Pakistan has opted to switch from the US dollar to the renminbi when conducting trade and investment with China, just after President Donald Trump attacked Islamabad via Twitter for maintaining terrorist ties.
The Pakistan central bank made the announcement just 24 hours after Trump’s offending tweet, while on the same day Chinese foreign ministry spokesman Geng Shuang lauded Islamabad’s contributing to the war on terrorism.
Shuang said that Pakistan had “made great efforts and sacrifices for combating terrorism,” as well as called for other countries to “fully recognise this.”
China has sought to foster closer ties with Pakistan as the latter’s relationship with the US has undergone further deterioration since President Trump took office, and Beijing has driven the growth of its Belt and Road initiative.
“Pakistan and the US have had a fraught relationship for years, but the big change recently has been China,” said Simon Baptist, Asia regional director at the Economist Intelligence Unit, to CNBC.
“China has really gone hard in cementing its existing relationship with Pakistan, it’s really the only place that’s seen significant investment under the Belt and Road initiative, and China has been pushing for geopolitical advantage there.”
The centrepiece development of the Belt and Road initiative is currently the China-Pakistan Economic Corridor, comprised of nearly USD$60 billion in land and sea infrastructure projects.