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Pakistan China Business Relation

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China is currently Pakistan’s largest single trading partner; while Pakistan is China’s second-largest trading partner in South Asia. Major imports from China include machinery and mechanical appliances, metals, chemical products, mineral ores, plastic scrap and transport equipment. Main exports include cotton yarn, cotton fabric, rice, leather and fish products.

In recent years, the bilateral trade volume between China and Pakistan has increased rapidly with stable commodity structure. However, despite robust investment from China, bilateral trade remains anemic. China’s imports from Pakistan reflect a downward trend whereas China’s exports to Pakistan are on an upward trajectory. Bilateral trade, which stood at US$ 1.3 billion in 2002, reached US$ 19.08 billion in 2018. Imports from China stood at US$ 12.7 billion and exports from Pakistan to China at US$ 1.85 billion in 2019.

To enhance bilateral trade volume, the two countries signed the 2nd Phase of China Pakistan Free Trade Agreement (CPFTA) during the Prime Minister’s visit in April 2019. CPFTA-II became operational from 1st January 2020. It would ensure provision of level-playing field in terms of concessions vis-à-vis other competitors; robust safeguard measures for protection of domestic industry; improved tariff reduction modality; higher liberalized import value from China and lesser import value for Pakistan and attracting FDI into SEZs.

Chinese Investment in Pakistan

According to the State Bank of Pakistan Annual Report 2018, during FY 2018, China was the biggest investor in Pakistan with an investment of US$ 1.591 billion out of a total of US$ 2.537 billion which amounts to 63% of total FDI. With the initiation of CPEC, there has been an upsurge in investment flows into Pakistan especially in infrastructure and energy sectors.


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