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Dec 03 - 09 , 2001

China has offered special facilities to develop garment and leather industry of Pakistan

The Federal Minister for Commerce and Industries, Abdul Razzak Dawood, who visited China last week with a delegation of businessmen signed an agreement with his Chinese counterpart to futher boost the trade and overall economic relation between the two countries. China has offered special facilities to develop garment and leather industry of Pakistan to enable it enhance its exports to China.

China already is one of the leading trade partners of Pakistan with a trade volume of over $ 1.5 million annually besides assisting Pakistan in developing its coal reserves in Thar, Gawadar Port, Hydel and Coal Fired Power Generation, Saindak Copper and many other projects of nation importance. Trade balance is, however in favour of China which is now intended to convert to an even level through enhanced exports from Pakistan specially the textile and leather products for which there is great potential. To improve the quality of Pakistan products, China has agreed to extend financial support to Pakistan for development of its garments and leather industry.

On his return from Beijing, the Commerce Minister told newsmen in Islamabad that the two countries have agreed to give a major boost to trade and economic cooperation in the coming years. A number of proposals will be finalised to this effect during General Pervez Musharraf visit to China next month. The relation between the two countries are excellent and there was much scope for enhancing economic relations", he said adding that China will invest in Pakistan textile sector by providing machinery and transfer of technology. China has agreed to provide soft loan of $25 million for this purpose, he disclosed. He termed his meeting with Chinese Minister for Foreign Trade and Economic Cooperation (MOFTEC) Shi Guang Sheng as very productive. During the meeting, they observed that two countries have been enjoying good political relations and deep-friendship over the years, but the pace of their economic cooperation was quite low. However, they noted that after the visit of Chinese Premier Zhu Rongji to Pakistan, there was good progress in their trade ties. The bilateral trade volume was $1.2 billion in the year 2000. This received a quantum jump in the following nine months and the trade volume raised to $990 million during the period from January to September 2001, registering 17 per cent increase.

The Commerce Minister hoped that the increase in the bilateral trade would be 22 per cent next year. Presently the balance of payment is in favour of China. But, he added the Chinese friends have assured that equity would be maintained in the bilateral trade.

Razzak Dawood said since China is very rich in silk cloth, so it was decided that Pakistan will extend its cooperation for its reprocessing, including embroidery and painting. China will export raw silk to Pakistan, enabling it to undertake its reprocessing for onward export to Middle East and Africa. It was decided that Chinese businessmen and dealing ministry will soon pay a visit to Pakistan to study as how the two countries can cooperate for their mutual benefits.

It was decided that Chinese investors will set up a "Silk Park" for display of its special cloth and its related development technology. For this purpose, Pakistan will allocate special land in its Industrial Estate Zone, probably in Karachi. Pakistan will extend its cooperation in garment making, using the Chinese silk. It was also agreed that China will enhance import of leather goods from Pakistan. Presently, Pakistan is exporting leathers goods worth dollar 10 million. Now it was decided to increase it to 150 million dollar annually.

Pakistan, the Minister said has also offered China to set up its garment industry in Pakistan, for which a special land can also be earmarked in Export Processing Zone. This will help China to develop variety of its cloth in value-added form, with the help of Pakistani experts. The Chinese side expressed its desire to further increase the import of gray cloth from Pakistan. "We welcomed the offer, and it was decided that a Purchase-Mission will soon come to Pakistan for this purpose" the Minister added. He pointed out that currently Pakistan was exporting 65 million square meter gray cloth (cotton fabric) to China. This export, he added will go up by 15 per cent next year.

It was agreed in principle that China will buy 100,000 tonnes of polyester annually from Pakistan and there will be greater cooperation among the businessmen of the two countries in this sector. Pakistan-side also expressed its desire to import textile machinery from China, and asked for credit line from Exim Bank of China. The Chinese side agreed to provide 25 million dollar loan to Pakistan, enabling it to buy the textile machinery from China. This, he said will help to upgrade the textile industry, he added.

To facilitate setting up Silk Park, the Minister explained that Pakistan could provide 100 per cent equity to Chinese manufacturers. Pakistan, he said had a liberal trade policy and anybody who will come to Pakistan can get 90 per cent relaxation in payment of various taxes for the first two to three years. The investors will have no problem to remit back their capital gains.

It may be pointed out here that China is already one of the leading trade partners of Pakistan and its exports to this country are over three times larger than the imports from this country. The wide gap in the balance of trade has remained a source of concern for this country. But all efforts to increase exports to China and thereby to level the trade imbalance have so far proved to be utterly inadequate. This may be due partly to Pakistan's inability to compete successfully in the Chinese market both price-wise and quality-wise. However, Pakistan goods might also be facing higher Chinese tariffs and that may be one of the factors adversely affecting the competitiveness of Pakistani exports in that country. In this context, the present visit of the Commerce and Industries Minister to China has yielded good results as the Chinese have agreed to lower down the tariff on the lines of European Commission and the USA.