It appears that China is in no mood to put a break on its investment drive in Pakistan. A leading Pakistani minister has confirmed that the Chinese government would invest $8.5 billion in the region. This is in addition to the $46-billion that has already been committed for the ambitious China-Pakistan Economic Corridor (CPEC) project.  

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Pakistan's Planning Minister Ahsan Iqbal gave a breakdown on the investment to Reuters, claiming that nearly $4.5 billion will go to upgrading the railway line system from Karachi to Peshawar, while another $4 billion will be spent on LNG terminal and transmission line.

"This has now all been approved, so this is an additional $8.5 billion to the $46 billion we had already, so we are now close to $55 billion," Iqbal said.

However, not everyone is upbeat about that these large-scale Chinese investments in Pakistan. The International Monetary Fund (IMF) warned in June that profit repayment from large-scale infrastructure investments such as CPEC could increase the Pakistani government's fiscal deficit. It predicted that country's gross external financing needs would shoot to $15.1 billion in 2018/2019 from $11.4 billion in the current financial year.

But Iqbal argues that these risks and expenses could be easily countered by economic boost that these large-scale projects would give to important sectors such as steel, construction and engineering.

"As the economy grows, our capacity to undertake the responsibilities of repayments also improves, what really matters is that all of that investment is going into productive sectors," Iqbal said.

These large-scale joint venture investment projects clearly underpin the close diplomatic ties between China and Pakistan. This close relationship has been shaped by a mutual mistrust against India.

Apart from economic investment, Beijing is one of the largest suppliers of military equipment and hardware to Pakistan. It is also helping Pakistan to build a nuclear power plant, despite reservations from several countries including India.    

TagsPakistan, China and Pakistan, CPEC Project, China-Pakistan Economic Corridor Project