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China and Pakistan reaffirm ties as Imran Khan arrives in Beijing in search of a bailout

  • Prime minister ‘wants to learn’ from his giant neighbour on first visit to China since taking office in August
  • Xi Jinping says he wants to strengthen ties and build a ‘new era’ for the two nations
PUBLISHED : Friday, 02 November, 2018, 9:32pm
UPDATED : Saturday, 03 November, 2018, 4:08am

China and Pakistan reaffirmed their “all-weather” relations in Beijing on Friday, as visiting Prime Minister Imran Khan sought fresh financial support from his giant neighbour in the face of a troubled economy back home.

“We have inherited a very difficult economic situation,” he told President Xi Jinping when they met at the Great Hall of the People in the Chinese capital.

“Unfortunately, our country is going through a low point at the moment with two very big deficits, a fiscal deficit and a current account deficit,” he said. “And so we, as I’ve said, have come to learn.”

Khan, who arrived in Beijing on Thursday evening for a five-day visit – his first to the city since his election victory in August – said before he left that he wanted to learn more from China, which is not only Pakistan’s strategic partner but also its biggest foreign investor and aid donor.

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Xi said that Beijing was “willing to work with the prime minister to strengthen the China-Pakistan all-weather strategic partnership and build a new era” in the two countries’ ties.

“Even though situations in international and domestic politics change, the bilateral relations will continue to improve,” he said.

A report by China’s state broadcaster CCTV said Xi was joined in the meeting by Politburo member Yang Jiechi and Foreign Minister Wang Yi.

Khan is being accompanied on his visit by several senior government officials, including Foreign Minister Shah Mehmood Qureshi, Finance Minister Asad Umar, commerce and trade adviser Abdul Razzak Dawood and Railways Minister Sheikh Rasheed.

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While neither of the leaders made any specific references to economic aid during their talks, Khan is keen to negotiate a bailout from Beijing to tackle Pakistan’s fiscal crisis.

The country’s foreign exchange reserves have fallen to a near five-year low of US$7.8 billion, the State Bank of Pakistan said on Thursday, while the net foreign reserves held by commercial banks have also dropped, to US$6.4 billion.

The Pakistani rupee has lost about a quarter of its value against the US dollar over the past year.

Khan is also keen to renegotiate Islamabad’s projects under the “Belt and Road Initiative”, Beijing’s international trade and infrastructure development programme.

China has pledged more than US$60 billion to Pakistan in the form of loans and investments for roads, ports, power plants and industrial estates under the scheme, but the South Asian nation’s ability to meet the repayments has long been a matter of some concern.

Islamabad’s worries were exacerbated when the United States insisted that any bailout funds provided by the International Monetary Fund must not be used to pay off Chinese lenders.

Pakistan has appealed to the IMF for an emergency bailout of US$8 billion and last month also secured a US$6 billion support package from Saudi Arabia.

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Finance Minister Umar said this week that his government was seeking funds from various countries and institutions to avoid becoming dependent on a single source.

Khan is expected to meet Chinese Premier Li Keqiang at the Great Hall of the People on Saturday when they will sign several agreements.

On Sunday, he will head to Shanghai for the China International Import Expo, where he will lead a delegation of 76 government officials and business leaders, and deliver a keynote speech.

Additional reporting by Reuters