China’s loans pushing Pakistan among world’s poorest countries to brink of collapse 

This handout picture taken and released by the Pakistan Prime Minister Office on November 2, 2022, shows Pakistan Prime Minister Shahbaz Sharif (L) speaking with China's Premier Li Keqiang (R) prior to their talks at the Great Hall of the People in Beijing, China. (AFP/File)
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Updated 19 May 2023

China’s loans pushing Pakistan among world’s poorest countries to brink of collapse 

  • Analysis finds paying back Chinese debt is consuming ever-greater amount of revenue for schools, electricity, food and fuel 
  • Behind the scenes is China’s reluctance to forgive debt, extreme secrecy about how much money it has loaned and on what terms 

A dozen poor countries are facing economic instability and even collapse under the weight of hundreds of billions of dollars in foreign loans, much of them from the world’s biggest and most unforgiving government lender, China. 

An Associated Press analysis of a dozen countries most indebted to China — including Pakistan, Kenya, Zambia, Laos and Mongolia — found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel. And it’s draining foreign currency reserves these countries use to pay interest on those loans, leaving some with just months before that money is gone. 

Behind the scenes is China’s reluctance to forgive debt and its extreme secrecy about how much money it has loaned and on what terms, which has kept other major lenders from stepping in to help. On top of that is the recent discovery that borrowers have been required to put cash in hidden escrow accounts that push China to the front of the line of creditors to be paid. 

Countries in AP’s analysis had as much as 50 percent of their foreign loans from China and most were devoting more than a third of government revenue to paying off foreign debt. Two of them, Zambia and Sri Lanka, have already gone into default, unable to make even interest payments on loans financing the construction of ports, mines and power plants. 

In Pakistan, millions of textile workers have been laid off because the country has too much foreign debt and can’t afford to keep the electricity on and machines running. 

In Kenya, the government has held back paychecks to thousands of civil service workers to save cash to pay foreign loans. The president’s chief economic adviser tweeted last month, “Salaries or default? Take your pick.” 

Since Sri Lanka defaulted a year ago, a half-million industrial jobs have vanished, inflation has pierced 50 percent and more than half the population in many parts of the country has fallen into poverty. 

Experts predict that unless China begins to soften its stance on its loans to poor countries, there could be a wave of more defaults and political upheavals. 

“In a lot of the world, the clock has hit midnight,” said Harvard economist Ken Rogoff. “China has moved in and left this geopolitical instability that could have long-lasting effects.” 

How it’s playing out 

A case study of how it has played out is in Zambia, a landlocked country of 20 million people in southern Africa that over the past two decades has borrowed billions of dollars from Chinese state-owned banks to build dams, railways and roads. 

The loans boosted Zambia’s economy but also raised foreign interest payments so high there was little left for the government, forcing it to cut spending on health care, social services and subsidies to farmers for seed and fertilizer. 

In the past under such circumstances, big government lenders such as the US, Japan and France would work out deals to forgive some debt, with each lender disclosing clearly what they were owed and on what terms so no one would feel cheated. 

But China didn’t play by those rules. It refused at first to even join in multinational talks, negotiating separately with Zambia and insisting on confidentiality that barred the country from telling non-Chinese lenders the terms of the loans and whether China had devised a way of muscling to the front of the repayment line. 

Amid this confusion in 2020, a group of non-Chinese lenders refused desperate pleas from Zambia to suspend interest payments, even for a few months. That refusal added to the drain on Zambia’s foreign cash reserves, the stash of mostly US dollars that it used to pay interest on loans and to buy major commodities like oil. By November 2020, with little reserves left, Zambia stopped paying the interest and defaulted, locking it out of future borrowing and setting off a vicious cycle of spending cuts and deepening poverty. 

Inflation in Zambia has since soared 50 percent, unemployment has hit a 17-year high and the nation’s currency, the kwacha, has lost 30 percent of its value in just seven months. A United Nations estimate of Zambians not getting enough food has nearly tripled so far this year, to 3.5 million. 

