China offers Pakistan to trade in yuan, help decrease trade deficit

[Ali Tariq]

ources quoting the Chinese ambassador said Beijing was contemplating to invite new Prime Minister Imran Khan as a guest of honour for China Import Fair set to be held in November 2018

By
Monitoring Report
-
August 20, 2018
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ISLAMABAD: To rein in Pakistan’s rising trade deficit, China is said to have offered Islamabad the option of commencing trading in Renminbi (Yuan) in which regard meeting has been held with the State Bank of Pakistan (SBP).

According to sources privy of the development, the recommendation was put forth by the Chinese Ambassador to Pakistan Yao Jing in a meeting with ex-interim Minister for Commerce, Mian Misbah-ur-Rehman, reports Business Recorder.

In the meeting, several issues of economic cooperation and bilateral between the two countries were brought forth.

Also, China is mulling announcing unilateral trade concessions to Pakistan which will increase its exports to Beijing and hence decrease trade deficit.


The China-Pakistan free trade agreement (CPFTA) part 1 favoured China since their exports to Pakistan were valued over $15 billion compared to Pakistan’s exports of a meagre $1.5 billion in FY18.

And the last round of CPFTA talks held in Islamabad were unsuccessful as both countries were unable to reach an agreement on the second phase.

Also, a high-level meeting presided under the chairman of ex-prime minister Shahid Khaqan Abbasi had taken the decision of not finalizing CPFTA part 2 till the industry was taken aboard.

Furthermore, sources quoting the Chinese ambassador said Beijing was contemplating to invite new Prime Minister Imran Khan as a guest of honour for China Import Fair set to be held in November 2018.

To ensure this visit more purposeful, the Chinese ambassador stated a team led by the Commerce Minister or the Secretary Commerce could visit China before the visit of new PM to find out areas of cooperation and firm up the aim of his visit.

In reply to the interim commerce minister’s worry on granting concessions to India and Bangladesh, the ambassador said those had been proclaimed under the framework of Asia-Pacific Trade Agreement (Bangkok Agreement).

The Chinese ambassador added China-Pakistan Economic Corridor (CPEC) was aimed more on energy and infrastructure linked projects, but Beijing recognized new areas of cooperation and support to Pakistan’s government via trade promotion, foreign direct investment (FDI) and social sector support.

For this, a delegation of Chinese Customs and Quarantine department would come to Pakistan shortly to address concerns over market access and quarantine issue which were impeding trade between both countries.

While talking about FDI, Mr Jing stated Beijing would begin measures to enhance joint venture and investment in special economic zones (SEZs). He advised Shanghai Import Fair would provide a good chance for Pakistan to exhibit its investment potential.

On the topic of social sector cooperation, Mr Jing said regional governments of Xinjiang province and Gilgit-Baltistan (GB) were working in tandem to enhance infrastructure facilities at border posts to resolve customs and quarantine related problems.

https://profit.pakistantoday.com.pk...to-trade-in-yuan-help-decrease-trade-deficit/

 

[Ali Tariq]

@ziaulislam

 

[Sugarcane]

That's nice offer, but from where we will get Yuan because our trade till now is heavily in favor of China? Unless our export to China is increased along with FDI from China, this will not work.

 

[war&peace]

Good decision. We should follow the same with other countries like we should trade with Turkey in Pak-Rupees and Lira ..

 

[ziaulislam]

@ziaulislam

yaun is good but wont chane mich apart from convenience and faster trade

Major point is trade concessions ...china is big market historically it tight controlled and concessions are given only to major Chinese product importing countriy

Problem is we are not thinking in linebof exports..e.g why sow wheat when it has little value why not soyabean?
Why old basmati rice when hybrid has 4x more produce after all anyone can label anything basmati...

 

[my2cents]

That's nice offer, but from where we will get Yuan because our trade till now is heavily in favor of China? Unless our export to China is increased along with FDI from China, this will not work.

If China wants to make Yuan as the international currency for trading like dollar, they would have to become like US, having trade deficits and become a consumption country. Countries have to stockpile yuan as part of their reserves to be able to trade with China.

 

[AyanRay]

I think it's a great opportunity for Pakistan. Even India should follow suit. Start trading with China in Yuan. Since we hardly have Yuan in our fx reserves, the only way China will be able to send us Yuan is by importing our stuffs. (We will outrightly reject and Yuan loans). So it will take care of our huge trade defecits and also give a big boast to Chinese egos. A win win situation.

 

[AyanRay]

If China wants to make Yuan as the international currency for trading like dollar, they would have to become like US, having trade deficits and become a consumption country. Countries have to stockpile yuan as part of their reserves to be able to trade with China.

Another point to become a global currency is that it should be fully convertable.Countries won't keep a currency in their fx reserves whose value is determined by few sets of people and not my market forces.