Over the year, China will release some 4.6 million bales out of its own cotton reserves this year rather than rely on imports. This is bad news for Pakistan considering the importance of Chinese market for its cotton industry. Cotton and its related exports make up around 16 per cent of the country’s total exports as of financial year 2015. China is the largest market for Pakistan’s cotton exports accounting for about 38 per cent of Pakistan’s total cotton trade and six per cent of total exports.

For the fiscal year ended July 2015, cotton trade with China was down by 15 per cent year-on-year. Lackluster demand from China has often been cited as one of the several factors behind Pakistan’s weak textile industry. China is the world’s foremost consumer of cotton, with an annual consumption of some 34 million bales.

Not only has China been buying less from Pakistan, the cost of production in Pakistan is very high. So, Chinese buyers find prices too high. Moreover, China has recently devalued the yuan to improve exports and, conversely, reduce imports. So, with the yuan-rupee parity much lower than it was before, the year ahead might witness a further decline in Pakistan’s exports to China, not to mention a surge in imports coming in from China.