Analyzing CPEC

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Peregrine
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Analyzing CPEC

Postby Peregrine » 11 Sep 2018 14:46

pankajs wrote:Bakis are up to their usual trick of trying to get squeeze more than the initial agreed share/due. That's not a bad idea.

It has been the Baki hallmark in all their negotiating with US, IMF and the world. They always have a new regime that promises implementation in return for more goodies.
pankajs Ji :

Then there was this Paki in the Toilet. He put one foot on the Water Closed the other on the Bidet and Sh*t in his Pants! :rotfl:

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Peregrine
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Analyzing CPEC

Postby Peregrine » 11 Sep 2018 15:15

X Posted on the Terroristan Thread

CPEC confusion - Editorial

When the new government sat down with the Chinese to ‘renew’ cooperation under the CPEC project, the day was marked more by confusion than fanfare.

It all began with the report in the Financial Times which quoted the prime minister’s commerce adviser Abdul Razak Dawood as saying that CPEC “unfairly benefits Chinese companies” through tax breaks and many other incentives that are unavailable to local counterparts. Not only that, he went on to say that the deals under CPEC would be reviewed, adding that “we should put everything on hold for a year so we can get our act together”.

These words were published on the same day as the country heard that Chinese and Pakistani delegates sat down together, and after a long meeting, agreed to broaden the base of the CPEC arrangement as well as open it up to involvement by ‘third countries’ that might be friendly to both China and Pakistan.

Unfortunately, the two messages did not mix well. Soon a ‘clarification’ arrived from the commerce adviser, asserting that he was “quoted out of context”. This, of course, begs the question what the original context was since the words uttered by him are quite clear.

While both governments spoke of renewing ties, broadening the base of their cooperation and inviting others to participate in their bonhomie, at least one of the ministers let it slip that there are powerful apprehensions about the entire deal within Pakistan. Long before we heard the words of the commerce adviser, who hails from the business community, we have heard various trade and business bodies articulate the very same concerns in very similar language.

Going forward, it is necessary to heed the substance of both voices that spoke on Monday. There is no doubt that CPEC should continue, and certainly grow with time. China is arguably Pakistan’s most important neighbour and has been a consistent friend through the decades. But as we move forward, it is important that Pakistan’s own interests, and political traditions, be kept front and centre.

To what extent does the new government wish to heed the voice of the business community when formulating its approach to CPEC? How far is the new government willing to go to honour its commitment to the electorate to conduct an audit of some CPEC projects like the Orange Line train, or to bring greater transparency to future CPEC negotiations such as those around the ML 1 project, or to place details of past agreements before parliament?

All of these are commitments made by the PTI before and after the election and we need to know where they stand today. Following Mr Dawood’s remarks, the Chinese embassy in Pakistan also issued a strongly worded reaction denying the interview altogether. It is clear that the time to choose the future course of CPEC has arrived.

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Analyzing CPEC

Postby Peregrine » 12 Sep 2018 03:03

X Posted on the Terroristan Thread

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Peregrine
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Analyzing CPEC

Postby Peregrine » 12 Sep 2018 20:35

X Posted on the Terroristan Thread

CPEC confusion – Editorial

When the new government sat down with the Chinese to ‘renew’ cooperation under the CPEC project, the day was marked more by confusion than fanfare.

It all began with the report in the Financial Times which quoted the prime minister’s commerce adviser Abdul Razak Dawood as saying that CPEC “unfairly benefits Chinese companies” through tax breaks and many other incentives that are unavailable to local counterparts. Not only that, he went on to say that the deals under CPEC would be reviewed, adding that “we should put everything on hold for a year so we can get our act together”.

These words were published on the same day as the country heard that Chinese and Pakistani delegates sat down together, and after a long meeting, agreed to broaden the base of the CPEC arrangement as well as open it up to involvement by ‘third countries’ that might be friendly to both China and Pakistan.

Unfortunately, the two messages did not mix well. Soon a ‘clarification’ arrived from the commerce adviser, asserting that he was “quoted out of context”. This, of course, begs the question what the original context was since the words uttered by him are quite clear.

While both governments spoke of renewing ties, broadening the base of their cooperation and inviting others to participate in their bonhomie, at least one of the ministers let it slip that there are powerful apprehensions about the entire deal within Pakistan. Long before we heard the words of the commerce adviser, who hails from the business community, we have heard various trade and business bodies articulate the very same concerns in very similar language.

Going forward, it is necessary to heed the substance of both voices that spoke on Monday. There is no doubt that CPEC should continue, and certainly grow with time. China is arguably Pakistan’s most important neighbour and has been a consistent friend through the decades. But as we move forward, it is important that Pakistan’s own interests, and political traditions, be kept front and centre.

To what extent does the new government wish to heed the voice of the business community when formulating its approach to CPEC? How far is the new government willing to go to honour its commitment to the electorate to conduct an audit of some CPEC projects like the Orange Line train, or to bring greater transparency to future CPEC negotiations such as those around the ML 1 project, or to place details of past agreements before parliament?

All of these are commitments made by the PTI before and after the election and we need to know where they stand today. Following Mr Dawood’s remarks, the Chinese embassy in Pakistan also issued a strongly worded reaction denying the interview altogether. It is clear that the time to choose the future course of CPEC has arrived. Wishful Thinking. The Chinese have paid sufficient "INCENTIVES" both to the Army as well as the Political and Bureaucratic Leaderships! It would be like "Bolting the Door After the Horse has Bolted!

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Re: Analyzing CPEC

Postby chetak » 12 Sep 2018 20:59

This is just a heads up.

Xposted from the OBOR thread.

The hans strike again. :mrgreen:


China to take over Zambia’s state power company over unpaid debt, report claims

September 9, 2018

China to take over Zambia’s state power company over unpaid debt, report claims

Secret talks are underway for China to take over Zambia's state power company Zesco after the country defaulted on loan payments, a report by Africa Confidential claimed.

The report also said that China previously finalized a takeover of Zambia's national broadcaster ZNBC.

Zambia's President Edgar Lungu has signed at least $8 billion in loans for various projects from China since his inauguration in 2015.

"The long-term outcome could be effective Chinese ownership of the commanding heights of the economy and potentially the biggest loss of national sovereignty since independence," the report said.

Last week, Edgar Lungu was among several other African presidents who attended the China - Africa summit in Beijing where Chinese President Xi Jinping pledged $60 billion in financial support to African nations and denied engaging in a "debt trap" diplomacy.



https://www.youtube.com/watch?v=h6mEL9bNMJA

His Excellency Zambia's High Commissioner to South Africa Emmanuel Mwamba, is, however, denying it.



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Re: Analyzing CPEC

Postby kit » 12 Sep 2018 21:34

chetak wrote:This is just a heads up.

Xposted from the OBOR thread.

The hans strike again. :mrgreen:


China to take over Zambia’s state power company over unpaid debt, report claims

September 9, 2018

China to take over Zambia’s state power company over unpaid debt, report claims

Secret talks are underway for China to take over Zambia's state power company Zesco after the country defaulted on loan payments, a report by Africa Confidential claimed.

The report also said that China previously finalized a takeover of Zambia's national broadcaster ZNBC.



i suppose this is how countries get owned ., enter the new "East China Company" .. :x

Motto : Get loans Get owned

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Re: Analyzing CPEC

Postby kit » 12 Sep 2018 21:37

the "president" could have a received a few millions for selling his country .. much like the Maldivian "president" who is so scared that anyone might find out that he is trying to control everything around him

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Analyzing CPEC

Postby Peregrine » 20 Sep 2018 00:49

X Posted on the Terroristan & OBOR, Chinese Strategy and Implications Thread

Opponents of CPEC shall never succeed, says Chinese president - Our Correspondent

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Army chief Gen Qamar Javed Bajwa with Chinese President Xi Jinping. PHOTO:

BEIJING: Chinese President Xi Jinping has said that those who oppose the Belt and Road Initiative (BRI) or China-Pakistan Economic Corridor (CPEC) shall never succeed as this is an initiative of peace and development not only for China but for the region and beyond.

