China denies seeking guarantees from Pakistan

After reports emerged about Pakistans ally and all-weather friend China, asking Islamabad to provide guarantees if it intends to avail the $6 billion package; Beijing has rejected “what it called rumors” of gradually ending financial support to Pakistan, pledged under the China Pakistan Economic Corridor (CPEC).

Chinese Foreign Miniter’s spokesperson Zhao Lijian rubbished the reports, declared them as “groundless” and added that both Pakistan and China are “moving forward in the construction of the mega project”.

“Pakistan and China reiterated their commitment to implementing the consensus reached by the leaders of both sides,” he said.

China has been bailing out Pakistan from its financial crisis and repayment of loans.

Earlier in December, China gave $1.5 billion financing line to Pakistan, to help it repay the $2 billion debt of Saudi Arabia.

A government source stated that “China has not given the loan from its State Administration of Foreign Exchange, commonly known as SAFE deposit, nor has it extended a commercial loan,” he said.

“Instead, both countries have agreed to augment the size of a 2011 bilateral Currency-Swap Agreement (CSA) by an additional 10 billion Chinese Yen or around $1.5 billion,” he added.

Pakistan is provided with loan amounts through CSA, a Chinese trade finance facility. Pakistan has been using this facility since 2011 to repay foreign debt, along with keeping its gross foreign currency reserves at comfortable levels.

With China coming to Pakistan’s rescue, the overall trade facility from China to Pakistan would reach up to at least $4.5 billion.

Chinese foreign minister’s spokesperson also stated that the Belt and Road Initiative (BRI) and CPEC has maintained positive momentum of development despite the Covid-19 pandemic.

“There is no halt in the construction, no job cut and no withdrawal of workforce from the CPEC projects, which effectively supports Pakistan in fighting the epidemic and stabilizing the economy,” said Zhao Lijian.

“I want to stress that China’s inputs in the BRI, including CPEC, has increased despite global economic recession.

“In the first three quarters this year, China’s direct investment in non-financial sectors of BRI partner countries grew by around 30 per cent. China has provided as much support and assistance as possible to help many BRI partners in combating Covid-19 and recover economy,” he added.