PBC Report

5th Review of the
China-Pakistan Free Trade Agreement

with Recommendations for Phase II Negotiations
Including a Note on China’s Steel Industry
March 2019
5th Review of the
China-Pakistan
Free Trade Agreement
with Recommendations for
Phase II Negotiations
Including a Note on China’s Steel Industry
March 2019
A c k n o w l e d g e m e nt s
Team Leader:
Samir S. Amir
Lead Researcher:
Mustafa Gul Kaliya
Disclaimer:
The findings, interpretations and conclusions expressed do not necessarily
reflect the views of the Board of Directors and Members of the Pakistan
Business Council or the companies they represent. Any conclusions and
analysis based on data from ITC Trade Map, ITC Market Access Map, World
Bank, Euro Monitor, UN Comtrade, World Integrated Trade Solutions
(WITS), WTO Tariff Data Base, and National Data (National Bureau
of Statistics of China) are the responsibility of the author(s) and do not
necessarily reflect the opinion of the ITC, World Bank, UN, WTO, EU, or
the National Bureau of Statistics of China. Although every effort has been
made to cross-check and verify the authenticity of the data, the Pakistan
Business Council, or the author(s), do not guarantee the data included in
this work. All data and statistics used are correct as of January 1st, 2019,
and may be subject to change.
For any queries or feedback regarding this report, please contact;

Samir@pbc.org.pk or Mustafa.Gul@pbc.org.pk
i2 5th Review of China-Pakistan Free Trade Agreement 2019

T h e Pa k i s tan B u s in e s s C o u ncil
An Overview
The Pakistan Business Council (PBC) is a business policy advocacy platform,

established in 2005 by 14 (now 78) of Pakistan’s largest private-sector
businesses and conglomerates, including multinationals. PBC businesses
cover nearly all sectors of the formal economy. It is a professionally-run
organization headed by a full-time chief executive officer.
The PBC is a not-for-profit entity, registered under Section 42 of the

Companies Ordinance 1984. Though it is not required under the law to do
so, the PBC follows to the greatest extent possible, the Code of Corporate
Governance as applicable to listed companies.
The PBC is a pan-industry advocacy group. It is not a trade body nor does
it advocate for any specific business sector. Rather, its key advocacy thrust
is on easing barriers to allow Pakistani businesses to compete in regional
and global arenas. The PBC conducts research and holds conferences and
seminars to facilitate the flow of relevant information to all stakeholders
in order to help create an informed view on the major issues faced by
Pakistan.
5th Review of China-Pakistan Free Trade Agreement 2019 3

ii
T h e Pa k i s tan B u s in e s s C o u ncil - A n O v e r v i e w
The PBC works closely with relevant government departments, ministries,

regulators and institutions, as well as other stakeholders including
professional bodies, to develop consensus on major issues which impact
the conduct of business in and from Pakistan. The PBC has submitted key
position papers and recommendations to the government on legislation
and other government policies affecting businesses. It also serves on
various taskforces and committees of the Government of Pakistan as well
as those of the State Bank, SECP and other regulators with the objective
to provide policy assistance on new initiatives and reforms.
The PBC’s Founding Objectives:

The major objectives of the PBC as stated in its founding documents are:
To provide for the formation and exchange of views on any question

connected with the conduct of business in and from Pakistan.
To conduct, organize, set up, administer and manage campaigns,

surveys, focus groups, workshops, seminars and field works for
carrying out research and raising awareness in regard to matters
affecting businesses in Pakistan.
To acquire, collect, compile, analyze, publish and provide statistics,

data analysis and other information relating to businesses of any
kind, nature or description and on opportunities for such businesses
within and outside Pakistan.
To promote and facilitate the integration of businesses in Pakistan

into the World economy and to encourage in the development
and growth of Pakistani multinationals.
To interact with governments in the economic development of

