5. Economic and trade relations between Pakistan and China
(1) Economic and trade relations with China after 1949
China-Pakistan economic and trade cooperation has developed well. The two countries have established trade relations since the early 1950s. In January 1963, the two countries signed a trade agreement; in 1967, border trade was initiated; in October 1982, the two countries established the China-Pakistan Joint Economic and Trade and Scientific and Technological Cooperation Committee, which has held 14 meetings so far.
Although China and Pakistan had established economic and trade relations in the early 1950s, due to the lack of complementarity between the economies of China and Pakistan at that time, the trade volume was small. Due to the shortage of foreign exchange between China and Pakistan at that time, barter trade played a very important role in China-Pakistan trade. The barter trade volume stipulated in the barter trade agreement in 1952 was Pakistan ’s export of 97.2 million rupees of cotton to China. In 1968, the barter trade volume between China and Pakistan reached US $ 14.5 million, and in 1979 it rose to US $ 48 million. In 1969, China and Pakistan signed a border trade agreement and started border trade. After the opening of the Karakoram Highway in 1978, the border trade between Xinjiang and Northern Pakistan increased significantly. The annual border trade volume increased from 240,000 rupees in 1970 to 3.9 million rupees in 1983 and 4,000 in 1988 Ten thousand rupees.
In the 1990s, although the value of China-Pakistan merchandise trade increased, the growth was not large and fluctuated. In 1990, it was US $ 585 million. In 1999, it increased by US $ 971 million, of which China exported US $ 581 million and imported 390 million US dollars. .
(2) China-Pakistan economic and trade relations since the 21st century
Since the beginning of the 21st century, China and Pakistan have actively expanded economic ties and adopted a series of strategic measures and institutional arrangements to promote economic and trade development between the two countries. In November 2006, the China-Pakistan Economic and Trade Cooperation Five-Year Development Plan and the China-Pakistan Free Trade Area Agreement were signed. Pakistan became the first South Asian country to recognize China's market economy status and the first to sign a free trade agreement with China. country. In 2009, the "China-Pakistan FTA Service Trade Agreement" was signed, becoming the first country to sign a service trade agreement with China. Signed the "Supplementary Agreement on the Five-year Development Plan for China-Pakistan Economic and Trade Cooperation" in December 2011, and the "Common Aspiration to Deepen China-Pakistan Strategic Partnership in the two countries issued a "China-Pakistan Joint Statement on Deepening China-Pakistan Strategy and Economic Cooperation", proposing to accelerate the construction of the China-Pakistan Economic Corridor, which will further strengthen the economic complementarity of the two countries and promote further economic and trade cooperation between the two countries. development of.
Bilateral Trade
Sino-Pakistani trade has certain complementarities, and the cooperation space and potential are large. In recent years, the growth rate of bilateral trade has remained above 10%. At present, China has become Pakistan's second largest trading partner. China ’s export commodities to Pakistan are increasingly diversified, and the proportion of electromechanical products is increasing year by year. However, the types of Chinese imports from Pakistan have not changed much, and they still remain in traditional commodities. China ’s main export commodities to Pakistan are: machinery and equipment, steel and its products, chemicals, electronic appliances, computers and communications products, fertilizers and agricultural products, among which machinery and equipment account for nearly 40%. Pakistan ’s main export commodities to China are: cotton yarn, cotton cloth, rice, ore and leather, among which cotton yarn accounts for more than half. In recent years, with the expansion of bilateral trade scale, trade disputes have also shown an upward trend, and Chinese-funded enterprises should attach great importance to it.