“Pakistan is our time-tested iron friend and Pakistan Army has a pivotal role towards this lasting relationship,” the Chinese leader said in a meeting with Chief of Army Staff (COAS) General Qamar Javed Bajwa, who called on him on Wednesday on special invitation.

The two sides discussed regional security environment, challenges, and the way forward, according to a statement issued by the military’s media wing, the ISPR, from Rawalpindi.

President Xi appreciated professionalism of Pakistan’s armed forces and acknowledged its role towards regional peace and stability. “China shall continue to support Pakistan as a strategic partner,” he said. “Those who oppose Belt and Road Initiative (BRI) or CPEC shall never succeed as this is an initiative of peace and development not only for China but for the region and beyond.”

The army chief thanked President Xi for his invitation. He also thanked the Chinese leader for acknowledging professionalism and contributions of Pakistan Army towards regional peace and stability.

Military ties ‘backbone’ to relations with Pakistan: China

Gen Qamar said that Pakistan understands the importance of peace and has given a lot of sacrifices for achieving it. “The BRI with CPEC as its flagship is destined to succeed despite all odds and Pakistan Army shall ensure security of CPEC at all costs,” he said.

The army chief said that “while we work for peace we need to stay strong to thwart designs of all inimical forces challenging our resolve and we greatly value Chinese support in this regard”.

Gen Qamar is returning to Pakistan on Wednesday night after the completion of his visit to China during which he met senior military and civilian leaders.

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Re: Analyzing CPEC

Postby CalvinH » 20 Sep 2018 01:02

With such statements Chinese are closing Pakis options for CPEC. Renegotiation on or walkout from CPEC is much harder with each such "invitations" and meetings.

Chinese are giving it back to Pakis the Paki way!

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Re: Analyzing CPEC

Postby SSridhar » 21 Sep 2018 09:15

Pak. invites Saudi Arabia to be third partner in CPEC - PTI
Saudi Arabia will be the third “strategic partner” of the $50 billion China-Pakistan Economic Corridor (CPEC), a senior Pakistani Minister announced on Thursday, soon after Prime Minister Imran Khan returned from his first foreign trip to the cash-rich kingdom. The CPEC is the flagship project of the multi-billion dollar Belt and Road Initiative (BRI), a pet project of Chinese President Xi Jinping, aimed at enhancing Beijing’s influence around the world through China-funded infrastructure projects.

Addressing a press conference here on Mr. Khan’s two-day visit to Saudi Arabia and the UAE, Minister of Information Fawad Chaudhry said Pakistan’s main interest lies in cooperation with Saudi Arabia on matters of trade and security.

Pakistan has invited Riyadh to join the CPEC as the third “strategic partner”, The News quoted him as saying.

Saudi Arabia’s Finance and Energy Ministers will visit Pakistan in the first week of October, Mr. Chaudhry said.

He said the projects that Saudi Arabia would be investing in the CPEC will be smoothed out during the Saudi delegation’s visit.

China has rejected accusations that its financial backing for the CPEC was a “debt trap” that could compromise cash-strapped Pakistan’s sovereignty.

The CPEC is the fastest-moving and flagship project of President Xi’s global Belt and Road Initiative (BRI).


The CPEC aims to construct and upgrade the transportation network, energy projects, a deep-water port at Gwadar and special economic zones to eventually support Pakistan’s industrial development as a manufacturing hub by 2030.

Mr. Chaudhry said Prime Minister Khan has assured Riyadh that Pakistan will stand with Saudi Arabia.

Promise of security

“We have also assured the Saudi leadership that we will continue to provide security to their country and provide strategic support wherever needed {i.e. nuclear weapons} ,” he said on the close defence partnership between the close allies.

He also said a high-level coordination committee has has been constituted [to look into matters of trade and commerce] and it has the complete backing of Saudi King Salman bin Abdul Aziz Al-Saud and Mr. Khan.

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Analyzing CPEC

Postby Peregrine » 23 Sep 2018 18:39

X Posted on the OBOR, Chinese Strategy and Implications & Terroristan Threads

Why China can’t win the world with easy money – Swaminathan A Aiyar

Indian politicians and diplomats fear China’sBelt and Road Initiative (BRI), which aims to finance and build massive infrastructure projects in 78 countries, controlling infrastructure running through Asia and Europe.China believes this will help it dominate the 21st century.

Asia needs a lot of infrastructure. India itself is a partner with China in the New Development Bank and Asia Infrastructure Investment Bank. But BRI is far more ambitious, planning giant projects. Many are turning into white elephants. This is sparking a financial drama in Pakistan.

In worst-case scenarios, BRI will become a debt trap for borrowers who cannot repay Chinese loans. Indian diplomats fear this debt trap will make borrowers Chinese puppets, or at least give China strategic footholds (like naval bases) in these countries. Maybe so, but I suspect most borrowers will turn against an overweening China, not to it. Indeed, an over-ambitious BRI could blow up in China’s face, causing such massive loan defaults that China’s own financial system
staggers.

Malaysia has just reneged on two major Chinese-financed projects worth $22 billion, calling them scams. It will not be the last.

In Pakistan, China is financing giant infrastructure projects called the China-Pakistan Economic Corridor (CPEC), costing $62 billion. Serious Pakistani analysts now fear the CPEC is a debt trap.

Today, Pakistan’s coffers are empty. It seeks $12 billion from the IMF. But US spokesman say they will not allow the IMF to lend money to Pakistan since this will rescue Chinese banks that made dud loans that Pakistan cannot repay. Trump is determined to scotch Chinese attempts to become economically dominant, and so has denied it a free ride on the global financial system. This is bad news for Pakistan and China. If the IMF shuns Pakistan, China will surely provide
rescue funds in the short run. But this will damage the credibility and prestige of the BRI.

The IMF is the lender of last resort across the globe, rescuing many bankrupt countries. The BRI was supposed to provide additional finance, over and above traditional sources. Suddenly Trump’s action shows that borrowing from China can cut you off from the global financial system.

Many countries resent tough loan conditions of traditional financial institutions. China has offered them easy finance with little risk assessment for gigantic but dubious projects. It has no global tendering — all contracts go to Chinese companies, which can inflate costs. Easy Chinese money once seemed manna from heaven. But the implosion of Chinese projects in Sri Lanka and Malaysia shows easy loans can become burdens. Trump now warns that countries in a Chinese debt trap may lose access to international financial institutions.

Conditions for CPEC projects are opaque. The Financial Times says the return on equity is sometimes a whopping 34%, not the 17% normally assumed (which is anyway very high). The profit is guaranteed by the government regardless of project success or failure. Any failure can bankrupt the borrower.

This reminds me of Enron. It rushed into developing countries, offering to build huge infrastructure. It demanded high returns, guaranteed by governments regardless of project performance. Many countries including India and Argentina agreed. But when borrowers found the guarantee cost exorbitant, they reneged. A multitude of such defaults and fiascos ultimately busted Enron. That’s a warning to China.

In Sri Lanka, the Chinese-financed Hambantota port was a white elephant, unable to repay Chinese banks. China wrote off a billion dollars, in return for a 99-year port lease. Indian diplomats see this not as a financial debacle but a strategic Chinese triumph, getting a naval base by luring Sri Lanka into a debt trap. But Sri Lanka says it will not allow Hambantota to become a naval base.