Pakistan and to facilitate, foster and further the economic, social
and human resource development of Pakistan.
More information on the PBC, its members, and its workings, can be found
on its website: www.pbc.org.pk
4
iii 5th Review of China-Pakistan Free Trade Agreement 2019
t h e pbc ’ S M E M B E R S C O M PA N I ES

iv
t h e pbc ’ S M E M B E R S C O M PA N I ES
6v 5th Review of China-Pakistan Free Trade Agreement 2019

A cr o n y m s
ASEAN Association of Southeast Asian Nations

BRI Belt and Road Initiative
CNY Chinese Yuan
CPEC China-Pakistan Economic Corridor
CPFTA China Pakistan Free Trade Agreement
FDI Foreign Direct Investment
FTA Free Trade Agreement
FTZ Free Trade Zone
GDP Gross Domestic Product
GoP Government of Pakistan
HS Harmonized System of tariff nomenclature
ITC International Trade Center
LDC Less Developed Countries
MFN Most Favored Nation
PTA Preferential Trade Agreement
SEZ Special Economic Zone
SAARC South Asian Association for Regional Cooperation
UK United Kingdom
USA United States of America
USD United States Dollar
WTO World Trade Organization
5th Review of China-Pakistan Free Trade Agreement 2019 vi

7
CONTENTS
Acknowledgements i
The Pakistan Business Council: An Overview ii
Key Findings xix
Recommendations xxii
Introduction 01
Discrepancy in Trade Data 03
Trade Overview 06
Pakistan’s Trade Overview 06
Pakistan’s Exports To The World 07
Pakistan’s Imports From The World 08
China’s Trade Overview 09
China’s Exports To The World 10
China’s Imports From The World 11
Pakistan-China Bilateral Trade 12
Trade Overview 12
Pakistan’s Exports to China 13
Pakistan’s Imports from China 16
Utilization of Concessions under CPFTA 19
Pakistan’s Imports from China 20
Pakistan’s Exports to China 34
China’s Trade with India 49
China’s Exports to India 49
China’s Imports from India 52
The US – China Trade War,
an Opportunity for Pakistan? 54
China Outward FDI 61
Overview 61
vii
8 5th Review of China-Pakistan Free Trade Agreement 2019
c o nt e nt s
FDI by Sector 62
Top Destinations for Chinese FDI 64
Chinese FDI in Sub-Saharan Africa 66
Chinese FDI in Asia 69
Top Chinese Investors 71
Chinese FDI in Pakistan 72
The Chinese Steel Industry 75
Overview 75
History of the Chinese Steel Industry 77
Global Steel Production 82
Raw Materials Required by the Steel Industry 84
Chinese Exports of Iron & Steel and its Articles (HS-72 & HS-73) 86
Chinese Exports of Iron & Steel and its
Articles (HS-72 & HS-73) to Pakistan 90
Pakistan Industry Analysis 92
Optical, photographic, cinematographic, measuring, checking,
precision, medical or surgical instruments and apparatus;
parts and accessories thereof (HS-90) 92
Instruments and appliances used in medical, surgical or
veterinary sciences, n.e.s. (HS-901890) 95
Sources 98
Annexure I 99
Ann exure II 102
LIST OF FIGURES
Figure 1: Discrepancy in Pakistan’s reported imports
from China (USD Billion) (2013-17) 04
Figure 2: Discrepancy in Pakistan’s reported
export to China (USD Billion) (2013-17) 05
Figure 3: Pakistan’s trade overview (USD Billion) (2013-17) 06
Figure 4: China’s trade overview (USD Billion) (2013-17) 09
Figure 5: Pakistan’s trade with China (USD Billion) (2013-17) 12
Figure 6: Pakistan’s import from China (% of concessionary items) (2017) 20
Figure 7: Pakisan’s import from China
(Concessionary and Non-concessionary items) (2013-17) 21
Figure 8: Pakistan’s exports to China (% of concessionary items) (2015-17) 34
Figure 9: Chinese outward FDI (USD Billions) (2008-17) 74
Figure 10: Manufacturig process for iron and steel. 76
Figure 11: Production of Coke in China (Million Metric Tons) 76
Figure 12: Pakistan’s export of HS 90 (2013-17) (USD millions). 93
Figure 13: Pakistan’s export potential of HS 90 to China
(2013-17) (USD millions). 93
Figure 14: Pakistani Exports of HS-901890 (USD Millions) (2013-17) 95
Figure 15: Pakistan’s potential exports to China of HS-901890
(USD Millions) (2013-17) 96

