Trading Friends. Trading Enemies.

[Indus Pakistan]

So with all the talk of trade deficit and economic problems I was looking at Pakistan's internationl trading partners. The figures are quite interesting. USA is the biggest single importer of Pakistani products but we buy little from USA. Thus USA is a trading friend in that we walk away with significant surplus. Europe is a good friend also. So is Afghanistan. All are surplus.

However China is by far huge source of deficit. Pakistan buys huge amount but the Chinese buy very little from Pakistan. This is same with UAE although to be fair with them Pakistan does get remittances from that country but still both countries are 'trading enemies' as they make large amount of the deficit Pakistan faces.

I think Pakistan needs to speak with the Chinese and demand that they tilt the playing field so that Pakistan can at least export to China as much as we import. That would go a long way to balancing the books. I understand the Vietnam at the moment exports to China in areas where Pakistan could grab the market. All China has to do is put tariffs on Vietnamese goods that make Pakistan exports competitive. Not much to ask Chinese to push the Vietnames out of way and give their 'ironclad' friends a chance? This is also lot better and respectable then asking or begging for loans. No?

Thoughts people ......

 

[BHarwana]

Yes Pakistan trade deficit with China is greater because Chinese goods are cheaper. If we buy the same amount goods from USA our trade deficit will become double. Most of the products coming from China are raw materials which when developed get exported. For example importing one machine from China cost us if $1000 the same machine if imported from Europe will cost $5000 this it will increase our trade deficit by many folds.
Hope you understand this.

 

[Indus Pakistan]

Yes Pakistan trade deficit with China is greater because Chinese goods are cheaper. If we buy the same amount goods from USA our trade deficit will become double. Most of the products coming from China are raw materials which when developed get exported. For example importing one machine from China cost us if $1000 the same machine if imported from Europe will cost $5000 this it will increase our trade deficit by many folds.
Hope you understand this.

Non of what you said helps the issue which is a large trade deficit with China which is cause of the trade account deficit. Of course there are economic reasons why the pattern of the trade is what it is. Although we must understand it's not all pure economics as artificial tariffs effect the pattern of trade, My point is since we have nearly $11 billion in trade deficit with China we could expect China as a friend to employ tariffs so that our goods become competitive versus for example Vietnam and other countries. After all we are the 'ironclad' friends not the Vietnamse.

 

[BHarwana]

Non of what you said helps the issue which is a large trade deficit with China which is cause of the trade account deficit. Of course there are economic reasons why the pattern of the trade is what it is. Although we must understand it's not all pure economics as artificial tariffs effect the pattern of trade, My point is since we have nearly $11 billion in trade deficit with China we could expect China as a friend to employ tariffs so that our goods become competitive versus for example Vietnam and other countries. After all we are the 'ironclad' friends not the Vietnamse.

By buying from China the trade deficit is not large but contained. Like we are buying cars from Japan instead of China if we start importing from China the price will decrease and deficit will decrease. Buying a $10000 car from Japan will cost $6000 from China and deficit will decrease. It is very simple math just try.

If people have money to spend they will buy stuff, you cannot stop them other than imposing taxes so better way is trying to make that stuff cheap so where a $1000 will leave your country now only $600 will leave. Yes stop imports of those which you are domestically producing and to revive domestic production we are making cpec so that our energy needs are met and we can produce and reduce trade deficit.

 

[Indus Pakistan]

By buying from China the trade deficit is not large but contained. Like we are buying cars from Japan instead of China if we start importing from China the price will decrease and deficit will decrease. Buying a $10000 car from Japan will cost $6000 from China and deficit will decrease. It is very simple math just try.

If people have money to spend they will buy stuff, you cannot stop them other than imposing taxes so better way is trying to make that stuff cheap so where a $1000 will leave your country now only $600 will leave. Yes stop imports of those which you are domestically producing and to revive domestic production we are making cpec so that our energy needs are met and we can produce and reduce trade deficit.

Your obfuscating the point here. I am talking about increasing Pakistani exports to markets that are source of huge deficits. China is the biggest source of the deficit and since it happens to be our friend we could ask them to apply tariff regime that increases our exports to that country and thereby relieving the current account deficit thus saving us from going cap in hand begging to IMF.

What are friends for ?

 

[Kabira]

Yes Pakistan trade deficit with China is greater because Chinese goods are cheaper. If we buy the same amount goods from USA our trade deficit will become double. Most of the products coming from China are raw materials which when developed get exported. For example importing one machine from China cost us if $1000 the same machine if imported from Europe will cost $5000 this it will increase our trade deficit by many folds.
Hope you understand this.

Its in China's interest to see Pakistan going forward without needing IMF bailout every 3 years. There were plans to setup industries under CPEC, time to implement them.

 

[Indus Pakistan]

Its in China's interest to see Pakistan going forward without needing IMF bailout every 3 years. There were plans to setup industries under CPEC, time to implement them.

True. We can't go to ask the Americans to help out. I mean as it is, America buys three times more from us then what we import from them. The biggest deficit is with China followed by UAE. Both could help out by helping us to export more to close the trading deficits. That would solve the economic problem Pakistan faces without going to IMF like you said every 3 years. It would be a permanent and respectable solution.

