13 December 2023

Published in: The Nation

The recent advancements in Pakistan-China economic relations mark a significant stride in fortifying bilateral ties. Pakistan’s request to consider amending the Free Trade Agreement (FTA) and the provision of substantial financial aid by China demonstrate a collaborative effort towards enhancing economic partnerships.
The decision to revise the FTA to extend favorable terms to Pakistani products aligns with the evolving dynamics of global trade. This move aims to bring Pakistani products on par with those enjoying similar preferences in the agreement between China and ASEAN countries. Interim Commerce Minister Gohar Ejaz’s statement emphasizes the crucial significance of aligning Pakistani products to international trade standards. Pakistan’s request for a substantial $5 billion in financing for Chinese company relocations to Special Economic Zones (SEZs) or Export Processing Zones (EPZs) also signifies a strategic move to enhance economic collaboration and investment. This proposed funding, structured under a “Pay as You Earn” framework, allows repayment through the utilization of export proceeds. This strategic approach not only encourages Chinese investment in designated zones but also safeguards Pakistan’s foreign exchange reserves, alleviating any potential burden.
Moreover, the allocation of $5 billion for immediate trade finance in yuan underscores a vital shift in reducing dependence on the US dollar. By diversifying currencies for trade finance, both nations aim to stabilize their financial dealings and minimize reliance on a single currency. This step not only enhances economic flexibility but also aligns with the goal of fostering a more balanced and diversified financial approach between Pakistan and China.
The synchronization of import valuation data to eliminate trade figure discrepancies highlights a commitment to transparency and accuracy in bilateral trade. This alignment not only streamlines trade processes but also fosters a more transparent and trust-based economic collaboration between Pakistan and China.
These recent developments in Pakistan-China economic relations showcase a mutual commitment to fostering a more robust and mutually beneficial economic partnership. As we adopt a progressive and pragmatic approach towards fortifying economic bonds, these initiatives hold the promise of driving sustainable economic growth and fostering a more balanced trade relationship between Pakistan and China in the long term.

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