China offering high-interest loans to developing countries
Pakistan is caught in the deep clutches of China’s predatory loans to developing countries in its expanding sphere of influence. A $50b high-interest rate loan to Pakistan from Beijing has been invested in the China Pakistan Economic Corridor, but it may not benefit Pakistan until 40 years after the CPEC becomes operational. This is just one of China’s investments for its overall goal of economic and military superiority through which many countries have become compromised long-term.
To establish a road from China to mainland Europe, China has invited countries like Pakistan and Iran to take part in lines of credit aimed at helping them complete development projects. CITIC Group, China’s state-owned investment arm issued a US$10 billion credit line towards development projects in Iran from railways to hospitals reported in 2017 as part of Beijing’s US$124 billion Belt and Road Initiative to connect China with Europe and Africa.
The loan terms have a high interest and repayment rate which means the likelihood of these developing countries to default is high. If they do default China will be granted control over land and sea resources and with these gained territories in Pakistan, Iran, and other countries China would be able to build strategic military bases among other things. China’s plan has already proved viable in the Congo.
Democratic Republic of Congo & Pakistan took out a loan from China
In 2017, Bloomberg reported that “The Democratic Republic of Congo’s government failed to account for more than half a billion dollars of infrastructure loans received from Chinese institutions over a six-year period, according to the Carter Center.”
The copper-mining venture, Sicomines, received $1.163 billion in loans between 2008 and 2014 for infrastructure. Only $478 million was disbursed. Congo holds the world’s largest supply of cobalt and is Africa’s largest producer of copper. The $3.2b mining job for Sicomines operates on a 6.8 million-metric-ton deposit is only part of a larger China-Congo deal struck in 2007.
Pakistan has already received $1b in a new $2b loan announced on July 28. The Tribune reported, “The $2 billion loan is likely to ease pressure on official foreign currency reserves and the rupee-dollar parity. The rupee strengthened by 64 paisas against the US dollar in the interbank market, closing at Rs 127.86 on Friday,” adding that the military has already declared the economy a state of emergency. Mike Pompeo has warned Imran-Khan not to use any funds provided by IMF $12b bailout to repay loans to China.