China - Country Outreach Report v 1.0

8/6/2019 China - Country Outreach Report v 1.0

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PUNJAB BOARD OF INVESTMENT & TRADE

China-Pakistan

Country Outreach Research

Sara.Ibtasar

6/20/2011

[Country Outreach research for China, to identify the trade patterns and opportunities in respect to

Pakistan and the global economy. So that the reader can easily understand and identify the potential

trade benefits and opportunities among the two boarder economies]


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Contents

Executive Summary ....................................................................................................................................... 3

China at a glance ........................................................................................................................................... 4

China in the global Economy ......................................................................................................................... 7

Pakistan China relationship ........................................................................................................................... 9

China and Pakistan; key sectors .................................................................................................................. 11

Imports and Exports .................................................................................................................................... 12

Pakistans share in Chinas total imports: ............................................................................................... 12

Top 10 exporters to China (2010) ........................................................................................................... 13

Investment Agreements among Pakistan and China .................................................................................. 14

Import Tariffs in China ............................................................................................................................ 14

Free Trade Agreement between China and Pakistan ............................................................................. 14

Chinas Tariff Rates with reference to China-Pakistan FTA..................................................................... 14

Non Tariff barriers in China ..................................................................................................................... 15

Investment .................................................................................................................................................. 19

FDI potential ............................................................................................................................................ 19

Key Investors ........................................................................................................................................... 19

Pak Trade China .......................................................................................................................................... 20

Conclusion & Recommendation ................................................................................................................. 21

References .................................................................................................................................................. 23

Appendix ..................................................................................................................................................... 24

Market Access of products under PCFTA ................................................................................................ 24

Comparison of China-Pakistan FTA and China-ASEAN FTA ..................................................................... 26


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Executive Summary

Three decades ago, China was among the worlds poorest countries with 80 per cent of the population

having incomes less than US $ 1 per day and only a third of all adults were able to read or write. By

2000, China had become one of the fastest growing countries in the world with real per capita growth

close to 9 per cent per annum between 1980-2000.

Consequently, Chinas per capita income doubled every ten years, faster than almost any country in the

world. This record is un-paralleled in history. It took UK almost a century, USA 50 years and Korea 25

years to double their per capita incomes. But China has surpassed all of them by achieving this goal

within a short span of 10 years. The proportion of the population with income less than $1 a day had

declined to less than 10 percent; - lower than the United States where the incidence of poverty was still

16 per cent.

China has come a long way and is soon predicted to be the second largest economy in the world. China

is an increasingly important trading partner of many countries including Pakistan. It is an emerging

economic superpower and has an extensive influence in Asia, Africa and Latin America through bilateral

trade and joint ventures worth billions of dollars.

It is central for Pakistan to strengthen bilateral trade relations with China. The government of Pakistan

must endeavor to protect the Chinese interests as well as investments in the country.


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China at a glance

The economy of the People's Republic of China is the third largest in the world, after the United States

and Japan (2008) with a nominal GDP of USD 4.91 trillion when measured in exchange-rate terms. It is

the second largest in the world after that of the U.S. with a GDP of USD 8.8 trillion when measured onpurchasing power parity (PPP) basis. China's per capita income has likewise grown at an average annual

rate of more than 8% over the last three decades drastically reducing poverty, but this rapid growth has

been accompanied by rising income inequalities. The country's per capita income is classified in the

lower middle category by world standards, at about USD 3,180 (nominal, 104th of 178

countries/economies), and USD 5,943 (PPP, 97th of 178 countries/economies) in 2008, according to the

IMF. China is the largest trading nation in the world and the largest exporter and second largest

importer of goods.

China's foreign trade has grown much faster than its GDP in the past 25 years. China's growth comes

both from huge state investments in infrastructure and heavy industry and from private sector

expansion in light industry instead of just exports. The smaller but highly concentrated public sector,dominated by 159 large SOEs, provided key inputs from utilities, heavy industries, and energy resources

that facilitated private sector growth and drove investment, the foundation of national growth. In 2008

thousands of private companies closed down and government announced plans to expand the public

sector to take up the slack caused by the global financial crisis in the capitalist world.

