To Plug the Rising Trade Deficit, China Offers to Trade in Yuan With Pakistan

China has offered Pakistan to start bilateral trade in Renminbi (Yuan) to deal with the issue of widening trade deficit, according to a report by Business Recorder. According to the sources, this proposal was tabled by the Chinese ambassador to Pakistan Yao Jing, in a meeting with former caretaker Minister for Commerce, Mian Misbah-ur-Rehman. During the meeting, various issues of bilateral trade and economic cooperation between China and Pakistan came under discussion. ALSO READ Pakistan & China Extend Currency Swap Agreement China is also considering to announce one-sided trade concession to Pakistan in order to increase its exports to China and reduce the trade deficit. The China–Pakistan Free Trade Agreement (CPFTA) Part-1 was in favor of China, given their exports to Pakistan are more than $15 billion against Pakistani exports to China of a mere $1.5 billion last year. The last round of CPFTA-II held in Islamabad remained unsuccessful as both Pakistan and China failed to reach a consensus during the second phase. A high-level meeting held under the chairmanship of former Prime Minister, Shahid Khaqan Abbasi, had decided not to finalize CPFTA-II until the industry is taken on board. Former Caretaker Minister of Commerce appreciated Chinese investment in the growing automobile sector of Pakistan and underscored its need for investment and joint ventures in the manufacturing of SUVs which are in high demand. The sources quoted that the Chinese Government is considering to invite the new Prime Minister of Pakistan Imran Khan as a guest of honor for the China Import Fair scheduled in November 2018. The ambassador stated that in order to make this visit more meaningful, a delegation led by the Commerce Minister or the Secretary Commerce may visit China prior to the visit of the prime minister to identify areas of cooperation. In reply to the interim commerce minister’s worry on granting concessions to India and Bangladesh, the ambassador said those had been proclaimed under the framework of Asia-Pacific Trade Agreement (Bangkok Agreement). The Chinese ambassador added that China-Pakistan Economic Corridor (CPEC) was aimed more on energy and infrastructure linked projects, but Beijing recognized new areas of cooperation and support to Pakistan’s government via trade promotion, foreign direct investment (FDI) and social sector support. In this regard, a team of government officials of Chinese Customs and Quarantine departments plan to visit Pakistan to address market access and quarantine issues which are hampering trade between the two countries. While talking about the FDI Mr. Jing stated that the Chinese Government will undertake measures to promote joint ventures and investment in SEZs. He suggested that the Shanghai Import Fair would be a good opportunity for Pakistan to showcase its investment potential.