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China's Xi says will support Pakistan in stabilising its financial situation

beijingwalker

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China's Xi says will support Pakistan in stabilising its financial situation​

Reuters
November 2, 20227:45 AM UTC

BEIJING, Nov 2 (Reuters) - China will continue to support Pakistan in stabilising its financial situation, state media quoted China's President Xi Jinping as saying on Wednesday.

China and Pakistan should move forward more effectively with the construction of their economic corridor, as well as accelerate the construction of infrastructure for the Gwadar Sea Port, state media reported.

 
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China's Xi affirms commitment to Pakistan economic ties​

ByThe Associated Press
November 2, 2022, 5:23 AM

BEIJING -- Chinese President Xi Jinping on Wednesday affirmed his country's commitment to invest in Pakistan despite obstacles created in recent years by security concerns and the global economic slowdown.

Xi cited the “all-weather strategic partnership” between the countries during a meeting in Beijing with newly elected Pakistani Prime Minister Shahbaz Sharif, according to the official Xinhua News Agency.

Beijing and Islamabad have ties dating from the Cold War, in part due to their mutual tensions with India, with which China has a lengthy disputed border that sparked a 1962 war and more recent clashes. Pakistan and India have fought repeatedly over the Muslim majority Himalayan territory of Kashmir.

China has committed tens of millions of dollars to build power plants and other infrastructure in Pakistan, and Xi pointed to transport links to the Arabian Sea port of Gwadar and in the southern trade hub of Karachi as key elements in that effort.

Pakistan is a main link in Xi's sprawling ”Belt and Road Initiative" that aims to build and connect ports, railways and roads to expand trade in a vast arc of countries across Asia,Africa and Europe.


Thousands of Chinese workers have been deployed to the project, although not all Pakistanis have welcomed their presence. In April, three Chinese nationals and their Pakistani driver were killed when their van was blown up by a suicide bomber.

The Chinese fatalities included the director of the Chinese-built Confucius Institute, which offers Chinese language graduate classes, and two teachers. The Baluchistan Liberation Army, a militant group in nearby Baluchistan province that includes Gwadar, claimed responsibility for the attack.

The Pakistani Taliban has also targeted Chinese interests in the past, including an attack on a bus last year that killed nine Chinese nationals in Pakistan’s northwestern Khyber Pukhtunkhwa province. Four Pakistanis also died in that attack.

Xi touched on the security issue, saying he was “highly concerned about the safety of Chinese in Pakistan, and hopes Pakistan can provide a reliable and safe environment for Chinese institutions and personnel carrying out cooperation in Pakistan."

In a statement, Sharif's office said he thanked Xi for “China’s invaluable assistance to Pakistan’s relief, rehabilitation and reconstruction efforts in the wake of devastation caused by super floods in the country."

It said the sides agreed to speed up projects and discussed extending Chinese investment in Afghanistan.

Peace and stability in Afghanistan, which has teetered on the verge of economic collapse since the Taliban seizure of power last year, would “promote regional security and economic development," Sharif's statement said.

“There was complete unanimity of views between the two leaders," his statement said.

 
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Not Xi's role to stabilise Pakistan, Pak people themselves need to do it. This can't happen like a country always in financial crunch.
Now that Xi has said this, the Chinese government will certainly intervene in Pakistan's economic situation. The Chinese government is not a government that promises lightly. Xi's statement is even more serious.
 
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Not Xi's role to stabilise Pakistan, Pak people themselves need to do it. This can't happen like a country always in financial crunch.

They've already loaned so much already and have invested in the idea of Pakistan as a component of their OBOR program. They don't want that all falling apart, especially after Sri Lanka.
 
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They've already loaned so much already and have invested in the idea of Pakistan as a component of their OBOR program. They don't want that all falling apart, especially after Sri Lanka.
You have hit the nail on the head. Protect your friends and advance your business. Win-win if you have a reciprocal friends who have proclivity in advancing those interests.
Pakistan is a huge quagmire with pitfalls and dangers lurking around. China would have to tread carefully.
 
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China's Xi says will support Pakistan in stabilising its financial situation​

Reuters
November 2, 20227:45 AM UTC

BEIJING, Nov 2 (Reuters) - China will continue to support Pakistan in stabilising its financial situation, state media quoted China's President Xi Jinping as saying on Wednesday.

