TRADE WITH CHINA

MULAZIM ALI KHOKHAR
Nov 24 - 30, 2008

China has always been a good friend of Pakistan since its inception. China and Pakistan have at all times co-operated with each other at every good & bad. For trade co-operation, they have signed various agreements to improve trade with each other. For that they have inked free trade agreements like early harvest like programs. The Early Harvest Program was put to venture at the start of 2006 & has been merged to bilateral FTA.

By the FTA Pakistan got access at zero duty on various industrial products, textiles goods, marble and other tiles, leather articles, sports goods, fruits and vegetables; iron and steel products and engineering goods. China also reduced its tariff by 50% on fish, dairy sectors; frozen orange juice; plastic products; rubber products; leather products; knitwear; woven garments etc. Under this agreement, all the products' have been put to zero tariffs during 2008.

PAK TRADE

Over the few years Pakistan's trade deficit has increased, last year it increased by 55.62% and during July-Oct current year the deficit has increased 37.96%. Though our exports have increased over time but the imports are increasing at a greater pace.

PAKISTAN TRADE STATISTICS

(MILLION US $ )

ITEM JUL - JUN
FY08
CHANGE FY07 JUL OCT
%
CHANGE FY09 FY08 %
Balance of Goods & Services -21602 -13881 55.62% -7557 -5478 37.96%
Exports of Goods & Services 23712 21418 10.71% 8366 7050 18.66%
Import of Goods & Services 45314 35299 28.37% 15923 12528 27.10%

During July-Oct 2008, the exports have increased by 18.66% to US $ 8.37 billion while the imports have increased by 27.1% to US $ 15.92 billion.

Pakistan being a developing country needs to control the exorbitant & mounting trade deficit and for that China has always helped Pakistan in getting the necessary technology to produce the necessary products.

Textile products account for about 60% of Pakistan's total exports, while the textile represents 4.5% of total world exports and Pakistan holds only 2.15% of world's total textile exports. This is indicating the real and continuous challenge for Pakistan facing the forceful competition. To cater the challenges in various exporting products we need to produce quality products at international standards.

We have sought help of China in form of China specific industrial zone being established in Pakistan and this will help produce quality products in sufficient quantities to increase our exports. Although China is our competitor in the field of international trade but being a friend we have never seen China not helping us even in trade.

TRADE WITH CHINA

Since 2004-05 trade with china has been increasing at CAGR 25% and china exports hold a share of about 4% to total Pak exports. Our total trade with China for the Financial Year 2008 increased by US $ 108.89 million from US $ 575.9 million to US $ 684.79 million.

Today China stands as the 7th best exporting country for Pakistan and Pakistan's exports to China have augmented to US $ 685 million.

EXPORTS TO CHINA

VALUE IN 000 $

PRODUCT PRODUCT
INCREASE DECREASE
. JULY-JUNE . JULY-JUNE
. 2007-08 2006-07 VAR. . 2007-08 2006-07 VAR.
LEATHER TANNED 41,470 34,612 6,858 COTTON
YARN
307,269 329,247 (21,978)
FISH & FISH PREP. 41,158 30,263 10,895 COTTON
FABRICS
45,598 49,972 (4,374)
OIL SEEDS/NUTS
& KERN.
7,883 975 6,908 CHEMICAL
& PROD.
11,872 21,870 (9,998)
GUAR & GUAR PROD. 7,310 3,833 3,477 ENGINEERING GOODS 2,083 2,654 (571)
MARBLE & ONYX MANUF. 6,746 3,661 3,085 CUTLERY 1,707 1,760 (53)
RAW COTTON 4,558 50 4,508 ARTSILK
& SYNT. TEX
868 1,433 (565)
TENTS & CONVAS 3,860 35 3,825 YARN OTH. T
HAN C.YARN
703 2,904 (2,201)
METAL MANUFACTURE 2,260 2,121 139 MADEUPS
ART. OF TEX
520 595 (75)
SURGICAL INSTRUMENTS 1,716 1,383 333 READYMADE GARMENTS 330 496 (166)
SPORTS GOODS 1,502 840 662 LEATHER CLOTHING 286 745 (459)
COTTON BAGS/ SACKS 641 523 118 KNITWEAR
(HOSIERY)
255 311 (56)
RICE 567 185 382 BED WEAR 165 414 (249)
FRUITS 549 43 506 CARPETS 150 318 (168)
LEATHER GLOVES 253 229 24 KNITTED/CROA. FAB. 72 425 (353)  
FOOTWEAR 193 25 168 TOWELS 51 62 (11)
PRECIOUS & PREC.STONE 53 15 38 VEGETABLES 19 73 (54)
OTHERS COMMODITIES 192,110 83,202 108,908 OTHER
LEATHER
MANF.
16 456 (440)
. . . . JEWELLERY
GOLD
- 173 (173)
TOTAL 312,829 161,995 150,834 TOTAL 371,964 413,908 (41,944)
. 371,964 413,908 (41,944) . . . .
. 684,793 575,903 108,890 . . . .

The best exporting products to China have been Cotton Yarn and Cotton Fabrics with US $ 307 and 45 million respectively during FY-08, while the figures stood at US $ 329 and 50 million respectively. The both best exporting products sales have declined last year due to hampered domestic cotton productions.

The next best exporting products to china are Leather Tanned products and Fish. Both the products have witnessed increase of US $ 6.9 and 10 million increases in export sales. The export figures in FY08 stood at US $ 41.47 & 41.16 million for leather & Fish products respectively.

WHAT NEXT

Pakistan is establishing China Specific Industrial Zone in Pakistan, this will increase two way co-operations, relief in taxes and the move will provide Pakistan with 40% of required FDI from China.

TDAP is also promoting trade through activities such as organizing exhibitions, participation in trade fairs and trade delegations and through trade diplomacy.

Furthermore, Ministry of Food and Agriculture is arranging for SPS controls at Pak-China border for certification of cherry and other fruit products exports since they are in great demand in the Chinese market.