Business

China Welcomes Saudi Plans to Invest in CPEC Project With Pakistan

China has praised investments Saudi Arabia intends to contribute to Chinese-funded massive infrastructure projects under construction in Pakistan, dispelling skepticism Islamabad was risking Beijing’s outrage by inviting a third party to a strictly bilateral deal.
The ongoing massive project, known as the China-Pakistan Economic Corridor (CPEC), is the flagship enterprise of President Xi Jinping’s global Belt and Road Initiative (BRI). “Not at all,” said Lijian Zhao, the deputy chief of the Chinese embassy in Islamabad.
In a detailed interview, the senior Chinese diplomat asserted that Beijing itself has been encouraging Islamabad to engage in investments in CPEC from other countries.
CPEC is estimated to bring $62 billion in Chinese investments to Pakistan over the next 15 years for building transportation networks, special economic zones and power plants to help Islamabad improve its manufacturing capacity and overcome energy shortages.
China has already invested more than $19 billion in 22 “early harvest” projects in Pakistan since the two countries launched the massive infrastructure development project four years ago.
The Chinese investment has helped Pakistan upgrade and construct new highways and power plants that have effectively addressed electricity shortages in Pakistan. It has also created more than 70,000 jobs for locals.
“If any other party would like to contribute positive factors to promote the interconnectivity and prosperity of the region on the basis of consultation, I think this is a positive factor,” Chinese Foreign Ministry spokesman Lu Kang told reporters Monday. He was responding to Pakistan’s invitation to the Saudis to invest in the bilateral development project.
The centerpiece of the project is Pakistan’s Chinese-built and operated deep-water Gwadar port on the Arabian Sea, which is regarded as the gateway to CPEC.
Saudi investment
Pakistani Petroleum Minister Ghulam Sarwar Khan announced last week after talks with a visiting Saudi delegation that Riyadh has “in principle” agreed to establish a multibillion-dollar oil refinery complex in Gwadar.
Zhao said that contrary to “misreporting and propaganda in the Western media,” all CPEC projects are doing “very well” on the ground and moving fast, with nine of the 22 completed, and the rest in the process of completion.
“In the initial phase, a network of roads and power plants has been established, laying the foundation for building special economic zones and bringing high-quality Chinese technology, as well as labor-intensive industries, to Pakistan to help build [the] manufacturing capacity of the country,” he explained.
The industrial cooperation will help create tens of thousands of much-needed jobs for Pakistan. It will enable the country to produce more high-quality, export-oriented goods that would help generate crucial foreign exchange for the country, Zhao said.
When the Chinese foreign minister visited Islamabad last month to “recalibrate” relatively smaller projects in the next phase to improve health, education and agricultural sectors, as well as provide clean drinking water, both countries agreed to bring “CPEC benefits directly to ordinary Pakistanis,” Zhao noted.
“In the next five years, we should further encourage other countries to participate, in terms of bringing financing, construction and equipment to CPEC projects,” he added.
CPEC opportunities
Just two months in office, Pakistan Prime Minister Imran Khan on Monday attempted to address media speculation that his government plans to renegotiate CPEC agreements, allegedly due to transparency and debt worries.
“The flagship China-Pakistan Economic Corridor under the BRI initiative of President Xi Jinping also offered opportunities to other countries to invest in CPEC projects and reap benefits in various sectors,” Khan told a meeting of his senior cabinet ministers in Islamabad.
The meeting discussed CPEC progress and Khan’s upcoming state visit to China later this month, an official statement said.
“Strengthening the all-weather Pakistan-China strategic cooperative partnership is the cornerstone of Pakistan’s foreign policy, and early implementation of CPEC projects would help realize the true potential of Pakistan-China economic relations, not only for the two countries, but for the entire region,” Khan said.
Pakistan’s economic woes
Pakistan’s foreign exchange reserves are rapidly depleting, as the country faces a mounting balance-of-payments crisis and urgently requires about $12 billion to meet its liabilities. Skeptics blame CPEC-related imports of heavy machinery and other equipment for Pakistan’s massive trade deficit.
Finance Minister Asad Umar announced Monday the government has decided to approach the International Monetary Fund (IMF) for a bailout package to tackle the national economic crisis.
The United States has already cautioned IMF against lending money to Pakistan, suspecting the country may use it to settle Chinese debts, assertions both Islamabad and Beijing strongly rejected.
Chinese President Xi has pushed the BRI as a means of increasing international trade and goodwill through massive infrastructure spending.
Morgan Stanley has estimated the initiative will cost $1.3 trillion by 2027. Xi has called it the “project of the century,” comparing it to the ancient Silk Road that made China a hub of international commerce.
Thailand, Laos, Sri Lanka and the Maldives have all voiced complaints about the terms of the loans from China, which many have described as debt traps. Newly elected Malaysian Prime Minister Mahathir Mohamad canceled a $20 billion rail project in August, for example.
Officials of the new Pakistani government insist their criticism of CPEC are not aimed at China, but at the former government for not prioritizing the projects in a way that would have brought early benefits to economically burdened citizens of the country.