Trade with China

ISLAMABAD: This refers to the report published in your esteemed newspaper on January 7, 2015, headlined, “Talks with China: Pakistan unlikely to make more tariff reduction”. Although China is the fourth largest market for Pakistan’s exports, its share in Pakistan’s total exports is negligible. The share of textiles in Pakistan’s exports is more than 50 per cent, which Pakistan also exports to China. China has increased its global share in textile exports from four per cent in the 1980s to 14 per cent in 1997 and this share is still increasing, according to a Pakistan Institute of Development Economics study.

There is no doubt that Pakistan and China have historically been friendly. However, the volume of bilateral trade is not so commendable or favourable towards Pakistan. A Free Trade Agreement (FTA) was signed with China during 2006-07 when the total volume of bilateral trade was $4.1 billion, which was mostly in favour of China; Pakistan’s total exports to China were $0.6 billion and Pakistan’s imports were $3.5 billion with a bilateral trade deficit of $2.9 billion before the signing of the FTA. After the FTA was signed, the bilateral trade deficit further increased to $4 billion. The European Union (EU) granted GSP Plus status to Pakistan in December 2013; there has been a 20 per cent increase of Pakistan’s exports to the EU. Pakistan will enjoy this status till 2017. The volume of trade between Pakistan and the EU, till January 2014, was $10.9 billion and this was in Pakistan’s favour, with a surplus of $1.78 billion. Despite the friendly relations with China, we still have not been able to take as much advantage of them when it comes to trade. The opposite seems to be the case when it comes to trade relations with the EU.

Muhammad Akram

Published in The Express Tribune, January 10^th,  2015.

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