Chinese foreign ministry spokesman Lu Kang, in his daily media briefing in Beijing, said China and Pakistan are all-weather friends and strategic cooperative partners, and acknowledged that China was extending financial assistance to help Pakistan boost its dwindling foreign reserves.
“The Chinese side has offered and will continue to offer its best through assistance, trade, investment and all-around practical cooperation to support and boost Pakistan’s economic and social development,” the spokesman said, in response to a question about China’s offer to give Pakistan $2 billion in aid to support its foreign exchange reserves.
A recent report in the Financial Times said China had agreed to lend at least $2 billion to Pakistan for helping it boost its dwindling foreign exchange and tanking currency.
The report, quoting two senior Pakistan government officials, said the loan was aimed at helping with a weakening fiscal position and high debts. “China’s promise to Pakistan is an indication of their commitment to help us avoid a crisis. If the rupee falls sharply and we need to prevent its slide, we can turn to China,” one of the officials in Islamabad told FT.
The Chinese foreign ministry spokesman further said both China and Pakistan have been “in close communication with each other on the relevant cooperation”.
The promised financial support signals deepening economic ties between China and Pakistan, amid turbulent economic indicators for the latter.
Pakistan’s foreign reserves, at $7.3 billion, have dropped to about one and a half months of import cover, regarded as a critically low level, said economists. The rupee has lost more than a fifth of its value against the dollar since late 2017, and Fitch has cut Pakistan’s debt rating deeper into junk territory last month.
According to the FT report, China has committed to invest more than $60 billion in infrastructure, energy, railway and road projects in Pakistan under the China-Pakistan Economic Corridor, a centrepiece of Chinese president Xi Jinping’s Belt and Road Initiative.