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Friday, May 17, 2024

Pakistan’s Preparing for High-Stakes Negotiations with China

Pakistan prepares for high-stakes negotiations with China regarding CPEC projects, focusing on addressing circular debt, proposing shifts in energy strategies, and finalizing financing arrangements amid security concerns and geopolitical tensions.

Pakistan gears up for the upcoming Joint Cooperation Committee (JCC) meeting, intending to address pressing issues such as the piling circular debt of Chinese independent power producers (IPPs) and proposing strategic shifts in the China Pakistan Economic Corridor (CPEC).

The proposed JCC meeting, scheduled for May 23 and 24 in Islamabad, precedes Prime Minister Shehbaz Sharif’s anticipated visit to China, aimed at advancing critical negotiations.

The government’s agenda includes proposing a transition of coal-based power plants from imported coal to local coal, aiming to reduce costs significantly and allocate the saved funds towards clearing the mounting circular debt of Chinese IPPs, which stands at an alarming Rs570 billion.

With Planning Minister Ahsan Iqbal leading discussions, the government emphasizes the necessity of securing Chinese cooperation to navigate the complex economic landscape.

Strategic Shifts and Negotiation Preparations

Prime Minister Shehbaz Sharif’s forthcoming visit to China holds paramount significance, especially in finalizing pivotal projects like the Mainline-1 (ML-1) rail link. Efforts to expedite the ML-1 project, estimated at $6.9 billion for the first phase, underscore Pakistan’s commitment to infrastructural development despite financial constraints.

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The decision to accept ML-1 financing in Chinese currency signals a pragmatic approach to bolstering bilateral ties. Security concerns, highlighted by the recent terrorist attack in Dasu targeting Chinese engineers, add complexity to negotiations.

China’s insistence on revising Standard Operating Procedures (SOPs) for Chinese nationals underscores the need for enhanced security measures. Additionally, discussions are anticipated on mitigating outstanding circular debt issues and accelerating development projects, including those in Gwadar port and industrial zones.

Harnessing Opportunities and Overcoming Challenges

Amid geopolitical tensions and economic uncertainties, Pakistan endeavors to harness opportunities within CPEC while addressing formidable challenges. The preparatory meeting chaired by Minister Ahsan Iqbal underscores the government’s resolve to expedite project implementation and restore confidence in Chinese investments.

From securing financing arrangements to streamlining project approvals, Pakistan aims to propel CPEC projects towards fruition, paving the way for sustainable economic growth and regional integration.

As Pakistan navigates intricate negotiations and prepares for high-level engagements, the spotlight remains on fostering robust partnerships and realizing the transformative potential of CPEC.

With strategic shifts in project financing and a renewed focus on inclusive development, Pakistan endeavors to consolidate its position as a key player in regional connectivity and economic revitalization.