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Hindustan Times
15 hours ago
- Business
- Hindustan Times
China securing loans to low-income nations with revenue streams in Chinese banks
New Delhi: China is securing loans to low-income and developing nations with commodity revenue streams and cash held in restricted escrow accounts in Chinese banks, with such practices implemented for almost half of the total loans worth $991 billion, according to a new study. China significantly ramped up loans to developing countries in Asia, Africa and Latin America after launching its Belt and Road Initiative (BRI) in 2013. (Representational image) The study, done by the Kiel Institute for the World Economy, AidData and Georgetown University and Oxford University and released on Thursday, found such practices prevalent in some of India's neighbours, such as Myanmar, where the country's gas revenues are being deposited directly into restricted Chinese bank accounts. In the case of Pakistan, the country is required to simultaneously hold cash collateral in four Chinese escrow accounts. Figures are available for holdings in only one account, and the overall cash holdings in the four accounts are likely to be significantly larger, according to the study titled 'How China Collateralizes'. The partially government-guaranteed loan from Bank of China and China Eximbank for the 1,320-MW Patuakhali thermal power plant project in Bangladesh was supported by 50% equity stakes that Bangladesh's Rural Power Company Ltd and China's NORINCO International Cooperation Limited hold in a special purpose vehicle responsible for the venture. China significantly ramped up loans to developing countries in Asia, Africa and Latin America after launching its Belt and Road Initiative (BRI) in 2013, but there have been significant concerns about the opacity surrounding agreements covering both loans and projects taken up under BRI. In December 2017, Sri Lanka handed over the strategic port of Hambantota to China on a 99-year lease after struggling to pay debts to Chinese firms. India never signed on to BRI because a significant component - the China-Pakistan Economic Corridor (CPEC) - passes through Pakistan-occupied Kashmir. The Indian side also has concerns about the lack of a level playing field under BRI. The study said China's total public and publicly guaranteed lending to low-income and developing countries between 2000 and 2021 was worth $911 billion, and nearly half - or $418 billion provided to 57 countries - is secured with cash deposits in Chinese bank accounts. The study concluded China's practices are impeding the ability of borrowing countries to effectively manage their finances. Borrowing countries are forced to route incomes from their main commodity exports to Chinese bank accounts, the study said. 'Our findings reveal a previously undocumented pattern of revenue ring-fencing, where a significant share of commodity export receipts never reaches the exporting countries,' it said. 'Revenues routed overseas secure priority repayment for the creditor; they remain out of public sight and largely beyond the borrower's reach until the secured debts are repaid,' it added. More than 60% of collateralised public and publicly guaranteed loans by Chinese creditors to low-income and developing countries rely on collateral unrelated to the stated purpose of the debt, the study said. This means bank accounts securing Chinese infrastructure project loans are not typically funded from project revenues. Instead, most cash flows come from sales of the borrowing country's leading commodity export, such as gas in Myanmar and Indonesia, oil in Angola, and copper in Congo. A state-owned enterprise of the borrowing country typically agrees to sell commodities under an offtake agreement with a Chinese state enterprise, and both enterprises 'agree to deposit the proceeds directly into bank accounts that secure unrelated infrastructure finance', the study said. 'Chinese creditors and their debtors have taken extraordinary measures to shield the use of escrow accounts - and the cash deposits that they hold - from public scrutiny,' the study said. The deposits in Chinese bank accounts, which are controlled by the lending entities, can average more than 20% of annual payments made by low-income countries to service external debt, the study found. 'Some of these revenues remain offshore beyond the control of the borrowing government for many years,' it said, adding the lack of access or transparency compromises the ability of borrowing countries to monitor and manage their fiscal affairs. Another important feature of Chinese lenders using cash collateral pools is that they simultaneously act as security for multiple debts. Cross-collateralisation accounts for 46% of China's collateralized public and publicly guaranteed lending volume to low-income and developing countries and this 'can exacerbate debt distress and complicate a debt restructuring if multiple creditors have competing rights to the same assets', the study said. The study also found that a common source of collateral supports multiple loans from the same Chinese creditor, and this practice 'poses a different challenge: it can cede government control over assets or revenue streams to a single creditor for long periods of time, until all the underlying debts for all the financed projects or programs are repaid'. Such a process can take decades, the study said.
