Pakistani Prime Minister Sharif meets China's Xi in Beijing ahead of IMF talks

June 7, 2024 6:10 AM EDT

FILE PHOTO: Chinese President Xi Jinping attends a signing ceremony with Bahrain's King Hamad bin Isa Al Khalifa (not pictured) at the Great Hall of the People in Beijing, China May 31, 2024. REUTERS/Tingshu Wang/Pool/File Photo

By Joe Cash

BEIJING (Reuters) -China's President Xi Jinping met Pakistani Prime Minister Shehbaz Sharif in Beijing on Friday, Chinese state media reported, days before Pakistan presents its annual budget and applies for a new International Monetary Fund (IMF) loan.

Pakistan's location on the Arabian Sea gives it strategic importance for China, providing an overland route out towards the Gulf of Aden and onto the Suez Canal, and enabling Chinese ships to avoid the potential chokepoint of the Malacca Strait.

"China will, as always, firmly support Pakistan and safeguard its national sovereignty and territorial integrity," Xi told Sharif, adding that the two countries' "all-weather strategic partnership... had broad development prospects."

Xi also said that China would also help Pakistan with its economic and social development.

Pakistan is in the middle of a debt crisis.

As such, Sharif's government is expected to seek at least $6 billion under a new IMF programme after it presents its annual budget on June 12. And the $27 billion or so that Pakistan owes China, according to World Bank data, is central to this next round of discussions with the fund.

The IMF in May opened discussions on the new loan after Islamabad completed a short-term $3 billion programme, which helped stave off a sovereign debt default last summer.

Pakistan owes China almost 13% of its total debt, which was taken on to pay for infrastructure projects over the years and other types of spending.

Beijing has lent Islamabad almost twice as much as its second- and third-ranked multilateral lenders, the World Bank and the Asian Development Bank, to which Pakistan owes $16.2 billion and $13.7 billion respectively.

Chinese firms have also invested a further $14 billion in Pakistan since a new economic corridor connecting their countries was announced in the summer of 2013 as part of Chinese President Xi Jinping's flagship Belt and Road Initiative, data from the American Enterprise Institute think tank shows.

Most of that investment was made by Chinese state-owned energy companies financing fossil-fuel and nuclear power plants, as well as logistics routes under construction connecting Gwadar Port in the Arabian Sea with the Xinjiang region in China's northwest.

Xi told Sharif that their two countries should focus on "promoting the joint construction of the China-Pakistan Economic Corridor," and Chinese and Pakistani firms 31 memoranda of understanding covering technology, agriculture, trade, energy, coal and gasification, according to Pakistan's commerce ministry.

But the Chinese leader also called on his guest to step up efforts to ensure the security of Chinese projects in the country.

In May, a suicide bomb attack killed five Chinese engineers working on a dam project in Pakistan's northwest.

(Reporting by Joe Cash; Additional reporting by Asif Shahzad in Islamabad; Editing by Kevin Liffey and Louise Heavens)

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