Countries are prickly about sovereignty. Even the US in its prime faced local hostility to its bases in Asia. So will China if it tries to gain military bases through debt traps.

Moreover, Trump’s stand on Pakistan now indicates that BRI finance can sink borrowers, by reducing their access to traditional institutions. This will make BRI much less attractive, hitting China’s strategic ambitions.

Repeated BRI fiascos could endanger even the mighty finances of China. It already has the highest debt/GDP ratio in the world of over 300%. The 2008 financial crisis showed that even the richest nations can be felled by bad debts.

The grander BRI tries to be, the greater will be its risk of failure, financially and strategically. The more modest BRI is, the greater will be its chances of economic success. But the less will be its chances of strategic success and domination.

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Re: Analyzing CPEC

Postby Neshant » 24 Sep 2018 11:26

SSridhar wrote:Pak. invites Saudi Arabia to be third partner in CPEC


India should object to any country moving trade through Indian territory in Gilgit & Baltistan.

Not that there will be any trade since OBOR projects over land routes into China both to the north and south have no profitable use.

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Analyzing CPEC

Postby Peregrine » 27 Sep 2018 02:47

X Posted on Terroristan Thread

Austerity axe falls on CPEC, Gwadar projects - Shahbaz Rana

ISLAMABAD : The government has formally axed 455 projects from the ongoing Public Sector Development Programme (PSDP), contending that they had been added to the annual development programme on political grounds.

The Ministry of Planning and Development on Tuesday presented the revised PSDP 2018-19 in a meeting of the Senate Standing Committee on Planning – a week after the mini-budget was presented in the National Assembly.

The document also reveals that a few projects of the flagship China-Pakistan Economic Corridor (CPEC) and Gwadar city have also been dropped from the PSDP.

The decision to exclude unapproved projects would reduce the overall financing needs of the PSDP by Rs2 trillion to close at Rs4 trillion.

Mayor Rawalpindi invites proposals for development schemes

However, the revised PSDP document also shows some contradictions. As against the finance minister’s announcement that Rs575 billion will be provided from the budget to finance the PSDP, the planning ministry has kept the allocations at Rs675 billion in the revised PSDP.

But the planning ministry has done this with the consent of the finance ministry, according to an official of the planning ministry.

The last PML-N government had announced Rs800 billion development budget, but the new political dispensation has lowered it under its economic stabilisation policy.

“The government has dropped approximately 400 projects from the PSDP on parameters of all new unapproved projects and approved schemes where spending is either nil or up to 10% of the cost,” Development Budget Adviser Asif Sheikh of the planning ministry told the Senate panel.

But he did not share the exact number of schemes that were dropped from the PSDP.

In the original PSDP document, there were 1,284 schemes, including those funded by corporations that have now been lowered to 829, showing that 455 schemes have been dropped.

The finance minister had announced on the floor of the National Assembly that CPEC projects and education schemes would not be dropped from the PSDP.

However, Sheikh admitted before the Senate panel that at least four projects of CPEC and one dozen schemes of Gwadar had been dropped from the PSDP.

The government has retained the Rs14.2 billion project of construction of the Lahore-Sialkot Motorway despite the fact that there was only 0.4% spending on the scheme. The allocation for the scheme in the new fiscal year is only Rs5 million.

The government also dropped rehabilitation of the Quetta-Dhadar section despite spending Rs700 million on it which is 10% of the total cost. It also axed another project of Kuzdar despite spending Rs500 million on it which constitutes 30% of the total cost. It also dropped the construction of Basima-Khuzdar project worth Rs19.2 billion.

The government has slashed 78 schemes of the National Highway Authority (NHA), bringing them down to only 54. The NHA’s budget allocation was cut by 12%, or Rs25 billion, to Rs185.2 billion.

However, the government added one new scheme – Projects under the Karachi Package – to the portfolio of the Ministry of Communication.

As many as 45 projects of the Higher Education Commission have been dropped from the PSDP, bringing the total number of schemes to 133.

The HEC budget was also cut by 13.5%, or Rs4.9 billion, to Rs31 billion. Finance Minister Asad Umar had assured former planning minister Ahsan Iqbal on the floor of the National Assembly that his government would not cut the HEC projects.

About 83 schemes of the interior ministry, some of them ongoing, have been cut and the government has lowered the overall number to only 29 projects.

The interior ministry’s development budget has been slashed by 48%, or Rs11.4 billion, to only Rs12.2 billion.

In violation of the criteria, the government has retained two projects of the Ministry of Law and Justice despite there was nil expenditure on them.

The construction of Supreme Court of Pakistan Branch Registry Building in Karachi has also been retained even though it has not been approved by any forum.

The government has axed 11 projects of the Pakistan Atomic Energy Commission in addition to reducing its budget by 6.7%, or Rs2 billion, to Rs26.7 billion.

About 12 projects of the planning ministry have been dropped and its allocation has been reduced by 56.6%, or Rs9.2 billion, to Rs7.1 billion. The CPEC Institute of Gwadar has also been axed.

The government has also dropped nine projects of the Power Division and cut its budget by Rs3 billion to Rs33.3 billion.

A Rs3.5 billion project for supply of electricity to Chitral has been cut from the PSDP. The government has dropped 20 projects of water resources and reduced its budgetary allocations from Rs79 billion to Rs78 billion.

Focus on preventive healthcare: president

Sheikh informed the standing committee that 12 schemes of Gwadar had been dropped from the PSDP, including a project for the construction of a fish harbor on water bay, expansion of the existing hospital at Gwadar, development of academic and research facilities at Gwadar and a scheme for land acquisition under the Gwadar Master Plan.

Overall, the federal ministries’ development budget has been slashed by 15.5%, or Rs68.5 billion, to Rs371.9 billion.

The corporations’ development budget has been reduced from Rs246 billion to Rs218.6 billion – a reduction of 11.2% or Rs27.6 billion.

The Capital Administration Division’s budget has been cut by Rs10 billion or 72% to Rs3.9 billion. The communication ministry’s budget has been reduced by 53%.

The federal education ministry’s budget has been cut by 27% to Rs3.2 billion, and that of the human rights ministry by 88% to only Rs35 million.

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Analyzing CPEC

Postby Peregrine » 29 Sep 2018 15:48

First phase of Gwadar free zone complete, CM told

QUETTA: Balochistan Chief Minister Jam Kamal Khan has said the Gwadar Port is a valuable asset for the country and the principal focus of the China Pakistan Economic Corridor (CPEC) project.

The chief minister expressed these views while visiting Gwadar Port along with Federal Minister for Defence Production Zubaida Jalal on Friday.

Gwadar opens new avenues of business, jobs

On the occasion, Gwadar Port officials briefed CM Kamal and the federal minister about the expansion of several projects and the ongoing trade activities at the port.

Provincial ministers Zahoor Baledi, Abdul Rauf Rind, Abdul Rahman Khetran, Noor Muhammad Dummar, Abdul Khaliq Hazara, members of the provincial assembly, Makran commissioner and other high provincial and district administration officials were also present on the occasion.

The CM further said that the incumbent government would utilise all available resources and assets for the development and progress of the country and the province.

Gwadar port aims to become new Dubai

China Overseas Ports Holding Company Chairman and CEO Zhang Baozhong briefed the chief minister about different projects operational at the port and free zone, including desalination and power plants projects.

Baozhong said his company had completed the free zone’s phase-I projects successfully in a record time period.

During the briefing, Kamal was told that the Gwadar Port was capable of handling one million containers per year.

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Re: Analyzing CPEC

Postby anupmisra » 30 Sep 2018 17:57

Fearing debt trap, Pakistan rethinks Chinese ‘Silk Road’ projects
Posting in full.

