KARACHI: Exports to China have remained stuck around $2.7 billion for the last five years as exporters find it hard to penetrate the Chinese market.
According to the State Bank’s data, imports from China increased by $3.843bn to $13.506bn in FY24, but exports remained stuck up for the last five years to $2.7bn.
China is now Pakistan’s largest trade partner as it has replaced the United Arab Emirates and the United States during the last five years.
The rapid growth in imports from China reached its peak in FY22, when the figure soared to $17.3bn while exports stood at $2.783bn.
Although China has been offering its market to Pakistani products, local exporters said the high cost of production in this country “makes our goods uncompetitive” in the Chinese market.
Exports to China remain stuck at around $2.7 billion
Moreover, China is also a competitor in textile and leather products.
Exporters said Pakistan had limited products to sell in the Chinese market.
“China is the world’s production house and their export industry has advantages of much better economic policies, stable inflation and low interest rate,” said Aamir Aziz, a manufacture and exporter of finished textile products.
Imports from China declined sharply in FY23 to $9.663bn, against exports of $2.025bn. Before this fall imports recorded a high of $17.3bn in FY22.
Imports from China were $15.527bn in FY21 while exports amounted to $2.33bn.
From FY20 to FY24, exports to China ranged between $1.7bn and $2.7bn. However, imports have kept rising from $12bn in FY21 to $13.5bn now.
Smuggling of a number of goods from China is unaccounted for. At the same time, under- invoicing is also very common.
Energy sector loans
Pakistan is looking to get reschedule $15bn Chinese loans in the energy sector, but experts see little hope. Finance Minister Mohammad Aurangzeb is in Beijing to persuade Chinese investors to reschedule the loans.
China supported Pakistan last year through rollover of payments on $2bn loans. Pakistan is willing to launch Panda Bond in the Chinese market, but financial experts don’t show much enthusiasm for it.
The finance minister’s visit to Beijing is crucial as his success in China could pave the way for the $7bn IMF loan.
Published in Dawn, July 28th, 2024
