Pakistan Should beware of China's Loan on High Interest Rate may be trap Pakistan

Pakistan being pushed into a corner by China with regard to the recently signed bilateral economic corridor deal? It certainly appears to be so, with highly placed sources saying the pact has run into rough weather. According to them, China has reportedly placed Pakistan in a financial bind, with the latter apparently failing to comprehend the finer aspects of the agreement linked to the landmark project. These highly placed sources say that to begin with, the funding from China will be in the form of loans offered at very high rates of interest, in most cases, higher than other commercially available options. The bureaucracy in Pakistan is learnt to have fought tooth and nail to reduce the damage to the state exchequer, but now appears to have been overwhelmed by real politick. The sources further state that China not only wants better than market returns for the money being invested in the proposed China Pakistan Economic Corridor (CPEC), but also wants Islamabad to select only Chinese firms for all CPEC-related contracts. For instance, business rivals of China are being quoted, as saying that Beijing is putting pressure on Pakistan to make sure that work related to the Gwadar Port Development Project is given only to a Chinese company selected by Beijing. Officials in Pakistan have reportedly railed against such interference, but the missive from China appears to be clear, no Chinese company means no project, and therefore, no money. According to the highly-placed sources, Pakistan, as a result, has been left with no option except to hold up the tendering process which was to conclude on July 30. With the process halted because of the Chinese firms only clause, the other contenders for the proposed economic corridor, including those from the United States, the Gulf and South East Asia, are in commercial limbo not of their making.