China vows to help Pakistan tackle economic woes

BEIJING (Reuters) - China Premier Wen Jiabao pledged to help Pakistan overcome its economic troubles, Chinese state media reported on Thursday, although details of the assistance were not disclosed.

Pakistani President Asif Ali Zardari was expected to seek $500 million or more in soft loans from its neighbor as it struggles to come to grips with a financial crisis.

Premier Wen said the two countries were ready to advance their strategic relationship, a day after Zardari and China President Hu Jintao signed 11 agreements on trade and economic cooperation.

Zardari, on his first foreign trip as president, had made clear that commercial ties with China were foremost on the Pakistani delegation's agenda, according to Xinhua news agency.

Pakistan is facing a critical shortfall in its balance of payments, along with inflation at close to 25 percent and heavy government borrowing from the central bank to cover a budget deficit.

Analysts believe the central bank's reserves are barely enough to cover two months of imports and that the country urgently needs $3 billion to $4 billion.

"That Zardari would choose China as his first country to visit as president shows the high emphasis he places on developing friendly, cooperative Sino-Pakistani relations," Premier Wen was quoted as saying by Xinhua.

"Whether it's confronting the present financial crisis or fighting terrorism, China and Pakistan must strengthen their bilateral cooperation," Wen said.

China agreed to provide $500 million in a concessional loan to help Pakistan meet its balance of payment needs in April. Zardari hopes to secure another concessional loan of $500 million to $1.5 billion, the Financial Times reported.

Zardari said he wanted to develop the political friendship between the two countries that was already "deeper than the sea," Xinhua reported.

Zardari is wooing Beijing at a time when his country's relations with the United States are strained after U.S. forces in Afghanistan carried out cross-border air raids and at least one ground assault on al Qaeda and Taliban targets in Pakistan.

Washington also recently sealed a civilian nuclear deal with India that riled Pakistan. Both New Delhi and Islamabad have developed nuclear weapons to counter each other, but Washington has ruled out a similar deal for Islamabad.

(Reporting by Simon Rabinovitch and Ben Blanchard; Editing by David Fox)