Resistance has stiffened under the new government of populist Prime Minister Imran Khan, who has voiced alarm about rising debt levels and says the country must wean itself off foreign loans.


After lengthy delays, an $8.2 billion revamp of a colonial-era rail line snaking from the Arabian Sea to the foothills of the Hindu Kush has become a test of Pakistan’s ability to rethink signature Chinese “Silk Road” projects due to debt concerns. The rail megaproject linking the coastal metropolis of Karachi to the northwestern city of Peshawar is China’s biggest Belt and Road Initiative (BRI) project in Pakistan, but Islamabad has balked at the cost and financing terms.

Resistance has stiffened under the new government of populist Prime Minister Imran Khan, who has voiced alarm about rising debt levels and says the country must wean itself off foreign loans. “We are seeing how to develop a model so the government of Pakistan wouldn’t have all the risk,” Khusro Bakhtyar, minister in Pakistan’s planning ministry, told reporters recently.

The cooling of enthusiasm for China’s investments mirrors the unease of incoming governments in Sri Lanka, Malaysia and Maldives, where new administrations have come to power wary of Chinese deals struck by their predecessors.

Pakistan’s new government had wanted to review all BRI contracts. Officials say there are concerns the deals were badly negotiated, too expensive or overly favoured China.

But to Islamabad’s frustration, Beijing is only willing to review projects that have not yet begun, three senior government officials have told Reuters.

China’s Foreign Ministry said, in a statement in response to questions faxed by Reuters, that both sides were committed to pressing forward with BRI projects, “to ensure those projects that are already built operate as normal, and those which are being built proceed smoothly”.

Pakistani officials say they remain committed to Chinese investment but want to push harder on price and affordability, while re-orientating the China-Pakistan Economic Corridor (CPEC) – for which Beijing has pledged about $60 billion in infrastructure funds – to focus on projects that deliver social development in line with Khan’s election platform.

China’s Ambassador to Pakistan, Yao Jing, told Reuters that Beijing was open to changes proposed by the new government and “we will definitely follow their agenda” to work out a roadmap for BRI projects based on “mutual consultation”. “It constitutes a process of discussion with each other about this kind of model, about this kind of roadmap for the future,” Yao said.

Beijing would only proceed with projects that Pakistan wanted, he added. “This is Pakistan’s economy, this is their society,” Yao said.

Islamabad’s efforts to recalibrate CPEC are made trickier by its dependence on Chinese loans to prop up its vulnerable economy. Growing fissures in relations with Pakistan’s historic ally the United States have also weakened the country’s negotiating hand, as has a current account crisis likely to lead to a bailout by the International Monetary Fund, which may demand spending cuts. “We have reservations, but no other country is investing in Pakistan. What can we do?” one Pakistani minister told Reuters.

The ML-1 rail line is the spine of the country’s dilapidated rail network, which has in recent years been edging towards collapse as passenger numbers plunge, train lines close and the vital freight business nosedives. Khan’s government has vowed to make the 1,872 km (1,163 mile) line a priority CPEC project, saying it will help the poor travel across the vast South Asian nation.

But Islamabad is exploring funding options for CPEC projects that depart from the traditional BRI lending model – whereby host nations take on Chinese debt to finance construction of infrastructure – and has invited Saudi Arabia and other countries to invest.

One option for ML-1, according to Pakistani officials, is the build-operate-transfer (BOT) model, which would see investors or companies finance and build the project and recoup their investment from cashflows generated mainly by the rail freight business, before returning it to Pakistan in a few decades time.

Yao, the Chinese envoy, said Beijing was open to BOT and would “encourage” its companies to invest. Rail mega-projects under China’s BRI umbrella have run into problems elsewhere in Asia. A line linking Thailand and Laos has been beset by delays over financing, while Malaysia’s new Prime Minister Mahathir Mohamad outright cancelled the Chinese-funded $20 billion East Coast Rail Link (ECRL).

Beijing is happy to offer loans, but reticent to invest in the Pakistan venture as such projects are seldom profitable, according to Andrew Small, author of a book on China-Pakistan relations. “The problem is that the Chinese don’t think they can make money on this project and are not keen on BOT,” said Small.

During President Xi Jinping’s visit to Pakistan in 2015, the ML-1 line was placed among a list of “early harvest” CPEC projects that would be prioritised, along with power plants urgently needed to end crippling electricity shortages. But while many other projects from that list have now been completed the rail scheme has been stuck.

Pakistani officials say they became wary of how early BRI contracts were awarded to Chinese firms, and are pushing for a public tender for ML-1. Partly to help with price discovery, Pakistan asked the Asian Development Bank (ADB) to finance a chunk of the rail project through tendering. The ADB began discussions on a $1.5-2 billion loan, but China insisted the project was “too strategic”, and Islamabad kicked out the ADB under pressure from Beijing in early 2017, according to Pakistani and ADB officials.

“If it’s such a strategic project then it should be a viable project for them to finance on very concessional terms or invest in?” said one senior Pakistani official familiar with the project, referring to the BOT model.

China’s foreign ministry said Beijing was engaged in “friendly consultations” with Pakistan on the rail project. Chinese companies participated in BRI projects in an open and transparent way, “pooling benefits and sharing risks”, it said. Analysts say Pakistan will struggle to attract non-Chinese investors into the project, which may force it to choose between piling on Chinese debt or walking away from the project.

In 2017, Pakistan turned down Chinese funding for a $14 billion mega-dam project in the Himalayas due to cost concerns and worries Beijing could end up owning a vital national asset if Pakistan could not repay loans, as occurred with a Sri Lankan port.

Khan’s government chafes at several Chinese intercity mass transport projects in Punjab, the voter heartland of the previous government, which now need hundreds of millions of dollars in subsidies every year. They also fume about the risk of accumulating off-books sovereign debt through power contracts, where annual profits of above 20 percent, in dollar terms, were guaranteed by the previous administration.

With the ML-1 line, there are also those who harbour doubts closer to home, including the previous government’s finance minister, Miftah Ismail, who said his ministry had always had concerns about its viability. “When people say it’s a project of national importance, that usually means it makes no sense financially,” he said.

https://indianexpress.com/article/pakis ... s-5379982/

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Re: Analyzing CPEC

Postby nam » 30 Sep 2018 18:07

China’s foreign ministry said Beijing was engaged in “friendly consultations” with Pakistan on the rail project


In the part of the world where i come from,anecdote for fooling someone is called "driving a rail".

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Re: Analyzing CPEC

Postby SSridhar » 01 Oct 2018 20:37

X-posted from Terroristan thread.

Pakistan cuts Chinese 'Silk Road' rail project by $2 billion due to debt concerns - Reuters
Islamabad has cut the size of the biggest Chinese "Silk Road" project in Pakistan by $2 billion, railway minister 'terrorist' Sheikh Rasheed said on Monday, citing government concerns about the country's debt levels.

The mega project to revamp the colonial-era line stretching 1,872 km (1,163 miles) from Karachi to the northwestern city of Peshawar was initially priced at $8.2 billion, but wrangling over costs has led to delays.

The changes are part of Islamabad's efforts to rethink key Belt and Road Initiative (BRI) projects + in Pakistan, where Beijing has pledged about $60 billion in financing but the new government of populist Prime Minister Imran Khan appears to be more cautious about the Chinese investment.

"Pakistan is a poor country that cannot afford huge burden of the loans," 'terrorist' Rasheed told a news conference in the city of Lahore.

"Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion," he added, referring to the China-Pakistan Economic Corridor (CPEC).

Rasheed said the government remains committed to the Karachi-Peshawar Main Line-1 (ML-1) project but added that he wishes to further reduce the cost to $4.2 billion from $6.2 billion.