From 2000 to 2015, China's trade with Pakistan increased from 1.163 billion US dollars to 18.956 billion US dollars, with an average annual growth rate of 20.45%, of which exports increased from 670 million US dollars to 16.48 billion US dollars, with an average annual growth rate of 23.8%. Imports increased from 490 million US dollars to 2.48 billion US dollars, with an average annual growth rate of 11.4%. This shows that China has always been in a state of trade surplus, and the gap is gradually expanding. Although China-Pakistan trade volume accounts for a small proportion of China's total trade volume, it shows an upward trend. The proportion of China-Pakistan trade volume in China's total trade volume in 2015 has nearly doubled compared with 2000, reaching 92% .From the perspective of Pakistan, China has become Pakistan's largest importer and second largest exporter. In terms of imports, exports and trade volume, the proportion of China-Pakistan trade volume in Pakistan's total trade volume is increasing year by year, and the increase is increasing. In 2010, imports, exports, and trade accounted for 2.61%, 3.90%, and 4.97% respectively. In 2015, these three accounted for 8.7%, 25.1%, and 19.6%, respectively.
According to statistics from China Customs, the bilateral trade volume between China and Brazil in 2015 was 18.927 billion US dollars, an increase of 18.3% year-on-year. Among them, China 's exports were US $ 16.45 billion, up 24.2% year-on-year; China 's imports were US $ 2.477 billion, down 10.1% year-on-year; the trade surplus was US $ 13.973 billion.
At present, China is Pakistan's second largest trading partner, and Pakistan is China's second largest trading partner and largest investment destination in South Asia.
Economic and Trade Cooperation Zone
On November 26, 2006, the Haier-Ruba Economic Zone established by President Hu Jintao personally provided a new platform for Chinese enterprises to invest in Pakistan. Located in Lahore, Pakistan 's second largest city, this zone is one of the first batch of “China's Overseas Economic and Trade Cooperation Zones” approved by the Chinese Ministry of Commerce and the “Pakistan-China Special Economic Zone” approved by the Pakistani government. One of the key projects planned. The Haier -Ruba Economic Zone provides a new platform for Chinese companies to invest in Pakistan.The key industries in this area are small household appliances and power generation equipment, automobiles, motorcycles and accessories, chemical industry, packaging and printing industry, etc. Haier promotes the concept of health, efficiency, energy saving and environmental protection in Pakistan, and provides Pakistani consumers with products that meet their needs. The strategic concept of jointly building the "Silk Road Economic Belt" will bring tremendous support and help to the Haier-Ruba Economic Zone and even the entire Pakistan in terms of science and technology and talents.
Contracted Labor Services
Pakistan is one of the key markets for China's foreign contracted projects. In recent years, more and more Chinese companies have entered Pakistan and actively participated in the implementation of projects in Pakistan's communications, oil and gas exploration , power, water conservancy, transportation, airports, ports, housing construction, resource development and other fields, with good results.According to statistics from the Ministry of Commerce of China, in 2015, Chinese companies signed contracts with Brazil in the amount of US $ 12.18 billion, a year-on-year increase of 377.6%, and turnover was US $ 5.16 billion, a year -on-year increase of 21.6%. As of the end of December 2015, Chinese companies have signed contracts in Brazil The contract value of the project is US $ 45.45 billion and the turnover is US $ 33.08 billion. As of the end of December 2015, there were 9515 Chinese laborers in Pakistan.Newly-signed large-scale engineering contracting projects include the China Road and Bridge Construction Karakorum Highway Upgrade and Transformation Phase II Project, China Construction Contracting Karachi to Lahore Expressway (Sukur to Multan Section), China Railway 20th Bureau Contracting Karachi to Lahore Seoul Expressway ( Apdul Hajim to Lahore) etc.