“I just sit in the house thinking what I will eat because I have no money to buy food,” said Marvis Kunda, a blind 70-year-old widow in Zambia’s Luapula province whose welfare payments were recently slashed. “Sometimes I eat once a day and if no one remembers to help me with food from the neighborhood, then I just starve.” 

A few months after Zambia defaulted, researchers found that it owed $6.6 billion to Chinese state-owned banks, double what many thought at the time and about a third of the country’s total debt. 

“We’re flying blind,” said Brad Parks, executive director of AidData, a research lab at William & Mary that has uncovered thousands of secret Chinese loans and assisted the AP in its analysis. “When you look under the cushions of the couch, suddenly you realize, ‘Oh, there’s a lot of stuff we missed. And actually things are much worse.’” 

Debt and upheaval 

China’s unwillingness to take big losses on the hundreds of billions of dollars it is owed, as the International Monetary Fund and World Bank have urged, has left many countries on a treadmill of paying back interest, which stifles the economic growth that would help them pay off the debt. 

Foreign cash reserves have dropped in 10 of the dozen countries in AP’s analysis, down an average 25 percent in just a year. They have plunged more than 50 percent in Pakistan and the Republic of Congo. Without a bailout, several countries have only months left of foreign cash to pay for food, fuel and other essential imports. Mongolia has eight months left. Pakistan and Ethiopia about two. 

“As soon as the financing taps are turned off, the adjustment takes place right away,” said Patrick Curran, senior economist at researcher Tellimer. “The economy contracts, inflation spikes up, food and fuel become unaffordable.” 

Mohammad Tahir, who was laid off six months ago from his job at a textile factory in the Pakistani city of Multan, says he has contemplated suicide because he can no longer bear to see his family of four go to bed night after night without dinner. 

“I’ve been facing the worst kind of poverty,” said Tahir, who was recently told Pakistan’s foreign cash reserves have depleted so much that it was now unable to import raw materials for his factory. “I have no idea when we would get our jobs back.” 

Poor countries have been hit with foreign currency shortages, high inflation, spikes in unemployment and widespread hunger before, but rarely like in the past year. 

Along with the usual mix of government mismanagement and corruption are two unexpected and devastating events: the war in Ukraine, which has sent prices of grain and oil soaring, and the US Federal Reserve’s decision to raise interest rates 10 times in a row, the latest this month. That has made variable rate loans to countries suddenly much more expensive. 

All of it is roiling domestic politics and upending strategic alliances. 

In March, heavily indebted Honduras cited “financial pressures” in its decision to establish formal diplomatic ties to China and sever those with Taiwan. 

Last month, Pakistan was so desperate to prevent more blackouts that it struck a deal to buy discounted oil from Russia, breaking ranks with the US-led effort to shut off Vladimir Putin’s funds. 

In Sri Lanka, rioters poured into the streets last July, setting homes of government ministers aflame and storming the presidential palace, sending the leader tied to onerous deals with China fleeing the country. 

China’s response 

The Chinese Ministry of Foreign Affairs, in a statement to the AP, disputed the notion that China is an unforgiving lender and echoed previous statements putting the blame on the Federal Reserve. It said that if it is to accede to IMF and World Bank demands to forgive a portion of its loans, so should those multilateral lenders, which it views as US proxies. 

“We call on these institutions to actively participate in relevant actions in accordance with the principle of ‘joint action, fair burden’ and make greater contributions to help developing countries tide over the difficulties,” the ministry statement said. 

China argues it has offered relief in the form of extended loan maturities and emergency loans, and as the biggest contributor to a program to temporarily suspend interest payments during the coronavirus pandemic. It also says it has forgiven 23 no-interest loans to African countries, though AidData’s Parks said such loans are mostly from two decades ago and amount to less than 5 percent of the total it has lent. 

