Pakistan finance minister: US should worry about its own China debt problem
Updated 10:07, 09-Nov-2018
CGTN’s The Point
“Pakistan has a debt problem for sure, but Pakistan does not have a China debt problem,” said Asad Umar, finance minister of Pakistan, at the China International Import Exhibition, which is being held in Shanghai. He made the comments in response to accusations by US media and leaders that China is using "debt diplomacy" to expand its influence worldwide.
Instead of fixating on Pakistan's China debt, Umar recommended US critics to focus on their country's China debt problem. “The US owes China 1.3 trillion US dollars; China is the biggest lender in the world to the US,” he said.
Under the China-Pakistan Economic Corridor (CPEC) projects, the Pakistani government was granted Chinese loans to build billions of dollars of infrastructure projects, from railways to roads. CPEC has become the poster child for these Chinese debt trap allegations.
Pakistan's external debt had increased to 95.1 billion US dollars by the second quarter of 2018, according to the State Bank of Pakistan. Of Pakistan's public debt portfolio, Umar said that China's debt is no more than 10 percent of the total, which is a not significant figure.
Umar addressed that the percentage of debt to GDP of Pakistan is high but still manageable. “The reason why debt sustainability is a problem in Pakistan is that we don't have enough exports. We are just not generating enough foreign currency inflows to be able to service the debt, and that's the fundamental problem,” he added.
While speaking of solutions to this problem, apart from increasing domestic savings, Umar also highlighted the importance of working with bilateral partners such as China to boost exports – cooperation that could be enhanced under the events like the CIIE.
However, Umar called the idea of the CPEC being some kind of sinister move by China to cause economic problems to Pakistan “absolute nonsense.” He emphasized that the CPEC is “an excellent example of cooperation between two countries, which is a benefit to both sides.”
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