Pegging your currency means your central bank will manipulate forex reserves to keep a stable exchange rate between PKR and the currency it is pegged against. It does not mean that your monetary policy will be dictated by the currency that PKR follows. It does not even mean that the country whose currency you peg against will have to take your foreign debt. HKD is pegged against USD - does that mean Hongkong is run by US?!See this is the problem out of the box thinking has, people are so use to thinking in their old ways that they cannot persevere things. pegging your currency only works with an active inclusion of the master country. This will allow China to lock in trade and help grow both our economies. This will also allow them to have a say in our economic development. Unfortunately slower methods will not work but revolutionary finical thinking will work. Why not have a flat tax in Pakistan at 10% but all have to pay it . Done by Poland in the 90s see where they got. Pegging done by UAE, Saudi, Brazil and see where they got.
I am suggesting creating a trading block like the euro on yuan….. I see that I did not spell this out. It could possibly be paksitan , China , Afghanistan Bhutan……..and maybe Russia.
to increase trade you need an industrial base and for that you need trained manpower and standards which all can only come if you invest in your people. We unfortunately are only able to pay debts to get out of this squeeze trap we need to work on growing our industrial base. We as a country have successfully destroyed our industrial base by continuously increasing our tax base for the 2 % of the population which pays taxes
i did not read your profile you are an Indian, my mistake should not have argued as you do not understand Pakistan’s problems
You want China to take over Pakistan's external debt. This does not require currency pegging. For this, China should have confidence in Pakistan's economy - not the other way around. It is the Chinese who will need the balls for it. Not Pakistan
Finally, the strategy of currency pegging is used to have an artificially depressed exchange rate of PKR against the pegged currency. This will only yield results if you are able to actually export manufactured goods to China. But your first problem is Pakistan lacks the capability to peg against Chinese Yuan without running into hyper inflation. Also, the Chinese don't import any manufactured goods from Pakistan despite the FTA - because they simply manufacture everything other than high tech upstream goods better than anyone else can!