In high-level talks in Washington last month, China was considering dropping its demand that the IMF and World Bank forgive loans if the two lenders would make commitments to offer grants and other help to troubled countries, according to various news reports. But in the weeks since there has been no announcement and both lenders have expressed frustration with Beijing. 

“My view is that we have to drag them — maybe that’s an impolite word — we need to walk together,” IMF Managing Director Kristalina Georgieva said earlier this month. “Because if we don’t, there will be catastrophe for many, many countries.” 

The IMF and World Bank say taking losses on their loans would rip up the traditional playbook of dealing with sovereign crises that accords them special treatment because, unlike Chinese banks, they already finance at low rates to help distressed countries get back on their feet. The Chinese foreign ministry noted, however, that the two multilateral lenders have made an exception to the rules in the past. 

As time runs out, some officials are urging concessions. 

Ashfaq Hassan, a former debt official at Pakistan’s Ministry of Finance, said his country’s debt burden is too heavy and time too short for the IMF and World Bank to hold out. He also called for concessions from private investment funds that lent to his country by purchasing bonds. 

“Every stakeholder will have to take a haircut,” Hassan said. 

One good sign: The IMF on Wednesday announced approval of a $3 billion loan for Ghana, suggesting it is hopeful a debt restructuring deal can be struck among creditors. 

China has also pushed back on the idea, popularized in the Trump administration, that it has engaged in “debt trap diplomacy,” leaving countries saddled with loans they cannot afford so that it can seize ports, mines and other strategic assets. 

On this point, experts who have studied the issue in detail have sided with Beijing. Chinese lending has come from dozens of banks on the mainland and is far too haphazard and sloppy to be coordinated from the top. If anything, they say, Chinese banks are not taking losses because the timing is awful as they face big hits from reckless real estate lending in their own country and a dramatically slowing economy. 

But the experts are quick to point out that a less sinister Chinese role is not a less scary one. 

“There is no single person in charge,” said Teal Emery, a former sovereign loan analyst who now runs consulting group Teal Insights. 

Adds AidData’s Parks about Beijing, “They’re kind of making it up as they go along. There is no master plan.” 

Loan sleuth 

Much of the credit for dragging China’s hidden debt into the light goes to Parks, who over the past decade has had to contend with all manner of roadblocks, obfuscations and falsehoods from the authoritarian government. 

The hunt began in 2011 when a top World Bank economist asked Parks to take over the job of looking into Chinese loans. Within months, using online data-mining techniques, Parks and a few researchers began uncovering hundreds of loans the World Bank had not known about. 

China at the time was ramping up lending that would soon become part of its $1 trillion “Belt and Road Initiative” to secure supplies of key minerals, win allies abroad and make more money off its US dollar holdings. Many developing countries were eager for US dollars to build power plants, roads and ports and expand mining operations. 

But after a few years of straightforward Chinese government loans, those countries found themselves heavily indebted, and the optics were awful. They feared that piling more loans atop old ones would make them seem reckless to credit rating agencies and make it more expensive to borrow in the future. 

So China started setting up shell companies for some infrastructure projects and lent to them instead, which allowed heavily indebted countries to avoid putting that new debt on their books. Even if the loans were backed by the government, no one would be the wiser. 

In Zambia, for example, a $1.5 billion loan from two Chinese banks to a shell company to build a giant hydroelectric dam didn’t appear on the country’s books for years. 

In Indonesia, Chinese loans of $4 billion to help build a railway also never appeared on public government accounts. That all changed years later when, overbudget by $1.5 billion, the Indonesian government was forced to bail out the railroad twice. 

“When these projects go bad, what was advertised as a private debt becomes a public debt,” Parks said. “There are projects all over the globe like this.” 

In 2021, a decade after Parks and his team began their hunt, they had gathered enough information for a blockbuster finding: At least $385 billion of hidden and underreported Chinese debt in 88 countries, and many of those countries were in far worse shape than anyone knew. 

Among the disclosures was that China issued a $3.5 billion loan to build a railway system in Laos, which would take nearly a quarter of the country’s annual output to pay off. 

