KARACHI: Pakistan’s trade deficit with its largest trading partner China widened to $6.223 billion in the previous fiscal year.

The increase in the deficit came as Pakistan’s exports to China falter while imports from that country have been increasing for the last five years.

The volume of Pakistan’s overall trade with China was $10.029bn in the fiscal year 2015-16, including $1.903bn exports and $8.126bn imports.

There is no improvement in trade in favour of Pakistan with Beijing despite China-Pakistan Economic Corridor (CPEC). Though shrinking foreign direct investment in Pakistan was still dominated by China during FY16, the size was insignificant.

The trade deficit with the United Arab Emirates (UAE), which was the second biggest exporter to Pakistan after China, was $4.941bn in the preceding fiscal year.

Pakistan imported goods worth $6.021bn from the UAE while the exports were just $1.080bn. Both exports and imports to the Emirates dropped in the previous fiscal year.

Some analysts have cautioned that the rising Chinese influence in the economy of Pakistan could be counterproductive if Islamabad failed to avail the opportunities emerging out of close relations with Beijing.

Due to unusually large trade deficits in the preceding fiscal year, Pakistan had to use remittances being sent by the overseas Pakistanis to meet the shortfall. The remittances in FY16 came in at $20bn, but the country still faced the current account deficit of more than $2.5bn.

Published in Dawn, August 16th, 2016