Investment in Pakistan
Before 2007, China's total investment in Pakistan was only 108 million US dollars. In 2007, driven by the agreement on economic and trade cooperation between the two governments, China's investment in Pakistan jumped.In January 2007, China Mobile acquired an 88.88% stake in Pakistan's Paktel Mobile Communications Company for US $ 460 million, and then acquired and invested hundreds of millions of dollars to rebuild and expand its network facilities. In May 2014, China Mobile won the Pakistani 3G license and 4G license auction; in 2008, the China Development Bank and the Pakistan Ministry of Finance jointly invested US $ 200 million to establish the China-Pakistan Joint Investment Company; in May 2011, the Industrial and Commercial Bank of China invested US $ 50 million to establish two branches in Karachi and Islamabad in Pakistan; In September 2011, Hong Kong-listed company United Energy Group, which is controlled by Oriental Group, successfully acquired all assets of BP Pakistan. The actual investment of the company in Pakistan has exceeded US $ 1 billion.With the advancement of the China-Pakistan Economic Corridor, Chinese investment in Pakistan will increase substantially. According to statistics from the Chinese Ministry of Commerce, China 's direct investment in Pakistan in 2015 was US $ 321 million. As of the end of 2015 , China 's direct investment in Pakistan was US $ 4.036 billion.
Aid to Pakistan
Pakistan is an important aid recipient country for China. Since 1956, China has provided Pakistan with economic and technical assistance within its capacity, mainly including free assistance, interest-free loans and preferential loans. Major aid projects include: Karakoram Highway, Taksiela Heavy Machinery Factory, Jinnah Stadium, Gwadar Port, Pakistan-China Friendship Center, water damaged road repair, parliament solar photovoltaic power generation, etc.
China-Pakistan Currency Swap Agreement
On December 23, 2011, the People ’s Bank of China and the Central Bank of Pakistan signed a China-Pakistan bilateral local currency swap agreement with a swap scale of 10 billion yuan / 1400 billion rupees. Both parties agree to extend the period.
Sino-Pakistan Financial Cooperation
In recent years, the banking cooperation between China and Pakistan has developed rapidly. At present, Pakistan ’s National Bank, Askari Bank, and United Bank (UBL) have set up representative offices in Beijing. Habib Bank opened the first branch of Pakistan Bank in China in Urumqi, Xinjiang. In April 2015, during President Xi ’s visit to Pakistan, the two sides signed The "Protocol on Banking Services in the Free Trade Zone Service Trade Agreement" promotes the cooperation and development of the financial industries of the two countries under the FTA framework. The China Development Bank and Pakistan jointly established a China-Pakistan Joint Investment Company in Pakistan, and sent a working group to be permanently stationed in Pakistan; the Industrial and Commercial Bank of China Karachi branch and its Islamabad branch started operations in May 2011, and in April 2015 Opened a branch in Lahore.
(3) Economic and trade agreement signed with China
1. China and Pakistan sign a bilateral investment protection agreement
In February 1989, China and Pakistan signed the "Bilateral Investment Protection Agreement"; in November 2006, the "Free Trade Agreement" signed by both parties also made clear provisions for bilateral investment protection; in October 2008, the two parties signed the "Free Trade Agreement" In the Supplementary Protocol to the Agreement, Pakistan has specifically granted 12 preferential policies to the China-Pakistan Investment Zone.
In November 1989, China and Pakistan signed the "Agreement on Avoiding Double Taxation on Income and Preventing Tax Evasion".
2. Other agreements signed between China and Pakistan
Other major bilateral economic and trade agreements signed by China and Pakistan are: "Agreement on Customs Cooperation and Mutual Assistance" signed in April 2005, "Framework Agreement on Cooperation in the Energy Field" signed in February 2006 and "Expanding and Deepening Bilateral Economic and Trade Cooperation "Agreement, the Five-year Development Plan for China-Pakistan Economic and Trade Cooperation signed in November 2006 and the China-Pakistan Free Trade Agreement, the Framework Agreement on Cooperation in the Field of Minerals signed in 2007, and the China- Pakistan signed in February 2009 Free Trade Zone Service Trade Agreement, and the renewal of the "Five-Year Development Plan for China-Pakistan Economic and Trade Cooperation" in December 2011.
3. Other relevant protection policies
In April 2015, China and Pakistan signed and issued a "Joint Statement on the Establishment of an All-weather Strategic Partnership". The two sides will further strengthen strategic communication and collaboration to safeguard the common interests of the two countries.