The PRC government's decision to permit China to be used by multinational corporations as an export

platform has made the country a major competitor to other Asian export-led economies, such as South

Korea, Singapore, and Malaysia. China has emphasized raising personal income and consumption and

introducing new management systems to help increase productivity. Government has also focused on

foreign trade as a major vehicle for economic growth. The restructuring of the economy and resulting

efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

However key bottlenecks continue to constrain growth; Available energy is insufficient to run at fully-

installed industrial capacity, the transport system is inadequate to move sufficient quantities of such

critical items such as coal, and the communications system cannot yet fully meet the needs of an

economy of China's size and complexity.

he two most important sectors of the economy have traditionally been agriculture and industry, which

together employ more than 70 percent of the labor force and produce more than 60 percent of GDP.

The two sectors have differ in many aspects. Technology, labor productivity, and incomes have

advanced much more rapidly in industry than in agriculture. Agricultural output has been vulnerable to

the effects of weather, while industry has been more directly influenced by the government. The

disparities between the two sectors have combined to form an economic-cultural-social gap between

the rural and urban areas, which is a major division in Chinese society.

China is the world's largest producer of rice and is among the principal sources of wheat, corn (maize),

tobacco, soybeans, peanuts (groundnuts), and cotton. The country is one of the world's largest

producers of a number of industrial and mineral products, including cotton cloth, tungsten, and


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antimony, and is an important producer of cotton yarn, coal, crude oil, and a number of other products.

Its mineral resources are probably among the richest in the world but are only partially developed.

China has acquired some highly sophisticated production facilities through trade and has also built a

number of advanced engineering plants capable of manufacturing an increasing range of sophisticated

equipment, including nuclear weapons and satellites, but most of its industrial output still comes from

relatively ill-equipped factories. The technological level and quality standards of its industry as a whole

are still fairly low, notwithstanding a marked change since 2000, spurred in part by foreign investment.

A report by UBS in 2009 concluded that China has experienced total factor productivity growth of 4 per

cent per year since 1990, one of the fastest improvements in world economic history.


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Location Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea,

and South China Sea, between North Korea and Vietnam

Area 9,596,960 sq km

Population 1,330,141,295 (July 2010 est)

Population Growth rate 0.494% (2010 est)

Capital Beijing

Literacy 90.9%

GDP Purchasing Power Parity- $8.818 trillion (2009 est.)

GDP growth rate 9.1% (2009 est)

GDP per capita $6,700 (2009 est)

GDP- Composition by sector Agriculture: 10.3%

Industry: 48.3%

Services: 43.4% (2009 est)

Unemployment rate 4.3%Labor force 813.5 million (2009 est)

Labor force

By occupation

Agriculture: 39.5%

Industry: 27.2%

Services: 33.2% (2008 est)

Investment 46.3% of GDP (2009 est)

Budget Revenues: US $1.002 Trillion

Expenditures US $ 1.111 Trillion

Debt- External US $ 349.3 Billion (2009 est)

Reserves and foreign exchange of gold US $ 2.426 Trillion (31st Dec 2009)

Inflation rate -0.7% (2009 est)

Industries Mining and ore processing, iron, steel, aluminum, and other metals,coal; machine; building; ornaments; textiles and apparel; petroleum;

cement; chemicals; fertilizers; consumer products; including

footwear, toys, and electronics; food processing; transportation

equipment, including automobiles, rail cars and locomotives, ships

and aircrafts; telecommunications equipment, commercial space

launch vehicles, satellites

Industrial production growth rate 9.9% (2009 est)

Exports US $ 1.204 Trillion (2009 est)

Main items of export Electrical and other machinery, including data processing equipment,

apparel, textiles, iron and steel, optical and medical equipment

Export partner US 20.03%. Hong Kong 12.03%, Japan 8.32%, South Korea 4.55%,

Germany 4.27% (2009)

Imports US $ 954.3 Billion (2009 est)

Main items of imports Electrical and other machinery, oil and mineral fuels, optical and

medical equipment, metal ores, plastics, organic chemicals

Import Partner Japan 12.27%, Hong Kong 10.06%, South Korea 9.04%, US 7.66%,

Taiwan 6.84%, Germany 5.54% (2009)


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China in the global Economy

The emergence of China as a market economy has benefited the global economy enormously, but also

entailed challenges as countries had to adjust to the sudden increase in the global supply of low-skilled

labor. The speed of the integration of China into the world economy, coupled with excess demand

worldwide, pushed up Chinas current account surplus, to as much as 11% of GDP by 2007. It has shrunk

since, however, and the authorities apparently seek to bring it down to around 4% of GDP.