Business Recorder
a day ago
- Business
- Business Recorder
Dar defends decision to nominate Trump for Nobel prize
ISLAMABAD: Defending the decision to nominate US President for Nobel Peace Prize, Deputy Prime Minister and Foreign Minister Ishaq Dar has said that Pakistan still backs its choice and considers Donald J Trump as a 'Man of Peace'. 'The decision rests with the Norwegian committee. We are uncaring to the outcome, having only acknowledged what Donald Trump initiated,' Dar told this during a news conference here at the Foreign Office (FO) on Friday to brief the media about his recent multi-nation foreign tours. The foreign minister clarified that both the government and the establishment recommended US President for the peace prize in a letter signed on June 11. 'We consider Donald Trump the 'Man of Peace' and I myself signed the nomination letter,' he remarked. Pakistan recommends US President for Nobel Peace 'Donald Trump has been nominated for the Nobel Peace Prize for his role in raising the Kashmir issue, as this matter had been sidelined since the former US President Bill Clinton era,' Dar added. He; however, claimed that Trump's willingness to arbitrate to settle Kashmir dispute and assure a peaceful resolution marked a significant shift in global perception. He stated that a tariff accord with the United States is set to be announced on 'win-win' basis. Dar announced that China has principally agreed to Pakistan's proposal to extend the China-Pakistan Economic Corridor (CPEC) to Afghanistan. In addition, Pakistan and Uzbekistan are set to sign a trilateral railway framework agreement with Afghanistan in the near future for better regional connectivity and economic cooperation. He said that Pakistan and the UAE have signed a protocol during the Pakistan-UAE Joint Ministerial Commission (JMC) meeting in Abu Dhabi for visa exemption for Pakistan's diplomatic and official passports holders. With regard to economic cooperation, the Emirate leadership has agreed to invest in Pakistan in a manner similar to its previous deposits with the State Bank of Pakistan, Dar said. He disclosed there were positive developments in long-stalled negotiations with Etisalat to settle the issue pending for last 18 years. To a query, Dar said Pakistan continues to plead for improved visa processes for its citizens. Responding to questions, DPM/ FM reiterated that Pakistan did not seek or begged a ceasefire with India but agreed to it in a dignified manner. 'Pakistan is always ready for dialogue— on terrorism, trade, Kashmir, and the Indus Waters Treaty— but only through a composite framework,' he stated. On Israel, he reaffirmed Pakistan's stand, stating there would be no recognition until a two-state solution is realised. Pakistan will assume the presidency of the United Nations Security Council (UNSC) in July, with peaceful resolution of disputes set to be a central theme, Dar announced. Copyright Business Recorder, 2025
News18
2 days ago
- Business
- News18
India Did What Pakistan Couldn't: How Modi Govt Kept Iran's Chabahar Port Safe During Israel War
Around 170 km from India-operated Chabahar port is Pakistan's Gwadar port, which started to feel the heat of war in spite of not being in Iran The 12-day Iran-Israel war pushed not just Middle East but Central Asia on the edge. The US and Israel decimated Iran's nuclear facilities, while parts of Tel Aviv started to resemble Gaza, with the incessant rocket firing by Iran, overwhelming Israel's Iron Dome. As global powers got involved, 'World War 3' became the buzzword amid the two countries that consider each other beyond sworn enemies. However, the Chabahar Port in Iran, a cornerstone of its strategic and economic ambitions to enhance regional connectivity, secure trade routes, and counterbalance geopolitical rivals like China and Pakistan, remained curiously untouched by a missile or drone. Here's how the Modi government saved it. Why Does Chabahar Port Matter? The Chabahar Port, a critical strategic asset for India in southeastern Iran, remained operational and unaffected by the recent Iran-Israel conflict due to several key factors. Despite escalating tensions, including missile exchanges and airstrikes, the port was not directly targeted, allowing its operations and India's investments to remain secure. Interestingly, 170 kilometers from India-operated Chabahar port is Pakistan's Gwadar port, which started to feel the heat of war in spite of not being in Iran. While Gwadar was operational