viii
c o nt e nt s
LIST OF TABLES
Table 1: Pakistan’s reported trade with China (USD Billion) (2013-17) 03
Table 2: China’s reported trade with Pakistan (USD Billion) (2013-17) 04
Table 3: Pakistan’s exports to the world (HS-02 level)
Table 4: Pakistan’s imports from the world (HS-02 level)
Table 5: China’s exports to the world (HS-02 level)
Table 6: China’s imports from the world (HS-02 level)
Table 7: Pakistan’s Exports to China (HS-02 level)
Table 8: Pakistan’s Exports to China (HS-06 level)
Table 9: Pakistan’s imports from China (HS-02 level)
Table 10: Pakistan’s Imports from China (HS-06 level)
(USD Millions) (2013-17)) 18
Table 11: Pakistan’s trade with China (USD Billions) (2013-17) 19
Table 12: Break-up of Pakistan’s imports from China
by categories defined under the CPFTA (USD Millions) (2017) 22
Table 13: Break-up of Pakistan’s exports to China by categories
defined under the CPFTA (USD Millions) (2015-17) 35
Table 14: Values in USD Millions 48
Table 15: Values in USD Millions 48
Table 16: China’s exports to India (HS-02 level) (USD Millions) (2013-17) 50
Table 17: China’s exports to India (HS-06 level) (USD Millions) (2013-17) 51
Table 18: China’ s imports from India (HS-02 level)
Table 19: China’s Imports from India (HS-06 level)
Table 20: China’s top 20 textile exports to the United States
affected by additional tariffs. (2017) (Thousands USD) 56
Table 21: Pakistan’s top potential exportable textile articles
to the United States (2017) (Thousands USD) 60
Table 22: Chinese FDI by Sector (2008-18) (USD Millions) 63
Table 23: Chinese outward FDI in the Textile Sector (USD Millions) 64
Table 24: Top Destinations of Chinese FDI (USD Millions) (2013-17) 65
Table 25: Top Low and Lower Middle Income Destinations of
Chinese FDI (USD Millions) (2013-17) 66
Table 26: Sectoral Break-up of investment in Sub-Saharan Africa
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ix 5th Review of China-Pakistan Free Trade Agreement 2019
c o nt e nt s
Table 27: Country-wise Break-up of investment in Sub-Saharan Africa

Table 28: Country-wise Break-up of investment in Asia
Table 29: Sectoral Break-up of investment in Asia (USD Millions) (2013-17) 70
Table 30: Top 15 Chinese investors (USD Millions) (2013-17) 72
Table 31: Sectoral break-up of Chinese investment in Pakistan
over the period 2009-17 (USD Millions) 73
Table 32: Top Chinese Investors in Pakistan over the period
2009-17 (USD Millions) 73
Table 33: Chinese greenfiled FDI projects in Pakistan
(USD Million) (2009-17) 74
Table 34: Top 10 Steel Producers (Million Metric Tons) 82
Table 35: Use of Steel by Country (Million Metric Tons) 83
Table 36: Apparent Steel Use per Capita (Kg) 83
Table 37: Chinese imports of Iron ores and concentrates
(HS-2601) (USD Millions) 84
Table 38: Chinese imports of Coke (HS-2704) (USD Millions) 85
Table 39: Chinese imports of Ferrous waste and scrap
(HS-7204) (USD Millions) 86
Table 40: China’s country-wise exports of Iron and Steel
(HS-72) (2013-17) (USD millions). 86
Table 41: China’s product-wise exports of Iron and Steel
(HS-72) (2013-17) (USD millions). 87
Table 42: China’s country-wise exports of Articles of Iron and Steel
(HS-73) (2013-17) (USD millions). 88
Table 43: China’s product-wise exports of Articles of Iron and Steel
(HS-73) (2013-17) (USD millions). 89
Table 44: China’s Top 20 exports of HS-72 and HS-73 to Pakistan
at HS-06 level (2013-17) (USD millions). 91
Table 45: Top five categories at HS-06 level of ‘Optical,
photographic, … ; parts and accessories thereof’ (HS-90). 94
Table 46: Top destinations of Pakistani export of HS-90
(2013-17) (USD Million) 94
Table 47: Pakistan’s top five export destinations of HS-901890 i.e.
‘instrument and appliances used in medical, surgical or
veterinary sciences, n.e.s.’. (2013-17) (USD Million) 96
Tabl 48: Top destinations of Pakistani export of HS-901890
(2013-17) (USD Million) 97
Table 49: Top 3 Pakistani exports for the tariff lines covered
under HS-901890 (2013-17) (USD 000’) 97