Two decades ago, China accounted for slightly less than 4% of world GDP at PPP exchange rates. By the

time it entered the WTO it was already the worlds second largest economy, accounting for 7% of global

activity. Sustained rapid economic growth since pushed up Chinas share to 13% by 2010.

Chinas contribution to global growth has been increasing exponentially, from 5% in 1980 to 12% in 2000and 30% in 2010. Almost 1 percentage points of the projected growth of 4-4 per cent of the world

economy in 2011-12 is accounted for by China. Chinas economic cycle is increasingly influenced by and

induces fluctuations in the rest of the world, and in OECD economies in particular. This is witnessed by

the rising share of Chinese imports in the exports of the rest of the world, and its acceleration following

Chinas WTO entry .


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Up to 2001, Chinas importance as a market for the rest of the world had been growing at 0.2

percentage points per year; since then, it has grown three times faster. The share of Chinese exports in

other countries imports has accelerated even more, reaching 11% by 2010.

Chinas exceptional growth performance is underpinned by a rapid expansion of the capital stock

coupled with solid efficiency gains.


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Pakistan China relationship

China and Pakistan have enjoyed a secure and jointly beneficial relationship. Pakistan was one of the

first countries to recognize the People's Republic of China in 1950. Pakistan and China have immense

reservoir of goodwill and soft power.

Over the years, the unique friendship between Pakistan and China has transformed into a strong

strategic partnership, robust economic cooperation and ever increasing people to people contacts. This

relationship is based on trust, understanding and common aspirations for peace and progress. In 2007

Pakistan and China signed a free trade agreement.

Currently, there are over 10,000 Chinese workers engaged in 120 projects in Pakistan today. In 2007

Chinese investment in Pakistan was valued at USD 4 billion, a figure that's estimated to grow to USD 15

billion by 2010. Given the range of multibillion-dollar projects in which different Chinese companies are

currently involved, it is safe to assume that Chinese investment in Pakistan has already exceeded USD 20

billion.

There was a dramatic growth in relations when the two countries signed their first trade agreement in

1963; a boundary agreement the same year helped China boost its defense of its Uighur autonomous

region of Xinjiang on the China-Pakistan border. In 1966 the two countries started construction of the

Karakoram Highway, along one of the old silk routes. Another binding factor was a common enemy:

India, which during those years had engaged in separate wars with Pakistan and China.

State-owned companies--including Tianjin Zhongbei Harbor Engineering Supervision Corp., China Harbor

Engineering Company Group, MCC and the Bureau of Geophysical Prospecting (BGP)--are working on a

range of projects in Baluchistan. The Chinese also have almost exclusive oil exploration rights in

Baluchistan.

Another area of heavy Chinese investment is Gwadar Port, where Tianjin Zhongbei Harbor Engineering is

working on a USD 1.6 billion project. Next to the port, the China Harbor Engineering Co. is building an

international airport. In the same region, China's Great United Petroleum Holdings is developing a USD

13 billion oil refinery.

Pak China Investment Company Limited (PCICL) is a great initiative taken by both countries to increase

investment activity among them. It is a Development Financial Institution (DFI) formed under the

initiatives taken by Government of Pakistan and Peoples Republic of China for promotion of Trade,

Investment and Economic Growth of Pakistan.


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The company was incorporated in July 2007 with an Authorized Capital of USD 200 Million and was

formally launched in December 2007. The company is a joint venture in which equity is equally

contributed by Government of Pakistan and China Development Bank (one of the largest State Owned

banks of Peoples Republic of China).

Pak China Investment Company Limited in view of its inherent strengths and mandate aims to become a

hub for investment activity and add value to sectors like Industry, Agriculture, Services, Information &

Technology, Manufacturing, Real Estate and Infrastructure etc, for which we offer conventional and

innovative solutions to Investors and Projects through a full range of Investment Banking services.


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China and Pakistan; key sectors

Untapped Key industries in China fromwhich Pakistan could benefit

Medicine

Energy and Power

Telecommunication

Automobile

Computer and Software

Petrochemical

Iron & steel

Integrated Circular

Transportation

Pakistan needs to extend its bilateral ties with China in the following key sectors; agriculture, healthcare,

technology basic raw materials, coal, infrastructure, cement, steel, banking & financial and marble. It

must set up joint ventures with Chinese private companies with buy-back arrangements due to which

our workers can learn the usage of Chinese technology and increase domestic productivity.