Islamabad has balked at the financing terms and has pushed for deeply concessional loans for ML-1. It also invited third countries to join or for the Chinese to be investors in the project through the build-operate-transfer (BOT) model that would rely less on debt.

The United States has criticised BRI projects, warning that the loans could turn into debt traps for poor countries unable to pay them money back. Beijing denies the claims, saying the loans are a win-win situation for both countries.

"CPEC is like the back bone for Pakistan, but our eyes and ears are open," 'terrorist' Rasheed said.

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Re: Analyzing CPEC

Postby Neshant » 02 Oct 2018 17:16

Pakistan should do as many CPEC projects as possible because none of this debt will be repaid.

May as well do it to the max and then default on the whole lot.

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Re: Analyzing CPEC

Postby Prem » 03 Oct 2018 01:38

Machines/Panels look repainted
https://twitter.com/zlj517/status/1047211818899394560
Congratulations! 1320MW Hub coal-fired power plant achieved a major milestone by interconnecting with national grid, achieving back energization. It would lead to synchronization of its 1st unit with national grid in December 2018.

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Re: Analyzing CPEC

Postby Prem » 03 Oct 2018 02:35


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Re: Analyzing CPEC

Postby anupmisra » 03 Oct 2018 08:25

Apparenly chini threats still work in pakhanistan.

S. Arabia not to be made part of CPEC

Pakistan said on Tuesday that Saudi Arabia would not be made part of the $50 billion China-Pakistan Economic Corridor (CPEC) framework and the kingdom’s proposed investments would fall under a separate bilateral arrangement.
Speaking at a joint news conference with Infor­mation Minister Fawad Chaudhry, Minister for Planning and Development Khusro Bakhtiar said there was no decision to bring a third country, like Saudi Arabia, under the framework of the CPEC.
Saudi Arabia is not to become a collateral strategic partner in the CPEC. This impression is not true,” he said
The framework between China and Pakistan is bilateral and Saudi Arabia is not entering that framework as a third-party investor
The planning minister expressed ignorance when asked how the cost of Main Railway Line (ML-I) had been reduced by $2bn from $8.2bn to $6.2bn as claimed by Railways Minister Shaikh Rashid Ahmed.
he said only 70,000 people in the country were direct taxpayers and return filers


:((

https://www.dawn.com/news/1436506/s-ara ... rt-of-cpec

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Re: Analyzing CPEC

Postby arun » 03 Oct 2018 12:32

^^^ Hrrrump ....... pipped to the X post :roll: . Nonetheless take this as PTI's spin on the same story reported by Dawn 8) .

Imran “I’m the Dim” “U Turn” Khan Niazi government of the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan does another one of his famous U Turns.

Saudi Arabia has been disinvited from being a third member of the Conning Pakistan to Enrich China aka Regional Gamechanger CPEC project. Looks like Higher than Himalayas, Deeper than Indian Ocean, Sweeter than Honey, As Close As lips to Teeth, Stronger than Steel Iron Brother PR China took a cue from Niazi’s second wife Reham Khan’s autobiography and inserted an empty cigar case without aid of KY Jelly :

Minister for Planning and Development Khusro Bakhtiar told media on Tuesday that the cash-rich kingdom's proposed investments would fall under a separate bilateral arrangement, Dawn news reported.

"Saudi Arabia is not to become a collateral strategic partner in the CPEC. This impression is not true," he said. ………………..

Last month, Information Minister Fawad Chaudhry said that Saudi Arabia is the third "strategic partner" of the CPEC, soon after Prime Minister Imran Khan returned from his first foreign trip to the kingdom.

Interestingly Chaudhry was sitting with Bakhtiar when he issued clarification that Saudi Arabia participation in the CPEC was not as third partner in the project.

Bakhtiar further said that there was no decision to bring a third country, like Saudi Arabia, under the framework of the CPEC.


PTI via The Week:

Pak takes U-turn says Saudi won't be part of CPEC

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Re: Analyzing CPEC

Postby chetak » 03 Oct 2018 17:00

I have a strong feeling that all the drama with sharif and his family has just been a curtain raiser to allow the pakis to renegotiate the CPEC deal downwards.

Trump breaking their off stump with the IMF googly has come as a blessing in disguise to help the pakis coral the hans.

sharif and family have been scapegoated by the paki army which was hugely complicit in the finalization of the original CPEC deal.

It is the very same paki army now pushing to renegotiate the CPEC deal after the possibility of the IMF firewall isolating them from most international funds.

The hans are very wary of anyone else setting up their tent in gwadar as its ultimate use is primarily as a military port.

So the saudis may be encouraged to look elsewhere. The saudis are desperate to get hold of or build a big refinery in this area to service central asian markets.

trump has got testimonials across the world, like in EU, russia, the hans, mexico, canada , pakis, iran, the gulf countries and just maybe India too in a very tight and steely grip. Good going for someone whom everyone else thought of as a clown.

The saudis very seriously bid for ownership of the Essar refinery which the GoI very cleverly pushed into russki hands. The Nayara Energy Refinery is an oil refinery at Vadinar, Gujarat, India. It is owned and operated by the Rosneft.




Wary of debt trap, govt rethinks Silk Road projects.

Wary of debt trap, govt rethinks Silk Road projects.

October 01, 2018

ISLAMABAD: After lengthy delays, an $8.2 billion revamp of a colonial-era rail line snaking from the Arabian Sea to the foothills of the Hindu Kush has become a test of Pakistan’s ability to rethink the signature Chinese ‘Silk Road’ projects due to debt concerns.

The rail project linking Karachi to Peshawar is China’s biggest Belt and Road Initiative (BRI) project in Pakistan, but Islamabad has balked at the cost and financing terms.

Take a look: CPEC projects — status, cost and benefits

Resistance has stiffened under the new government of Prime Minister Imran Khan, who has voiced alarm about rising debt levels and says the country must wean itself off foreign loans.

ARTICLE CONTINUES AFTER AD

Chinese envoy says Beijing will only proceed with projects that Islamabad wants

“We are seeing how to develop a model so the government of Pakistan wouldn’t have all the risk,” Minister for Planning, Development and Reforms Khusro Bakhtyar said at a recent press briefing.

The cooling of enthusiasm for China’s investments mirrors the unease of incoming governments in Sri Lanka, Malaysia and the Maldives, where new administrations have come to power wary of Chinese deals struck by their predecessors.

The new government in Pakistan had wanted to review all BRI contracts. Officials say there are concerns the deals were badly negotiated, too expensive or overly favoured China.

But to Islamabad’s frustration, Beijing is only willing to review projects that have not yet begun, three senior government officials have told Reuters.

China’s foreign ministry said, in a statement in response to questions faxed by Reuters, that both sides were committed to pressing forward with BRI projects, “to ensure those projects that are already built operate as normal, and those which are being built proceed smoothly”.

CPEC 2018 Summit: Is Pakistan ready to make the right choices?

Pakistani officials say they remain committed to Chinese investment but want to push harder on price and affordability, while re-orientating the China-Pakistan Economic Corridor (CPEC) — for which Beijing has pledged about $60 billion in infrastructure funds — to focus on projects that deliver social development in line with PM Khan’s election promises.

China’s Ambassador to Pakistan Yao Jing told Reuters that Beijing was open to changes proposed by the new government and “we will definitely follow their agenda to work out a roadmap for BRI projects based on ‘mutual consultation’”.

“It constitutes a process of discussion with each other about this kind of model, about this kind of roadmap for the future,” Mr Yao said.

Beijing would only proceed with projects that Pakistan wanted, he added. “This is Pakistan’s economy, this is their society,” he said.

