The imposition of fines and stalling of various projects have increased economic mistrust between Pakistan and China, at a time when the former nation is facing a financial crisis. A Pakistan civil court had imposed a USD 2.48 million fine on China National Petroleum Corporation after it was alleged of violating the contract signed with Petroleum Exploration (Pvt) Ltd.
According to reports, there have been unresolved differences between the two governments, because of which many projects have been stalled.
Media reports suggest that investments have been slowed by China in large infrastructure projects as these projects have been projects are vulnerable to local politics and there has been a delay in returns on investments.
The difference between the two nations, which is not new, has been kept hidden from the world. As per reports, the two countries’ economic co-operation has suffered due to terror attacks on Chinese interests.
The financial crisis of Pakistan has decreased its capacity to deliver financial obligations in various projects. Meanwhile, China has faced accusations of carrying out dubious practices in Pakistan, which include signing fraudulent deals with Independent Power Producers (IPP) and getting tax exemptions.
Beijing has time and again refused to renegotiate the power purchase agreements which are worth $3 billion on the pretext that its commercial banks cannot revise the clauses mentioned in the agreement which was earlier signed with the Pakistani government.
According to a report published in Pakistan, Islamabad was being overcharged by Chinese contractors by $3 billion on two CPEC power plants. Concerns were also raised that the deals overly favoured China or were too expensive and badly negotiated.
The people of Pakistan feel that the loans sanctioned by China for dubious projects will not help the local economy as Chinese companies and employees are handed over China-funded projects with high-interest loans.
Pakistan is believed to have fallen into the debt trap of China and its economy has been in a deep mess. Because of its increasing dependence on China, Pakistan has been in massive debt, and its cash reserves are dwindling.
As per reports, Pakistan owes $30 billion which is one-third of its external public debt to Chinese commercial banks and China.
Between July 2021 and March 2022, more than 80 per cent of the bilateral debt service of Pakistan went to China. However, the debt-riddled nation has failed to repay the loan and has asked China for debt relief.
Source : WIONews