Pakistan also needs to extend ties with Chinese firms in the field of energy in order to overcome its

severe energy crisis.

Another important area of collaboration between China and Pakistan is the education sector. It is

important for both countries to promote Student exchange programs, jo int research projects

and more mul t i - d i sc ip l ined research which can be ext remely usef u l in prov id ing f resh ideas

and the necessary in te l lectual content f or tak ing Pak - Ch ina f r iendsh ip and par tnersh ip to

new heights.

Pak is tan va lues the contr ibut ion that Pek ing Un ivers i ty , one of the o ldest and f inest in the

wor ld , has made towards promot ing Pak - Ch ina f r iendsh ip .


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Imports and ExportsPakistans share in Chinas total imports:

Pakistans exportto China China's importfrom world Pakistan'sshare (%)

Value in 2010 Value in 2010

All products 1,435,944 1,394,199,479 0.10

Cotton 910,813 10,616,975 8.58

Ores, slag and ash 149,799 108,179,350 0.14

Fish, crustaceans, molluscs, aquatic invertebrates nes 63,098 4,370,977 1.44

Raw hides and skins (other than furskins) and leather 46,999 5,925,947 0.79

Plastics and articles thereof 40,207 63,703,420 0.06

Ships, boats and other floating structures 30,339 1,676,335 1.81

Residues, wastes of food industry, animal fodder 26,462 3,230,989 0.82

Copper and articles thereof 25,658 45,998,647 0.06

Salt, sulphur, earth, stone, plaster, lime and cement 21,021 4,509,985 0.47

Mineral fuels, oils, distillation products, etc 20,191 188,464,963 0.01

Other made textile articles, sets, worn clothing etc 13,984 261,012 5.36

Machinery, nuclear reactors, boilers, etc 12,016 172,348,655 0.01

Iron and steel 10,858 25,308,713 0.04

Optical, photo, technical, medical, etc apparatus 8,756 89,813,826 0.01

Lac, gums, resins, vegetable saps and extracts nes 6,704 120,845 5.55

Edible fruit, nuts, peel of citrus fruit, melons 5,736 2,137,263 0.27

Organic chemicals 5,396 48,215,280 0.01

Meat, fish and seafood food preparations nes 4,390 100,243 4.38

Oil seed, oleagic fruits, grain, seed, fruit, etc, nes 4,039 27,040,398 0.01

Vegetable plaiting materials, vegetable products nes 4,031 201,226 2.00

Manmade staple fibres 4,007 3,018,523 0.13

Electrical, electronic equipment 2,647 314,384,277 0.00

Stone, plaster, cement, asbestos, mica, etc articles 2,472 1,062,890 0.23

Tools, implements, cutlery, etc of base metal 1,993 2,763,035 0.07

Manmade filaments 1,756 3,782,147 0.05

Cereals 1,485 1,501,379 0.10


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Top 10 exporters to China (2010)

1 Japan 176,736,115

2 Republic of Korea 138,416,090

3 Chinese Taipei 115,674,562

4 China 106,813,382

5

United States of

America 102,704,439

6 Germany 74,416,704

7 Australia 60,517,963

8 Malaysia 50,400,864

9 Brazil 38,049,821

10 Thailand 33,200,147

61 Pakistan 1,728,236

China's primary trading partners include Japan, the U.S., South Korea, Germany, Singapore, Malaysia,

Russia, and the Netherlands

The vast majority of China's imports consists of industrial supplies and capital goods, notably machinery

and high-technology equipment, the majority of which comes from the developed countries, primarily

Japan and the United States.

Regionally, almost half of China's imports come from East and Southeast Asia, and about one-fourth of

China's exports go to the same destinations. Chinas import grew by 29 % to US$ 893.1 billion during the

first nine months (January-September) of 2008.

Pakistan exports to China increased from US$ 0.7 billion in 2008-09 to US$ 1.153 billion in 2009-10

showing a growth of 64.59%. China is 4th largest export market of Pakistan. Pakistans share in Chinas

import is negligible. Main products being exported to China are Cotton Yarn, Cotton Fabric, Leather

Tanned and Fish & Fish Preparations.

Pakistans major exports to China Pakistans major imports to China

Cotton Yarn & woven fabricOrganic chemicals

Leather and leather manufacturers

Ores, slag, ash

Fish and its products

Boiler machinery & appliancesElectrical appliances and parts

Organic chemicals

Petroleum products & oil


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Investment Agreements among Pakistan and China

China joined WTO in 2001 and undertook to comply with WTO trade commitments such as loweringtariffs, reducing non-tariff barriers, expanding market access and improving transparency.

