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China denies CPEC backing as ‘debt trap’ for Pakistan

  • Category
    World Affairs
  • Published
    20th Sep, 2018
  • China has rejected accusations that its financial backing for the China Pakistan Economic Corridor (CPEC) was a “debt trap” that could compromise Islamabad’s sovereignty.
  • China maintains it provides no-str

Issue

  • China has rejected accusations that its financial backing for the China Pakistan Economic Corridor (CPEC) was a “debt trap” that could compromise Islamabad’s sovereignty.

  • China maintains it provides no-string attached backing to CPEC, which is the key to its ‘One belt, one route’ initiative.

Background

  • China-Pak Relations:Pakistan was one of the first countries to establish diplomatic relations with the People’s Republic of China (PRC), even when the U.S.-Pakistan relationship was strong. They define their present friendship as “higher than the mountains, deeper than the oceans and sweeter than honey”.

  • CPEC is a politically charged $46 billion economic project that aims at bolstering Pakistan’s economy by constructing special economic zones including 3,218-kilometer long route consisting of highways, railways and pipelines. It runs through Baluchistan province and GilgitBaltistan. It also passes through Pakistan occupied Kashmir, to which India has expressed strong opposition.
    a. Among the 22 projects within the framework of CPEC, 18 of them are directly invested or offered aid by the Chinese side, and only four of them used China’s concessional loan.
    b. $19 billion had been invested in the CPEC, which had generated 70,000 new jobs. Through it, Pakistan’s growth rate is expected to be pushed by 1% or 2%.

  • Debt trap diplomacy: Through its $1 trillion “One Belt, One Road” initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments. As a result, countries are becoming ambushed in a debt trap that leaves them vulnerable to China’s influence. It can be considered as China’s neo-colonial design of hegemony.
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