Pakistan refuses to allow use of Chinese currency for CPEC projects

ISLAMABAD: Calling it a matter of economic sovereignty, Pakistan has turned down China’s demand to allow use of yuan (Chinese currency) on the lines of the US dollar in the country for projects under the China-Pakistan Economic Corridor (CPEC).

According to report published by the Times of India, the meeting between a top officials of China and Pakistan was held the other day in which they discussed a long-term developmental plan under the CPEC. During the meeting, the Chinese officials insisted to use renminbi (commonly known as Chinese yuan) for development projects. But Pakistan’s side said the use of yuan for common use in any part of Pakistan or exchangeable like dollar has to be on a reciprocal basis.

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The officials, according to the report, also said the issue would again be discussed again for some kind of institutional arrangement at the CPEC Joint Cooperation Committee (JCC) meeting to be co-chaired by Interior Minister Ahsan Iqbal, who is also minister for planning and development reforms, and Wang Xiaotao, vice-chairman of National Development and Reforms Commission (NDRC) of China.

According to one report, the Chinese authorities wanted to avoid currency exchange risks attached with the use of the US dollar and the Pak rupee, hence they pressed the use of yuan in Pakistan.

The official said the $3.5 billion Karachi Circular Railway (KCR) project was also unlikely to be cleared for inclusion in the CPEC at this stage because of some unsettled issues between the two countries. The project is likely to be dropped for now.

Both the sides, however, decided to move ahead despite hurdles and finance at least three special economic/industrial zones (SEZs) and some important rail, electricity and road projects.

It was reported that the discussions were positive and the two sides are also expected to sign agreements on actively promoted power projects.