Islamabad’s efforts to recalibrate CPEC are made trickier by its dependence on Chinese loans to prop up its vulnerable economy.

Growing fissures in relations with Pakistan’s historic ally the United States have also weakened the country’s negotiating hand, as has a current account crisis likely to lead to a bailout by the International Monetary Fund, which may demand spending cuts.

“We have reservations, but no other country is investing in Pakistan. What can we do?” one Pakistani minister told Reuters.

Crumbling railways
The ML-1 rail line is the spine of the country’s dilapidated rail network, which has in recent years been struggling to survive as passenger numbers plunge and the vital freight business nosedives.

The Khan-led government has vowed to make the 1,872km line a priority CPEC project, saying it will help the poor travel across the country. But Islamabad is exploring funding options for CPEC projects that depart from the traditional BRI lending model — whereby host nations take on Chinese debt to finance construction of infrastructure — and has invited Saudi Arabia and other countries to invest.

One option for ML-1, according to Pakistani officials, is the build-operate-transfer (BOT) model, which would see investors or companies finance and build the project and recoup their investment from cash-flows generated mainly by the rail freight business, before returning it to Pakistan in a few decades time.

Ambassador Yao said Beijing was open to BOT and would “encourage” its companies to invest.

Rail mega-projects under the BRI umbrella have run into problems elsewhere in Asia. A line linking Thailand and Laos has been beset by delays over financing, while Malaysia’s new Prime Minister Mahathir Mohamad outright cancelled the Chinese-funded $20bn East Coast Rail Link (ECRL).

Beijing is happy to offer loans, but reticent to invest in the Pakistan venture as such projects are seldom profitable, according to Andrew Small, author of a book on China-Pakistan relations.

“The problem is that the Chinese don’t think they can make money on this project and are not keen on BOT,” said the author.

Published in Dawn, October 1st, 2018


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Re: Analyzing CPEC

Postby chetak » 03 Oct 2018 18:28

Fitch warns of CPEC ‘curtailment’ under IMF programme


Fitch warns of CPEC ‘curtailment’ under IMF programme
Khaleeq Kiani
August 17, 2018

ISLAMABAD: The US pressure could lead to ‘stricter’ conditions by the International Monetary Fund (IMF) to bailout Pakistan, including curtailment of China-Pakistan Economic Corridor and greater transparency in its financing, according to Fitch Rating.

The “US pressure could lead to stricter programme conditionality, including the curtailment of CPEC projects and greater transparency in CPEC financing”, said the New York-based rating agency. It said US backing was not strictly required to secure an IMF programme, but the IMF board emphasised consensus decision-making.

It said Pakistan’s incoming PTI-led coalition government will be under immediate pressure to arrest the deterioration in external finances and address fiscal challenges, as well as to attract the external funding necessary to meet its financing gap.

“The new government has more political capital to take positive though difficult policy actions, but it has a thin majority in parliament and faces a strong opposition, which could complicate policymaking,” Fitch said.

The rating agency expects Pakistan to seek potential financing from several sources including China and multilateral development banks, and possibly the IMF. Pakistan has been a repeated user of IMF financing, entering 12 programmes since 1980.

The IMF would probably require further fiscal and monetary tightening, greater exchange-rate flexibility, and wide-ranging structural reforms, which could also help attract other sources of financing.

Moreover, the IMF has unique monitoring mechanisms to implement corrective policies, without which there will continue to be significant uncertainty over the medium-term sustainability of Pakistan’s finances.

Negotiations over an IMF agreement could be complicated by loans linked to the CPEC, part of China’s Belt Road Initiative (BRI), particularly amid rising global geopolitical tensions. Recent statements from US Secretary of State Mike Pompeo suggest the US administration does not want IMF financing used to bail out Chinese lenders.

The $62bn CPEC project makes Pakistan one of the largest recipients of BRI financing. These loans have financed imports of capital goods, which have in turn inflated the current account deficit. The loans will eventually need to be repaid or refinanced.

The rating agency said PTI founder Imran Khan, outlined a broad economic agenda for a “New Pakistan” during his campaign, with a focus on confronting corruption, reducing inequality and expanding social services. However, advancement of this policy agenda is likely to be limited in the short term, with external and fiscal problems taking priority.

The current account deficit reached 5.6pc of GDP in the fiscal year ended June 2018, up from 4.7pc in FY17, while liquid foreign-exchange reserves fell by almost $4bn from end-December 2017 to end-July 2018 to just over $10bn.

The sharp rise in global risk aversion towards emerging markets, and a projected pickup in Pakistan’s external debt obligations in 2019 are adding to financing pressures. The fiscal deficit has also widened and is likely to well exceed previous estimate of 6pc of GDP in FY18, up from 5.8pc a year earlier.

Fitch revised the outlook on Pakistan’s ‘B’ rating to ‘negative’ from ‘stable’ in January to reflect these rising external and fiscal pressures.

The State Bank of Pakistan has already taken some steps, raising its policy rate by 175bps since January and introducing greater flexibility in the heavily managed rupee by allowing four separate depreciations since mid-December 2017, which resulted in a cumulative 17pc decline against the dollar.

These measures have so far not been enough to prevent the widening of the large external financing gap, which has been bridged with support from China, including an agreement to provide $2bn in additional bilateral lending in July. The Saudi-backed Islamic Development Bank has also reportedly extended a $4bn loan, the rating agency claimed.

The new government appeared to recognise the urgency of the situation, with the likely incoming finance minister, Asad Umar, stating that “all options are on the table” and that the government will formulate a policy and financing path within six weeks.

Published in Dawn, August 17th, 2018

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Analyzing CPEC

Postby Peregrine » 09 Oct 2018 17:32

To CPEC or not to CPEC - Nabeel Qadeer

Cooperation is a key concept in the global economic world today. The world GDP values $80 trillion (2017), a 3% increase from last year. However, this has been marked by intricacies. China’s economy has grown by 6.8% in 2017, making it the second-largest economy after the United States. The trade war between the two economic giants has further intensified to get deeper control. This has made Lagarde, the managing director of the IMF, to urge de-escalation of trade disputes as it would trigger an economic slowdown.

A shift from globalisation to the new global economy has led to the development of Global Value Chains (GVC) i.e. breaking up of production process so different steps are carried out in different countries.

In simple terms, GVCs provide economic opportunities to developing countries for trade specialisation and strengthening their competitive advantage. In addition, as GVCs strengthen, the factor of ‘dependency’ and therefore, relevance to ‘cooperation’ increases.

For smaller economies to fully benefit from GVCs and not be left in a disadvantaged position, reduced trade tariff is among the most important factors. One validated model of establishing this is trade blocs and economic corridors. True, regional blocs may negatively impact ‘cooperation’ due to strategic reasons. Therefore, countries like China have undertaken sub-regional steps. Examples of this would be the Nanning-Singapore Economic Corridor and CPEC.

The China-Pakistan Economic Corridor is a long-term infrastructural project and part of China’s global initiative of ‘One-Belt, One-Road’. It connects Southern Chinese city of Kashgar to Gwadar Port, in south-western Pakistan through multiple nodes and several passages. Co-financed by Beijing and Islamabad, it is valued at $62 billion and includes projects for road and railways network, energy, sea-port development and economic zones, besides others of a more social nature.

The benefits for Pakistan are many — CPEC brings the largest-ever amount in FDI at a time when Pakistan’s reserves have come to a historic low. With reference to infrastructural development, Pakistan would have faced severe challenges in undertaking the projects independently for two reasons; one, the high cost involved and second, technical expertise and experience that China brings to the table. In addition, it vows to create 700,000 jobs between the years 2015-2030.