Another AidData report around the same time suggested that many Chinese loans go to projects in areas of countries favored by powerful politicians and frequently right before key elections. Some of the things built made little economic sense and were riddled with problems. 

In Sri Lanka, a Chinese-funded airport built in the president’s hometown away from most of the country’s population is so barely used that elephants have been spotted wandering on its tarmac. 

Cracks are appearing in hydroelectric plants in Uganda and Ecuador, where in March the government got judicial approval for corruption charges tied to the project against a former president now in exile. 

In Pakistan, a power plant had to be shut down for fear it could collapse. In Kenya, the last key miles of a railway were never built due to poor planning and a lack of funds. 

Jumping to the front of the line 

As Parks dug into the details of the loans, he found something alarming: Clauses mandating that borrowing countries deposit US dollars or other foreign currency in secret escrow accounts that Beijing could raid if those countries stopped paying interest on their loans. 

In effect, China had jumped to the front of the line to get paid without other lenders knowing. 

In Uganda, Parks revealed a loan to expand the main airport included an escrow account that could hold more than $15 million. A legislative probe blasted the finance minister for agreeing to such terms, with the lead investigator saying he should be prosecuted and jailed. 

Parks is not sure how many such accounts have been set up, but governments insisting on any kind of collateral, much less collateral in the form of hard cash, is rare in sovereign lending. And their very existence has rattled non-Chinese banks, bond investors and other lenders and made them unwilling to accept less than they’re owed. 

“The other creditors are saying, ‘We’re not going to offer anything if China is, in effect, at the head of the repayment line,’” Parks said. “It leads to paralysis. Everyone is sizing each other up and saying, ‘Am I going to be a chump here?’” 

Loans as ‘currency exchanges’ 

Meanwhile, Beijing has taken on a new kind of hidden lending that has added to the confusion and distrust. Parks and others found that China’s central bank has effectively been lending tens of billions of dollars through what appear as ordinary foreign currency exchanges. 

Foreign currency exchanges, called swaps, allow countries to essentially borrow more widely used currencies like the US dollar to plug temporary shortages in foreign reserves. They are intended for liquidity purposes, not to build things, and last for only a few months. 

But China’s swaps mimic loans by lasting years and charging higher-than-normal interest rates. And importantly, they don’t show up on the books as loans that would add to a country’s debt total. 

Mongolia has taken out $1.8 billion annually in such swaps for years, an amount equivalent to 14 percent of its annual economic output. Pakistan has taken out nearly $3.6 billion annually for years and Laos $300 million. 

The swaps can help stave off default by replenishing currency reserves, but they pile more loans on top of old ones and can make a collapse much worse, akin to what happened in the runup to 2009 financial crisis when US banks kept offering ever-bigger mortgages to homeowners who couldn’t afford the first one. 

Some poor countries struggling to repay China now find themselves stuck in a kind of loan limbo: China won’t budge in taking losses, and the IMF won’t offer low-interest loans if the money is just going to pay interest on Chinese debt. 

For Chad and Ethiopia, it’s been more than a year since IMF rescue packages were approved in so-called staff-level agreements, but nearly all the money has been withheld as negotiations among its creditors drag on. 

“You’ve got a growing number of countries that are in dire financial straits,” said Parks, attributing it largely to China’s stunning rise in just a generation from being a net recipient of foreign aid to the world’s largest creditor. 

“Somehow they’ve managed to do all of this out of public view,” he said. “So unless people understand how China lends, how its lending practices work, we’re never going to solve these crises.” 

