Image Credits - Asia Times
Between 2000 and 2021, China primarily provided Pakistan with development funding in the form of loans, accounting for up to 98% of the assistance, while only 2% of the support was in the form of grants, according to a research report. This funding was mainly directed toward the China-Pakistan Economic Corridor (CPEC), which is a significant global infrastructure and investment project initiated by Beijing.
Launched in 2013, the CPEC is considered one of the most prominent components of China’s Belt and Road Initiative (BRI), with its total investment exceeding USD 62 billion, including a substantial USD 25 billion infusion into Pakistan’s economy, which was facing financial challenges.
According to AidData, a US-based research lab, out of the entire Chinese development finance portfolio totaling $70.3 billion that was committed to Pakistan between 2000 and 2021, only 8 percent was categorized as official development assistance (consisting of grants and highly concessional loans), while the remaining 89 percent constituted other official sector loans.
The China-Pakistan Economic Corridor (CPEC), a global initiative aimed at infrastructure and investment, originally projected to have around $45 billion in investments when launched in 2013, has grown significantly, with investments now exceeding $62 billion, including a substantial injection of at least $25 billion into Pakistan.
During 2017, Pakistan saw the highest amount of financial commitments, totaling $14.0 billion. Despite a dip in 2018, the figures rebounded in 2019 and 2020, even amid the pandemic. The loans have an average interest rate of 3.72%, a maturity period of 9.84 years, and a grace period of 3.74 years.
From 2000 to 2021, the primary sectors in which funding was allocated in Pakistan were energy (constituting 40% or $28.4 billion), general budget support (30% or $21.3 billion), and transportation and storage (14% or $9.7 billion). Throughout the Belt and Road Initiative (BRI) era spanning from 2014 to 2021, the leading industries were transportation and storage (13% or $7.2 billion), general budget support (30% or $16.08 billion), and energy (43% or $23.29 billion).
In a recent meeting between Chinese President Xi Jinping and visiting interim Prime Minister Anwar-ul-Haq Kakar from Pakistan in Beijing, President Xi suggested intensifying collaborative efforts between the two nations as they marked the 10th anniversary of the China-Pakistan Economic Corridor (CPEC).
According to research, the data reveals that China’s investments in Pakistan exceed those of the United States. The report indicates that China has outpaced the United States in foreign development financing multiple times, with significant differences in funding, such as 1.6 times more in 2013, 7.7 times more in 2016, and an astonishing 22.4 times more in 2021.