There’s a flip side of the coin as well. A school of thought that questions CPEC’s role as a true game changer, argues about the corridor’s financial feasibility — will Build-Operate-Own-Transfer be indeed the model used, entailing China investing in Pakistan or due to limited lucrativeness, would Pakistan be taking ‘concessional loans’? If the latter is the case, Pakistan would further go down in the cycle of foreign debt.

The second question is: how equipped is the local industry to compete with or even support Chinese contractors? Would CPEC then actually be an impetus for economic growth or further slow down local activity?

China is a superpower — economic and political, and also Pakistan’s time-tested neighbouring friend. By a mutually beneficial cooperation, which creates a win-all situation, without putting either at a disadvantage, both Pakistan and China will gain from CPEC. China benefits from direct access to Pakistan’s port, cutting its trade route from 16,000km to less than 5,000km (Shanghai to the Strait of Malacca). And Pakistan has the opportunity for infrastructural development, economic growth and benefiting from China’s cutting-edge technology.

However, this completely depends on Pakistan’s take — will the new government be able to bring China to the negotiating table to ensure CPEC’s financial sustainability in favour of Pakistan? Will matters of transparency that surfaced during the last regime be curbed and handled in an exemplary manner? More importantly, how does Pakistan plan to use CPEC to its advantage in the global political order? Saudi Arabia’s recent willingness to join CPEC as an investor substantiates this.

If the people of Pakistan want to truly make it a game changer, they have a role to play. The right questions to ask the decision-makers involved in CPEC are simple yet potent: what opportunities shall open up for the SME sector of Pakistan? How will a local businessman be secured and given the room to grow via the belt road project? What job opportunities will we be able to create for the graduates and youth of our country? It is important that we as Pakistanis gear ourselves to grab the opportunity that awaits — it is important we do so with the desire to put Pakistan first; national interest over self-interest!

With cooperation and the government’s acumen, Pakistan can make CPEC a tool to accelerate its economy and realign its political positioning. So I ask, Is Pakistan ready to CPEC? I sure hope that we are.

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Analyzing CPEC

Postby Peregrine » 09 Oct 2018 22:56

X Posted on the OBOR, Chinese Strategy and Implications & Terroristan Threads

Terroristan Reduces the CPEC US$ 60 Billion Loan by US$ 2 Billon and takes a Further Loan of US$ 42 Billion!

”Pakistan expecting another $42bn investment from China under CPEC”


Dismissing the allegations that the government is weakening China Pakistan Economic Corridor (CPEC), Information Minister Fawad Chaudhry has said that Pakistan is anticipating another additional $42 billion in terms of investment from China.

Speaking to a private news channel, the information minister brushed off the opposition’s accusations against the government of ‘weakening’ CPEC project. “We have decided to expand CPEC, one of the ways to achieve it if other countries invest in the project. We are anticipating another additional $42bn in terms of investment from China,” said Chaudhry. But, but, Rasheed the Cigar in the Mouth Asana Specialist pared down the Railway "Aid" Package by US$ Two Billion ot redduce the Debt!

The investment would be utilized in providing expertise, building industrial zones, Gwadar port development and different power and infrastructure projects, informed the minister.

The opposition lawmakers in Senate accused on Monday the government of trying to ‘weaken’ the China-Pakistan Economic Corridor (CPEC) and asked why the Parliament was not taken into confidence prior to offering a third country to join the multibillion dollar project.

“It appears – one feels as the incumbent government is rethinking CPEC programs and if media reports are juxtaposed with the statements from the Foreign Office, an impression is emerging that efforts are underway to dilute the project,” claimed Pakistan Peoples Party Senator Raza Rabbani .

Meanwhile, the Information Minister was of the view that the government will complete all projects signed by the predecessor Pakistan Muslim League Nawaz’s govt with China under CPEC.

On Monday, the government cut the size of the biggest Chinese “Silk Road” project in Pakistan by $2 billion, Railways Minister Sheikh Rasheed said, citing government concerns about the country’s debt levels. Rasheed the Cigar Asana Specialist!

The changes are part of Islamabad’s efforts to rethink key Belt and Road Initiative projects in Pakistan. “Pakistan is a poor country that cannot afford huge burden of the loans,” Rasheed told a news conference in the city of Lahore.

“Therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion,” he added, referring to the CPEC. Rasheed the Cigar in the Mouth Asana Specialist!

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Analyzing CPEC

Postby Peregrine » 10 Oct 2018 17:16

Fully Posted on the Terroristan Thread

Saudi's oil refinery in Gwadar threatens Iran, China – ANI
ISLAMABAD: Pakistan's latest announcement about Saudi Arabia's investment in an oil refinery at the port city of Gwadar has set alarm bells ringing in the international arena.
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Analyzing CPEC

Postby Peregrine » 11 Oct 2018 17:34

Terroristan and OBOR, Chinese Strategy and Implications Threads

Pakistan's bailout exposes some serious flaws in China's belt and road plan - Mihir Sharma

Pakistan’s government has finally admitted it needs help. Finance Minister Asad Umar says he will be meeting officials of the International Monetary Fund on the sidelines of its annual meeting Bali this weekend. There he’ll try and work out the terms for a bailout that would cover a $10 billion hole in Pakistan’s financing needs.

The decision has to be a little humiliating for new Pakistani Prime Minister Imran Khan -- an anti-Western firebrand who’s had to turn to the West for help just like virtually every other Pakistani leader before him. More importantly, the process is likely to be a window into what’s wrong with China’s globe-spanning Belt and Road infrastructure initiative.

On the one hand, this is a familiar situation: Pakistan has had to seek bailouts 10 times since 1990 and still owes money from the last time it needed a handout. Khan was wise to approach the IMF early enough in his tenure that he can blame the previous government and accuse it of mismanagement.

Pakistan’s problem isn’t only poor macroeconomic stewardship, however. It’s the deals the preceding administration struck with China. A few years ago, Chinese President Xi Jinping promised to invest $60 billion into Pakistan’s economy. Since then, Pakistanis have hoped Chinese money would fund the power and transport infrastructure that could jump-start growth.

Building the China-Pakistan Economic Corridor -- often hailed as the most crucial leg of the Belt and Road -- has proved to be more expensive than expected. Machinery imports for Chinese projects caused Pakistan’s current account deficit to rise by over 50 percent in the first two years of the CPEC build-out. Islamabad has struggled to pay for all this and probably can’t expect more help from China: Beijing has been generous enough already, lending Pakistan $5 billion in 2017-18 and putting in an emergency $1 billion this summer when the country was staring once again at empty coffers.

If CPEC operated on straightforwardly commercial terms, none of this would be a problem. Then the projects would be remunerative for Pakistan. The IMF might demand some mild adjustment to their payment schedules and other parameters, and business could continue. The Fund’s likely other bailout terms -- devaluing the currency, privatizing the state airline, hiking interest rates and implementing long-delayed structural reforms -- would probably hurt a lot more.

But nobody expects that to be the case. In fact, it’s likely that CPEC’s costs to Pakistan are much higher than would make sense for the projects in question. Worse, currently these costs are opaque and some are hidden by the security establishment behind a veil of secrecy.

The IMF doesn’t operate like that; it will expect to be told, transparently, what the actual costs are for CPEC projects. That’s the point at which Khan’s backers in the military will begin to worry, because if the terms are as ruinous as suspected, support for CPEC -- and, by extension, for China’s paramountcy in Pakistan -- will wither. Worse, the IMF may withhold some aid: Senior U.S. officials have already said any bailout shouldn’t lead to Western taxpayers paying off Chinese bondholders.

It’s an open question what Khan himself will pick, if he’s then forced to make a choice between staying the course with CPEC and financing his own grandiose new welfare schemes. But the lesson for Pakistan’s leaders -- and, indeed, all those looking to China to rescue them from the pesky demands made by Western finance -- runs deeper.

