China wants balanced trade, Pakistan tells ‘iron ally’

China’s iron ally Pakistan has become a source of economic concern for China as Beijing has asked Islamabad to cut imports. Addressing an event marking the start of local assembly of Chinese home appliance brand Midea, Chinese envoy to Islamabad Li Bijian said bilateral trade is heavily skewed against Islamabad, the agency reported. press Dawn.

“You import more and export less, even though my government, together with your government, is trying to reduce the trade deficit,” Bijian said, saying China wants to see more balanced trade.

Data from Pakistan’s central bank shows that at least a quarter of the total import bill in 2020-21 came from Beijing, according to Dawn’s report. It also showed that exports to China accounted for less than 8%.

China and Pakistan have a free trade agreement that allows Pakistan to export more than 300 items to Pakistan without incurring customs duties. Bijian also said the business situation is not developing as expected. Pakistan’s economy, like most economies, took the brunt of Covid-19 and failed to rebound as expected.

The International Monetary Fund (IMF) has asked Pakistan – as it had earlier asked Sri Lanka – to implement economic reforms that successive governments have been reluctant to follow and have asked Beijing’s state-owned banks to bail them out. in times of crisis. The IMF says Pakistan owes China $24.7 billion in total external debt. The United States Institute of Peace, in an article entitled “Pakistan’s growing problem with its Chinese economic corridor”, states that Pakistan “lacks the political will to break the grip of powerful groups of interests”.

A UN report pointed out that these groups “receive an estimated $17.4 billion in economic privileges – including tax breaks and preferential access to capital – which amounts to nearly 6% of Pakistan’s GDP”.

Business journalist Khurram Hussain in 2021, while writing for Pakistani news agency The News PK, said Pakistan was exporting low-tech agricultural staples like “frozen meat, poultry, dairy in solid form, human hair, animal stomachs, cut flowers, flower buds, tea, saffron, turmeric, maize, rice, starches, sausages, tobacco and tobacco refuse” in relation to the import “of electrical and electronic equipment, machinery, nuclear reactors, boilers, consumer goods, organic chemicals, iron and steel, articles of iron or steel, synthetic filaments, plastics, fertilizers and staple fibers Synthetics” from Beijing.

Hussain said the trade deficit cannot be overcome by exporting rice and buying technology and machinery.

Pakistan, also unable to prevent terrorism from emanating from its soil, remains on the Financial Action Task Force (FATF) gray list, which further deters companies and other countries from setting up projects in China.

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