Daily Times

As per the data of the State Bank of Pakistan, Pakistan’s exports to China increased from $1.8 billion in the fiscal year 2018 to $1.9 billion in the fiscal year2019. In percentage terms, the share of exports to China increased from 7.2 percent in total exports in the fiscal year 2018 to 7.7% in the fiscal year2019. Major export items include cotton yarn, rice, alcohol and other spirits, copper and related products andchromium ores. It is worth mentioning that these items are contributing over 60 percent of the total exports to China which indicates a low export base of Pakistan.

The detailed figures of these products indicate that Pakistan’s exports of cotton yarn to China were $753.7 million in 2018, which reflects only 13.7 percent of the market share in China. Similarly, in rice exports, Pakistan only has 10 percentof the market share in China, as the total imports volume of China from the world in 2018 was $1.6 billion while Pakistan exported only $0.16 billion rice to China.

Pakistan’s imports from China decreased from $11.5 billion in the fiscal year2018 to $10.2 billion in the fiscal year2019. In terms of imports share, total imports share from China stands at 21.1 percent in the fiscal year 2018, which decreased to 20.2 percent in the fiscal year 2019.

Major import items from China include telephone sets, minerals/chemical fertilisers, electric generating sets, semiconductor devices and products related to alloy steel. However, the recent devaluation of Yuan will affect the trade balance as imports from China will become cheaper and exports of Pakistan will become competitive in the Chinese market. This may cause the further penetration of Chinese products in local markets.

The inflow of investment from China in the fiscal year 2019 declined to $1.1 billion from $2.1 billion in the fiscal year 2018. This shows that the FDI from China decreased by 47 percent during last year. A few months ago, a delegation of Chinese investors met with Prime Minister of Pakistan Imran Khan to show their interest in construction, automobile, power and information technology sectors. However, to materialize the investment in Pakistan, extensive efforts are required to minimise the bottlenecks in ease of doing business and boosting investors’ confidence.

The inflow of investment from China in the fiscal year 2019 declined to $1.1 billion from $2.1 billion in the fiscal year 2018

Under the revised FTA between Pakistan and China, 313 product lines of Pakistan will have duty free access and unilateral concession in China for the next fifteen years. This is a positive development for exporters to increase their market share in China.There is a need to develop domestic industries and market in Pakistan in order to obtain maximum benefits from the concessions under the FTA. Furthermore, it is important to develop a regulatory environment to increase investment inflows.

A recent step by the Chinese government of issuing long-term visas to Pakistani exporters should be followed by more such examples, as it will help Pakistani traders to better explore the Chinese markets. The move of declaring tax holiday for the Gwadar Port will help in tax-free import of raw material, which will promote trading activities in domestic markets.

It is important that Pakistan develops those products that are in demand in China along with increasing the export base. Leather is Pakistan’s major export item, but the export volume to China was only $38.6 million in 2018. Products including seafood, fruits, cereals, meat and dairy products also possess potential of export to China.

China has agreed to provide modern technology to improve the agriculture sector of Pakistan, which will not only help in boosting production but also increase exports in products including cotton and rice.

For the overall exports, the FBR recently announced an export facilitation scheme to facilitate exporters under which efforts will be made for ease of doing business and minimising human interaction among exporters and the department. Apart from that, duties and taxes on imported items such as machinery are exempted.

These are positive measures that will help to increase the overall exports of Pakistan and exports to China,along with creating domestic employment opportunities.

The writer works at the Sustainable Development Policy Institute, Islamabad