China loaned Pakistan $21bn more than reported, study finds

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ISLAMABAD — Two decades of Chinese lending to Pakistan totaled about $21 billion more than previously thought, a study revealed this week, while also showing that the cash-strapped South Asian country has the biggest China-funded energy portfolio in the world.

AidData, a research institute at William and Mary University in the U.S., calculated Pakistan’s cumulative public debt exposure to China at $67.2 billion for the period from 2000 to 2021. That surpasses the $46 billion recorded for the same period in the World Bank’s International Debt Statistics, based on voluntary disclosures from Pakistan.

The Global Chinese Development Finance report released on Tuesday comes amid growing scrutiny of Beijing’s lending, particularly for Belt and Road Initiative (BRI) infrastructure projects in the fragile economies of the so-called Global South. The researchers found that “Beijing is navigating an unfamiliar and uncomfortable role as the world’s largest official debt collector,” with 80% of its lending involving countries in financial distress.

Pakistan, home to the $50 billion China-Pakistan Economic Corridor (CPEC), a flagship BRI project, is a prime example. It is the third-largest recipient of Chinese loans, after Russia and Venezuela, the data shows. But Islamabad, which has been rocked by a political crisis and heavy inflationary pressure, was forced to obtain a $3 billion standby arrangement from the International Monetary Fund this year to avoid a debt default.

With the country heading into a turbulent election season, the Chinese debt load could be a focus of debate, particularly as the party that initiated CPEC appears to have the pole position.

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