PAK-CHINA RELATIONS GETTING STRONGER

AMANULLAH BASHAR
(feedback@pgeconomist.com)
Jan 17 - 23, 20
11

The economic managers in Pakistan are getting prepared to open a new chapter on the horizon of economic cooperation with China with special emphasis to grab a major share in more than one trillion US dollar global imports by China.

In Pak-China bilateral trade, it looks quite strange to see that the trade balance is heavily tilted in favour of China with the simple reason that neither Pakistani exporters have a sufficient back of export surplus nor they can compete with the contemporaries in terms of cost of production.

It may be mentioned that the key exports from Pakistan to China include textiles and made-ups, leather, marine products, minerals, marble/granite, chemicals, and food items. The basket of export items is quite limited and there is a dire need to expand the production base of the same items to the economy of the scale to meet the import requirements of China.

According to well-placed sources, China will be the major export destination of Pakistan during financial 2011 with over 30 per cent of the total exports, which certainly need improvement in the scale of production.

One of the most exciting areas of cooperation between Pakistan and China is the flow of investment into Pakistan. Though, at the moment, China has made investments in various projects especially natural resources and infrastructure development to the tune of $15 billion, yet it does not translate the true spirit of the relations between the two countries as well as the size of the Chinese economy.

The trust worthy friends of China need to be encouraged in a large number of untapped economically potential areas such as agriculture, oil and gas exploration and development of infrastructure in Thar coal fields..

TRADE WITH CHINA TO ELIMINATE FOREIGN EXCHANGE FEAR FACTOR

One of the most significant initiatives taken by the present government is to have a serious dialogue with China as well as Sri Lanka, Iran and Turkey to set aside trade in dollar terms as the transaction should take place either in local currencies or on barter system.

The significant development on currency front has a great potential to multiply trade volume with China without adding pressure on foreign exchange reserves of Pakistan.

In the present scenario, the policy of imposing sanctions against Iran by the United State has opened a new door for regional currencies as recently Iran has expressed its willingness to accept payment of an oil deal worth $20 billion in rupee terms from India.

It may be mentioned that China, which has the world's largest money printing operation, is struggling to meet the demand for Yuan in the face of rampant lending and a flood of foreign exchange into China.

It is interesting to note that China employs more than 30,000 people to print money and offers them incentives to work extra hours to ensure there is enough Yuan in circulation to match demand, which is growing by 20 per cent a year.

The financial analysts were of the view that China will overtake the United States as the largest economy as early as 2018 on purchasing power parity as the financial crisis accelerates the shift in economic power to emerging economies.

EXPORTS TO CHINA

In order to gear up exports to China, the Trade Development Authority of Pakistan

(TDAP) has taken initiative to support and facilitate the trade through its recently launched interactive knowledge based Web Portal (www.tdap.gov.pk) to enhance bilateral trade with a firm and consolidated effort to grab a bigger share of over a trillion US$ imports of China.

The federal ministry of trade and commerce as well as TDAP have strongly recommended that China and Pakistan need to work together to improve the efficacy of the free trade agreement (FTA) through dismantling non-tariff barriers.

To achieve the target of enhancing exports to China, the government is working on the projects focusing on trade related workshops and seminars to be held both in China and Pakistan, in order to educate and create awareness amongst stakeholders about the trade potential.

LANGUAGE

The barrier of Chinese language is the only irritant hampering growth in business relations between the private sectors of the two countries.

In order to bridge the gap, it is a food for thought for the policy makers at the helm of affairs that courses of Chinese language should be introduced at all business colleges and universities to pave the way for smooth communication between the business counterparts in both of the countries.

The warmth of relationship between Pakistan and China calls for immediate initiative of introduction of Chinese faculty in all major universities, which is the only way to bring the people of the two friendly countries closer to each other.

There is an ample scope of cooperation in the education sector of Pakistan and China by sending large groups of children of the primary and secondary level for learning Chinese language courses sponsored by the government in Pakistan. This sort of investment in the education program would certain yield fruits in not a distant future.

PROMOTIONAL ACTIVITY

Currently, Pakistan is preparing to participate in 15 international exhibitions to be held in China in which the country would be representing different segments of the economy, indeed a positive step. In this connection, TDAP will arrange and send some eight business delegations to China next year.

Under this action plan to enhance trade ties with China, TDAP will invite and sponsor business delegation from China to visit Pakistan EXPO to be held on February 25 to 28, 2011. While Pakistan will be the host of several Chinese buying missions during the year. One of the most interesting events this year would be the mango festival being organized to capture fruit market in China.