Rain wipes out first Pakistan-New Zealand T20 after just two balls

Updated 18 April 2024

Rain wipes out first Pakistan-New Zealand T20 after just two balls

  • Fast bowler Mohammad Amir returned to international cricket after nearly four years
  • Having come out of retirement last month, Amir’s participation was limited to just fielding

RAWALPINDI: Heavy rain caused the first Twenty20 international between Pakistan and New Zealand to be abandoned after just two deliveries in Rawalpindi on Thursday.
New Zealand skipper Michael Bracewell won the toss, which had also been delayed by 30 minutes, and opted to bat but no action was possible for two-and-a-half hours.
Umpires Ahsan Raza and Aleem Dar then announced a five-over-a-side game at 10:10 local time (9:10 GMT).
Pakistan paceman Shaheen Shah Afridi conceded two leg-byes to debutant Tim Robinson off the first ball before bowling the batsman with a sharp delivery off the next.
But as soon as the Pakistan fielders started celebrating the wicket, the rain returned to force an abandonment.
Fast bowler Mohammad Amir returned to international cricket after nearly four years, having come out of retirement last month, but his participation was limited to just fielding.
The 32-year-old retired in December 2020 after being dropped from the side but changed his mind last month and decided to restart his career, which had already been stalled by a match-fixing ban in 2010.
Pakistan handed T20I caps to batsman Usman Khan, spinner Abrar Ahmed and all-rounder Muhammad Irfan Khan, while Robinson debuted for New Zealand.
The remaining matches are in Rawalpindi on April 20 and 21 and in Lahore on April 25 and 27.
The series gives a chance to both teams to test their bench strength ahead of the Twenty20 World Cup to be held in June in the United States and the West Indies.
New Zealand are without nine key players, including skipper Kane Williamson, who are playing in the ongoing Indian Premier League.

Five custom officials among six killed in gun attack in northwest Pakistan

Updated 18 April 2024

Five custom officials among six killed in gun attack in northwest Pakistan

  • Officials of the custom department attacked while on routine patrol in Dera Ismail Khan 
  • Latest killings come amid renewed violence in northwestern and southwestern regions

PESHAWAR: Six people, including five officials of the customs department, were killed and another wounded on Thursday when gunmen opened fire on their vehicle in the northwestern Khyber Pakhtunkhwa province, police and rescue officials said.
Officials of the custom department were out for routine patrol in Dera Ismail Khan city when their vehicle came under attack in the jurisdiction of Draban Police Station, Regional Police Officer Nasir Hussain Satti told Arab News.
“As terrorists started firing on the custom officials, the driver lost control of the vehicle,” Hussain said. 
“As a result, their car collided head-on with another vehicle coming from the opposite direction, leaving five officials and a girl dead on the spot while one person suffered injuries.”
KP Chief Minister Ali Amin Gandapur condemned the incident.
“The incident is extremely tragic. Police should take all measures to arrest elements behind the attack,” a statement quoting the chief minister said.
Aziz Dotani, a spokesman at DI Khan district’s Rescue 1122 service, said a relief team promptly rushed to the area to transport bodies to the nearest medical facility.
The latest killings come at a time of renewed militant violence in Pakistan’s northwestern and southwestern regions, especially after the banned Tehreek-e-Taliban Pakistan (TTP) called off its fragile, months-long truce with the government in November 2022.
While there has been a spike in militant attacks across the northwest and southwest of the country, militants have particularly attacked policemen in Khyber Pakhtunkhwa in recent weeks. 
Earlier this month, unidentified gunmen shot dead a policeman in the restive North Waziristan tribal district. Separately, an official working with the provincial counterterrorism department and a senior cleric affiliated with the Jamiat Ulema Islam religious political party were shot dead in two separate incidents of “targeted killings” in the North Waziristan tribal district, according to police.
While no group immediately claimed responsibility for the latest killings, suspicion is likely to fall on the TTP, which has had a significant presence in KP before being driven out as a result of successive military operations over the years. Pakistan says the TTP is now mostly based in hideouts in neighboring Afghanistan, which the Taliban denies. 
Last month, seven Pakistani soldiers, including two army officers, were killed in a militant attack in North Waziristan, according to the Pakistani military. The attack led the Pakistani military to carry out rare airstrikes against suspected TTP hideouts inside Afghanistan on March 18, killing eight people. The strikes prompted Afghan forces to fire back at Pakistani soldiers along the border.
Afghan Deputy Interior Minister Mohammad Nabi Omari has urged Pakistan and the banned TTP to start negotiations afresh but Pakistan has rejected the Afghan minister’s suggestion, urging Kabul to take action against militant groups operating from its soil.
Both Pakistan and Afghanistan have traded blame in recent months over who is responsible for the recent spate of militant attacks in Pakistan. 
Islamabad says the attacks are launched mostly by TTP members who operate from safe havens in Afghanistan. Kabul denies this and blames Islamabad for not being able to handle its own security challenges.

