceremony at the Great Hall of the People in Beijing on Saturday. — AFP

China said on Saturday it was willing to offer assistance to Pakistan to help it weather its current fiscal woes but that terms of such aid are still being discussed.

That followed a meeting in Beijing between Chinese Premier Li Keqiang and Prime Minister Imran Khan, who met the previous day with Chinese President Xi Jinping.

Following Li's meeting with Khan, Vice Foreign Minister Kong Xuanyou said the two sides had “made it clear in principle that the Chinese government will provide necessary support and assistance to Pakistan in tiding over the current economic difficulties.

“As for the specific measures to be taken, the competent authorities of the two sides will have detailed discussions,” Kong told reporters.

And despite Pakistan's looming balance of payments crisis, Kong said there were no plans to scale back the China-Pakistan Economic Corridor (CPEC), although he did say it would be altered somewhat to “tilt in favour of areas relating to people's lives”.

“There's been no change in the number of CPEC projects. If there were to be any change, it would be an increase going forward,” he said.

Media reports had earlier said China was preparing a $6 billion package of aid, including loans and additional investment for CPEC.

The issue did not come up in opening remarks between Li and Khan. Li said Prime Minister Khan's visit would “further consolidate and develop the firm, enduring ties between our two countries”.

Khan responded by saying that CPEC had evolved from the concept stage to showing tangible results “on the ground” that have “caught the imagination of the people of Pakistan.

“We feel that this is a great opportunity for our country to progress, to attract investment. It gives us an opportunity to raise our standard of living (and) growth rate,” Khan said.

Though China is Pakistan’s closest ally, Khan’s newly elected government has sought to rethink the $60 billion CPEC that Beijing calls the flagship infrastructure programme in its vast Belt and Road Initiative. Pakistan seeks to amend the CPEC to focus on socio-economic progress besides infrastructure development.

A report by the South China Morning Post quoted Cheng Xiaohe, deputy director of the centre for international strategic studies at Renmin University, as saying that while China would offer Islamabad financial assistance, it was the Pakistani government's responsibility to resolve its economic troubles.

“China can’t replace the Pakistani government in taking care of its people,” he said.

The academic emphasised that Pakistan must also look towards other sources for help as well, saying: “Pakistan must seek all kinds of assistance”.

Pakistan’s foreign reserves have plunged 42 per cent since the start of the year and now stand at about $7.8 billion, or less than two months of import cover.

Officials say the recently announced $6 bailout package from Saudi Arabia is not enough as Pakistan still have to approach International Monetary Fund to avert a balance of payments crisis. This will be 13th rescue package Pakistan plans to receive from the lender since the late 1980s.