x
E x e c u ti v e s u mmary
In November 2006, the governments of Pakistan and China signed

the China-Pakistan Free Trade Agreement (CPFTA). Under the CPFTA,
both countries agreed to offer preferential market access through tariff
concessions. The first phase of the CPFTA covered the period 2007-12.In
the first phase, Pakistan gained tariff concessions on 6,418 tariff lines, while
China secured concessions on 6,711 tariff lines. Negotiations for Phase II
of the CPFTA are still goods etc. In 2017, the difference between Pakistan’s
reported imports from China and China’s reported exports to Pakistan was
$2.8 billion. Similarly, the difference between Pakistan’s reported exports
to China and China’s reported imports from Pakistan was $325 million. So,
while Pakistan reported a trade deficit of $13.88 billion in its bilateral trade
with China, China reported a trade surplus of $16.42 billion in its trade
with Pakistan.
Pakistan’s exports to the world are mostly dependent on ‘Other made-up

textile articles’ (HS-63), ‘Cotton’ (HS-52), ‘Articles of apparel and clothing
accessories’ (HS-61 & 62) and Cereals (HS-10). Imports on the other
hand, are primarily focused on ‘Mineral fuels, mineral oils and products of
their distillation; bituminous substances’ (HS-27), ‘Machinery, mechanical
appliances, nuclear reactors, boilers; parts thereof’ (HS-84), ‘Electrical
machinery and equipment and parts thereof’ (HS-85), and ‘Iron and steel’
(HS-72). In 2017, Pakistan’s imports from the world grew by $10.4 billion to
$57.4 billion, while exports increased by $1.3 billion to $21.9 billion thus
leading to a trade deficit of $35.6 billion. The table below shows Pakistan’s
top 5 exports and imports to the world in 2017.
12
xi 5th Review of China-Pakistan Free Trade Agreement 2019
e x e c u ti v e s u mmary
Pakistan’s Top 5 Exports to the World Pakistan’s Top 5 Imports to the World
HS-Code Description 2017 (USD Million) HS-Code Description 2017 (USD Million)
TOTAL All products 21,878 TOTAL All products 57,440
63 Other made-up textile 27 Mineral fuels, mineral oils and
articles; sets; worn clothing products of their distillation;
and worn textile articles; rags 3,956 bituminous substances; mineral . . . 13,712
52 Cotton 3,498 84 Machinery, mechanical appliances,
nuclear reactors, boilers; parts thereof 6,863
61 Articles of apparel and clothing 85 Electrical machinery and equipment
accessories, knitted and parts thereof; sound recorders
or crocheted 2,516 and reproducers, television . . . 4,745
62 Articles of apparel and clothing 72 Iron and steel 3,419
accessories, not knitted or crocheted 2,465
10 Cereals 1,752 87 Vehicles other than railway or
tramway rolling stock, and parts
and accessories thereof 2,666
China is the largest exporter in the world with exports worth $2.26 trillion
in 2017.Roughly 43% of Chinese exports to the world are of ‘Electrical
machinery and equipment and parts thereof;’ (HS-85) and ‘Machinery,
mechanical appliances, nuclear reactors, boilers; parts thereof’ (HS-84).
Similarly, imports of ‘Electrical machinery and equipment and parts thereof;’
(HS-85), ‘Mineral fuels, mineral oils and products of their distillation;’ (HS-
27) and ‘Machinery, mechanical appliances, nuclear reactors, boilers; parts
thereof’ (HS-84) account for almost half of China’s total import bill. In 2017,
China imported $1,841 billion and exported $2,272 billion worth of goods
leading to a trade surplus of $431 billion. The table below shows China’s
top 5 exports and imports.