Seven killed in southwest Pakistan as heavy rains continue to wreak havoc nationwide

Updated 18 April 2024

Seven killed in southwest Pakistan as heavy rains continue to wreak havoc nationwide

  • At least 33 people killed and 46 injured in various rain-related incidents in northwestern Pakistan
  • Pakistan is ranked fifth most vulnerable country to climate change according to Global Climate Risk Index

QUETTA: Seven people including a woman were killed in southwestern Pakistan as rains continue to wreak havoc in the South Asian nation ranked as the fifth most vulnerable country to climate change according to the Global Climate Risk Index.
Heavy rains in the last three weeks have triggered landslides and flash floods in several parts of Pakistan. 
On Thursday, seven people were killed in the southwestern Balochistan province, officials in the town of Chaman here the deaths took place said. 
“In the first incident a car drove into flood waters in Mashan Talab situated on the outskirts of Chaman,” Deputy Commissioner Chaman Raja Atthar Abbas told Arab News.
“Five men sitting inside the vehicle drowned in flood water while two people including a woman were killed after a mud wall fell on them on College road.” 
Torrential rains had caused “severe damage” in Chaman and its surrounding areas as dozens of mud house collapsed in the last two days of rains, Abbas added. 
Separately, at least 33 people were killed and another 46 injured in various rain-related incidents in Pakistan’s northwestern Khyber Pakhtunkhwa (KP) province in the last six days, the Provincial Disaster Management Authority (PDMA) said on Thursday.
Rains that began last Friday had completely destroyed 336 houses and partially damaged another 1,606 in different districts across the province, according to the PDMA.
The incidents occurred in Khyber, Upper and Lower Dir, Upper and Lower Chitral, Swat, Bajaur, Shangla, Karak, Tank, Mardan, Peshawar, Charsadda, Hangu, Battagram, Dera Ismail Khan and other districts.
“The deceased include 17 children, eight men, eight women, while the injured included 32 men, six women and eight children,” the PDMA said in its daily situation report on Thursday.
On Wednesday, the authority had warned of another spell of heavy rains in the province from April 17 till April 21, which could trigger landslides and flash floods.
In 2022, downpours swelled rivers and at one point flooded a third of Pakistan, killing 1,739 people. The floods also caused $30 billion in damages, from which Pakistan is still trying to rebuild.

Amir returns to international cricket as New Zealand bat in first T20I

Updated 18 April 2024

Amir returns to international cricket as New Zealand bat in first T20I

  • Amir retired in December 2020 after being dropped from the side but changed his mind last month
  • Fast bowler decided to restart his career, which had also been stalled by a match-fixing ban in 2010

