ISLAMABAD-Pakistan’s trade deficit with China had shrunk by $3.2 billion during previous fiscal year mainly due to completion of China-Pakistan Economic Corridor (CPEC) projects.

The trade balance between Pakistan and China had shrunk to $10.8 billion during the Fiscal, year (2018-19) as compared to the previous year (2017-18) i.e. $14 billion.

According to the data of Ministry of Commerce, the trade deficit between Pakistan and China was continuously increasing till the fiscal year 2017-18 when it has reached to $14 billion.

However, in last fiscal year, the trade imbalance between two countries had come down by $3.2 billion. Overall trade between Pakistan and China was $14.6 billion.

Pakistan’s exports had recorded at $1.86 billion as against imports of $12.7 billion. Therefore, trade deficit had recorded at $10.8 billion in previous fiscal year.

The data showed that Pakistan’s trade deficit was $10.897 in year 2018-19, $14.004 billion in 2017-18, $12.671 billion in year 2016-17 and was $10.436 billion in 2015-16.

Data showed that exports had not shown healthy growth as compared to the imports of Pakistan from China. Trade was in China’s favour under Free Trade Agreement (FTA)-I.

However, in April 2019, Pakistan and China had agreed on second phase of FTA to reduce the Pakistan’s trade deficit. Prior to the signing of Phase-II of the FTA with China, the Ministry of Commerce has taken into account the interests of the Pakistani industrialist through substantive consultation process with different chambers and trade associations.

Based on these consultations, the following steps have been taken to protect the Pakistani industrialists under Phase-II of Trade Agreement with China; all sensitive sectors have been protected and are not subject to duty reduction and increased in the protected list of Pakistan from 10pc to 25pc that come around 1760 tariff lines.

The government has also Strengthened Safeguard Mechanism to protect domestic products against surge in Chinese imports.

Officials said Pakistan had comparative advantage in the recently signed FTA phase-II as compared to the agreement signed in 2006.

The CPFTA phase-II was concluded after the 11th round of negotiations in April 2019 and was signed during PM Imran Khan’s recent visit to China in which Pakistan got tariff relaxation and duty-free market access for 313 tariff lines.

It is worth mentioning here that Pakistan first entered into the FTA with China on November 24, 2006, which came into force in July 2007.

Bilateral trade between the two sides reached $17.2 billion in 2017-18 as Chinese exports to Pakistan grew from $3.5 billion to $15.7 billion from 2006-07 to 2017-18.

Phase-I of the FTA concluded in five years by the end of 2012 under which Pakistan liberalised tariffs on 35.6pc tariff lines whereas in the second phase 19.9pc of tariff lines were liberalised with tariff rate of 5% or less.