China’s demand to use Chinese currency in Gwadar FreeZone has been turned down by Pakistan. Pakistan has rejected the demand by saying that any such step will affect Pakistan’s ‘economic sovereignty’.
At the Senior Officials Meeting on Monday, Pakistan told their final decision on the usage of Chinese currency. They clearly rejected the demand.
Moreover, there were some issues on signing the Karachi Circular Railways (KCR) project framework agreement worth $2 billion. The issues will be discussed between Planning Minister Ahsan Iqbal and Vice Chairman of the National Development and Reform Commission during JCC meeting, today.
Officials said, “If a consensus is achieved on the KCR at the political level, only then will both the sides sign the Framework Agreement. China wants to introduce its currency in Pakistan as part of its policy to internationalize the renminbi (RMB) – the official name of its currency.”
In Pakistan, both Ministry of Finance and the State Bank of Pakistan opposed China’s demand to use their currency RMB.
This was agreed upon that every financial agreement will be dealt via existing bilateral Currency Swap Arrangement.
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Officials said, “China wants Pakistan to accept its currency demand and make it part of the final draft of the Long-Term Plan (2014-2030). Pakistan has conveyed its opposition to the demand a few months ago but the Chinese side pressed it again.”
Original LTP draft stated, “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.”