Trade deficit with China rises by 72pc

Published February 18, 2006

ISLAMABAD, Feb 17: Pakistan’s trade deficit with China has increased significantly in the last two years from $865.211 million in 2003-04 to $1.488 billion in 2004-05, indicating a rise of over 72 per cent.

Officials data available with Dawn indicated that the consistent increase in trade deficit with China was due to ever-increasing quantum of import of machinery, and parts, textiles and chemical products from China particularly following the preferential trade agreement (PTA) effective from January 1, 2004.

Under the PTA, China had allowed tariff concession to Pakistan on 893 items, whereas Pakistan had given concession to China on nearly 200 items. This concession in tariffs on products helped the Chinese exports flooding the Pakistani markets.

Although China had given concession on more tariff lines to Pakistani products but that could not help in any tangible increase in export of Pakistani products to China. This showed the lack of proper projection and correct analysis of the products by the Pakistani trade officials while negotiating the treaty.

But, it also happened because of the fact that China had given concession almost on the similar products to India under the Bangkok Trade Agreement (BTA), which created great competition for Pakistani products.

The statistics showed that Pakistan’s trade deficit with China stood at $245.512 million during the year 1998-99; $291.201 million in 1999-2000; $225.781 million in 2000-01; $346.588 million in 2001-02 and $594.465 million in the year 2002-03.

The trade deficit had increased to $865.211 million during 2003-04 and $1.488 billion in the year 2004-05. Only in the first quarter (July-Sept) of the current fiscal year, the trade deficit with China was recorded at $571.992 million.

The trade gap with China would further widen during the current fiscal year as the early harvest programme (EHP) — zero rate of duty—, which would attract more Chinese products at cheaper price to Pakistani markets.

Pakistan’s export to China has increased by 22.8 per cent to $354.092 million during the year 2004-05 as against $288.259 million in the previous year after the implementation of the PTA.

While Chinese exports rose by 59.75 per cent to $1.842 billion during the period under review as against $1.153 billion during the same period last year.

Pakistan’s major export to China was cotton yarn, which increased by 0.73 per cent to $149.821m in 2004-05 against $148.735m in the previous year.

The product-wise analysis showed that Pakistan exported $52.057m worth cotton fabrics during the year 2004-05 as against $52.531m during the previous year; export of chemicals and compounds $37.724m as against $8.512m; leather stood at $26.136m as against no exports; fish and fish preparations worth $22.537m in 2004-05 against $19.565m in the previous year.

Export of ores and concentrates of iron and steel increased to $25.639m in the year under review as against $8.910m in the previous year, raw cotton rose to $9.666m as against $1.925m; made ups of textile including towels $2.74m as against $1.066m; cutlery $1.554m as against $0.964m; apparel and clothing $1.325m as against $0.470m; knitted or crocheted fabrics $2.497m as against $0.034m.

The value of import bill of machinery was $97m in 1998-99 from China, which increased to $808.468m in 2004-05.

China’s other major exports to Pakistan during the year 2004-05 were- chemicals and compounds ($130.8m); chemical materials and products ($118.885m); coal, coke and briquettes ($63.428m); vehicles and parts ($55.005m); iron, steel and manufacture ($51.197m).

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