KARACHI, Feb 21: In a polite snub, China has asked the Pakistani rice exporters to improve on their packaging as the first export consignment of 12 rice containers, under the Early Harvest Programme (EHP), reached the Chinese port.

The EHP has been launched from January this year under which Pakistan is exporting rice to China on one per cent duty. Signed in December 2005, EHP manifests the desire of the governments of Pakistan and China to translate their friendship, stretched over a period of more than five decades, into economic and trade partnership of the people of the two countries.

Under the EHP, Pakistan also enjoys the facility of exporting mangoes and oranges at five per cent duty till the end of the year 2006. From January 2007, Pakistan will export fruits at zero per cent duty. But, export of edibles demand special quarantine and packaging standards set by China.

“As a gesture of goodwill, the Chinese have not refused to accept Pakistani rice export consignments with sub-standard packaging. But China has advised the rice exporters to improve the packaging and bring it to the Chinese standard,” well-placed trade sources disclosed to Dawn on Tuesday.

Regarded as a first step towards a Free Trade Agreement (FTA), the EHP stipulates zero duty for about 3,000 items to be traded between the two countries. From Jan 1, 2006, Pakistan has started offering zero duty on 486 categories of Chinese products, while China is offering similar zero tariff on 769 categories of Pakistani products.

For those products with low tariff, China will cut duty by 27 per cent on 1,671 products from Pakistan, and Pakistan will cut tariff by 22 per cent on 575 categories of goods.

Before the EHP came into operation, Pakistan and China were trading under a Preferential Trade Agreement which, according to Chinese Customs, has pushed up the two-way volume of trade to $4.26 billion in the year 2005.

Pakistan’s exports to China jumped to $832 million in 2005 from $594 million in the year 2004, showing a robust growth of more than 39 per cent. Businessmen and commerce ministry officials of the two countries now want Pakistan China trade volume to reach $8 billion by the year 2008.

“Doing business with China is a science,” suggests Ilyas Javed, a former chairman and now a patron of Pakistan China Business Council (PCBC) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). He explained that the Chinese are very meticulous in business practices and expect their partners to conform to their standards.

“Ignorance of Chinese business standards is no excuse,” remarked Javed Khalili, now the senior vice chairman of the PCBC, who is convinced that under the EHP to be followed by an FTA in next one or two years, China will offer unlimited business opportunities to Pakistani businessmen.

A ‘Dragon City’ of more than 3,000 Chinese companies is coming up in the neighbouring Dubai, which will have a massive warehousing facility with a big population of senior Chinese executives. It will operate in the whole region of the Middle East, South Asia and other nearby countries.

Zahid Umar, an active member of the PCBC in the FPCCI, foresees Pakistan-China business growing further after the opening of the FPCCI liaison office at Guangzhou in South China.

During the conversation with the three PCBC leaders it was revealed that the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Chamber of Commerce of Industry,too, have opened their offices in Beijing and Shanghai.

The Indian initiative has pushed up the two way volume of China-India trade to $10bn and now the target is to take this volume to $25bn in the next few years.

Indian websites reveal that the Chinese leaders have been advising Pakistan right from —President Musharraf to federal ministers and officials — to go on a fast track on improving trade and economic relations with India.

While official Chinese imports are worth about $3 billion a year now, a lot of goods are making their way into Pakistani markets through informal channels. The total worth of these smuggled Chinese goods are said to be between 30 to 50pc of the formal imports. In a way Pakistan is now absorbing Chinese goods from $4bn to $4.5 billion in a year.

Two Chinese cities — Urumchi in Sinkiang and another small city in the Chinese hinterland— are thronged by Pakistanis mainly, from the NWFP. Those frequenting China say that there are now five weekly flights to Urumchi from Islamabad. All these flights are packed to the capacity and an overwhelming majority of them are from Pakistan mainly, from the NWFP.

Many of these passengers known as “khepias or carriers” in business jargon, visit the two Chinese cities frequently with dollars in cash and bring back the Chinese goods. The popular Chinese items being smuggled are toys, batteries, stationery items, tiles, electronic goods, computer parts and what not under the sun. The bulk of the items, being smuggled, are goods and products rejected by the domestic Chinese market.

Businessmen complain that the Pakistan government should have included these items, being smuggled from China, into the duty-free list under the EHP.

China is already in Pakistan’s automobile market in a big way and is producing relatively less expensive two- wheelers. It has forced the Japanese assemblers of the two-wheelers to bring down the prices of their products. After India, it is Pakistan now which is a big market of the two-wheelers.