The Chinese government has shown a willingness to entertain Pakistan’s request for amending the existing Free Trade Agreement (FTA) and enhance yuan-based trade with Pakistan, Interim Commerce Minister, Gohar Ejaz said on Monday.
This decision, as reported by Dawn, was made during the visit of the Interim Commerce Minister, who is leading a delegation of 20 members in China. The mutual understanding between Pakistan and China involves a thorough revision of the FTA, focusing on extending comparable preferences to Pakistani products.
During the visit, Minister Gohar Ejaz stated that the proposed revision aims to align Pakistani products with the existing agreement between China and the Association of Southeast Asian Nations (ASEAN) countries.
Pakistan plans to submit a priority list after consultations with relevant stakeholders, and the Chinese counterpart has reportedly agreed to these requests.
Additionally, Pakistan has formally approached the Chinese government, urging them to allocate a substantial sum of $5 billion, equivalent to RMB, for financing investments aimed at facilitating the relocation of Chinese companies to Special Economic Zones (SEZ) or Export Processing Zones (EPZ) in Pakistan.
The proposed funding structure operates under a “Pay as You Earn” framework, enabling repayment through the utilization of export proceeds.
In the envisioned scheme, Chinese investors will actively seek investment funds from their government and generate revenue in US dollars through the export of goods. These proceeds will then be utilized to offset the loan amount.
Gohar Ejaz assures that Pakistan’s foreign exchange reserves will remain unaffected, mitigating potential burdens if the proposed scheme receives approval.
Furthermore, both countries have agreed on an immediate availability of $5 billion, equivalent to 30 billion RMB, for trade finance. Notably, this amount will be utilized in Chinese currency for export and import activities, aiming to minimize reliance on US dollars.
Both sides have also reached an agreement to align import valuation data, addressing discrepancies in trade figures.
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