| by Dr. Noor Ahmed Memon |
China and Pakistan are close and friendly neighbors. Pakistan has treated China as its most important economic partners. Rapid economic development in China and consequent inter-regional activity has caused increased demand for raw materials, exchange of parts, components, intermediate products and development of cross country production works and processes. Consistent growth in economic relations amplifies the strength off their relationship.
China and Pakistan also have witnessed steady growth in mutual investments in recent years. In the last few years, investment of more than US $1.3 billion was made by China in Pakistan. Chinese have invested in Pakistan in telecommunications, energy, infrastructure, heavy engineering, IT, mining, and defense related industries.
Presently, a large number of Chinese companies are working in Pakistan in oil and gas, IT and telecom, power generation, engineering, automobiles, infrastructure and mining sectors.
These include names like, ZTE, Huawei Technologies Co Ltd, China National Machinery Import/Export Corporation, Metallurgical Construction Corporation of China, China International Water and Electric Corporation, China Petroleum, and Haier.
Pakistan and China are already cooperating closely in the development of Gwadar Port, which would help economic activity in Pakistan and provide important access route to the sea for China’s Western regions, Afghanistan and Central Asian states. A large number of important projects such as the up-gradation of Karakoram Highway, Thar Coal Mining, up-gradation of Pakistan Railways and Power Generation Projects – both nuclear and non-nuclear – are some of the examples of this expanding economic cooperation.
Pak- China Trade
There is high demand for Chinese goods in Pakistani market. Their experience of growth in trade is positive due to convenient trade flows and openness measures. Trade and investment policies are liberal since 80s' and generally WTO compliant. The pattern has merchandise bias but with high volume of manufactured items.
Bilateral trade had reached US $ 3.31 billion in 2009. The balance is, however, in favour of China due to lesser exports by Pakistan. The balance of trade increased from US $1.38 billion in 2005-2006 to US $2.0 billion in 2008-2009. Important factor of trade deficit with China is growing exports of Chinese products to Pakistan. Since these are more economical, businessmen are inclined to buy more from China. Pakistan, therefore, should be looking at China not simply as an export market, but as a primary source for import of capital goods and industrial raw material. Table-1 shows trade balance between Pakistan and China.
Table 1: Pak - China Trade (Value US $ million) | |||
| Year | Exports | Imports | Trade Balance |
| 2005 - 06 | 436.9 | 1,842.8 | - 1,378.9 |
| 2006 - 07 | 547.6 | 2,321.3 | - 1,773.7 |
| 2007 - 08 | 684.8 | 3,029.5 | - 2,344.7 |
| 2008 - 09 | 701.0 | 2,708.3 | - 2,007.3 |
| Source: (i) Trade Development Authority of Pakistan. (ii) State Bank of Pakistan. | |||
Exports: Exports from Pakistan to China increased from US $ 437 million in 2005-2006 to US $701 million in 2008-09, thus showing an average increase of 10% per annum. The main items of Pakistan’s exports to China are cotton fabrics, cotton yarn, bed wear, surgical instruments, tent and canvas, marble, fish and its preparations and leather. Unfortunately, mix of Pakistan’s products exported to China is very narrow. Almost around 80% of its exports consist of cotton yarn and other textile products. Export of textile and other items from Pakistan to China is given in Table-2.
Table 2: Export of Textile and other products from Pakistan to China Value: US $ 000) | ||
| Products | 2008-09 | 2007-08 |
| Cotton yarn | 366,295 | 307,269 |
| Cotton cloth | 79,418 | 45,598 |
| Bedwear | 4,361 | 165 |
| Yarn other than cotton yarn | 1,211 | 703 |
| Textile made-ups | 1,123 | 520 |
| Tents and canvas | 1,114 | 868 |
| Art silk & synthetic textiles | 473 | 281 |
| Cotton thread | 388 | 330 |
| Readymade garments | 268 | 143 |
| Knitted fabrics | 103 | 51 |
| Towels | 913 | 4,558 |
| Raw cotton | 269 | 286 |
| Apparel & clothing | 231 | 3,860 |
| Tents and canvas Knitwear | 131 | 255 |
| Waste material of textile | 35 | 142 |
| Cotton bags / sacks | -- | 641 |
| Fish & fish preparation | 42,487 | 41,158 |
| Plastic materials | 15,361 | 10,795 |
| Leather | 36,638 | 41,470 |
| Marble & stones | 6,860 | 6,559 |
| Surgical goods | 2,312 | 1,716 |
| Cutlery | 1,777 | 1,707 |
| Guar and guar products | 5,745 | 7,310 |
| All others | 133,530 | 208,408 |
| Total | 701,043 | 684,793 |
| Source: Trade Development Authority of Pakistan. | ||
Under the 5 years programme launched in 2006 for strengthening of economic relations, the existing trade is to be enhanced to US $15 billion by 2012. Besides, different projects have been identified in the programme for co-operation and investment in various economic fields.
Imports: China has become one of the top five import sources of Pakistan.
