China has so far only tacitly acknowledged the economic crisis brewing in Pakistan. The state media continues to talk about the strengths of the China-Pakistan Economic Corridor. But Chinese people on social media are asking questions about the future of Pakistan’s economy and the reliability of the ‘iron brotherhood’ relationship with Islamabad.
Pakistan’s defence minister Khawaja Muhammad Asif boldly stated on 19 February that the country has become bankrupt. The confession piqued the interest of Chinese people who only see their state media maintain radio silence on it.
The hashtags “Pakistan bankruptcy” and “Pakistan Defence Minister says the country is bankrupt” briefly trended on the Chinese social media platform Weibo. But they didn’t pick up traction as Beijing continues to play down the severity of the economic crisis in Pakistan.
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Growing Chinese debt
Pakistan owes $30 billion to the Chinese government and its financial institutions, which is just 30 per cent of its total foreign debt. The country also owes the IMF, the World Bank, and the Asia Development Bank.
If that wasn’t enough, China Development Bank recently announced a $700 million loan to boost Pakistan’s forex reserves by about 20 per cent.
Despite there being relative silence on the economic crisis, some experts in China have said that Beijing will help Islamabad.
“At present, Pakistan does face risks similar to Sri Lanka, but I think it is unlikely that it will go bankrupt because China, Saudi Arabia, and other countries are all helping Pakistan. The problem now is that the IMF loan has not been implemented,” wrote Liu Zongyi, secretary-general of the Shanghai Institutes for International Studies.
Wang Yi, director of the CCP Central Foreign Affairs Commission alluded to the economic difficulties during his recent meeting with Pakistan’s foreign affairs minister Bilawal Bhutto Zardari in Germany.
“China firmly supports Pakistan in maintaining security and stability as well as achieving development and revitalisation, and stands ready to provide assistance within its ability to help Pakistan overcome temporary difficulties,” said Wang Yi in Munich on 17 February.
Chinese citizens, though, have argued for the need to help Pakistan because it will reduce pressure on India — something perceived as unfavourable for China.
“The current situation in Pakistan is indeed very bad. The economy is on the verge of bankruptcy, the political oligarchs hold power, and there is friction with Afghanistan on the border. If Pakistan is in chaos, the pressure on India will be greatly reduced, which is not good for our country” wrote a Weibo user from Shanghai.
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China’s support not limitless
China’s support for Pakistan’s economic crisis isn’t limitless, and some doubts have emerged about how far Beijing should go with its assistance.
Pakistan’s ambivalent actions in the Russia-Ukraine war have raised doubts about Islamabad’s ‘iron brotherhood’ with Beijing. The rumours about Pakistan supplying weapons to Ukraine were discussed by independent Chinese commentators.
People in China have asked if the “iron brotherhood” relationship with Pakistan is as strong as perceived. “Why is Batie no longer iron?” is one of the popular Pakistan-related search terms on Baidu. ‘Batie’ roughly translates to ‘iron brother’.
Though the reports about Pakistan supplying weapons to Ukraine are unconfirmed, they have added to the doubts about Pakistan’s politics and fragile economic position.
Chinese commentators have underscored that there are limits to how much Beijing can help. Pakistan will need to help itself to emerge from the current crisis.
“Only China has given a full plan. From this perspective, it is the Western world that ‘abandoned’ Pakistan, and China is the one that extended a helping hand. And if Pakistan wants complete self-help, it cannot completely rely on China, it still has to fight for itself,” wrote Liu Qingbin, senior researcher at the China Digital Economy Institute.
As much as Beijing wants the US to stay out of it, Washington has expressed serious concerns about Pakistan’s debt to China. “We have been very clear about our concerns not just here in Pakistan, but elsewhere all around the world about Chinese debt, or debt owed to China,” said US State Department Counselor Derek Chollet during his visit to Islamabad on 15 February.
Though Beijing may officially maintain that its support for ‘iron brother’ Pakistan is limitless, the reality is that China has decided to support Pakistan minimally, like they have for Sri Lanka. They want Islamabad to address its economic woes through internal policy adjustments.
Beijing will try to create a soft landing for Islamabad’s financial storm rather than offer a reprieve on the existing loans.
(Edited by Theres Sudeep)