like Chabahar during the war, Pakistan closed all border crossings with Iran in Balochistan, including those in Gwadar district like Gabd-Rimdan, starting June 15. With no smuggled Iranian oil, a prolonged closure could have further strained the port's role as a trade hub. Food, too, was running short in the district according to local reports. If Gwadar is a key asset of the China-Pakistan Economic Corridor (CPEC), Chabahar was India's antidote. India's investments in Chabahar Port, totaling around $550 million, include direct funding for terminal operations, a credit line for expansion, and contributions to the Chabahar-Zahedan railway. These investments have strengthened India's strategic foothold in the region, enhanced trade connectivity, and countered rival ports like Gwadar. At the peak of the Iran-Israel war, just ahead of Iran contemplating closure of the Strait of Hormuz, the world's most critical oil and gas shipping route, air freight was said to be up by 15% and ocean freight was up by 1,000 USD/TEU. Even in that volatile market, Chabahar as a port was functioning like any other day. The Modi Government's Approach What helped was Modi government's nuanced diplomatic stand where it did not lean heavily towards Israel, in spite of the large online sentiment, while advocating diplomacy. On June 13, 2025, at the onset of the conflict, Prime Minister Narendra Modi received a call from Israel PM Benjamin Netanyahu, where they likely discussed the escalating situation. On the same day, India's External Affairs Minister S. Jaishankar spoke with Iranian Foreign Minister Abbas Araghchi, urging Iran to avoid actions that could further escalate the conflict. Later, Modi called Iran President Masoud Pezeshkian, advocating for de-escalation. A neutral position, unlike the Russia or US, has its benefits too. It saved two ports. Not just Chabahar, but Israel's Haifa where despite Iranian ballistic missiles sprayed and a nearby oil refinery, Iran stayed clear of the Indian investments with cargo operations proceeding normally.
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First Post
3 days ago
- Business
- First Post
China leaves ‘all-weather' friends high and dry: Pakistan, Iran, Sri Lanka
The so-called friends of China — from Pakistan to Sri Lanka and Iran — wonder what foes could be like, if the friend urges allies to take big risks but fails to support them when crises hit read more Beijing often urges its partners into high-stakes deals but routinely fails to come through when crises strike. AP China's claim to be an 'all-weather' friend has for long been dubious. Once hailed as steadfast allies, Pakistan and China now see their partnership fray. Islamabad's deepening financial crisis prompted a plea for Chinese support; yet, Beijing delivered little beyond words. Further west, China likewise offered only rhetoric, not action, on Iran's behalf. These developments echo earlier strains in Beijing's alliances. Sri Lanka famously lost control of its Hambantota port after defaulting on Chinese loans, a move that can be likened to the Shylockian demand for a 'pound of flesh' in The Merchant of Venice by William Shakespeare. African governments have likewise warned that China's opaque, stringent loan conditions leave borrowers crippled. STORY CONTINUES BELOW THIS AD Beijing often urges its partners into high-stakes deals but routinely fails to come through when crises strike. Pakistan: China's 'all-weather' friend on shaky ground Beijing's cosy partnership with Pakistan is straining under economic pressure. Islamabad owes China billions under the $62 billion China–Pakistan Economic Corridor (CPEC), and when Pakistan's reserves ran low, it urgently sought relief. But China's response was strikingly cautious: analysts say Beijing had grown 'impatient' with Pakistan's woes and 'reluctant to provide unconditional bailouts'. In 2018, Prime Minister Imran Khan flew to Beijing expecting aid, but the official communique made no mention of emergency support. Instead, China insisted that Pakistan fully honour existing CPEC terms — signalling that any relief would depend on Islamabad's compliance. With Beijing withholding immediate assistance, Pakistan had little choice but to turn to the IMF for a bailout. Officials eventually secured a separate $6 billion rescue package from Saudi Arabia and an IMF programme, underscoring that China's role was not to rescue Islamabad but to protect its strategic interests. This episode suggests that