Pakistan, China to set in motion railroad project worth billions

Pakistan and China have agreed to launch a high-speed rail project worth nearly $10 billion as Bejing follows up on its promise of helping Islamabad, Bloomberg reported Wednesday.

The agreement was reached during a meeting in Beijing where Prime Minister Shehbaz Sharif and Chinese President Xi Jinping agreed to get started on the Main Line-1, according to a statement from the Prime Minister's Office, which described it as “a project of strategic importance.”

The project involves:

• Upgrading a 1,163-mile
• Colonial-era track from Karachi to Peshawar to carry high-speed trains

Earlier this week, Pakistan formally approved the project, which has been in discussion for years, without saying where the funding would come from or providing technical details.

Pakistani officials were expecting to get loans from China for the upgrade.

China has constantly been criticised in the past by the US for using what it calls “debt diplomacy” to make developing nations more dependent on Beijing. Despite this, China delayed a bailout for Pakistan earlier this year as its debt soared, and it has been scaling back lending in Africa as its economy slows.

The International Monetary Fund (IMF), in a report released in September, revealed that about 30% of Pakistan’s foreign debt is owed to China, including state-owned commercial banks.

During the meeting, Xi and PM Shehbaz agreed to finalise details on an inner-city rail line in Karachi. The Chinese president also said his nation would provide 500 million yuan ($68.7 million) to Pakistan to help it rebuild after flooding over the summer that displaced more than half a million people.

Without revealing many details, the People’s Bank of China said in a statement that the central banks of both countries inked a memorandum of cooperation on a yuan clearing in Pakistan on Wednesday.