(4) Matters needing attention in doing business in Pakistan
1. Investment
(1) Obey the overall situation. Pakistan is particularly friendly to China and has high expectations for Chinese companies to invest in Pakistan. Chinese companies investing in Pakistan should focus on the overall situation, consider long-term considerations, insist on mutual benefit and win -win results, strengthen coordination and communication with their Pakistani partners, consciously assume the necessary social responsibilities, and avoid local partners or Residents and religious groups have friction and disputes.
(2) Entering the village to follow the customs. Pakistan is an Islamic country. To carry out investment cooperation in Pakistan, we must not only study the local laws and regulations seriously, be familiar with the local cultural environment and customs, operate legally, but also respect local religious customs.
Safety first. In recent years, Pakistan's security situation has been severe, with terrorist attacks and criminal cases frequently occurring in certain areas. Before investing, companies should carefully inspect the market and seek advice from the Chinese Embassy in Pakistan on business and counseling , and choose a relatively safe investment location. After the investment, localized operations should be carried out as much as possible to reduce the number of Chinese personnel in Pakistan, and attention should be paid to strengthen the security of the resident and production and business sites .
2. Trade
(1) Pay attention to the impact of the political and economic situation on bilateral trade. Pakistan's political situation is turbulent, and the economy is greatly affected by external factors. Chinese companies should always pay attention to Pakistan's political, economic and security situation, debt status, state and bank credit ratings, inflation, and exchange rate changes to reduce operational risks.
(2) Avoid trade disputes. The business reputation of Pakistani businessmen is generally good, but Sino-Pakistani trade disputes have been on the rise in recent years and should be more vigilant. To this end, Chinese companies are reminded to pay attention to the following points: ① choose good trading partners through appropriate channels; ② understand local foreign trade, customs, ports and other relevant policies and regulations; ③ reduce the potential risks of contract terms, keep the contract, and keep fair and reasonable terms Undertake trade activities; ④ attach importance to the selection of foreign collection banks and freight forwarders; ⑤ improve the quality of business personnel.
(3) Make full use of the Pakistan Chamber of Commerce to carry out work. The Pakistan Chamber of Commerce has a very important position in Pakistan's foreign trade activities. The powerful importers and exporters are all members of the Chamber of Commerce. Enterprises can directly contact the relevant chambers of commerce to obtain more comprehensive information.
3. Prevent investment cooperation risks
In the process of investment, trade, contracted projects and labor service cooperation in Pakistan, special attention should be paid to pre-investigation, analysis, and assessment of related risks. Risk evasion and management should be done during the event to effectively protect its own interests. Including the credit investigation and evaluation of the project or trading customers and related parties, the analysis and avoidance of the political and commercial risks of the project location, and the feasibility analysis of the project itself. Enterprises should actively use insurance, guarantee, bank and other insurance financial institutions and other professional risk management institutions to protect their own interests, including trade, investment, contracted projects and labor service credit insurance, property insurance, personal safety insurance, etc. Factoring business and Forfeiting business, various types of guarantee business (government guarantee, commercial guarantee, guarantee letter), etc.
(3) Economic and trade agreement signed with China
1. China and Pakistan sign a bilateral investment protection agreement
In February 1989, China and Pakistan signed the "Bilateral Investment Protection Agreement"; in November 2006, the "Free Trade Agreement" signed by both parties also made clear provisions for bilateral investment protection; in October 2008, the two parties signed the "Free Trade Agreement" In the Supplementary Protocol to the Agreement, Pakistan has specifically granted 12 preferential policies to the China-Pakistan Investment Zone.
In November 1989, China and Pakistan signed the "Agreement on Avoiding Double Taxation on Income and Preventing Tax Evasion".
