Home / This Week / Cover Stories / Is Pakistan benefiting through Pak-China trade?

Is Pakistan benefiting through Pak-China trade?

There is lots of interest exhibited by almost every Pakistani these days about the trade prospects with China. Even those who have never been to school know about CPEC and talk about the trade between Pakistan and China and the prospects of the Chinese investment in Pakistan. By and large, the perception is positive with some exceptions. There is concern in certain quarters of the society as well regarding the Chinese dominance. There is simple rule of economics that if the trade relations strengthen between a large and a small economy, the net beneficiary is always the small economy.

China is the second largest economy of the world having the worth of $14 trillion (nominal GDP). Pakistan’s economy is worth $306 billion and is 42ndlargest in the world in terms of nominal gross domestic product. China is the most-populated country in the world with total population of 1.3 billion whereas Pakistan being the 5thmost-populated country has a population of over 207 million. Pakistan’s economy over the period of last 30 years has grown below 5% whereas China’s economic growth is around 10% over last 30 years. Pakistan’s exports have never been over $26 billion, however, China’s exports are over $2.26 trillion.

China’s export of manufacturing sector is over 94% of the total exports whereas Pakistan’s manufacturing sector is not as good as it should be. China has trade surplus but Pakistan has got trade deficit beyond the means. China’s foreign reserves are over $3 trillion whereas Pakistan has got reserves to hardly afford import of three months.

Banking sector of an economy plays a vital role in the economic development. China also has the world’s largest total banking sector assets of $40 trillion with over $26 trillion in total deposits.

Pakistan’s banking sector ???: opinions may be sought from the experts, businessmen and the masses who suffer multiple charges for availing banking services.

China is a net importer of services products. This has been capitalized by India as being one of the largest service providers to China. Though the balance of trade is in favor of China yet Indian have tried their best to capitalize by providing services. The volume of bilateral trade between India and China stands at over $84 billion whereas bilateral trade between India and Hong Kong is around $34 billion.

Pak-China Free Trade Agreement is talk of the town and there is prevalent assumption that the influx of inexpensive Chinese products have almost wiped out the local industry. It must be noted that there is a serious discussion for FTA between India and China. Though India is facing balance of trade over $30 billion, yet lots of Indian businessmen are in favor of FTA between China and India. China also has free trade agreements with Australia, New Zealand, South Korea and Switzerland.


China-Australia Free Trade Agreement (ChAFTA) has delivered positive results for Australian businesses. A couple of years ago, China accounted for 34% of Australian exports. This made them Australia’s top export market with a total value of around AUS$98 billion, according to the Australian Government Department of Foreign Affairs and Trade.

A free trade agreement (FTA) between China and New Zealand was signed in 2008.The trade volume between the two countries hit $15 billion a couple of years ago and both countries seem to be enjoying the trade relations.

China has been Switzerland’s most important trading partner in Asia for around a decade and the third-largest globally after the EU and the United States.

China and South Korea signed Free Trade Agreement in 2012. Trade between China and South Korea was around $235 billion a couple of years ago. South Korea manufactures products that China wants, and it enjoys a healthy trade balance with China.

Based on all these examples, even a layman may gauge that FTA is not a problem at all. It is the mindset and the focus on business. Pakistan may achieve a lot from China in terms of trade in case there is focus on what is the need of China. Pakistan’s main export partners are United States 17%, China 8%, United Kingdom 8%, Afghanistan 6%, Germany 6%, United Arab Emirates 4% and Bangladesh 3%. It is the need of the hour to think what has gone wrong over the period of last decade that Pakistani exporters have not been able to benefit from the FTA and what is the issue with the local manufacturers who think the import from China would ultimately make Pakistan a trading country.

Check Also

Intricacies of the national budget

Intricacies of the national budget

Whether budgetary conditionalities of the International Monetary Fund (IMF), directives of the State Bank of …

Leave a Reply