China’s Top 5 Exports to the World China’s Top 5 imports from the World
HS-Code Description 2017 (USD Million) HS-Code Description 2017 (USD Million)
TOTAL All products 2,263,371 TOTAL All products 1,843,793
85 Electrical machinery and 85 Electrical machinery and
equipment and parts thereof; equipment and parts thereof;
sound recorders and reproducers, sound recorders and reproducers,
television . . . 598,325 television . . . 457,922
84 Machinery, mechanical appliances, 27 Mineral fuels, mineral oils and
nuclear reactors, boilers; parts products of their distillation;
thereof 383,244 bituminous substances; mineral . . . 249,625
94 Furniture; bedding, mattresses, 84 Machinery, mechanical appliances,
mattress supports, cushions and nuclear reactors, boilers; parts
similar stuffed furnishings; . . . 88,973 thereof 169,532
62 Articles of apparel and clothing 26 Ores, slag and ash 126,478
accessories, not knitted or crocheted 73,409
61 Articles of apparel and clothing 90 Optical, photographic, cinematographic,
accessories, knitted or crocheted 71,824 measuring, checking, precision,
medical or surgical . . . 97,469

xii
Pakistan’s trade with China reached its highest point in 2017; imports rose
to $15.38 billion, and exports fell $1.51 billion leading to a trade deficit
of $13.88 billion. Cotton (HS-52) is Pakistan’s largest export to China and
represents roughly 60% of total exports. Meanwhile, imports from China
are mostly focused on Machinery (HS-84 & 85), and Iron and Steel (HS-72),
both of which combined made up 52% of total imports from China. The
figure below shows Pakistan’s trade with China over the period 2013-17.
Pakistan’s trade with China (USD Billion)
18.00 15.38
16.00 13.68
13.88
14.00
11.02 12.09
12.00 9.59
9.08
10.00
6.63 7.34
8.00
6.00
2.65 3.97
2.25 1.93 1.59 1.51
4.00
2.00
-
2013 2014 2015 2016 2017
Pakistan’s exports to china Pakistan’s imports from china Pakistan’s Trade Deficit with China
Analysis of utilization of concessions offered under the CPFTA shows that 42% of all
imports from China fall under the full concession list, i.e. Category 1. Furthermore,
over 84% of goods imported from China are in the concessionary list. Similarly, out of
total exports to China, 87% were those that received concessions under the CPFTA.
The largest share of exports, 56%, are from Category 2 (Tariff rate reduced to 0-5%)
followed by Category 1 with a 26% share.
14
xiii 5th Review of China-Pakistan Free Trade Agreement 2019
The top twenty items with high export potential to China from Pakistan have been
identified in Table 17, these have an estimated additional cumulative export potential
of $2.98 billion. Out of these high potential export items, ‘Semi-milled or wholly
milled rice, whether or not polished or glazed’ (HS-10063090) has the highest
potential of $519.45 million.
China also runs a huge trade surplus with India which was $51.6 billion
in 2017. The largest export category for China in its exports to India in
2017 was HS- 85, ‘Electrical machinery and equipment and parts thereof’
which accounted for 32% of total Chinese exports to India. Meanwhile,
the largest share of imports was for ‘Natural or cultured pearls, precious or
semi-precious stones, … ; coin’ (HS-71).
On March 22, 2018,following a report by the Office of the U.S. Trade

