Pakistan- China trading going strong
Pakistan and China are pursuing a joint action plan to observe 2011 as the Pakistan-china friendship year. The two countries have initiated a new series of people-to-people interactions, bilateral exchange of government delegations and cultural troupes and opening up of extensive trade opportunities. The completion of 60 years of diplomatic relations between the two nations is being celebrated with great zeal and fervour.
The Trade Development Authority of Pakistan (TDAP) has taken a lead role in this regard by declaring China as the focus country for its trade initiatives in 2011-2012. TDAP is engaged in determining ways of how to expand trade, innovate commercial policies and create a favourable environment for cooperation with China on a wider scale.
The major events of the year, such as PakChina Business Cooperation Summit and a series of events under the auspices of Pakistan China Business Forum shall be bringing together a diverse range of more than 150 counterpart companies and an equally appreciable number of delegations from both the countries. Vigorous consultations have been pursued through these forums to explore opportunities for future investment and exports. The Western China International Fair, Urumqi International Trade Fair and Kashghar International Fair are strong forums where TDAP has played a key role in enhancing trade prospects for Pakistan.
The Pakistan China Business Forum is based on a grand vision of creating multiple trade-transport-energy corridors between Pakistan and China so that the region can be connected to South, West and Central Asia.
TDAP has identified enormous areas of mutual cooperation with a particular emphasis on the government and the private sector of China to invest in Pakistan through joint ventures. The business-to-business meetings is a proactive initiative of TDAP which is expected to achieve bilateral trade target of $12 billion by the end of 2012 through forging new business alliances between Pakistani and Chinese enterprises. TDAP has also stressed on the need for relocation of Chinese industries to Pakistan due to their potential of creating job opportunities and enabling the industrial units in Pakistan to create surplus for re-exporting to China. These are remedial measures for the trade deficit between Pakistan and China.
Special Economic Zone
As part of the broader vision covering PakChina relations, TDAP is working on the concepts of trans-border and trans-regional economic zones so that China’s Western Development Strategy benefits its immediate neighbours, particularly Pakistan.
China has allowed Pakistan to develop a one square kilometer zone which can be extended to 2 km in the newly created Special Economic Zone in Kashgar. Tariq Puri, Chief Executive TDAP, views the creation of the zone as significant, as Kashgar would become the Shenzhen of the West, providing a trade interface to investors and entrepreneurs of both the countries.
Although the overall trade between Pakistan and China is on a rise, border trade still remains a small fraction of the overall volume. Therefore, the development of Kashghar in the Xinjhiang province of China as the hub of bilateral and regional trade carries significance, as Kashghar city is the nearest to Pakistan. The construction of a railroad, fibre optic link and air link, and establishment of oil and gas pipelines up to Kashghar, will revive the Silk Route and will be a great benefit for Pakistan. A pre-feasibility study for a 411 miles long rail link between Havelian in Pakistan and Khunjerab has already been done at a cost of $10 billion.
In December 2010, Ryanair, a Pakistani charter airline, inaugurated its first 90 minute cargo flight between Islamabad and Kashgar. This has set a new means for transport of cargo between Pakistan and China. The connectivity will enhance transit trade opportunities for Pakistan, as African, South and Central Asian countries will find it cheaper to trade through Pakistan. Border trade was also a significant part of the agenda at the PakistanChina Business Forum in Kashghar, organized by TDAP, which is also making efforts towards visa facilitation for businessmen travelling to Kashghar.
FTA and Exports
According to Tariq Puri, the volume of bilateral trade between China and Pakistan is expected to increase to $15 billion by 2015 as by that time a good infrastructure for economic and trade cooperation with China would have been established. The Free Trade Agreements (FTAs) that have been signed with China cover goods, services and investments as the country is a colossal market for Pakistani goods and transportation costs to China are fairly low. Analysts say Pakistani exporters can create their own export market in China for jeans, fleece, knitwear and bed linen. Pakistan has the potential to export textiles, made ups, minerals, precious stones, leather, marine products, fish and value-added products produced from seafood plus sports goods and light engineering goods such as fans.
The overall year on year growth of Pakistani exports to China is 30 percent while Chinese exports are at 25 percent. TDAP is working to cover the trade deficit of $6 billion through such measures as sending Chinese buyers’ missions to Pakistan, encouraging Pakistani traders and trade officials to participate in Chinese fairs and exhibitions, entertaining unilateral trade concessions by China for Pakistan, second phase negotiations for further trade liberalization, establishment of trans-border economic zones, increase in the number of entry points between China and Pakistan for agricultural produce and promotion of the Chinese private sector in Pakistan