Beijing provides Islamabad with investments and trade breaks that the EU and the US are not willing to offer at a time of economic crisis. Pakistan needs to address its trade deficit.

Islamabad (AsiaNews/Agencies) – Sino-Pakistani trade is up, and China is becoming Pakistan’s main trading partner. This has raised alarm bells in Islamabad where officials are concerned that bilateral trade is leading to a major deficit. For this reason, they want the Chinese to invest more in Pakistan and give its products greater access to the Chinese market.

Chinese Deputy Prime Minister Zhang Dejiang, in Pakistan on an official visit earlier this month, gave assurances that China will provide trade concessions and increase cooperation in numerous sectors, including port development, roads, railways, mobile telephony, communication technology, hydro and thermal power, mining, electronics, and nuclear energy.

In 2006, China and Pakistan set up a Pakistan-China Haier Ruba Economic Zone (HREZ) in Lahore, the first industrial park outside China supported by the Chinese government and exclusively for Chinese investment. Under the deal, China is committed to consider duty-free access into China for all products manufactured in the park.

Quickly, China is becoming Pakistan’s top trading partner, ahead of the United States and European Union. For example, EU-Pakistan trade has an annual turnover of about US$ 10 billion. However, early this month, the European Union and Pakistan failed to come up with any breakthroughs on liberalising bilateral trade. Conversely, Islamabad granted China a number of advantages, including in the mining sector.

Beijing has also been an Islamabad booster at the international level. It has helped the Pakistanis finalise a deal with Iran to build a gas pipeline. It has also offered to build at least two new 650-megawatt reactors at Chashma over the next seven years. The Chashma-3 and Chashma-4 nuclear power plants are being built by Pakistan Atomic Energy Commission and China Zongyuan Engineering Corporation, despite strong opposition by Western powers like the United States that are afraid that Islamic extremists might get hold of nuclear material.

In May, Pakistan’s trade deficit grew to US$ 1.60 billion, up from US$ 1.09 billion a year earlier.  The country's total trade deficit in the first 11 months of the fiscal year that ends this month was US$ 13.88 billion.

• pakistan
• china
• trade
• united
• states
• european
• union
• investments
• gas
• pipeline