Representative (USTR) regarding China’s acts, policies and practices
concerning technology transfer, intellectual property and innovation,
President Trump signed a memorandum announcing that the United
States would take multiple steps to protect American technology and
intellectual property from certain alleged discriminatory and burdensome
trade practices by China. As part of the response, the Office of the United
States Trade Representative (USTR) released a list of approximately $200
billion worth of Chinese imports that would be subject to additional tariffs.
The full list of goods on which additional tariffs have been levied contains
5,745 complete or partial lines of which 937 lines pertain to textiles and
apparel. It is important to note that total textile imports from China by
the USin 2017 were in excess of $41.0 billion out of which a mere $3.57
billion or 8.7% of textile imports have currently been subject to additional
tariff. Pakistan however, has an export capability in just 189 of the 806 tariff
lines that China is now facing additional tariffs on. Hence, the incremental
increase for Pakistan is limited if it remains focused on the HS codes that it
presently exports to the US.
Over the last decade, Chinese Outward Foreign Direct Investment (FDI)
has been on an increasing trend. In 2017, Chinese companies invested
$178 billion in various sectors around the world. Although, Energy remains
one of the most important areas for FDI; in 2017, Agriculture, Transport and
Logistics took the largest share of FDI. As for the investment in the textile
sector, the Ruyi Group has been the single largest source of outward FDI.
The group accounted for nearly 59%, or $3.64 billion, of the $6.18 billion
textile sector FDI in the past seven years. The figure below shows China’s
Outward FDI for the period 2008-2017.

xiv
CHINESE OUTWARD (USD Billion)
171 178
200
180
160
140 115
103
120
80 80
100 70
66
80 56 56
60
40
20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Interestingly, most of the Chinese FDI is concentrated in high-income

countries.Among the top ten destinations for Chinese FDI, eight are high-
income countries. Amongst the low and lower-middle-income economies,
Pakistan ranked third in FDI inflow from China. Laos, managed to attract
the largest share of Chinese FDI in 2017 worth $3.07 billion.
Chinse FDI in Sub--Sahara Africa has decreased substantially in the last

few years. In 2013, the region managed to attract $12.3 billion worth of
Chinese investments. However, in 2017, Chinese FDI in the region was
only $980 million. Over the last decade, the most significant share of
Chinese FDI in Sub- Sahara Africa was in the Democratic Republic of the
Congo which was followed by South Africa and Niger. A major proportion
of China’s FDI in Africa has been in the primary sector. However, during
recent years the Chinese have diversified their portfolio with investments in
real estate and manufacturing along with investments in the energy sector.
These investments have also enabled knowledge-transfer from China,
and as a result, complete value-chains with vertically integrated industries
xv
have been set-up.Chinese developmental projects in Africa have shown

steady progress in the last few years and have helped provide improved
infrastructure, means of communication and telecommunications.
Over the last five year, Chinese companies have invested over $149 billion
in Asia (not including China). Major destinations for Chinese investments
in Asia over the same period are Singapore, Malaysia, Pakistan, Indonesia,
India, Laos and the UAE. These investments have been focused primarily
on energy, transport, real estate and logistics sectors. Although the energy
sector is the largest recipient of Chinese FDI in the region, rail transport
systems have attracted significant amounts of investments making rail
transport the second biggest recipient of Chinese FDI. In 2017, the highest
share of Chinese FDI in Asia was in the logistics sector worth $10.0 billion
followed by the energy and transport sectors with FDI worth $7.5 and $6.0
billion respectively.
Over the past decade, 16 Chinese projects worth $10.5 billion have been
launched in Pakistan. Out of the 16 projects, 10 were Greenfield projects
and accounted for 77.0% of the $10.5 billion investment. Furthermore,
Chinese FDI in Pakistan is mostly focused on the Energy sector; out of the
16 Chinese FDI projects, eleven are in the energy sector.
China is the largest producer of steel in the world. The Chinese steel
industry was originally built with the support of the Soviet Union during
the 1950s. However, the Soviets withdrew their technical support in 1960,
leaving China with old and outdated technology. In 1981, the Chinese
state introduced the ‘contract responsibility system’ (CRS) for state-owned
enterprises. Under the CRS program, autonomy over production decisions
was devolved to enterprise managers, these in turn ‘contracted’ with the
State over firm-level production plans. In terms of expanding steel output
and substituting imports at low cost, the CRS program was a major success.
The complete marketization of the steel sector began in 1993 with the
cancellation of the CRS and its replacement with the ‘modern enterprise
system’ (MES). Under the MES, steel firms were devolved full managerial
autonomy, including financial responsibility for all profits and losses. As a
consequence of the devolution of full financial responsibilities to firms, the
MES program quickly threw the steel industry into a debt crisis. Given its
strategic importance to the national industrialization program, the state
was left with little choice but to financially bail out steel firms. In the Ninth

