KARACHI, July 20: China emerged as the second largest market for Pakistani products after the United States in the fiscal year 2012-13, indicating a shift in the mindset of exporters who are more inclined to explore new markets.

The latest official data revealed that trade with China has been growing at a fast rate, though balance of trade is vastly in favour of China.

Pakistan’s exports to China are 56 per cent of imports by Pakistan.

The State Bank reported that the biggest importer for Pakistan is the US as exports to US in FY13 were to the tune of $3.878 billion.

The second highest exports were for China as it paid $2.697bn for Pakistani products in FY13. This development took place during the last five years.

During the fiscal year, Pakistan imported goods worth $4.761bn from China.

Trade and industry sources said that imports from China are much higher than official figures because of massive smuggling from the country.

Despite being the largest export market for Pakistan, the US exports to Pakistan were much lower. In FY13 the US exported goods worth $1.019bn to Pakistan.

China has also emerged as second largest trade partner after the UAE. But Pakistan has to face a serious trade imbalance with the UAE as its exports to Pakistan were the highest among trading countries with Pakistan.

UAE’s exports to Pakistan were $6.376bn while its imports were just $1.935bn in FY13. The two countries’ trade volume was $8.311bn.

However, China with its growing trade occupies second position with a trade volume of $7.458bn. The newly-elected government recently signed agreement with China to invest in Pakistan and develop a number of projects that would help boost trade.

It was observed that trade growth China was seriously imbalanced and was not in favour of Pakistan while smuggling of Chinese goods, like electronic items, makes the situation more concerning.

The current account deficit in FY13 was $2.299bn which was half of the previous year, but growing trade imbalance is pressuring Pakistan’s external account.

The trade imbalance during the FY13 was $15bn which neutralised the possible positive impact of record remittances sent by the overseas Pakistanis.

The country received almost $14bn remittances during the year which helped it keep its current account deficit in a manageable limit despite having poor foreign exchange reserves.