Chinese investment mushrooms in Pakistan, Beijing to set up transportation plant in Sindh

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As a continuation of China’s debt-diplomacy with Pakistan, a Chinese company Yutong Bus, a large modern Chinese manufacturing company specializing in the production of buses, has accepted an offer to set up a public transport factory in the Sindh. The factory would either be located in Karachi or Hyderabad. It must be built on 15 to 18 acres of land. Libijian, Chinese Consulate General in Karachi, wrote in a tweet: “Great news and congratulations! Yutong Bus for setting up transportation factory in Karachi or Hyderabad.

The development came during a meeting between provincial transport minister Sharjeel Inam Memon and Paul Zhang, national manager of Yutong Bus China. Zhang was also accompanied by department head Yutong Wayner Wang, China Economic Net (CEN) reported. “The meeting agreed to prepare a concrete proposal in this regard by next week,” a statement said.

“The transport department is making every effort to attract foreign investors to set up a public transport factory in Sindh,” according to the provincial minister. Meanwhile, China’s debt-trap diplomacy could possibly exploit the textile industry in Pakistan to reap by proxy the benefit of the European Union’s GSP+ which grants Islamabad zero tariffs on several products.

Pakistan could fall into a debt trap like Sri Lanka due to its economic ties with China. Pakistan’s already fragile economy suffered another setback when China recently demanded the repayment by November 2023 of $55.6 million for the Lahore Orange Line project, an Italian publication reported. ‘Osservatorio Globalizzazione.

Meanwhile, at the end of March, foreign exchange reserves held by the State Bank of Pakistan fell by $2.915 billion, due to repayment of external debt. Thus, Pakistan faces a bleak economic future when it comes to relations with China. The Chinese company China-Railway North Industries Corporation (CR-NORINCO) which completed the Lahore Orange Line project in 2020 demanded from the Punjab Mass Transit Authority an outstanding amount of $45.3 million by the end of March 2023 and the remaining outstanding $10.5 million by the end of the year. CR-NORINCO insisted that all dues be refunded before the contract expires on November 16, 2023, Osservatorio Globalizzazione reported.

China has struck a tough bargain with Pakistan over the repayment of its loans and other investments in Pakistan. In fiscal year 2021-22, Pakistan paid about $150 million in interest to China for using a $4.5 billion Chinese trade finance facility. In the 2019-20 financial year, Pakistan paid $120 million in interest on a $3 billion loan. The Chinese request for the Lahore line payment was made in the first week of April 2022, when the new political dispensation under Prime Minister Shahbaz Sharif had just taken office. Earlier, in early March 2022, China granted Pakistan’s request to postpone a huge $4.2 billion debt repayment to provide major relief to its all-time ally.

China was quite strict in recovering the money from Pakistan. Take for example the energy sector in Pakistan, where Chinese investors have repeatedly insisted on solving problems with existing project sponsors in order to attract new investment. Some Chinese projects in Pakistan are facing problems getting insurance for their loans in China due to Pakistan’s massive circular energy sector debt of around $14 billion, Osservatorio Globalizzazione reported. Pakistan has to pay about $1.3 billion to Chinese power producers and so far only $280 million has been paid. Another example of China’s tough negotiation over monetary transactions with Pakistan is well documented in the case of the Dasu Dam project.

Last year, China demanded $38 million to compensate the families of 36 engineers who died in the Dasu Dam terrorist attack. Compensation became a precondition for the resumption of work on the project. To appease China, Pakistan later agreed to pay $11.6 million in compensation. Pakistan’s fundamental challenge is that its economy is collapsing and needs an injection of funds to survive. While China is heavily responsible for Pakistan’s debt problem, it is the mismanagement of Pakistan’s economy by successive governments that has led to the current impasse. (ANI)

The factory would either be located in Karachi or Hyderabad. It must be built on 15 to 18 acres of land. Libijian, Chinese Consulate General in Karachi, wrote in a tweet: “Great news and congratulations! Yutong Bus for setting up transportation factory in Karachi or Hyderabad. The development came during a meeting between provincial transport minister Sharjeel Inam Memon and Paul Zhang, national manager of Yutong Bus China. Zhang was also accompanied by department head Yutong Wayner Wang, China Economic Net (CEN) reported.

“The meeting agreed to prepare a concrete proposal in this regard by next week,” a statement said. “The transport department is making every effort to attract foreign investors to set up a public transport factory in Sindh,” according to the provincial minister.

Meanwhile, China’s debt-trap diplomacy could possibly exploit the textile industry in Pakistan to reap by proxy the benefit of the European Union’s GSP+ which grants Islamabad zero tariffs on several products. Pakistan could fall into a debt trap like Sri Lanka due to its economic ties with China.

Pakistan’s already fragile economy suffered another setback when China recently demanded the repayment by November 2023 of $55.6 million for the Lahore Orange Line project, an Italian publication reported. ‘Osservatorio Globalizzazione. Meanwhile, at the end of March, foreign exchange reserves held by the State Bank of Pakistan fell by $2.915 billion, due to repayment of external debt. Thus, Pakistan faces a bleak economic future when it comes to relations with China.

The Chinese company China-Railway North Industries Corporation (CR-NORINCO) which completed the Lahore Orange Line project in 2020 demanded from the Punjab Mass Transit Authority an outstanding amount of $45.3 million by the end of March 2023 and the remaining outstanding $10.5 million by the end of the year. CR-NORINCO insisted that all dues be refunded before the contract expires on November 16, 2023, Osservatorio Globalizzazione reported. China has struck a tough bargain with Pakistan over the repayment of its loans and other investments in Pakistan. In fiscal year 2021-22, Pakistan paid about $150 million in interest to China for using a $4.5 billion Chinese trade finance facility. In the 2019-20 financial year, Pakistan paid $120 million in interest on a $3 billion loan.

The Chinese request for the Lahore line payment was made in the first week of April 2022, when the new political dispensation under Prime Minister Shahbaz Sharif had just taken office. Earlier, in early March 2022, China granted Pakistan’s request to postpone a huge $4.2 billion debt repayment to provide major relief to its all-time ally. China was quite strict in recovering the money from Pakistan. Take for example the energy sector in Pakistan, where Chinese investors have repeatedly insisted on solving problems with existing project sponsors in order to attract new investment. Some Chinese projects in Pakistan are facing problems getting insurance for their loans in China due to Pakistan’s massive circular energy sector debt of around $14 billion, Osservatorio Globalizzazione reported.

Pakistan has to pay about $1.3 billion to Chinese power producers and so far only $280 million has been paid. Another example of China’s tough negotiation over monetary transactions with Pakistan is well documented in the case of the Dasu Dam project. Last year, China demanded $38 million to compensate the families of 36 engineers who died in the Dasu Dam terrorist attack. Compensation became a precondition for the resumption of work on the project. To appease China, Pakistan later agreed to pay $11.6 million in compensation.

Pakistan’s fundamental challenge is that its economy is collapsing and needs an injection of funds to survive. While China is heavily responsible for Pakistan’s debt problem, it is the mismanagement of Pakistan’s economy by successive governments that has led to the current impasse. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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