xvi
Five Year Plan launched in 1996, the Chinese government abandoned

its prior policy of decentralised industrial development in favour of a
new programme based on the principle of ‘grasp the large, let go of
the small’. A set of bureaucratic reforms led to the number of regulatory
authorities being streamlined in 2003. Various Chinese planning bodies
were abolished and replaced by two newly formed organisations with a
clear division of regulatory authority; the State-owned Assets Supervision
and Administration Commission (SASAC) and the National Development
and Reform Commission (NDRC). The SASAC’s role was to exercise direct
‘ownership’ functions on behalf of the State, and it took responsibility
for issues relating to enterprise financing, mergers and managerial
appointments. The NDRC’s role was to act as a national planning body,
setting broad industrial goals which were then to be implemented at the
firm level at the discretion of the various SASAC branches. The Chinese
government had thus moved back to an interventionist approach to the
steel industry. Growth in the Chinese steel industry rapidly accelerated
from 2000 onwards, and within a decade national steel consumption had
quadrupled, production increased five-fold, investment increased six-fold,
and the country shifted from being a net steel importer to becoming an
aggressive exporter. Within three decades policy reforms had seen the
Chinese steel industry transform from a small-scale and technologically
backward industry to becoming the world’s fastest growing steel industry,
producing half of the global steel output.
In response to the recent additional tariffs imposed by the Trump

administration on imports from China, the Chinese government, in a bid
to keep exports competitive, has increased tax rebates on 397 tariff lines.
From these 397 tariff lines, 88 are from Iron and Steel and its Articles (HS-
72 & HS 73) groups, where the tax rebate ranges from 9% to as high as
16% as shown in Annexure II. At the surface level, this retaliatory measure
will for sure be beneficial for the Chinese exporters; however, since the
rebates are not country-specific, it might lead to Chinese producers
engaging in dumping practices which would pose a severe threat to a
small-scale producer such as Pakistan.
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xvii 5th Review of China-Pakistan Free Trade Agreement 2019
The most substantial chunk of Chinese exports of Iron and Steel (HS-72),
13%, are of ‘Flat-rolled products (FRP) of alloy steel of width >=600mm,
only hot-rolled, in coils’ (HS-722530) while the largest share of exports of
articles of iron and steel (HS-73) was ‘Structures and parts of structures,
iron or steel, n.e.s.’ in 2017.
Steel and its products accounted for $1.93 billion, i.e., 11% of Pakistan’s
total imports from China in 2017. Furthermore, over the last five years’
steel imports from China registered a staggering growth of 131%.
Pakistani exports of ‘Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments and apparatus; parts
and accessories thereof’ (HS-90) were on a fluctuating trend between 2013
and 2016. In 2017, exports grew by about 13% and were recorded at $411
million. The largest share of exports is ‘Instruments and appliances used
in medical, surgical or veterinary sciences, n.e.s.’ (HS-901890) which made
up 88% of the exports in HS-90. Furthermore, Pakistan only exports $15.8
million worth of ‘Instruments and appliances used in medical, surgical
or veterinary sciences, n.e.s.’ to China while its total potential is $344.7
million.

xviii
K e y F indin g S
• Bilateral trade figures reported by Pakistan and China to the International

