Pakistan Rejects China’s Demand to Use Yuan for Transactions in Gwadar Free Zone

China’s demand to employ the use of the Yuan for transactions in the Gwadar Free Zone under China-Pakistan Economic Corridor (CPEC) has been ruled out.

The reason behind this decision was the concern for Pakistan’s economic sovereignty.

According to officials, who attended the Senior Officials Meeting (SOM) on Monday 20th November 2017 in Islamabad, the Chinese authorities were made clear of Pakistan’s stance on the use of foreign currency.

According to Pakistani officials, “China wants to introduce its currency in Pakistan as part of its policy to internationalize the renminbi (RMB) – the official name of its currency.”

The Joint Cooperation Committee (JCC), the body in charge of making decisions for CPEC, will have its 7th meeting today, 21st November 2017.

The issue for the $2 billion Karachi Circular Railway (KCR) project will be discussed at today’s meeting by Planning Minister, Ahsan Iqbal, with Vice Chairman of the National Development and Reform Commission.

The officials suggested, “If a consensus is achieved on the KCR at the political level, only then will both the sides sign the Framework Agreement.”

The reason behind China’s demand was to avoid exchange risks involved in using US dollar and Pak Rupee. Both Ministry of Finance and the State Bank of Pakistan rejected this demand.

However, both the sides were on board with the decision to make financial arrangements under the existing bilateral Currency Swap Arrangement. The arrangement, which was to expire next year, has been extended and the maximum currency swap limit has also been increased up to $500 million.

According to the original LTP draft sent to Beijing for vetting earlier this year, “Pakistan shall promote the construction of the Gwadar Port Free Zone by drawing on the experience of China (Shanghai) Pilot Free Trade Zone and other Pilot Free Trade Zones in China, and explore RMB offshore financial business in Gwadar Free Zone.”

However, some pending issues still remain to be finalized before the signing of the final draft of the LTP by China and Pakistan on Tuesday (today).

On the other hand, Beijing’s demand for Islamabad to establish the Customs Special Supervised Areas along the CPEC route for facilitating its investments in Special Economic Zones (SEZs) was accepted by Pakistan.

“Another issue that may hamper the final signing and release of the LTP document on Tuesday is the eleventh-hour demands put forth by Khyber-Pakhtunkhwa to add in the LTP,” said the officials.

As suggested by officials, the federal government would prefer to consider the K-P concerns to make the LTP a consensus document, although the Chinese were not in favor of it.

The LTP final document will be made public after today’s meeting as claimed by Ahsan Iqbal.

Via Tribune

  • Very weldone, Pakistan Govt. It will be good if only PKR (Pakistani Rupee) will be used instead of PKR & USD in Gwadar region for trading

  • Saaray good good ker rahe hain, Dollar k saath kub tak chippak k rehna hai. Sides choose tou kerni he hain. Yuan adopt ker layna chaaheeye tha.

    American dollar poori duniya mein doobta hai laykin Pakistan mein apni jagga pay he rehta hai. Pakistan ko ab america say koi faida nahi ho raha, na hona hai… lipstick powder wughaira mil jaae ga, ya thoray say weapons, wo bhi low graded. Properly switch ker layn china pay tou economic activity fast ho sakti hai.

    • Molvi Saabb… Aap ka kehney kka matlab hai pehlay ager America k
      ghulaam thay tou abb China k ghulam ban jayen… sirf iss liye k America
      aap logo ko bura lagtaa hai…. Ager Yuan mein deal shuru ho gayee tou
      Rupee bilkul khatam ho jaey gaa.. Pakistani Economy china per dependent
      hogii… aur china doosri East India company ban jaey gaa Pakistan k
      liye…. aur phir Jiss ko china chahey gaa woh hi Pakistan mein Prime
      Minister Baney ga… Humein apni independence aur soveriegnty per koi
      compromise nahi kernaa chahiye.. Pehlay hi iss govt ney bohat se aisey
      decision kiye hein jin k aney waley waqt mein pata chuley gaa.. maslan
      stock exchange poorrii chinaa ko sale ker dee hai waghaira waghaira…

      • Fractional Reserve Banking System k tehet Fiat Currencies operate kertay hain, phir rotay hain k kabhi is k neechay kabhi us k neechay… Rehna neechay he hai agar apna financial system change nahi kerta tou. Is leeye bardaasht karen. Kisi kee beard daykhh k usay molvi declare na ker deeya karen. Bohot Muhazzib Laqqab hai, at least main is qaabil nahi k Molvi kehlaya jaaon.

  • I don’t understand what’s wrong in it? If anyone can bring in US dollars and go to bank and get rupees without any identification or explanation of purpose then what’s wrong with yuan? You are trolling China but you aren’t looking what Nawaz ganja did to Pakistani economy by making laws to promote money laundering in the first place.

    • Mark my words, this decision will be changed according to the “inside” report. Usage of PKR will be a great hindrance for the one belt initiative. PKR transactions will not allow Chinese to trade with other nations smoothly.

      • People commenting here have not an iota of knowledge regarding
        economy… There is a term called economic sovereignty… ever heard
        it… ???? If we conceded with China and started trading in Yuan… The
        whatever left of the economic sovereignty will be vanished…. and China
        will be in control…Just like currently America is in control…..
        JUST a FEW economic sanctions by chinese will get Pakistan on its
        Knees…and we will have a puppet regime installed by Chinese in
        Pakistan… who will do whatever their chinese Master will tell them to
        do… and we’ll soon be turned to over working robots and getting meager
        chinese pennies as a compensation… and we will not be able to raise
        voice as all the freedom of speech will be curbed… just like it
        currently is in China itself…Sooo please… let the sanity prevail…
        this govt has already conceded sooo much to china… for example…
        Chinese have Given us Loan on 3% and international financial
        institutions like wordbank IMF gives the loan at 1%…and Govt has sold
        Pakistan Stock exchange… The STATE Asset… whose value would increase
        with the increase of economic activity of CPEC.. and guess what… who
        will be the beneficiary… .China ofcourse… being the sole owner of
        Pak Stock Exchange… soooo… i can go on writing the ILL Decision
        these Govt has taken totally favouring china and against Pakistan….

        • Current govt was run by nawaz and his cronies. Children of ishaq dar are responsible for all the deals signed under cpec as said by many tv anchors. I just dont understand why people of pakistan dont open their eyes and see our economic situation is like Zimbabwe when their central bank dumped Zimbabwe dollar and shifted to USD. We cant say to Chinese that we dont want to do this or that because our rulers have destroyed out our economy and thus we cant dictate or even do normal business deals with China or any other country.

      • No doubt about it PKR is a sinking ship even the children of rulers who go for loan from IMF aren’t trusting Pakistan is good for business SH**. Pakistan should shift all trade with Iran and China in Yuans. It will help us a lot. First sanctions on Iran under US banking system makes our trade very difficult. India shifted most of their trade with Iran in INR then EUROs. Secondly we wont be needing to pay American bank for conversion or transfer fees for our trade with China. So the middle man (America) will be out in our trade with China . It will solidify our economic relations with China.

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