China granted $48.5bn in bailing out to Pakistan

[game]

Your opinion is a little flawed in case of CEPEC. I never commented on cepec because Pakistanis were realy imotianal on this topic.
But now u have started seeing objectively than ask youself 2 questions:

1. What items china can send to other countries through CEPEC which cannot be sent at same price or at less price through Sea route?
2. After cepec how much more money china will make , than using sea route?

If , the answer is not a huge difference , than china will never do it with your terms & conditions

China has more benefits..commercial as well as strategic
First ,BRI/CPEC will get nearest port access for the western region of China ,which is vastly not industrialized
Second, with an alternate access to Arabian sea by passing Malacca straits China can ensure the continuous supply of critical imports like oil
After Tariff war with US many Chinese relocated operations to bordering Vietnam..inreality 90% of products are made in India..in vitenam they do the remaining 10% and past made in Vietnam sticker and export,there by bypassing tariffs and some times gets concessional duties in US as they are made in Vietnam.Similarly China can move manufacturing if the situation arises
another strategic benefit is ,China can make Gwadar as military base in pretext of providing security to BRI /CPEC or Chinese ships in region and can have higher hand in Gulf /arabian sea and Indian Ocean..also encircle India from west

The benefits are tilted most toward China.But if Pakistan can make use of the opportunities,they have lot of things to export to China and replace other countries that China depend on ,as there is a Free trade agreement making Pakistani imports much attractive to Chinese

 

[etylo]

correct - just because you have good relations it does not mean taking them and putting them on pedestal as the new colonial masters. The new relationship was going that way here until our late Magafuli put end to this nonsense including building white elephants that did not have any valid definition.

CPEC could have been a two way relationship but it was a one way street. Why was there not any local industries sprung up to supply these projects including massive labour forces which could have been leveraged. We saw similar issues - their project, their labour, their materials - our local companies were shafted. So where is the partnership?

For Gwadar - it was to serve the elites and ISlamabad and their proxy sardars but locals be damned as they have been for decades. then to cut their livelihoods and others was nothing short of criminals. Then do you wonder why they are taking to the streets.

Here even the Chinese consulates have admitted, there are criminals in their own midst which is a huge admission.

Stop BS of things you know nothing about. We prefer not to have any thing to do with your continent.

 

[epebble]

5% on $48bn is excessive.

6-month U.S. Treasury bills are yielding 5% now. What do you think a good rate for non-investment grade loan should be? Remember, Pakistan has never paid back a single dollar of loan in 75 history without borrowing more. No economist believes it will ever pay back (net) its external debts in foreseeable future. So, these 'loans' are actually grants for at least a generation or two.

Pakistan's External debt in millions of USD

 

[aryobarzan]

When Gwadar project starts working thousands of jobs that it provides to the Balochisran local economy will calm the separation aspirations of this region for Pakistan which means the loan has done its job . In Iran Balochestan the government is also busy making investments to make Baloch population to feel that they have a future..so money spent in Balochistan has added political benefit to both countries.

 

[ThunderCat]

in a way your opposition to CPEC is right.

we are so good at messing things up, when CPEC was signed, everything was kept under wraps by saying being a state secret, it raised doubts about it in so many minds.

later we saw it was true, the loans extended for infrastructure in particular for power houses which bears an investment of USD35 billion (approx) was not on easy terms.

for example:
power house construction companies charged interest during construction (which they kept revising) based on LIBOR besides 4.5% during the entire construction process which must be charged only if construction companies took loan, but this is not the case. they partially borrowed short term loan on a very low rate.

it is our fault that we mismanaged everything on those projects from feasibility to execution process and later.

Such projects needs evaluation; especially when taking the environmental sustainability. We never conduct ecological assessment. We ruined Karachi with all this growth.

Instead of trying to sustain Karachi, we're heading to ruin Gwadar as well. CPEC is a destructive drug interpreted as a medicine.

 

[Paul2]

JOHANNESBURG (Reuters) – China spent $240 billion bailing out 22 developing countries between 2008 and 2021, with the amount soaring in recent years as more have struggled to repay loans spent building "Belt & Road" infrastructure, according to a study published Tuesday.

Almost 80% of the rescue lending was made between 2016 and 2021, mainly to middle-income countries including Pakistan, Argentina, and Mongolia, according to the report by researchers from the World Bank, Harvard Kennedy School, AidData and the Kiel Institute for the World Economy.

China has lent hundreds of billions of dollars to build infrastructure in developing countries, but lending has tailed off since 2016 as many projects have failed to pay the expected financial dividends.

"Beijing is ultimately trying to rescue its own banks. That's why it has gotten into the risky business of international bailout lending," said Carmen Reinhart, a former World Bank chief economist and one of the study's authors.

Chinese loans to countries in debt distress soared from less than 5% of its overseas lending portfolio in 2010 to 60% in 2022, the study found.

Argentina received the most, with $111.8 billion, followed by Pakistan with $48.5 billion and Egypt with $15.6 billion. Nine countries received less than $1 billion.

