Trade balance tilts further in Beijing’s favour

Updated August 06, 2017

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Made-in-China garments now dominate local markets mainly because of their low prices. A massive influx of Chinese clothing has forced many Pakistani garment-makers out of business in recent years. Some analysts believe the actual value of Chinese imports is notably higher than the official figure of $10.53bn for 2016-17.—White Star/file
Made-in-China garments now dominate local markets mainly because of their low prices. A massive influx of Chinese clothing has forced many Pakistani garment-makers out of business in recent years. Some analysts believe the actual value of Chinese imports is notably higher than the official figure of $10.53bn for 2016-17.—White Star/file

KARACHI: China emerged as the largest trade partner of Pakistan in 2016-17, although exports to Beijing have been declining for the last four years.

Exports to China equalled just 15 per cent of imports from the same country last year, according to data released by the State Bank of Pakistan (SBP).

Chinese products are replacing local goods and becoming a dominant force in the domestic market, data shows.

Exports to China equalled 15pc of imports from the same country last year

Exports to China shrank to $1.62 billion in 2016-17 from $2.69bn in 2013-14. Imports from China, in contrast, grew to $10.53bn in 2016-17 from $4.73bn in 2012-13, an increase of 123pc.

Four years ago, Pakistan’s exports to China were 45pc of imports from the neighbouring country. The proportion fell to just 15pc in 2016-17.

The government argues that China-Pakistan Economic Corridor (CPEC)-related imports are behind the increase in overall imports.

However, trade data shows imports from Beijing have been increasing each year as Pakistan consistently failed to grow exports to China. The Ministry of Commerce never announced any strategy or plan to explore the Chinese market for Pakistani products.

“Not only are Chinese products replacing Pakistani goods in the domestic market, but also the Pakistani products like ceiling fans are no longer Pakistani. Most parts like copper winding are imported from China, but fans are sold as Pakistani products,” said Rashid Aziz, a retailer of ceiling fans.

Local markets have been flooded with smuggled Chinese products, which are sold openly. Imported and smuggled Chinese goods have complete domination in the local market, hurting survival prospects of local products like furniture, wooden goods, tiles, glass items, fans, cotton finished products, iron and steel products etc.

No official estimates are available as far as the market size of smuggled Chinese products is concerned. But people in local markets believe the value of smuggled goods can be higher than that of official imports.

The official figure for imports from China is also disputed by independent economists. They say Chinese exports to Pakistan are about $5bn higher than the figure published by Pakistan.

The country faces a trade imbalance of $30.5bn while the current account deficit reached a record-high of $12bn in 2016-17.

Published in Dawn, August 6th, 2017