Pakistan's trade imbalance with China
Pakistan recorded a trade deficit of $2266 Million in November of 2015. The Balance of Trade in Pakistan averaged $-243 Million from 1957 until 2015, reaching an all-time high of $62 Million in June of 2003 and a record low of $-2663 Million in August of 2014. The Balance of Trade in Pakistan is reported by the Pakistan Bureau of Statistics.
Pakistan has been running a persistent trade deficit since 2003 mainly as a result of high imports of energy. Since 2012, China has developed as Pakistan's largest trading partner substituting the United States. Recently, the biggest trade deficits were recorded with China and India. Pakistan records trade surpluses with the Afghanistan, the United States, Germany and the United Kingdom.
Data released by the State Bank shows that during July-March of this fiscal year, trade was 200% surplus in China's favor. Imports from China rises to $5.092 billion against $4.40 billion at the same time of last year, $4.3 billion in 2012, $4.72 billion in 2013 and $5.979 billion in 2014. The government of Pakistan is showing interest in developing trade relations with China. Both countries in recent times have signed a MoU of $46bn investment in Pakistan by China. Specialists say that Pakistan requires reducing its trade deficit with China. Pakistan's overall trade deficit increased to $17.9billion in the first ten months of 2015. The expected investments by Chinese companies would increase remittances from Pakistan, which have already crossed $1bn by September. The trade deficit with China during the nine months was $3.398billion which was 200% more than Pakistan's exports to China. China's exports during nine months were $1.694billion compared to imports of $5.092billion.
In the case of India, the volume of trade is significantly lower than China, but the trade balance is in India's favor. Till September 2015, imports from India rises to $1.114billion compared to $1.35billion during the same time of last year, showing a decline. However, exports to India during this period were $296 million, just 26pc of the imports from India, indicating a significantly large trade surplus with India.
Interestingly, the top trade partner for Pakistan is Afghanistan as the trade surplus for Pakistan is increasing. During the first nine months of 2015, exports to Afghanistan jumped to $1.241billion from $760m in the same period of the previous fiscal year. However, imports from Afghanistan have further reduced to $30m from $42m in the same period of last year. Despite being close door neighbor, Iran has been declining from the trade list of Pakistan since both imports and exports to the country are reaching to negligible.
Imports from Iran during the nine months of 2015 stood at $271,000 compared to $520,000 during the same period of the fiscal year 2014. Exports to Iran during this time were $26m compared to $41m in the corresponding period of last year.
Pakistan's regional trade deficit with five neighboring countries has been increasing while, during the nine months of this fiscal year, deficit rise to $2.5bn. Total imports from the region during this period were $6.280bn ($5.09bn alone from China) while exports to the area were of $3.779 billion.
A prominent Pakistani economist said, "A long highway connecting one strategically important region with another, thousands of miles away, will not be an economic corridor, unless it links Pakistani businessmen and traders to markets in China, that would be enormous."