It may seem simpler at first to take advantage of Chinese money that doesn’t demand countries carry out painful investment-friendly domestic reforms if they want to borrow money. But without structural changes of the sort that lenders like the IMF demand -- and which Pakistan, for one, has constantly postponed -- crises such as the one Islamabad now faces are inevitable. Pakistan needs to reform so that its producers and exporters thrive. Unless these enterprises succeed, CPEC can’t be paid for and, even if it gets built, it will provide few benefits to ordinary Pakistanis.

As for China, this is a moment to step back and realize that the Belt and Road as currently envisaged isn’t working as planned. Cost escalations, hidden charges and other nasty surprises have soured one country after another on Chinese-led infrastructure. Worse, Beijing simply isn’t willing to commit enough resources to play lender of last resort for the countries that the BRI might drive towards default.

As a consequence, more countries that China sought to bring within its own sphere of influence are likely to be pushed away -- and to turn again to the West for help. I suspect this isn’t where Chinese President Xi Jinping hoped his new Silk Road would lead.

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Analyzing CPEC

Postby Peregrine » 11 Oct 2018 18:36

X Posted on the OBOR, Chinese Strategy and Implications & Terroristan Threads

Beijing welcomes Riyadh in CPEC

QUETTA: Chinese Ambassador to Pakistan Yao Jing has said China has no objection over inclusion of Saudi Arabia and other countries in the China Pakistan Economic Corridor (CPEC) projects and would welcome Riyadh’s investment in Pakistan.

“We will welcome Saudi Arabia and other countries’ investment in CPEC projects. China wants to expand CPEC up to central Asian states via Afghanistan,” the Chinese ambassador said while speaking to businessmen and journalists at two separate functions in Quetta on Wednesday.

Chinese ambassador also confirmed that CPEC projects are being revisited in view of the Pakistan Tehreek-e-Insaf (PTI) led new government’s vision, adding that new development projects will be included in the project with consensus.

Govt says Riyad all set to join CPEC as third Partner

Yao said reviewing the CPEC agreement is natural as the new Pakistani government which came into power after the July 25 general election has its own agenda and vision.

The envoy said the new Pakistani government wants to give all attention to socio-economic sector and in reviewing of CPEC agreement the desire of the Pakistan’s new government would be considered.

“Both China and Pakistan governments have agreed to further expand the CPEC,” he said, adding that taking decision with mutual understanding and consensus is part of the CPEC agreement.

He said both the governments have decided to continue work on ongoing projects launched under CPEC in Pakistan and particularly Balochistan and these projects would be completed on time.

Yao said Pakistan and China have very cordial relations since long; they are not only partners in CPEC but have lots of other ties and projects in which they are helping each other. “China and Pakistan are strategic partners,” he said.

He said that the main objectives of CPEC include establishing road-network, construction of highways and motorways, power generation and developing agriculture sector.

Yao Jing said in the next phase, China will focus on joint ventures and will give attention to socio-economic sector, which is also vision of the new Pakistani government.

“Under CPEC it was decided that more resources would be provided to the western provinces of Pakistan. It is our desire to link the mega project to Central Asian states via Afghanistan and under CPEC will open new ways of development and prosperity in the entire region,” he said.

The Chinese ambassador said CPEC has entered “a new era” and that jobs would be created for the people of Pakistan through its various projects. “Balochistan offers numerous opportunities to investors in terms of agriculture, livestock, mines and minerals,” he said.

At the chamber of commerce, businessmen urged the Chinese ambassador to establish a Chinese consulate in Quetta to address their business needs. The ambassador promised the business community that their request would be discussed with Chinese high-ups.

Responding to a question about Balochistan’s share in CPEC, Yao Jing said Balochistan is an important part of CPEC and the second phase of the project would be more important for Balochistan.

He said that though entire Pakistan is equal for his country, China wants to work for the development of different sectors of Balochistan on priority. “China will help in developing agriculture, industry and other sectors in Balochistan,” he said.

Austerity axe falls on CPEC, Gwadar projects

The envoy said he is very much inspired with the vision of new federal and Balochistan governments as they want to develop socio-economic sector. “Balochistan should be main beneficiary of CPEC. Chinese investors would find out new trade and investment opportunities in Balochistan,” he added.

Yao said Balochistan has great potential in mineral resources, mining, livestock, and fisheries and there is need to work for the promotion of these sectors. He said China will extend all help and assistance to the local people for sending fruit, vegetable and seafood to international market.

He said he had a meeting with Balochistan Chief Minister Jam Kamal and observed that new provincial government is more interested in the development of the province and providing maximum facilities to its people.

To a question, he said the Chinese universities are open for Pakistani students and these universities offer scholarships in March every year and students could apply for admission online. However, he said, Balochistan students would be provided assistance in applying for admission to the Chinese universities.

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arun
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Re: Analyzing CPEC

Postby arun » 11 Oct 2018 19:53

Our representative on the IMF Executive Board should ensure that Christine Lagarde’s commitment on obtaining full details on Conning Pakistan to Enrich China aka CPEC is 800% adhered to. Also any possibility of the IMF loans being used to allow China to bail out of Pakistani commitments must be squelched. Juicy bits about Higher than Himalaya’s, Deeper than Indian Ocean, Sweeter than Honey, As close as lips to Teeth, Stronger then Steel Iron Brother ripping off the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan should be leaked thereafter:

Transcript of International Monetary Fund Managing Director Christine Lagarde's Opening Press Conference, 2018 Annual Meetings, Bali, Indonesia
October 11, 2018

Participants:

Christine Lagarde, Managing Director, IMF
David Lipton, First Deputy Managing Director, IMF
Gerry Rice, Director, Communications Department, IMF …………………

MR. RICE: Thank you, Madame Lagarde. Let me take The Wall Street Journal in the front row, please.

QUESTIONER: Madame Lagarde, thanks for taking questions.

The Government of Pakistan has said this week that it is going to seek a program from the IMF. One of the issues here is that the Government of Pakistan has incurred quite large debts, many of them from China as part of China's Belt and Road Initiative. A large number of countries have incurred very large debts as part of this initiative, and policymakers in the U.S. have expressed concerns about whether a program to Pakistan and other countries so indebted would be kind of a backdoor bailout of China.

I was wondering if you could address how the IMF would approach a program with Pakistan and other countries who may find themselves in this situation, given these concerns that have been raised about the Belt and Road Initiative. Thank you.

MS. LAGARDE: Well, first of all, I have seen, like you, the press statement, but I have not yet seen the Finance Minister of Pakistan. And David and I are going to see the delegation this afternoon. So I am assuming that there might be a program request on their part, but that has not been discussed. And we will explore that this afternoon.

Second point, the IMF is available to its entire membership. We have 189 members, and we have to serve the entire membership, each and every one of them.

Third point, in whatever work we do, we need to have a complete understanding and absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country. And to really understand the extent and composition of that debt, both in terms of sovereign, in terms of state‑owned enterprises and the like of it, so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a program.

A fourth point, this issue of debt transparency and an appropriate understanding of debt is not only going to apply to Pakistan. It has to apply to all countries. And it is part of a necessary disclosure exercise that we have to agree with our members for the purpose of a debt sustainability analysis, but also for the purpose of the governance and corruption project that has been approved by the Board of the IMF, and for which we are now moving into the implementation period. Again, on that point, fully understanding what the liabilities are and to whom they have been assigned is a necessity. ……………..


IMF Press Release:

Transcript of International Monetary Fund Managing Director Christine Lagarde's Opening Press Conference, 2018 Annual Meetings, Bali, Indonesia


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