China will demand returns on its investments rather than simply writing them off. The latest development is worse. In a dramatic reversal of loyalties, Pakistan's Chief of Army Staff, Gen Asim Munir, has reportedly offered the United States access to military bases on Pakistani soil to launch strikes against Iran, China's strategic partner and a fellow Muslim nation. If true, this move not only signals a chilling betrayal of the Islamic principle of ummah (solidarity among Muslim nations) but also raises serious questions about Pakistan's reliability as a Chinese ally. STORY CONTINUES BELOW THIS AD For years, China has nudged Pakistan into geopolitical standoffs, from India to Afghanistan, without offering full-throated support in return. Now, Pakistan appears to be returning the favour — pursuing backroom deals with Washington, Beijing's chief rival, even at the expense of regional Islamic unity. In essence, Pakistan may be responding to China's duplicity with a diplomatic double-cross of its own. Iran: China's rhetoric, No rescue China's strategic partnership with Iran has likewise revealed limits. Despite formal ties, China's actions in moments of crisis have been modest. When conflict flared in 2023, Beijing publicly protested attacks on Iranian territory and urged de-escalation but provided no concrete assistance. China continued its oil purchases and offered only 'ritual calls for 'dialogue,'' as analyst Craig Singleton put it, with 'no drones or missile parts, no emergency credit line' for Tehran. In effect, Iran's leaders were left largely on their own. A power promising friendship to all sides risks being an 'unreliable partner' when true support is needed. STORY CONTINUES BELOW THIS AD As Iran finds itself under sustained bombardment from Israeli and American airpower in the latest round of hostilities, China's silence has been deafening. Despite signing a much-publicised 25-year strategic cooperation pact with Tehran in 2021, Beijing has offered little more than vague diplomatic statements calling for 'restraint' and 'dialogue'. While Iran bears the brunt of Western military might, China — its supposed economic and strategic partner — has done nothing tangible to shield it. No emergency aid, no political deterrence, and certainly no military support. This passivity has not gone unnoticed in Tehran, where officials are beginning to question whether China's promises of partnership are worth anything in moments of existential crisis. Once again, Beijing's playbook appears consistent: exploit the partnership when it serves Chinese interests, then retreat into cautious neutrality when the ally is under fire. Sri Lanka & Africa: China's debt-trap diplomacy China's approach to debt has alarmed leaders from Asia to Africa. In Sri Lanka, Colombo borrowed heavily to build the Hambantota deep-water port. When the port failed to generate enough revenue, Sri Lanka in 2017 gave China a controlling stake and a 99-year lease on the facility. Sri Lanka effectively handed over a sovereign asset to settle its debts. STORY CONTINUES BELOW THIS AD In Africa, governments have voiced analogous concerns. Many Chinese loans carry high interest rates, short maturities and stringent conditions that squeeze borrowers. For example, Uganda agreed to cede the first 20 years of toll and airport revenues to China under a single infrastructure loan. Unlike Western creditors, China generally does not cancel principal; instead, it extends repayment schedules, leaving nations mired in long obligations. This dreaded 'debt-trap diplomacy' is akin to a modern usury scheme, as Chinese financing often ensnares partner states in burdensome debt. In case after case — from Sri Lanka's debt crisis to Africa's warning cries, from Pakistan's economic freefall to Iran's military isolation — China has repeatedly proven to be an unreliable partner. It urges nations into high-risk ventures and alliances but recoils when those same partners face pressure or peril. As Iran takes a relentless beating from Israeli and American forces, Beijing remains conspicuously absent, offering neither deterrence nor defence. And now, the betrayal appears mutual. STORY CONTINUES BELOW THIS AD What emerges particularly from Islamabad's offer of military bases to the US must trouble Beijing: If China's 'all-weather friendships' are built on shallow commitments, its allies are increasingly beginning to respond in kind — with double-crosses, disillusionment and quiet departures from the orbit of the Middle Kingdom. The author is a senior journalist and writer. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost's views