Since entry in WTO, China has introduced progressive reforms mainly in reducing import tariffs but

exporters of the world still perceive that a variety of non-tariff barriers still exist which limit the access

to Chinese markets.

Import Tariffs in China

In China, like Pakistan, import tariff rates are based on the Harmonized Commodity Description and

coding System (HS) which is an international standardized system of names and numbers for classifying

traded products developed and maintained by World Customs Organization (WCO).

Import tariff rates vary according to the type of commodity, components and the intended use of the

commodities. Most of the tariff rates are ad valorem, which are assessed as

percentage of CIF value.

The study of China Customs Tariff reveals that average tariff rates on imports have dropped to 9.5%,

with agricultural products at an average of 15.3% and industrial products at an average of 8.9%. China

also allows tariff exemption regimes for certain imported machinery and equipment to encourage

scientific research and technology development and investments in key hi-tech industries.

Free Trade Agreement between China and Pakistan

In November 2003, China and Pakistan signed the Preferential Trade Arrangement. In October 2004, the

two countries launched the joint research on free trade agreement. In April 2005 the two sides singed

the "Early Harvest Program".

In December 2005, China-Pakistan "early harvest" preferential tariff program for the Free Trade Area is

signed.

On Nov. 24, 2006, China and Pakistan signed a free trade agreement (FTA), in which they plan to begin

to reduce or eliminate tariffs on all products in two phases from July 1, 2007.

In October 2008, the two sides singed a supplement agreement on their FTA. In December 2008, the

negotiations on bilateral trade in services are concluded.

Chinas Tariff Rates with reference to China-Pakistan FTA


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China-Pakistan concluded FTA in 2006 and its enforcement/implementation started from 1st July 2007.

Almost three years have completed since signing of agreement yet Pakistan has not been able to get

benefit from it. Some of the reasons for it are as under:-

Two Low Tariff Lines Coverage amd Elimination of Tariffs under FTA Elimination:

As per FTA Tariff Reduction Modality of China following in the schedule:

It is clear from the above that tariff elimination is on 35.5% of tariff lines only whereas on 34.5% of tariff

lines there would be tariff of 0-5%. Out of remaining 30% tariff lines there would be no concession at all

to 15% (1132 lines) and there would be marginal concession to other remaining 15% lines (1133).

Therefore, it is obvious that maximum concession is only to 35.5% of total tariff lines of 7,550 covered

under the FTA.

This is too narrow a coverage of bilateral trade and too low tariff lines if we look at Chinas FTAs with

other countries. As provided in FTA, 90% coverage will be considered in Phase-II which may start in

2013. Besides, if we look at the total data of 2009, we find share of duty free lines applicable to Chinas

imports from Pakistan was 19.2%. Chinas overall average tariff on imports from Pakistan was 6.9% in

2009 as compared to overall MFN average of 9.5.

If we compare Chinas FTAs with Pakistan and ASEAN we will find ASEAN at great advantage as there is

zero percent duty under China-ASEAN FTA on items which are covered under China-Pakistan FTA where

there is some duty. ASEAN has a clear advantage rendering Pakistani products less competitive. (Please

see table attached in appendix)

Non Tariff barriers in China

1. Import prohibitions:

In China import prohibitions are maintained on grounds of public interest, environmental protection oras a requirement under international commitments. Prohibitions include some products of animal

origin, raw hides, west of skins and leather etc. Some of these import prohibitions are viewed as

discriminatory and aimed at protection of local industry/products.

2. Import licensing regime/registration requirements:


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The import licensing regime and registration requirements in China is complex and sometimes act as

non-tariff barriers to the bilateral trade between Pakistan and China.

3. Tariff Rate Quota (TRQ) Items and Regime:

The Chinese government also administers an Import License system on the importation of certain

restricted goods, in order to strictly monitor the content or volume.

The Chinese tariff rate quotas mostly hit certain sensitive agricultural products which are considered to

be creating non-tariff barrier for many exporters of the world. The tariff rate quota (TRQ) is applied on

some of the following commodities:

-Rice

-Wheat

-Cotton

-Sugar

-Raw wool/wool tops

-Urea imports

-Diammonium phosphate- NPK compound fertilizer.

