In a meeting that happened in Beijing, Chinese President Xi Jinping and Pakistani Prime Minister Shehbaz Sharif to launch a high-speed rail project that could cost $9.85 billion, Bloomberg reported.
The move comes as the world’s No. 2 economy moves to slow some of its lending due to growth concerns.
The report quoting a statement from Sharif’s office said two nations agreed to get started on the Main Line-1. The statement described it as “a project of strategic importance.”
That project involves upgrading a 1,163-mile, colonial-era track from Karachi to Peshawar to carry high-speed trains.
Earlier this week, Pakistan formally approved the project, which has been in discussion for years, without saying where the funding would come from or providing technical details.
Officials in Pakistan have previously said they expected to get loans from China for the upgrade, the news agency report said.
The US has in the past criticized China for using what it calls “debt diplomacy” to make developing nations more dependent on Beijing.
Still, earlier this year China delayed a bailout for Pakistan as its debt soared, and it has been scaling back lending in Africa as its economy slows.
About 30% of Pakistan’s foreign debt is owed to China, including state-owned commercial banks, the report said quoting a report by International Monetary Fund issued in September.
In June, Moody’s Investors Service downgraded its outlook on Pakistan to negative from stable, citing financial concerns.
In their talks, Xi and Sharif agreed to finalize details on an inner-city rail line in Karachi. The Chinese leader also said his nation would provide 500 million yuan ($68.7 million) to Pakistan to help it rebuild after flooding over the summer that displaced more than half a million people.
Also Wednesday, the two countries’ central banks signed a memorandum of cooperation on a yuan clearing in Pakistan, the People’s Bank of China said in a statement. It didn’t give more details, as per the Bloomberg report.