China and Pakistan should move forward more effectively with the construction of their economic corridor, as well as accelerate the construction of infrastructure for the Gwadar Sea Port, state media reported.

Instead of wording it would be nice if Chinese IPPs are more transparent on their return rates

They've already loaned so much already and have invested in the idea of Pakistan as a component of their OBOR program. They don't want that all falling apart, especially after Sri Lanka.
With booming population it's less likely Pakistan will fail(as size of total econ will grow no matter what)
Second Pakistan has no choice but to side with China due to india


Hence why you see China has been more forgiving with other countries as compared to Pakistan
 
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Now that Xi has said this, the Chinese government will certainly intervene in Pakistan's economic situation. The Chinese government is not a government that promises lightly. Xi's statement is even more serious.

I said it multiple times. GOP is not capable of managing $2-5 billions help from China in these unprecedented financial difficulties. Now hear this, I propose that China pay all of our external loans ($130 billion) and also finance $70 billion worth project that are part of a comprehensive development plan to generate money producing sources.

Pakistan will pay loans back with an interest rate of 1% annually and a grace period of 5-7 years. Pakistan is already paying billions in interest alone, Pakistan is better paying that interest to China. Now I know this is an unprecedented proposal but hey, that's how you help a friend. Specially an idiot friend like Pakistan. We pay $14-17 billion each year in our loans. We can instead pay back $7-8 billion to China annually. Loans will be paid back in no time (that is 20 years).
 
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Any "loan" with lower interest rate than the U.S. Treasury Bond rate is automatically simply aid.


U.S. 10-year treasury is ~5% and will go to ~6% by next year.


U.S. 30-year treasury is ~5% and will go to ~6% by next year.


If inflation doesn't go down to 2% next year, then it will probably be higher.


And this is the "risk-free" rate.


If you factor in risk of default, then it would be significantly higher.


If we assume a 30% default chance (a very low estimate), then the break-even interest rate charged to Pakistan for dollar loans should probably be ~10% at the minimum, especially for long term loans with a significant grace period.


Seems like Xi is doubling down on failure.


Projects need to be changed to ~100% chance of success profit making endeavors like corporate farming and outsourcing centers.


There's a reason why Aid never works, and that's because Aid has no natural checks on corruption and failure.


Especially in a governance structure like the one that Pakistan has, where one change in government (like Imran Khan coming into office) pretty much derails the entire development process and pretends that all predecessors' debts and commitments magically do not apply to them anymore.


Especially when very little effort is put into actually paying off debts instead of simply taking on higher interest rate debt and leaving the Chinese debt on the books while blaming everything other than themselves for the problem.
 
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Help us once, we'll keep electing or selecting morons in power

Let us bring organic Change with in first and foremost and than if Chinese are kind enough to help, it'll be awesome
 
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They've already loaned so much already and have invested in the idea of Pakistan as a component of their OBOR program. They don't want that all falling apart, especially after Sri Lanka.
But most smart 'investors' know how not to fall into Sunk Cost Fallacy at some point. For USA, it was 2011 in Iraq and 2021 in Afghanistan.
 
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@RealNapster

Nappy Pai,

Now I know this is an unprecedented proposal but hey, that's how you help a friend.

In another thread @beijingwalker bro made it clear that Cheenis dont mix up friendship and money, Your taller than mountain friends wont lend you a chawanni without charging an usurious rate.

My advice to Pak govt will be to declare all Chinese loans/contracts as mala fide and fraudulent, seize all assets and stop paying debt. Let the Chinese do what they can against GOP to recover their dues.

Regards
 
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@RealNapster

Nappy Pai,

Now I know this is an unprecedented proposal but hey, that's how you help a friend.

In another thread @beijingwalker bro made it clear that Cheenis dont mix up friendship and money, Your taller than mountain friends wont lend you a chawanni without charging an usurious rate.

My advice to Pak govt will be to declare all Chinese loans/contracts as mala fide and fraudulent, seize all assets and stop paying debt. Let the Chinese do what they can against GOP to recover their dues.

Regards
The average interest of loans in CPEC project is less than 2%.

I need to remind you that the USA government is providing no less than 5% interest on all dollar deposits now.
 
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Pakistan has big population and good geographical position. It at least should have become another Vietnam or even Bengal. Sadly it didn't happen. Pakistanies should firstly learn from Vietnam: Offering a stable and open minded environment for investments.
 
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