4. High Phytosanitary standards and strict protocol:

Chinas current legislation related to its Sanitary and Phytosanitary(SPS) regime includes the Law on the

Entry and Exit of Animals and Plant Quarantine, the Food Hygience Law, the Law on Animal Disease

Prevention, the Law on Import and Export Commodity Inspection, the Law on Frontier Health and

Quarantine, as well as accompanying implementing regulations and rules.

Pakistan and China have written protocols on Phytosanitary measures on the export of mangoes, citrus

fruit, rice, etc since 2003 but since the procedures are complicated therefore they have hindered exportof these products from Pakistan to Chinese markets.

Under these protocols the ports of entry in China have also been restricted to only few cities which also

hinders export of these products to other important cities of China directly. As an example, a major city

of Western China is Chengdu where entry of mangoes from Pakistan is not directly allowed although

there is direct flight between Chengdu and Karachi twice weekly. There is, therefore, need for revision of

these protocols with China to further promote the exports of fruits to vast Chinese markets.

5. Excessive customs and administrative procedures:

Customs procedures can become excessive or inappropriate if they differ too much from international

norms. These procedures can result in delays and extra costs (both directly and indirectly) in processing

goods at the customs stations. Valuation techniques are sometimes raised as an issue. Naturally, the

importer will want to place as low a value as possible upon goods, while the importing government will

seek to counter this and raise as much tax as possible.

The exporters are now experiencing and may continue to experience for quite some time increased

levels of inspections, examinations and testing by Chinese authorities on imports of products in China

and there is more inflexible approach and attitude to regulatory issues by local authorities.


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6. Value added tax (VAT) sometimes acts as non-tariff barrier:

All importers of goods into China must pay value-added tax. Rather than being neutral and equitable,

VAT has acted as a non-tariff barrier for Chinese agricultural imports, as its application to domestic

producers is often not identical to that of imported goods, with administrative complexity clouding the

process.

7. State Trading:

State trading has apparently been reduced in China. Imports of vegetable oil (rapeseed oil, palm oil, and

soybean oil) were removed from state trading from 1st January 2006. In 2007, China maintained state

trading in, inter alia, grain (including wheat, maize, and rice), sugar, tobacco, crude oil and processed oil,

chemical fertilizer, and cotton. Chinas Ministry of Commerce (MOFCOM) issues and adjusts annually the

list of goods subject to state trading and of authorized state trading enterprises (STEs).

State trading enterprises, which are most notably active in grain trading, restrict the imports of certain

agricultural goods in China. This is the case as these enterprises hold the exclusive rights to importparticular goods, and domestic firms need to enter into import contracts through such state trading

enterprises. These trading enterprises can obtain imports at world prices and as they can have a

monopoly position and their prices, when resold domestically, are higher than world prices. Although

the role of state trading enterprises has decreased, but it is generally observed that they still dominate

the agro-food trade. This distorts normal trade and is considered as non-tariff barrier by major exporters

of the world.

8. Chinese Legislation on Standards:

Chinese Legislation includes mainly Standardization Law and the Regulations for the Implementation of

the Standardization Law. The Standardization Administration of China (SAC), under the GeneralAdministration of Quality Supervision, Inspection and Quarantine (AQSIQ), administers standardization

work in China. Chinese authorities have different product certification, labeling and packaging

requirements for specific imported products. It is, therefore, important that products should comply

with the specific product requirements so that products are not refused or delayed entry into China.

Certain main challenges which exporters face in Chinese markets include obtaining a clear definition of

Chinese laws, the time spent on meeting certain standards and inconsistencies in Chinas administration

of technical standards.

Most of the consumer goods for their import in China require specific Chinese labeling by the China

Entry-Exit Quarantine and Inspection (CIQ) bureau. The Chinese language label has to meet Chinas laws,

regulations and compulsory standards. Chinese label verification is conducted by CIQ together with

product inspection and quarantine.

The labeling requirement of China varies according to the type of the imported product. All products are

mandatorily required to be labeled in simplified Chinese language and some products require both

Chinese and English. It is compulsory for the Chinese label to be printed or fixed on the package prior to

shipment arriving into Chinese port.


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Any of the consignment which does not meet Chinese label requirements as per laws, regulations and

standards required, the same will be declared as unqualified and sent to designate warehouses under

supervision of AQSIQ departments for meeting label requirements which entails extra costs, fees and

delays.

