China and Pakistan have signed a slew of projects under the multi-billion China-Pakistan Economic Corridor (CPEC), including the Gwadar Master Plan. Pakistan has sought $9 billion from China to finance the Main Railway Line (ML-1) and other infrastructure projects in the project’s Phase 2.
While announcing that the 9th Joint Cooperation Committee meeting of CPEC was successful, the Chinese foreign ministry said the two “iron brothers” have approved and signed two agreements, including a Gwadar Master Plan.
The two countries also formed a joint project financing group on the ML-1 railway line and aimed to start the project next month. However, Pakistan’s planning minister, Makhdum Khusro Bakhtyar, who co-chaired the meeting, allayed the fear of a rising Chinese debt on the country.
“Government decided to take ML-1 loan and ensure its repayment because of the limitations of Pakistan Railways… The project loan would not affect the country’s debt-to-GDP situation because it would be completed in about five-six years and contribute also to the GDP size as well,” the Pakistani minister said.
Financing may be in the Chinese renminbi currency, one of the six major currencies of the International Monetary Fund (IMF), he added.
The Pakistani military is in the process of raising a division headquarters of the 44th Light Infantry in Balochistan’s Gwadar to coordinate security initiatives and protect the CPEC.
The CPEC is a flagship infrastructure-related project conceived by Chinese President Xi Jinping as part of Beijing’s expanded multi-billion dollar Belt and Road Initiative (BRI) proposing to create more efficient commercial links between the continents of Asia, Africa, and Europe.