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Exports

Pakistan's Trade Deficit with China Reaches Alarming Levels

Strategic Insights

— 2 min read

Pakistan's trade deficit with China has surged to significant levels, prompting lawmakers to demand urgent reforms and a shift towards value-added exports. While the Ministry of Commerce has taken steps to balance trade with the United States, the same level of effort has not been replicated with China, resulting in a massive trade gap that remains overwhelmingly in Beijing's favor. According to official figures, Pakistan imported goods worth $20.8 billion from China in FY2020-21, against exports of just $3.1 billion. The imbalance persists, with imports at $17 billion compared to exports of only $2.7 billion in 2024-25.

Key Takeaways:

  • Pakistan's trade deficit with China has reached alarming levels, prompting lawmakers to call for urgent reforms and stronger accountability.
  • The Ministry of Commerce has failed to reduce the massive trade gap with China, which remains tilted in Beijing's favor, despite taking steps to balance trade with the United States.
  • Pakistan continues to export raw materials such as copper and cotton, only to re-import them as expensive finished goods, highlighting structural weaknesses in the country's commerce strategy.
  • The Commerce Ministry has informed the National Assembly Standing Committee on Commerce that 15 Sanitary and Phytosanitary Standards (SPS) and Technical Barriers to Trade (TBT) protocols have been signed under Phase III of the Free Trade Agreement (FTA) with China.
  • Members of the Standing Committee have urged the government to shift towards value-added production in textiles, minerals, and processed meat, citing an export potential of $5 billion in the latter.
  • Lawmakers have cautioned that paperwork and protocols alone will not close the gap, pressing for stronger performance by trade missions abroad and proactive showcasing of Pakistani products on global platforms.
  • Pakistan has made gains in seafood, maize, and textiles under the Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA) and expanded concessions under the Pakistan-Sri Lanka Free Trade Agreement (PSFTA).
  • The Committee has resolved to reaffirm the Karachi Chamber of Commerce and Industry (KCCI) as the country's premier chamber, while allowing new district chambers without undermining its role.

Statistics:

  • Pakistan imported goods worth $20.8 billion from China in FY2020-21, against exports of just $3.1 billion.
  • The trade imbalance persists, with imports at $17 billion compared to exports of only $2.7 billion in 2024-25.
  • 15 Sanitary and Phytosanitary Standards (SPS) and Technical Barriers to Trade (TBT) protocols have been signed under Phase III of the Free Trade Agreement (FTA) with China.
  • The export potential of processed meat is estimated to be $5 billion.
  • Pakistan has made gains in seafood, maize, and textiles under the Malaysia-Pakistan Closer Economic Partnership Agreement (MPCEPA), with exports valued at $X billion.

Sources:

  • "Pakistan's trade deficit with China reaches alarming levels" - Dawn (no date)
  • "Pakistan imports $20.8 billion worth of goods from China in FY2020-21" - Business Recorder (no date)
  • "Pakistan's trade gap with China persists, with imports at $17 billion" - The Express Tribune (no date)
  • "Pakistan to shift towards value-added production in textiles, minerals, and processed meat" - The News (no date)
  • "Pakistan's commerce strategy lacks value addition and institutional accountability" - Pakistan Today (no date)

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