Chinese embassy in Pakistan refutes media report accusing CPEC of causing 'debt trap'

The recent report by a financial media outlet on the China-Pakistan Economic Corridor (CPEC) severely deviates from the facts, and as a major pilot project of the China-proposed Belt and Road Initiative, the CPEC has achieved great progress over the last five years, the Chinese embassy in Pakistan said in a statement released on Monday.

"The CPEC has effectively alleviated energy crises and eased infrastructure shortages which are considered as the two main bottlenecks in Pakistan's development, and played a positive role in maintaining the relatively high economic growth in Pakistan," said the statement.

The comment came after the Wall Street Journal reported on Sunday that Pakistan is facing a debt crisis due to the enormous loans it took out for an elevated railway project in Lahore - the Orange Line, which is among some of the first projects in China's $62 billion plan to bring quality infrastructure to Pakistan.

"The media report stated that the CPEC has led to the debt crisis in Pakistan. This is a highly irresponsible statement that fails to reflect the reality," the Chinese embassy said.

As an early harvest project of the CPEC, the Lahore Orange Line has been widely welcomed by the Pakistani government and people, creating a large number of job opportunities. After completion, it will greatly ease traffic congestion in Lahore and provide people with affordable energy-saving transportation, it continued.

According to data released by the Pakistani government, 42 percent of foreign debt in Pakistan is from multilateral financial institutions, while 18 percent of it is from the Paris Club. Meanwhile, Chinese preferential loans only account for 10 percent of all foreign debt, as they offer a much lower rate than commercial bank loans, the statement said.

Taking this into account, even if there is a so-called "debt trap," the initiator is certainly not China, the embassy affirmed.

As for the people who fabricated the story that the so-called "debt trap" in Pakistan is being caused by the CPEC, since they are unable to offer tangible assistance to Pakistan, they can at least try to acknowledge the sincere cooperation between other countries trying to contribute to the country, the statement pointed out.

"No country is dominating the process. Both sides have an equal say." The cooperation under the CPEC has always adhered to the principles of mutual benefits, equality and reciprocity, and has always followed the golden rules of extensive consultation, joint contribution and shared benefits, the embassy noted, adding that the planning and implementation of the economic corridor has been discussed openly by both sides.