Pakistan is about to sign the second phase free trade agreement with China. China has agreed to allow Pakistan to export 313 items duty-free. Pakistan and China will also sign several MoUs and agreements to enhance bilateral cooperation in diverse areas. The China-Pakistan Economic Corridor is one of the largest projects under the Belt and Road Initiative and nearly 50 per cent of the project has been completed since 2014. China is helping Pakistan's spinning mills become more cost efficient and competitive. China also wants to relocate its textile units to Pakistan to benefit from Pakistan’s low paid and well-experienced textile labor.
Pakistan’s major exports to China are cotton yarn, chemical material, crude vegetable material, rice, raw hides and skins, fish and fish preparations. Major imports are machinery and spare parts, manufactured fertilizer, yarn and thread of synthetic fiber, iron and steel, chemical materials and products, vegetable and synthetic textile fiber, road vehicles and their parts, non-ferrous metals, tires and tubes of rubber etc.
Meanwhile, Pakistan’s economy is going through a difficult period, with the country’s foreign exchange reserves falling. Economic growth is expected to slump to 3.9 per cent in fiscal 2019 down from 5.2 per cent in 2018.