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Pakistan PM Khan Tries to Rally Support for Chinese Investment

Stock Markets Oct 07, 2019 11:28PM ET
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(Bloomberg) -- Pakistan’s Prime Minister Imran Khan begins a two-day visit to China on Tuesday to help rally support for more investment after project spending declined sharply.

Khan will meet with Chinese President Xi Jinping, Premier Li Keqiang and business executives in his third visit to Beijing within a year. He’ll likely discuss railway projects and trade curbs with the officials, while also addressing concerns around the contested region of Kashmir ahead of Xi’s visit to India later this week.

Pakistan has been one of the largest beneficiaries of China’s Belt & Road Initiative, Xi’s flagship program to build a network of railways, ports, pipelines and highways linking Asia, Europe and Africa. China has financed billions of dollars of power and road projects in Pakistan, boosting infrastructure in the South Asian nation but also saddling it with debt.

While most of the early projects have now been completed, the second phase of the program has been slow to start. Official data shows foreign direct investment from China plunged 77% to $461 million in the fiscal year through June from $2 billion in the previous year.

Pakistan’s debt problems, which led the government to seek a bailout from the International Monetary Fund once again, have also prompted the nation to scale back some projects. The South Asian nation owes China more than double what it owes the IMF over the next three years.

China has sought to tighten oversight of Belt and Road projects amid growing concerns the program is loading poorer nations with unsustainable debt. China’s ambassador to Pakistan, Yao Jing, recently said the economic corridor projects between the two nations are “running according to our satisfaction and there is no slowdown in it.”

Pakistan has reduced its Chinese loans to upgrade a colonial-era railway by $2 billion to $6.2 billion, and wants to cut it down by another $2 billion, according to the nation’s railways minister. Khan will likely discuss the project during his trip to Beijing this week, as well as Chinese curbs on agricultural exports from Pakistan, including on rice, wheat, corn, soybean, sugar and tobacco, according to state-run Radio Pakistan.

Kashmir Tensions

Regional security will also be on the agenda, with Khan expected to discuss the situation in Kashmir with Xi before the Chinese leader visits Indian Prime Minister Narendra Modi later this week in the southern state of Tamil Nadu.

India scrapped decades of autonomy in the Muslim-majority state of Jammu and Kashmir, straining relations with Pakistan. Kashmir, in the Himalayas, has been divided between India and Pakistan since independence from British rule, and is claimed by both. Two of the nations’ three wars were fought over the territory. China also claims part of the area.

Burzine Waghmar, a member of the Centre for the Study of Pakistan at SOAS University of London, said Khan will unlikely get strong assurances from Beijing on Kashmir.

“Xi will definitely not publicly proclaim questionable objections about Article 370 and Kashmir on the eve of his informal working visit to Tamil Nadu on the heels of hosting Khan,” he said.

Pakistan PM Khan Tries to Rally Support for Chinese Investment

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