RAWALPINDI: Pakistan fast bowler Mohammad Amir returns to international cricket from an absence of almost four years after New Zealand won the toss in their rain-delayed first Twenty20 in Rawalpindi on Thursday.
The 32-year-old retired in December 2020 after being dropped from the side but changed his mind last month and decided to restart his career, which had also been stalled by a match-fixing ban in 2010.
Pakistan have handed T20I debuts to batter Usman Khan, spinner Abrar Ahmed and allrounder Muhammad Irfan Khan to gauge their bench strength ahead of June’s World Cup in the United States and the West Indies.
New Zealand, missing nine players due to the Indian Premier League, handed a T20I debut to batter Tim Robinson.
The remaining matches are in Rawalpindi on April 20 and 21 and in Lahore on April 25 and 27.
Pakistan: Babar Azam (captain), Usman Khan, Abrar Ahmed, Iftikhar Ahmed, Mohammad Rizwan, Mohammad Amir, Muhammad Irfan Khan, Naseem Shah, Saim Ayub, Shadab Khan, Shaheen Shah Afridi
New Zealand: Michael Bracewell (captain), Mark Chapman, Josh Clarkson, Jacob Duffy, Dean Foxcroft, Ben Lister, Jimmy Neesham, Tim Robinson, Ben Sears, Tim Seifert, Ish Sodhi
Umpires: Ahsan Raza (PAK) and Aleem Dar (PAK)
Tv umpire: Faisal Afridi (PAK)
Match referee: Andy Pycroft (ZIM)

US says Pakistan’s prosperity and security remains a ‘top priority’

Updated 18 April 2024

US says Pakistan’s prosperity and security remains a ‘top priority’

  • Blome’s comments come amid a spike in militant attacks in Pakistan
  • Pakistani finance chief has launched negotiations for a new IMF bailout 

KARACHI: US Ambassador Donald Blome met Pakistani Foreign Minister Ishaq Dar on Thursday and said the South Asian nation’s prosperity and security remained a ‘top priority’ for Washington.
Blome’s comments come amid a spike in militant attacks in Pakistan and while its finance chief is in discussions with the International Monetary Fund in Washington on a potential follow-up program to its nine-month, $3 billion stand-by arrangement.
“US Ambassador Donald Blome met today with Foreign Minister Ishaq Dar to discuss recent events in the region,” Acting US Mission Spokesperson Thomas Montgomery said. 
“Ambassador Blome conveyed the United States’ commitment to working with the government and people of Pakistan, underscoring that prosperity and security for Pakistan remains a top priority for the United States.”
Pakistan went to the polls on February 8 in a vote marred by a mobile Internet shutdown on election day, arrests and violence in its build-up and unusually delayed results, leading to accusations that the vote was rigged. 
However, the US has repeatedly said it will work with the new government of Prime Minister Shehbaz Sharif, though it has expressed concerns about reported election irregularities and urged a probe.
Although defense and key foreign policy decisions are largely influenced by Pakistan’s powerful military, Sharif will have to juggle relations with the US and China.
Islamabad has close economic ties to both the nations, which has put it in a tricky position as the two countries have embarked upon a costly trade war.
“From our perspective it has to be an and-and discussion,” finance minister Muhammad Aurangzeb said in an interview this week when asked how the Sharif government plans to conduct its trading relationships with the world’s two largest economies.
“US is our largest trading partner, and it has always supported us, always helped us in terms of the investments,” he said. “So that is always going to be a very, very critical relationship for Pakistan.”
“On the other side, a lot of investment, especially in infrastructure, came through CPEC,” he said, referring to the roughly 1,860-mile-long China-Pakistan Economic Corridor designed to give China access to the Arabian Sea.
Aurangzeb said there was a “very good opportunity” for Pakistan to play a similar role in the trade war as countries like Vietnam, which has been able to dramatically boost its exports to the US following the imposition of tariffs on some Chinese goods.
“We have already a few examples of that already working,” he said. “But what we need to do is to really scale it up.”
Militancy has also spiked in recent months, creating a major challenge for the new government, with religiously motivated groups like the Pakistani Taliban as well as ethnic separatists showing an enhanced ability to hit high-value targets.
In an attack last month that has so far been unclaimed, a suicide bomber rammed a vehicle into a convoy of Chinese engineers working on a hydropower project at Dasu in the northwestern Khyber Pakhtunkhwa province, killing five Chinese nationals and their Pakistani driver. 
The Mar. 26 assault was the third major attack in little over a week on China’s interests in the South Asian nation, where Beijing has invested more than $65 billion in infrastructure projects as part of its wider Belt and Road initiative.