News18
3 days ago
- Politics
- News18
Pakistan-China Game Plan Foiled: Why India Refused To Sign SCO Joint Statement
Last Updated: Rajnath Singh's dissent at the Shanghai Cooperation Organisation meet signals India's growing resolve to call out terror sympathisers, even on multilateral platforms In a major geopolitical move, Defence Minister Rajnath Singh's refusal to sign the Shanghai Cooperation Organisation (SCO) joint statement has exposed deep divisions within the grouping, dealt a blow to China's leadership credibility, and derailed a coordinated strategic narrative pushed by Beijing and Islamabad. Singh is currently in China's Qingdao to attend the SCO Defence Ministers' meeting. The summit is being attended by member states, including Russia, Pakistan and China, to discuss issues related to regional and international security. This marks the first time in the history of SCO that a joint communique was not adopted, signalling a serious fracture in consensus. Intelligence sources tell CNN-News18 that India's dissent was not a procedural objection, but a calculated disruption of what was a China-Pakistan strategic objective to corner India diplomatically. Rajnath Singh refused to sign the joint statement because it made no mention of the Pahalgam terror attack that claimed 26 innocent lives, and failed to reflect India's strong position on terror. While skipping any mention of Pahalgam, the document mentioned Balochistan, tacitly accusing India of creating unrest there. Pahalgam's exclusion from the document appears to have been done at Pakistan's behest as its all-weather ally, China, currently holds the SCO Chair. What China And Pakistan Were Planning The plan was to reclaim victimhood by showcasing unrest in Balochistan as proof of India's interference, thereby justifying crackdowns, enforced disappearances, and extrajudicial killings in the region. India's refusal effectively derailed this narrative offensive, sources said. Intelligence Dossiers, Satellite Proof Shared India had in advance shared intelligence dossiers and satellite imagery with SCO members, providing hard evidence of Pakistan's involvement in cross-border terrorism. These included updates on terror camps in Pakistan-occupied Kashmir and proof of state complicity in sheltering terror groups like Lashkar-e-Taiba and Jaish-e-Mohammed. Despite this, China, as chair of the summit, attempted to sideline India's terrorism narrative and position Pakistan as a responsible ally. According to intelligence sources, China has consistently resisted acknowledging India's right to defend its sovereignty or to call out Pakistan's terror record, even when presented with hard evidence. China In Pakistan's Trap? The exclusive inputs reveal that China has walked into Pakistan's double game. With a $62 billion investment in the China-Pakistan Economic Corridor (CPEC) under threat from rising insurgency in Balochistan, China is now deflecting blame and pushing to internationalise Balochistan as a conflict zone, conveniently avoiding any conversation around Uyghur oppression and its own double standards on terrorism. On the other hand, Pakistan is desperate to avoid scrutiny over its terror infrastructure, especially in the wake of the Pahalgam attack, which drew sharp international attention. Intelligence sources say Islamabad wants to divert the global spotlight from its deepening terror links and India's Operation Sindoor, using SCO as a stage for a diplomatic cover-up. Strategic Disruption, Not Procedural Dissent India's refusal to sign the joint statement wasn't just procedural dissent, it was a strategic disruption, as per sources. The move ensured that Pakistan and China's joint narrative did not go unchallenged or get legitimised by consensus. With this, Defence Minister Rajnath Singh has not only stalled a dangerous China-Pakistan diplomatic gambit, but also reinforced India's uncompromising position on terrorism, sovereignty, and regional integrity. The SCO's credibility has taken a hit. Its image as a consensus-driven body has been tarnished, and for the first time, its joint voice has been disrupted — a strong signal that India will not tolerate whitewashing of terrorism, even at multilateral forums. First Published: June 26, 2025, 14:12 IST News india Pakistan-China Game Plan Foiled: Why India Refused To Sign SCO Joint Statement | Exclusive