2. Other agreements signed between China and Pakistan
Other major bilateral economic and trade agreements signed by China and Pakistan are: "Agreement on Customs Cooperation and Mutual Assistance" signed in April 2005, "Framework Agreement on Cooperation in the Energy Field" signed in February 2006 and "Expanding and Deepening Bilateral Economic and Trade Cooperation "Agreement, the Five-year Development Plan for China-Pakistan Economic and Trade Cooperation signed in November 2006 and the China-Pakistan Free Trade Agreement, the Framework Agreement on Cooperation in the Field of Minerals signed in 2007, and the China- Pakistan signed in February 2009 Free Trade Zone Service Trade Agreement, and the renewal of the "Five-Year Development Plan for China-Pakistan Economic and Trade Cooperation" in December 2011.
3. Other relevant protection policies
In April 2015, China and Pakistan signed and issued a "Joint Statement on the Establishment of an All-weather Strategic Partnership". The two sides will further strengthen strategic communication and collaboration to safeguard the common interests of the two countries.
(4) Matters needing attention in doing business in Pakistan
1. Investment
(1) Obey the overall situation. Pakistan is particularly friendly to China and has high expectations for Chinese companies to invest in Pakistan. Chinese companies investing in Pakistan should focus on the overall situation, consider long-term considerations, insist on mutual benefit and win -win results, strengthen coordination and communication with their Pakistani partners, consciously assume the necessary social responsibilities, and avoid local partners or Residents and religious groups have friction and disputes.
(2) Entering the village to follow the customs. Pakistan is an Islamic country. To carry out investment cooperation in Pakistan, we must not only study the local laws and regulations seriously, be familiar with the local cultural environment and customs, operate legally, but also respect local religious customs.
Safety first. In recent years, Pakistan's security situation has been severe, with terrorist attacks and criminal cases frequently occurring in certain areas. Before investing, companies should carefully inspect the market and seek advice from the Chinese Embassy in Pakistan on business and counseling , and choose a relatively safe investment location. After the investment, localized operations should be carried out as much as possible to reduce the number of Chinese personnel in Pakistan, and attention should be paid to strengthen the security of the resident and production and business sites .
2. Trade
(1) Pay attention to the impact of the political and economic situation on bilateral trade. Pakistan's political situation is turbulent, and the economy is greatly affected by external factors. Chinese companies should always pay attention to Pakistan's political, economic and security situation, debt status, state and bank credit ratings, inflation, and exchange rate changes to reduce operational risks.
(2) Avoid trade disputes. The business reputation of Pakistani businessmen is generally good, but Sino-Pakistani trade disputes have been on the rise in recent years and should be more vigilant. To this end, Chinese companies are reminded to pay attention to the following points: ① choose good trading partners through appropriate channels; ② understand local foreign trade, customs, ports and other relevant policies and regulations; ③ reduce the potential risks of contract terms, keep the contract, and keep fair and reasonable terms Undertake trade activities; ④ attach importance to the selection of foreign collection banks and freight forwarders; ⑤ improve the quality of business personnel.
(3) Make full use of the Pakistan Chamber of Commerce to carry out work. The Pakistan Chamber of Commerce has a very important position in Pakistan's foreign trade activities. The powerful importers and exporters are all members of the Chamber of Commerce. Enterprises can directly contact the relevant chambers of commerce to obtain more comprehensive information.
3. Prevent investment cooperation risks
In the process of investment, trade, contracted projects and labor service cooperation in Pakistan, special attention should be paid to pre-investigation, analysis, and assessment of related risks. Risk evasion and management should be done during the event to effectively protect its own interests. Including the credit investigation and evaluation of the project or trading customers and related parties, the analysis and avoidance of the political and commercial risks of the project location, and the feasibility analysis of the project itself. Enterprises should actively use insurance, guarantee, bank and other insurance financial institutions and other professional risk management institutions to protect their own interests, including trade, investment, contracted projects and labor service credit insurance, property insurance, personal safety insurance, etc. Factoring business and Forfeiting business, various types of guarantee business (government guarantee, commercial guarantee, guarantee letter), etc.