 

[BHarwana]

Your obfuscating the point here. I am talking about increasing Pakistani exports to markets that are source of huge deficits. China is the biggest source of the deficit and since it happens to be our friend we could ask them to apply tariff regime that increases our exports to that country and thereby relieving the current account deficit thus saving us from going cap in hand begging to IMF.

What are friends for ?

When have Chinese denied us access to their market. Our problem is we don't have stuff to export. Our problem is not markets. China has given access to every industry and open excess. I fail to understand your point. What access are you asking China? Their companies are investing in our country. China is the biggest source of FDI in Pakistan but tell me you want to export this to China and China is not allowing us name a product?

If you want to get an initial boost there are only 3 things that can help Pakistan in short term. A. Textile, B Information Technology, C. Leather China is a huge market for both. Subsidise these industries and ask China access to these industries.

 

[maximuswarrior]

I don't think there is any harm in discussing a more balanced trade policy with China. Pakistan should by all means approach China and discuss import and export.

 

[BHarwana]

What you are demanding @Indus Pakistan China is already giving Pakistan. To increase your exports to China you need to have production and for that you need energy.

China is ready to import we need to produce more.

https://twitter.com/x/status/1038808384340996096

They have granted your wish even before you wished it. They know your problem more than you do.

 

[Indus Pakistan]

They have granted your wish even before you wished it. They know your problem more than you do.

My friend your not looking at this matter with a critical analysis. It's not about 'wishes' or 'wanting' but about giving prefential agrrements to Pakistan that tilt the playing field toward Pakistan and against Vietnam, Philipines, Indonesia etc At the moment it is tilted against Pakistan and in favour of ASEAN. A more balanced field would help Pakistan reduce the gaping trade deficit.


Mr Malik said China signed several bilateral and regional FTAs, which limited the benefit of preferences to Pakistan. China’s FTA with the Association of Southeast Asian Nations countries has also made the preferential treaty for Pakistan mostly irrelevant. For example, China charges 3.5 per cent duty on the import of yarn from Pakistan under the FTA while it also charges the same duty on imports from India without any treaty.


https://www.dawn.com/news/1356432

 

[BHarwana]

My friend your not looking at this matter with a critical analysis. It's not about 'wishes' or 'wanting' but about giving prefential agrrements to Pakistan that tilt the playing field toward Pakistan and against Vietnam, Philipines, Indonesia etc At the moment it is tilted against Pakistan and in favour of ASEAN. A more balanced field would help Pakistan reduce the gaping trade deficit.


Mr Malik said China signed several bilateral and regional FTAs, which limited the benefit of preferences to Pakistan. China’s FTA with the Association of Southeast Asian Nations countries has also made the preferential treaty for Pakistan mostly irrelevant. For example, China charges 3.5 per cent duty on the import of yarn from Pakistan under the FTA while it also charges the same duty on imports from India without any treaty.


https://www.dawn.com/news/1356432

@Indus Pakistan let me explain it to you this way. In Pakistan your energy cost is high and the products you produce their cost also become high. No the 3.5% tariff from China is nothing because of IMF loans we are already being charged 25% tariff from home on every export this becoming not competitive. The only solution is to reduce energy cost and that will only come down when energy projects under CPEC will kick in. Now returning to yarn. Your textile is already running at full capacity of your raw material production of cotton solution is to increase the production of cotton so cost comes down.

One thing we need from China is more Chinese language institutes and access to their search engine so that we can access their IT market. China IT market is huge and can only be accessed from with in China because of their internet policy. Now approaching Chinese market is also difficult because of language difference. There are many improvements needed on our side rather than Chinese side. Cotton yarn from Pakistan goes to China which is marked 3.5% Grip yarn come from China on which Pakistan has 40% tariff.
Tariff is not the problem it is the business men who are focused on other markets. Pakistani business are not taking their products north they are more focused south and west.
China is the most open market. FTA will come into action by end of this year and that 3.5% will fly away but we need massive reforms apart from access to China.

@Indus Pakistan tell me what is the actual problem we are facing in your thinking? Then I will give my version of story.

 

[Indus Pakistan]

@Indus Pakistan tell me what is the actual problem we are facing in your thinking? Then I will give my version of story.

Don't have energy to go into detail but it's the usual Pakistani problem. Our leaders did not bargain hard enough with China and walked away with a bad deal. To put it bluntly we keep selling ourselves too cheap and then get taken for granted. I mean the Vitenames love licking American testicles but even they get better access to Chinese market then 'ironclad' brother Pakistan.

 

[Sliver]

China charges 3.5 per cent duty on the import of yarn from Pakistan under the FTA while it also charges the same duty on imports from India without any treaty.

this caught my attention.

how is India getting the same import duty as pakistan? is there any other treaty between India and China? and this can easily be changed by China (and should be).

 

[BHarwana]

Don't have energy to go into detail but it's the usual Pakistani problem. Our leaders did not bargain hard enough with China and walked away with a bad deal. To put it bluntly we keep selling ourselves too cheap and then get taken for granted. I mean the Vitenames love licking American testicles but even they get better access to Chinese market then 'ironclad' brother Pakistan.

Lol okay relax I will explain to you the actual problem in some time and then please give your assessment when ever you have time.