China keeps its promise, offers $1bn market access to Pakistan

In this file photo, Pakistani Prime Minister Imran Khan, left, and China’s Premier Li Keqiang attend a welcome ceremony at the Great Hall of the People in Beijing on Nov. 3, 2018. (AFP)

• Islamabad to get additional balance of payment support from Beijing
• Second phase of FTA to be finalized next year, minister tells Arab News

KARACHI: Pakistan’s economy can finally breathe a sigh of relief.
In what is being considered as a major milestone for the country, Prime Minister Imran Khan – during a recent trip to China — has managed to secure $1 billion market access from Beijing to support its balance of payment program, Commerce Minister, Abdul Razak Dawood told Arab News in an exclusive interview.
“Pakistan’s delegation — comprising secretaries of finance, commerce, planning, and foreign affairs — and the governor of the State Bank of Pakistan will hold talks with Chinese authorities in Beijing, on November 9, for details of market access and the balance of payment support program,” Dawood said.
“During the visit [by PM Khan], China has assured to double its imports from Pakistan,” Dawood said, adding that plans are in place “to enhance exports and fully benefit from the market access as per the commitments by the Chinese authorities”.
In predated comments made to Arab News, Finance Minister, Asad Umer had said at the time that, during PM Khan’s visit to China, both countries would “negotiate the tariff of items line by line so that they (Chinese) could give us a trade concession to increase exports to China”.
However, according to Dawood, China has offered to increase exports by $1 billion without any terms or conditions. “They said leave the tariff lines aside and asked Pakistani officials to double exports to China. After achieving the targets, they will further enhance exports from Pakistan,” Dawood said.
The existing trade ties between the two countries, also known as “iron brothers”, have yet to realize their full potential, with the odds working mostly in China’s favor. During fiscal year 2018, Pakistan’s exports to China were recorded at $1.75 billion, while China exported $11.47 billion worth of goods to Pakistan, data released by the State Bank of Pakistan showed.
The ball is now in Pakistan’s court. “The plan will be finalized in a few days about the quantum of exports to China. We will decide how much textile, leather, and other goods will be exported to achieve the $1 billion target,” Dawood said.
Pakistan is facing a high current account deficit of $18 billion, mainly due to high import bills and insufficient exports and home remittances.
China’s timely help follows closely on the heels of support extended by Saudi Arabia where PM Khan was able to secure $6 billion from one of it oldest allies, during a recent trip to the Kingdom earlier this month. As part of the deal, Pakistan will be given $3 billion in cash, with an additional $3 billion worth of oil to be provided on deferred payments.
On Tuesday, Umar said that Pakistan had managed to emerge from the crisis due to the help extended by China and the Kingdom, even as plans are in place to negotiate a deal with the International Monetary Fund (IMF) for a bailout program. The IMF team is expected to arrive in Pakistan on Wednesday to kickstart the conversation.
“As a long-term solution to the balance of payment troubles, I am satisfied with the market access offered by the China,” Dawood said, adding that this initiative would help increase much-needed exports.
Additionally, during PM Khan’s visit, China and Pakistan signed 15 agreements for cooperation in various fields ranging from agriculture to space research. “Bother countries have singed MoUs for further cooperation in the area of socio-economic development, poverty alleviation, agriculture, economic and technical cooperation, forestry, earth sciences, higher education and technology,” Dawood said.
Also on the agenda was steps to take the Sino-Pak Free Trade Agreement (FTA) forward, which is now expected to be finalized next year. “Pakistan and China have decided to endorse the second phase of the FTA before June 2019,” Dawood said.
All eyes are on the multi-billion dollar China Economic Corridor Project – where Islamabad and Beijing are collaborating to realize the dream envisaged under the One Belt and Road Initiative.
While discussing the future for CPEC, it was decided to move on with the next phase with a focus on industrial expansion, agricultural revitalization and integrating trade between the two economies.