Friday, September 07, 2018

Will Imran support China against the US?

Former cricketer Imran Khan, who was elected Pakistan's 22nd prime minister last month, faces "many economic challenges", wrote DP Srivastava. "Asad Umar, who has been appointed the minister for finance, revenue and economic affairs in Imran Khan's cabinet, stated that, 'We are facing a significant current account crisis.' He added that the current account deficit had gone up from $2 billion a year at the beginning of Nawaz Sharif's term to $2 billion a month recently. According to the IMF report of March, Pakistan's fiscal deficit is expected to reach 7% against the target of 4.1%, Pakistan's current account deficit has increased from 1% of gross domestic product in 2014-15 to 4.4% in 2017-18. The foreign exchange reserve had dwindled to $9 billion which is less than two months of imports." Pakistan wants to borrow $12 billion from the IMF but the US, the largest contributor to the IMF, objected saying, "...there was no rationale for the IMF and associated US tax dollars to go towards payment of Chinese loans". China's share of Pakistan's debt has gone up from 17.84% in 2014-15 to 33.77% in 2017-18. Sri Lanka was forced to hand over territory when it was unable to pay Chinese loans, but in a recent summit with leaders of 52 African countries China promised to write off debts of the poorest ones because it is engaged in a trade war with the US. "History tells us trade wars are easy to start and hard to stop, just like real ones," wrote former Prime Minister of Australia Kevin Rudd. Rudd is fluent in Mandarin and is an open supporter of China, even against the government of his own country Australia. Rudd thinks that the US will not win a trade war so easily because China can also levy tariffs against US products. He says that the US maybe wrong in expecting Xi Jinping to surrender because, "Xi hasn't shown much inclination to back down. Whenever anyone has given him serious trouble in internal politics he's smashed them..." In a speech to cadets at the US Military Academy at West Point Rudd stressed how Xi Jinping has concentrated all power in his hands and imprisoned anyone who would seek to challenge him. Having made himself a strongman at home Xi cannot afford to show any weakness. How can he negotiate with the US on trade if he is unable to make any compromise? "China does not have very competent bureaucracy in foreign aid, in expansion of soft power," said Anne Stevenson-Yang. "So not surprisingly they are not very good at it, and it brought up political issues like Malaysia that nobody anticipated." Prime Minister of Malaysia Mahathir Mohamad warned against a "new version of colonialism" by China. Imran Khan should know that the Chinese do not play cricket.

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