Since China have stringent laws in this regard which are not in line with international levels/practice

therefore they are considered as NTBs.


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Investment

FDI potential

China and Pakistan have witnessed steady growth in mutual investments in recent years. In the last few

years, China invested more than USD1.3 billion in Pakistan. A large number of Chinese companies are

presently working in Pakistan in different sectors viz. Oil and Gas, IT and Telecom, Power Generation,

Engineering, Automobiles, Infrastructure and Mining. These include names like, ZTE, Huawei

Technologies Company Ltd., China National Machinery Imp/Exp Corporation, Metallurgical Construction

Corporation of China, China International Water and Electric Corporation, China Petroleum, and Haier.

Chinese goods are very much in demand in the Pakistani markets. Their experience of growth in trade is

positive due to convenient trade flows and openness measures. China has become one of the top five

import sources of Pakistan. Major imports from China are machinery, chemicals, garments and other

textile products, stationery, construction materials like tiles, sanitary wares and crockery. Machinery and

electrical appliances are the major parts of overall imports.

Some recent examples of Pak- China cooperation include; Chashma nuclear power plant II, Neelum-

Jhelum hydropower station and Sardhi wind power project. Remarkably, a project of $6.5 billion

generating about 2,300 MW of electricity through wind turbines and solar panels was also signed

recently.

Following cooperation are expected among both countries in the near future; defence production, Reko-

Diq copper mining project in Baluchistan, energy generation, technology development, software park

building and communications infrastructure to promote ICT sector, including e-government, e-

commerce and e-enterprise.

Key InvestorsEnergy Hydro & Wind

power

Defense products Manufacturing Mining &

Minerals

Harbin Power

Engineering Company

Ltd

Dong fang Electric

Corporation

Wuxi Suntech PowerCo., Ltd.

Cement industry

SINOMA Group

China three

Gorges

Corporation

CWE

Gezhouba

Banking

CMBC

NORINCO

Steel industry

MCC

Hefei Meiling

Company

Lumena


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Pak Trade China

The graph above illustrates the pattern of growth in trade during the last 05 years, between 2005 and2009. During 2009 Pakistan exported goods worth more than US$ 1,154 million to China and imported

worth US $4,411 million.


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Conclusion & Recommendation

Pakistan and China have decided to celebrate year 2011 as a

China and Pakistan have developed an all-season friendship which is based on equality, brotherhoodand overall cooperation. In the past 60 years, the two countries have carried out multi-dimensional

cooperation in varied fields. Despite unstable international situation, the China-Pakistan friendship

remained strong and vibrant. This is only because both the countries enjoy high respect and trust over

each other.

Being considered as the worlds most booming economy, China has shown phenomenal growth in every

sector of the economy and is moving in the right direction, China is the only country that has taken a

supportive stand for Pakistan after the Bin Laden operation.

Despite the strong cordial relationship among the two countries there is a cultural disconnect among

them due to lack of people to people contact and the language barrier.

People to people collaboration is an important aspect which if strengthened will benefit both China and

Pakistan. First and foremost it will improve socio economic and political relations among both nations

consequently resulting in an increase in foreign direct investment. Other than this it will also improve

cooperation in education, media, health and tourism.

The second most important aspect is for the Pakistani nationals to understanding Chinese language as is

predicted China is going to be the world s biggest market in the near future.

Chinese language has already become a necessity for most of the developed countries of the world in

order to enhance bilateral trade and development. Although Chinese language is considered to bedifficult, however, we need to send our scholars and students to China for learning it, and then teaching

it to others. Learning Chinese language will not only open up social corridors between the two countries

but will also enhance bilateral trade among both.

Pakistani educational institutions should introduce Chinese language as mandatory subject at all levels

from Primary to universities with an aim to produce Chinese speaking Pakistani youth across the society

which shall bring the two friendly nations closer in all aspects of life. Pakitstani youth fluent in Chinese

will no doubt in the long run serve as the single most vital channel for developing and sustaining

mutually beneficial relations between the two countries.

Due to the economic crisis in the world there are thousands of MBA graduates being produced in allparts of Pakistan who are unable to find jobs. These MBAs can find excellent job opportunities in

Pakistani business houses based in China, provided they learn to speak and comprehend Chinese. Today

most of the Pakistani businesses houses in China are run by uneducated Pakistani officials. For this

reason it is important that a comprehensive Chinese language programme be organised especially in

coordination with business universities within the country. By having a strong command over the

Chinese language, young graduates can find work easily in China and excel in their field. In addition, our


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fresh graduates can also accompany Pakistani businessmen on tours to China, who are otherwise

dependent on translators provided by hosts and hotels in China.