Major imports from China are machinery, chemicals, garments and other textile products, stationery products, construction materials like tiles, sanitary wares and crockery, etc. Imports from China also increased from US$ 1.84 billion in 2005-2006 to US$ 2.71 billion in 2008-2009, thus showing an average increase of 9% per annum. Textile machinery and electrical appliances are the major parts of overall exports. Bilateral trade had reached around US $ 3.41 billion in 2008-09.
However, amongst other reasons, one of the reasons for improvement in trade and investment from China is the Chinese government’s persuasion of its state-controlled enterprises to import Pakistani products in order to improve the trade balance and make more project specific investments.
Import of textile machinery from China to Pakistan is given in Table-3.
Table 3: Import of Textile Machinery from China to Pakistan (Value : in Rs . 000) | |||||
| Machinery | Unit | 2008-09 | 2007-08 | ||
| Quantity | Value | Quantity | Value | ||
| Carding Machines | No | 67 | 88,993 | 355 | 330,542 |
| Combing Machines | No | 2 | 4,857 | -- | -- |
| Drawing / Roving Machines | No | 11 | 14,914 | 253 | 204,786 |
| Blow Room Machinery | No | 36 | 42,886 | 134 | 132,910 |
| Machinery Preparing Textile Fibre | No | 517 | 197,058 | 38 | 26,059 |
| Textile Spinning Machines | No | 131 | 255,450 | 1,888 | 1,203,882 |
| Textile Doubling or Twist Machines | No | 97 | 75,867 | 55 | 32,527 |
| Weft Winding Machines | No | 3 | 2,607 | 13 | 9,858 |
| Cone / Bobbin Winding Machines | No | 12 | 14,954 | 10 | 2,049 |
| Reeling Machines | No | -- | -- | 1 | 868 |
| Textile Winding Machines | No | 55 | 57,958 | 43 | 19,286 |
| Textile Fibre Machinery | No | 99 | 125,080 | 142 | 113,194 |
| Weaving Machines / Power Looms | No | 84 | 719,60 | 106 | 28,773 |
| Weaving (Shuttleless Looms) | No | 27 | 31,612 | 258 | 95,233 |
| Circular Knit Machines | No | 19 | 17,039 | 3 | 2,144 |
| Flat Knitting Machines (Dia > 165 mm) | No | 247 | 46,393 | 25 | 9,399 |
| Embroidery Machines | No | 4,025 | 1,121,603 | 2,453 | 1,657,711 |
| Circular Knitting Machines | No | 262 | 71,256 | 195 | 61,860 |
| Dobbies Jacquard copy Machines | No | 209 | 28,590 | 6 | 821 |
| Other Auxiliary Machines | No | 201 | 91,529 | 174 | 47,065 |
| Top and Flat Card Clothing | 000 Kg | 61 | 73,495 | 89 | 93,324 |
| Other Card Clothing | 000 Kg | 65 | 101,134 | 137 | 102,384 |
| Parts Accessory Machines of Textile Fibre | Kg | 173 | 314 | 465 | 186 |
| Spindles Textile Machines | Kg | 1,752 | 2,527 | 3,950 | 4,269 |
| Spindle Flyer Ring Travellers | 000 Kg | 118 | 132,384 | 252 | 154,219 |
| Spinning Rings | 000 Kg | 114 | 142,540 | 254 | 131,581 |
| Reeds for Looms | 000 Kg | 97 | 39,270 | 129 | 32,046 |
| Healds and Healds Frame | 000 Kg | 197 | 93,322 | 324 | 96,259 |
| Shuttles | 000 Kg | 19 | 11,068 | 19 | 5,541 |
| Parts of Weaving Machinery | 000 Kg | 53 | 43,862 | 101 | 55,270 |
| Other Parts | 000 Kg | 288 | 265,433 | 594 | 291,204 |
| Total | -- | -- | 3,193,995 | -- | 4,945,250 |
| Source: Federal Bureau of Statistics, Government of Pakistan. | |||||
The excellent political and strategic partnership between Pakistan and China contributed in increased trade and economic cooperation, enhanced investment and mutual economic prosperity.
The areas of bilateral cooperation included the setting up of Pakistan and China Joint Investment Company (JIC) for direct investment and joint ventures. The objective is to support Chinese investments in Pakistan and earn profits for its investors. Today 120 Chinese enterprises and 10,000 Chinese personal in Pakistan are contributing to Pakistan’s economy in diverse sectors including telecommunications, infrastructure development, energy, mining, construction, consumer goods, auto industry and defense technology.
In the last few years, the two governments have convened a number of high-level conferences/forums, inaugurated by their respective leadership in Pakistan and China, to promote economic cooperation thereby exhibiting interest, resolve and patronage to the private sector business community of the two countries.
Prime Minister, Syed Yousuf Raza Gilani on his visit to China, proposed the creation of a joint ‘Pakistan-China Holding Company,’ aimed at facilitating financing for Chinese companies intending to invest in Pakistan.
The Prime Minister sought more investment in Pakistan’s hydro power and infrastructure development projects and said it would go a long way in generating economic activity and employment opportunities in the country.
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