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23 Nov, 2019 10:38

Trade war escalates? Beijing points finger at IMF as US berates Chinese megaproject in Pakistan for debt-trapping

Trade war escalates? Beijing points finger at IMF as US berates Chinese megaproject in Pakistan for debt-trapping

A senior US diplomat launched a verbal barrage at Beijing’s economic presence in Pakistan, claiming the massive investment brought nothing but corruption and a legacy of debt. China hit back saying IMF loans were a worse burden.

The US and China may be interlocked economically and financially, but it doesn’t make them friends. A power struggle against the rising superpower is a major part of Donald Trump’s foreign policy, and one of its latest verbal battles could be heard this week over Pakistan.

A senior American diplomat in South and Central Asia mounted harsh criticism of the China Pakistan Economic Corridor (CPEC) project, an ambitious plan to turn Pakistan into a major trade route connecting China directly with the Arabian Sea. Speaking at the Woodrow Wilson Center, Assistant Secretary of State Alice Wells said the multibillion-dollar project, which China touts as a model of cooperation with other nations in its ambitious Belt and Road Initiative, was riddled with corruption and only hurt the Pakistani people.

“Together with non-CPEC Chinese debt payment, China is going to take a growing toll on Pakistan’s economy, especially when the bulk of payment starts to come due in the next four to six years,” the US diplomat said. She added that a “lack of transparency” would boost the cost of the projects and result in an even heavier debt burden.

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But there is a bright and hopeful alternative to the the doom-and-gloom future brought by America’s archrival in the form of cooperating with the US, Wells said. The US government offers development grants rather than loans, and encourages private companies to do business in Pakistan.

“Mind you, unlike Communist China, the United States doesn’t tell US business where to go. They go where they see the greatest opportunities for mutual benefit,” she said.

And everybody knows that Coca Cola, Procter & Gamble, and KFC only masquerade as profit-driven, cost-cutting sharks while in reality they want to bring Pakistanis clean water, job training and assistance to “underprivileged minorities.”

It’s hardly a surprise that the barrage didn’t sit well with China, especially since it came just as Beijing was hosting the 5th CPEC Media Forum, an annual event meant to promote the very project Wells went after.

“Pak-China relations were based on ‘win-win cooperation’ and were mutually beneficial for both countries,”said Chinese Ambassador to Pakistan Yao Jing on Friday. He added that his government would be willing to restructure Pakistani debt if needed, “whereas the International Monetary Fund (IMF), which is mainly governed by the West, was strict in its repayment system.”

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The IMF is notorious for linking its loans to political and economic reforms by the borrowing countries that incidentally benefit international capital while leaving populations in those countries destitute and ready to offer their labor at a cheaper price. Occasionally, IMF-advised austerity leads to public uprising, as was the case in Ecuador resently. Washington doesn’t pin such outcomes on predatory loaning practices as it does with China.

Ambassador Yao noted that some 90 percent of Pakistan’s creditors were from the West rather than China, and that the US itself had no qualms about owing Beijing over a trillion dollars. He added that Wells’ reliance on speculative media reports to accuse Chinese projects of corruption and inflated prices was inappropriate for a senior government official.

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