Economic relations between China and Pakistan are mostly based on trade which unfortunately is in one

direction imports from China to Pakistan. If however Pakistani graduates start conversing fluently in

Chinese, they can play a crucial role in elevating the country's commercial ties with China and help

transform our one way trade into a two way mutually beneficial commerce and investment channel.

These young graduates, on their return to Pakistan will bring with them knowledge and experience of

Chinas rapidly growing business sector, which will help improve the corporate and trade sectors of

Pakistan in the long run.

Encouraging Pakistani nationals to learn chinease will not only benefit Pakistan but will also benefit

China in a number of ways. Primarily the western china, which is less developed will get connected with

Pakistan which will open new avenues of socio-economic development in the Chinese province of

Xinjiang. This would lead to more investment and trade opportunities being established with Pakistan.

Xinjiang is the largest province of China in area. It is of great importance for Pakistan because of itsstrategic location on the great Silk Route which has the potential to be the most important future trade

and energy corridor. It is also the shortest and most economical logistical route to Persian Gulf, the main

source of oil imports for China.

It is crucial for us at this point in time to realize the importance of learning Chinese as China today

second largest economy in the world and in a few years time, it will beat the US to become the largest

global economy.

There is a lot of potential for trade between Pakistan and China. The reciprocal cooperation of Pakistan

and China can lead both the countries towards progress and prosperity for strong Sino-Pak relations

which have always been important. In the present geo-political and geo-strategic dynamics, Pakistan

and China need each other more than ever.


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References

http://www.thefrontierpost.com/?p=16988

http://www.trademap.org/Bilateral_TS.aspx

www.tdap.gov.pk

http://www.pakchinainvest.com/

http://jang.com.pk/thenews/feb2011-weekly/busrev-21-02-2011/p10.htm

BOI: Trade brief between China and Pakistan
http://www.thefrontierpost.com/?p=16988http://www.thefrontierpost.com/?p=16988http://www.trademap.org/Bilateral_TS.aspxhttp://www.trademap.org/Bilateral_TS.aspxhttp://www.tdap.gov.pk/http://www.tdap.gov.pk/http://www.pakchinainvest.com/http://www.pakchinainvest.com/http://jang.com.pk/thenews/feb2011-weekly/busrev-21-02-2011/p10.htmhttp://jang.com.pk/thenews/feb2011-weekly/busrev-21-02-2011/p10.htmhttp://jang.com.pk/thenews/feb2011-weekly/busrev-21-02-2011/p10.htmhttp://www.pakchinainvest.com/http://www.tdap.gov.pk/http://www.trademap.org/Bilateral_TS.aspxhttp://www.thefrontierpost.com/?p=16988


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Appendix

Market Access of products under PCFTA

Zero rated access

Cotton Fabrics (woven and knitted)

Pharmaceutical

Surgical and dental instruments

Sports goods

Man made filaments

Man made staple fiberJersey, pullovers, cardigans, waistcoats, shawls, scarves etc

Bed wear, Curtains, Towels, tents and Canvas

Vegetables (cabbage, peas, mushrooms, preserved vegetables)

Fruits (dates, mangoes, all citrus fruits)

Medicinal plants; soya bean oil seed

Guwar gum

Jam, jellies, and marmalades

Prepared animal fodder

Chemicals (selected)

Articles of leather accessories (;eather apparel, gloves, belt etc)

Tubes, pipes and hollow profiles, seamless or iron or steel

Electric motors


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Margin of Preference

Cotton Yarn

Readymade garments

Hosiery

Textile made ups (other than bedwear,

curtain, towels, canvas)

Footwear

Molasses

Fish and Fish preparations

Chemical products (selected)

Engineering goodsJewellery

Furniture

Cement

Meat and Meat preparations

Beverages

Fruit and vegetable juices and confectionary

items

Spices

No Concession

Carpets

Rice

Leather tanned

Raw cotton

Onyx manufacturers


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Comparison of China-Pakistan FTA and China-ASEAN FTA

China - Country Outreach Report v 1.0

Documents

Transcript of China - Country Outreach Report v 1.0