November 26, 2006	Sunday	Ziqa'ad 4, 1427

KARACHI, Nov 25: This is the right time, many an economist and businessman think, for Pakistan to seriously explore the Chinese market of over 1.5bn people after signing the FTA and to get the local industry prepared to face competition for its survival.

Undertaking substantive research work to identify commodities and services which Pakistan can export would be more helpful to narrow down the rising trade gap with the economic powerhouse of the world.

Dr Qaisar Bengali, professor of economics at the Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, talking to Dawn said that it was essential to see whether there was any protection clause included in the agreement or not, if yes, then definitely Pakistan would get some benefit otherwise it would suffer.

According to international norms, a weaker country is always given some advantages to protect its industry from adverse impact making the free trade agreement really beneficial for both the signatories, he added.

But in Pakistan’s case the status of China as supplier of most of consumer goods would further get a boost as Pakistan has already been flooded with cheaper Chinese goods almost of all kinds.

“Definitely China would see expansion in their business and its trade surplus will further rise to new horizons as Pakistan has less to offer to the economic giant and importing more from there,” he elaborated.

He negated the impression that Chinese investors would start making huge investment in Pakistan owing to cheap raw material and labour, saying “our labour is not cheap but it is highly inefficient”. He further said that in largest context of regional trade scenario being signatory to Safta (Saarc Free Trade Agreement) and now FTA with China might create some conflict.

Ahsan Javed Chishti, chief economist at BMA Capital, said that initially trade deficit with China might go up but in the longer run Pakistan would be receiving Chinese investment in other industries, besides some of the mega projects that would translate into expansion of local industry boosting exports and improving infrastructure as well.

He termed the FTA deal a win-win situation for both: Pakistan would get access to the Chinese market and would only be able to capture its share if its goods meet quality standards at competitive prices, while China would be selling Pakistan more and more goods ranging from household items to textile plants and highly-sophisticated and latest technology items, besides getting cheap raw material and easy access to Pakistani ports for onwards export of its goods to world destinations at reduced freight rates.

“Next year is Olympic year and the demand of almost all kind of products and particularly sport goods will be rising there,” he said and added: “Local goods manufacturers should now start planning how to cash on this chance in a big way that not only give recognition to our industry but would also establish our credibility as quality-conscious nation.”

Mr Chishti says the rising influx of Chinese goods after the FTA goes effective next year may put some pressure on fragmented industries but it would force them to gear up their efforts to organise on modern lines adopting latest technologies for production. He said that it would also encourage the Chinese to invest in Pakistan in export-oriented industries, thus broadening the export base of the country and economic activities, creating more employment. They would also be bringing with them latest technologies and efficient methods of producing better quality goods.

Mr Chishti said that there was huge potential but simultaneously it was necessary to increase the productivity of local producers if the real benefit of this free trade deal has to be gained.

He said that the FTA had not made China bound to purchase from Pakistan, but it had given an opportunity to the local industry to make full benefit of this deal by offering good quality goods at reasonable rates to capture the Chinese market. Consumers, he observed, were benefiting from cheaper Chinese goods of all kinds. Mr Chishti said that export of raw materials such as copper, coal, raw cotton, yarn, etc., to China might start registering manifold increase because the emerging economic power needs them for meeting the demand of its industry.

A leading businessman in import and export with China was upbeat on the assurance of the Chinese president that Pakistani goods would be given preference. He said that now the government should direct its commercial counsellors to identify goods having demand in the Chinese market and display Pakistani items by holding single-country exhibitions in many Chinese cities to attract potential buyers of those goods.

The Pakistan-China two-way formal trade totalled $3.1bn in 2005-06 as compared to $2.196bn in 2004-05. The rising volume of bilateral trade indicated that there was still huge potential existed which should be explored as the balance of trade is hugely in favour of China.

During 2005-06 Pakistan’s export to China stood at $470m from $355m the previous year, and imports showed more rapid increase at $2.7bn against $1.842bn the previous year.