The People's Bank of China (PBOC) swap lines accounted for $170 billion of the rescue financing, including in Suriname, Sri Lanka and Egypt. Bridge loans or balance of payments supported by Chinese state-owned banks was $70 billion. Rollovers of both kinds of loans were $140 billion.

China granted $48.5bn in bailing out to Pakistan

China granted $48.5bn in bailing out to Pakistan

dunyanews.tv

However, there are big differences between IMF programmes and Chinese bailouts. One is that Chinese money is not cheap. “A typical rescue loan from the IMF carries a 2 per cent interest rate,” said the study. “The average interest rate attached to a Chinese rescue loan is 5 per cent.”

China grants billions in bailouts as Belt and Road Initiative falters

New study attempts to capture total rescue loans from world’s biggest bilateral creditor

www.ft.com

I witnessed it myself when I worked on a rail project in Kazakhstan. $1.6B slowly vaporising over 2 years with close to no real world impact. Utter failure. And these 1.6B went onto rail only. There were dozen more projects around the country.

 

[ThunderCat]

Edit the thread title. This was in the past. Not anymore.

 

[TNT]

The thing is, where did all this money go? Most CPEC projects were over priced and had huge kickbacks. The projects had no cohesion and no planning towards a bigger economic goal.

 

[Windjammer]

So now we are are calling this rescue lending. Sounds so much better than debt trap.

Since you are never far away from Pakistan's internal matters and often harping the same tune.
Is it because Indians are the only creatures to have been Clubbed out by the Chinese.... I mean literally.

 

[nahtanbob]

are you nuts?

We need to build more cities esp in balochistan that has immense resources but hasn't seen any development in decades. probably the most backward province in pakistan.

You are telling me all your ancestors were fools not setting up cities in Balochistan

we are so good at messing things up, when CPEC was signed, everything was kept under wraps by saying being a state secret, it raised doubts about it in so many minds.

any brownie points for guessing why was it a state secret ?

 

[ThunderCat]

Slightly off-topic, but another example is how I opposed the expansion of Skardu airport to boost tourism. As if big jetliners are improving the situation for already endangered wildlife.

But Pakistanis preoccupied with more cool planes and growth couldn't care any less. The mentality is of infancy.

Even that Polish vlogger Eva Zu Bek preaching how many empty beaches and mountainous regions deserve hotels and ski resorts built on them.

Anyone who's studied tourism like me knows the difference between tourism and unsustainable tourism.

are you nuts?

We need to build more cities esp in balochistan that has immense resources but hasn't seen any development in decades. probably the most backward province in pakistan.

Resources are finite. Do you think this is "development" or a slow suicide?

 

[nahtanbob]

British FT is as credible as Indian sources on Chinese matters, they are totally biased against China.

Quotes :

“We do not have a China debt problem, as China’s debt is only 26% of the total external debt of Pakistan,” said Umar while clearing China of Pakistan’s debt mess.

“The average interest rate of the CPEC energy project is 4% compared with 4.25% given by the World Bank, the Asian Development Bank and other western institutions,” he added.

He said a majority of infrastructure project loans were taken at a concessional rate of 2%.

We do not have China debt problem: Umar

All of the CPEC obligations does not show up in the official debt figures of the Pakistani government. The power contracts signed with Chinese IPPs are a good example.

 

[ThunderCat]

Only way to justify this is if exports increased. They haven't however there is still time. A developed infrastructure is still better than under developed.

I just wish they could just fix waste management and clean the country, loans for this would be worth it. The easiest way to differentiate from India is by becoming clean.

India is more overpopulated than Pakistan so Pakistan has been cleaner on average, although both countries could use improvement.

However at the end of the day their population sizes are a disaster in the making. The three/four current Asian Tigers all have finite growth; hence more stablity and China could become another one by having controlling their growth.

 

[xyxmt]

The problem is people brainwashed here. Just because its China doesnt mean we have to be onboard with anything and everything.

Chinese have a way of debt traps with countries. Plus it didnt provide any skills to our labour or employment. Most were chinese who didnt want to be here.

The way they are developing gwadar is already nonsensical. The port is cut off from the city and population. It feels and looks like colonization for the local population who are already suffering.



Development? For sure. Debt traps? No.

Its was not China who decided what projects, they offered investment and Pakistan had to decide which projects, but knowing Pakistan and Pakistani politicians+our over achieving Army...need i say more.

Added: you can invest 200 billion in Pakistan economy but nothing will change as long as our economist, scientists, educator, administrator and controllers are Generals.

 

[ThunderCat]

Its was not China who decided what projects, they offered investment and Pakistan had to decide which projects, but knowing Pakistan and Pakistani politicians+our over achieving Army...need i say more.

Added: you can invest 200 billion in Pakistan economy but nothing will change as long as our economist, scientists, educator, administrator and controllers are Generals.

Best investment would have been free Chinese contraceptives if they got any. Seeing they are fine with their current population dynamics and missing a little growth, Pakistan could use all the contraceptives the Chinese can spare.