Trade Balance between Pakistan and China

We always heard about the geostrategic importance of Pakistan. But never unearthed this so-called opportunity other than only for defense purposes in US wars against USSR and War on terror, but our relations as an ally with the US is still in a limbo due to distrust between Washington and Islamabad!  My topic is not analyzing the PAK-US relations but to highlight our approach to engage with new allies and take distance from old allies. We are just shifting our concentration from the US to China is in a most inappropriate manner i.e. disassociation with US and engagement with China in hurry/hustle with no assessment of risk and opportunity costs involved and there is no consensus from all stakeholders and policy experts and it looks like a One Man/institution show.

We are neighbor to three out of five emerging economies of BRICS i.e.  Brazil, Russia, India China, and South Africa. Other than defense lens, we never acknowledge our own importance in business perspective, nor do we try to approach almost half population of the globe living in these BRICS economies. The success reason of these economies is mainly due to their own population and serve it through indigenous products, and upon doing that they have experienced and able to compete with other MNC global giants.

Pakistan has very low trade engagement with neighbors as compared to others in the region like IRAN and INDIA. Yes Pakistan has larger trade with China but it is mainly one sided by overloaded imports as compared to exports i.e. almost 90% vs 10%. The country faces a trade imbalance of $30.5bn while the current account deficit reached a record-high of $12bn in 2016-17. Pakistani traders’ especially SME’s facing a lot of problems from Chinese authorities upon exporting goods via Sost-Kashghar Route. Pakistani agri-products normally disposed-off/perished while reaching Urumqi China and so many traders have been disappointed by these non-tariff barriers by Chinese authorities as well as lack of support and cooperation from Pakistani trade departments. In addition to this local markets have been flooded with smuggled Chinese products, which are sold openly with no fear from taxation and customs authorities, these practices resulted in low collection of tariffs and taxes. Imported and smuggled Chinese goods have complete domination in the local market and local manufacturers have discouraged by this import overlay and with prevailing electricity issues and have diverted the investment to other countries or switched their efforts and importing/smuggling goods from China. No official estimates are available as far as the market size of smuggled Chinese products is concerned. But people in local markets believe the value of smuggled goods can be higher than that of official imports.

Before engaging fully in upcoming China Pakistan Economic Corridor (CPEC) and One Belt One Road (OBOR), based on above empirical evidence we need to build strategic policies with quick actions to prevent the above economic losses and try to achieve the optimal benefit from existing and future trade especially with CHINA. Pakistani authorities need to table the issues of local traders with Chinese counterparts in order to balance out/narrow this Import-export gap. In addition to this there is a need of spreading the advocacy campaign with local consumers to give priority to local manufacturers. Yes this is not possible immediately but we need to build the capacity of Local companies through application of modern business philosophies. Pakistan is now home of more than 70% of energetic youth; we can concur to these challenges if we made policies for long-term vision with no short-termism behavior.

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