CPEC Dynamics; Bilateral Currency Swap Agreement And Balance of Payment of Pakistan


  • Muhammad Nadeem Javaid Karachi School of Business and Leadership, Bahadurabad, Karachi, Pakistan
  • Sikander Bizenjo Dawood Hercules Corporation, 9th Floor, Dawood Center, Pidc, Karachi, Pakistan




CPEC, Bilateral Currency Swap Agreements, China, Pakistan, Trade, BRI, OBOR, Macroeconomics


The China Pakistan Economic Corridor (CPEC) is considered as principal strategic component of China’s Belt and Road Initiative (BRI). Both countries have signed deals to the tune of $46 billion in 2015. Now these investments and loans call for repatriation of profits and interests which are causing a burden on Pakistan’s, already fragile, Balance of Payments (BoP). This study investigates the impact of China – Pakistan bilateral currency swap agreement (BSA) on Pakistan’s BoP by exploring three similar cases of BSA’s of China with: New Zealand, Mongolia, and Ukraine. Our analysis shows that bilateral trade in all the three cases has felt a strong and positive outcome but China as the foremost winner. Our recommendations suggest how Pakistan could gain the full advantage of the BSA in short, medium, and long-term.


Anzai, A., 2018, "Belt and Road provides landlocked Mongolia with chance to grow". Nikkei Asian Review.

Bank of Korea, 2012, Introduction of Korea-China Currency Swap-Financed Trade Settlement Facility. Ministry of Strategy and Finance, The Bank of Korea.

Bank of Mongolia, 2017, Mongolia's Foreign Trade Review.

CPEC - LTP, 2017, Long Term Plan for China-Pakistan Economic Corridor (2017-2030). Islamabad: Government of Pakistan; People's Republic of China.

Gabusi, Giuseppe., 2017 “Crossing the River by Feeling the Gold: The Asian Infrastructure Investment Bank and the Financial Support to the Belt and Road Initiative” 25, 23-24.

Huang, Y., 2016, "Understanding China’s Belt and Road Initiative: Motivation, framework and assessment". China Economic Review , 40, 314-21.

Hussain, I., 2018, Business? Yes. As Usual? NO! Islamabad: The CPEC 2018 Summit Supplement.

IMF, 2018, IMF Country Report Pakistan (Report No. 18/78). Washington.

IMF, 2017, IMF Country Report: Pakistan (Report No. 17/212). Washington: IMF.

IMF, 2017, Pakistan Selected Issues (Report No. 17/213). Washington: International Monetory Fund.

IMF, 2017, Thirtieth Meeting of the IMF Committee on Balance of Payments Statistics. Paris: International Monetory Fund.

Irshad, M. S., Xin, Q., & Arshad, H., 2015, "One Belt and One Road: Dose China-Pakistan Economic Corridor benefit for Pakistan’s Economy?". Journal of Economics and Sustainable Development , 6 (24).

Kamal, J., & Malik, M. H., 2017, "Dynamics of Pakistan’s Trade Balance with China". State Bank of Pakistan.

Kumar, A., 2006, "China-Pakistan Economic Relations". Institute of Peace and Conflict Studies (30).

Liang, Y., 2008, "Why Are China’s Exports Special? The Role of FDI, Regional Trade, and Government Policies". The Chinese Economy , 41 (6), 99-118.

McDowell, Daniel., 2019, “The (ineffectivness) Financial Statecraft of China’s Bilateral Swap Agreements ”

Ministry of Finance, 2018, Pakistan Economic Survey 2016-17. Islamabad: Ministry of Finance.

Munro, A., & Wooldridge, P., 2010, "Motivations for swap-covered foreign currency borrowing". BIS Papers.

Mustafa, S., & Zafar, A., 2017, "China Pakistan Economic Corridor: Importance and challenges for Pakistan and China". International Journal of Social Science and Economic Research.

NTC, 2015, Reasons of Decline in Exports of Pakistan. National Tariff Commission. Government of Pakistan.

OEC, 2018, Retrieved 2018, from The observatory of the economic complexity: https://atlas.media.mit.edu/en/

OSCE, 2016, Latest from OSCE Special Monitoring Mission (SMM) to Ukraine. Kiev: Organization for Security and Co-operation in Europe.

Park, H.-S., 2016, "China’s RMB Internationalization Strategy: Its Rationales, State of Play, Prospects and Implications". Harvard Kennedy.

PBC, 2018, 4th Review of the China Pakistan Free Trade Agreement (CPFTA) & Recommendations for Phase II and Negotiations. Karachi: Pakistan Business Council.

PBS. 2018, Exports & Imports of Pakistan. Retrieved from http://www.pbs.gov.pk/sites/default/files//tables/14.08%20_0.pdf

SBP, 2001, State Bank of Pakistan Annual Report FY01.

Shah, A. R., 2018, "How Does China–Pakistan Economic Corridor Show theLimitations of China’s‘One Belt One Road's Model". Asia and the Pacific Policy Studies , 5 (2), 378-385.

Small, A., 2017, "First Movement: Pakistan and the Belt and Road Initiative". Asia Policy.

Spivak, V., 2017, Why a Russia-China currency swap agreement turned out to be a damp squib. Retrieved 4 6, 2018, from Russia Beyond: https://www.rbth.com/business/2017/04/25/why-russia-china-currency-swap-agreement-turned-damp-squib-750321

Stats NZ, 2018, "New Zealand's two-way trade with China more than triples over the decade". Retrieved from Stats NZ.

Swaine, M. D., 2015, "Chinese Views and Commentary on the “One Belt, One Road” Initiative". China Leadership Monitor (47).

Vangeli, A., 2017, "China’s Engagement with the Sixteen Countries of Central, East and Southeast Europe under the Belt and Road Initiative". China and the world economy , 25 (5), 101-124.

Vorshilov, E., & Ulzii-Ochir, N., 2016, "Analyzing the Impacts of Mongolia’s Trade Costs". The Northeast Asian Economic Review.

Yelery, A., 2016, "China’s Bilateral Currency Swap Agreements: Recent Trends". China Report.

Zhitao, L., Wenjie, Z., & Cheung, Y.-W., 2016, "China's Bilateral Currency Swap Lines". EconStor.




How to Cite

Javaid, M. N. . ., & Bizenjo , S. . (2021). CPEC Dynamics; Bilateral Currency Swap Agreement And Balance of Payment of Pakistan. Review of Economics and Development Studies, 7(4), 561-576. https://doi.org/10.47067/reads.v7i4.417