Pakistani markets are awash with low-cost Chinese products. What is significant from Pakistan’s perspective is that China is fast developing Xinjiang into a major textile exporting hub. Xinjiang is China’s top cotton-growing area, producing between three to four million tons, or 60 per cent of the seven million tons of cotton produced by China.

China is already Pakistan's major competitor in global trade, particularly in the textile and garment segments, and with the establishment of a textile park in Xinjiang, its textile exports are anticipated to increase manifold. The textile park in Xinjiang will be a heavy blow to Pakistani textile exports. Already being high value added and low in cost due to high technology, superior production efficiency, subsidised manufacturing and cheap labor, China’s textile exports from Xinjiang passing through CPEC to the Middle East-North Africa region will experience a further reduction in costs in terms of transportation.

On the other hand, Pakistan’s exports are already facing a decline in global markets owing to a host of factors, two of which are high production costs and lack of incentives in the sector. Although a $1.7 billion textile package has recently been announced by Pakistan, it is no match with the incentives provided by China to textile exporters in Xinjiang, and Pakistan will not be able to compete with Chinese exporters.