China promises more economic aid for Pakistan, but won’t yet commit to specific pledges

China pledged further economic aid for Pakistan on Saturday, but has yet to provide details of how it will help the country’s troubled economy.

China’s Premier Li Keqiang and his Pakistani counterpart Imran Khan signed 15 agreements and memorandums of understanding in the Great Hall of the People in the Chinese capital, pledging stronger cooperation in fields such as poverty alleviation, agriculture, industry and science.

But although Pakistan is keen to negotiate a bailout to tackle its economic problems, China insists that more talks are needed to finalise the details.

Pakistan’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 dropped to US$6.4 billion.

Imran Khan hoping for a bailout from China, Pakistan’s ‘all-weather’ friend

“During the visit, the two sides have made it clear in principle that the Chinese government will provide necessary support and assistance to Pakistan in tiding over its current economic difficulties,” Chinese foreign vice-minister Kong Xuanyou told reporters after Li and Khan’s meeting.

“As for specific measures to be taken, the relevant authorities of the two sides will have detailed discussions,” he said. He did not elaborate further.

Li also stressed that China still viewed Pakistan as an “all-weather” partner, adding that the country was seen as one of Beijing’s foreign policy priorities.

Cheng Xiaohe, deputy director of the centre for international strategic studies at Renmin University, said China would offer economic assistance, but it was the Pakistan government’s responsibility to tackle its economic problems.

“China can’t replace the Pakistani government in taking care of its people,” he said.

While China continues to be Pakistan’s biggest foreign investor and aid donor, it is also working to increase liquidity amid its trade war against the US.

As a result, “Pakistan must seek all kinds of assistance”, Cheng said.

Beijing also took a firm line on the various infrastructure agreements between the two sides under the China-Pakistan Economic Corridor (CPEC) – part of the wider “Belt and Road Initiative”.

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 Pakistan’s ability to meet the repayments has long been a matter of some concern and Khan had signalled before his election victory that he was keen to renegotiate some of the deals.

But on Saturday Kong said there would be no change in the number of projects under CPEC.

“There is no change at all. If there were, it would only be to increase [them], not decrease” he said.

In his meeting with Li, Khan invited the Chinese premier to visit Pakistan and see for himself the difference the mega-project has made in the country.

“In 2013 CPEC was just an idea. Now it is on the ground and it has caught the imagination of the people of Pakistan,” he said.

“We feel that this a great opportunity for our country to progress, to attract investment. It gives us an opportunity to raise our standard of living and growth rate.”

Khan’s China play threatens Middle East headache for Beijing

The shift in tone on the CPEC projects may indicate that they are a precondition of further Chinese economic aid.

“China strongly believes that CPEC projects bring greater stability to both Pakistan and China. The economic corridor project will certainly boost the local economy of Pakistan as it will create new jobs and inject cash into local communities,” Cheng said.

“Simultaneously, CPEC projects will also bring stability to China’s southwestern region,” he said, adding that China would push for their implementation despite Pakistan’s debt concerns.

Additional reporting by Reuters and Agence France-Presse