China to park $2b in reserves and triple its imports from Pakistan

ISLAMABAD: China has indicated to park about $2 billion in Pakistan’s foreign exchange reserves and extended a unique but unprecedented offer to triple it imports from Pakistan.

One of the cabinet members, who was part of the prime minister’s visit to China, confided to The News that Beijing will park almost $2 billion in Pakistan’s reserves, but it is yet to be worked out from both sides that out of $2 billion how much RMB -- Chinese currency -- will be kept in the reserves.

According to the cabinet member, Finance Minister Asad Umar will announce in a press beefing about Chinese offer to place $2 billion in Pakistan’s reserves and will let the masses know about the details of the China visit relating to financial issues.

More importantly, Chinese Premier Li Keianq, during the visit in clear words asked the top leadership of Pakistan that they are ready to double the imports from Pakistan and if Pakistani entrepreneurs have the capacity, after doubling the imports from $ 1.2 billion to $2.2 billion, they would also increase imports from Pakistan by additional $1 billion. So China, he said, is ready to triple the imports from Pakistan, but it all depends upon the ability of Pakistani entrepreneurs.

In addition, Beijing will also extend to Pakistan a special quota for export of sugar and rice which will also help have a massive surge in exports to China. The cabinet member said that a crucial meeting of Pakistan’s top officials is going to take place in Beijing on November 9 with their counterparts to shape up the process to finalisation of placing the dollars in Pakistan’s account to improve reserves situation and carve out the modus operandi to improve the export of Pakistani goods to China.

In the November 9 meeting, secretaries of finance, foreign affairs, commerce and governor State Bank of Pakistan would figure out the mechanism and implementation plan to achieve the said two targets. Both sides would also asses how much US dollars in cash and how much Chinese currency (RMB) equal to how much value of dollars will be parked. Pakistan and China have currency swap agreement for trade since Zardari regime which was firmed up in Nawaz era and now it will shape up in a big way.

Currently, Pakistan exports range $120-150 million per month which improved in the July, August, September, October and November to $200 million per month. In the remaining months, the Commerce Ministry wants to jack up its monthly export to $400 million to materialise the offer of China.

Adviser to Prime Minister on Commerce, Trade and Industries Abdul Razzak Dawood confirmed the development, saying that Chinese premier has asked Pakistan that his country is ready to double its imports from Pakistan which will be triple later on. He said this is a tremendous offer from China and he is going to have marathon meetings with Pakistani entrepreneurs from to carve out a plan to get maximum advantage of the Chinese offer. He said that currently, Pakistani exports to China stand at $1.2 billion per annum which can go up to $2.2 billion and then to $3.2 billion.

However, one of the top officials who is also privy to the developments, told that Pakistan wanted market access and unilateral concession of 313 tariff lines, but the Chinese premier by setting aside these demands offered Pakistan’s top leadership that his country is poised to increase its imports from Pakistan by 100 percent and later on it would also increase them by another 100 percent.

The official said that Pakistan can increase its exports by just $500 million by sending to Chinese market one million tons sugar and one million tons rice. He said China’s imports stand at $2 trillion, but Pakistani entrepreneurs lack the ability to harness even 1 percent share in China’s total imports.