Trade Center (ITC) greatly differ from one another. Although, over the
last few years, the discrepancy in the trade data reported by Pakistan
and China has been decreasing, it is still too large to ignore. In 2017,
Pakistan reported a trade deficit of $13.88 billion in its trade with China.
China, on the other hand, reported a trade surplus of $16.42 billion in
its bilateral trade with Pakistan.
• Pakistan’s overall trade deficit in calendar year 2017 amounted to $35.6

billion.
• Over the past five years, Pakistan’s exports to China have decreased
by more than 40%. Imports, on the other hand, have grown by 132%.
This has led to a bilateral trade deficit of $13.88 billion as reported by
Pakistan to the ITC. Pakistan’s exports to China are highly dependent
on Cotton (HS-52), which represented roughly 60% of total exports to
China in 2017.
• China also runs a huge trade surplus with India which was $51.6 billion
in 2017.
• Analysis of Pakistan’s imports from China shows that out of the total
imports of $15.4 billion from China, 84% were of products that fell
under the China-Pakistan Free Trade Agreement (CPFTA) concession
list.
20
xix 5th Review of China-Pakistan Free Trade Agreement 2019
K e y F indin g S
• Similarly, analysis of Pakistan’s exports to China showed that 87% of the

$1.5 billion exports were goods that received concessions from China
under the CPFTA.
• The top twenty high potential exports from Pakistan to China identified
in Table (17) have an estimated cumulative export potential of $2.98
billion. From these goods, Semi-milled or wholly milled rice, whether
or not polished or glazed (HS-10063090) has the highest potential of
$519.45 million.
• The current trade tensions between China and the USA provides an
opportunity for Pakistan to increase its trade with both China and the
USA. In 2017, the US subjected $3.57 billion worth of Chinese textile
imports to additional tariffs, the next round of additional tariffs which
were to be enforced in January 2019 are currently on hold.
• In the event of additional tariffs being levied on Chinese imports by

the USA, there is a very small potential for Pakistan to get incremental
exports to the US if Pakistan remains focused on the HS-codes that it
presently exports to the US. The challenge is to develop capabilities in
those products that China exports.
• In 2017, Chinese companies invested $177.7 billion in various countries

/ sectors across the world. In the last ten years, major Chinese
investments have been in the energy sector.
• In 2017, the largest share of outbound Chinese FDI worth $45.87 billion
was in agriculture. The energy sector, in 2017, contributed $22.7 billion
to outbound Chinese FDI.
• The Chinese investment in the US and France in the area of textiles

follow two diverse strategies; the investment in US can be classified
as upstream investments whereas the investment in France is in the
downstream sector.
• Chinese investment in Vietnam and Cambodia’s textile and apparel

industry has managed to increase employment in the region. However,
since bulk of these local jobs are low or medium skilled positions, there
is no evidence of knowledge transfer. Furthermore, Chinese investment
in Africa has led to the creation of jobs as well as improved infrastructure,
and better means of communications and telecommunications.

xx
K e y F indin g S
• In the past ten years, China has invested over $10.5 billion in Pakistan.
These investments have mostly focused on the energy sector; out of the
sixteen Chinese FDI projects, eleven are in the energy sector. The $10.5
billion invested in Pakistan, includes $7.2 billion under China Pakistan
Economic Corridor (CPEC) which is a part of the Belt and Road Initiative
(BRI).
• China is the largest producer of Steel in the world. In 2017, China

produced over 831 million tons of Steel, which was almost half of the
world’s total production. Similarly, in terms of usage of steel, China
ranks at the top; utilizing 767.5 million tons of steel. In wake of the
trade war between China and the USA, the Chinese government, in a
bid to keep steel and other exports competitive, increased rebate on
397 tariff lines. Out of the 397 tariff lines, 88 are from Iron and Steel
and its Articles (HS-72 & HS 73) with the tax rebate ranging from 9%
to as high as 16% as shown in Annexure II. Since the rebates are not
market specific, there is a possibility that some this subsidized steel will
eventually be exported to Pakistan.
• For Pakistan there is high potential for export to China under HS-
901890, i.e. ‘instrument and appliances used in medical, surgical or
veterinary sciences, n.e.s.’. Since China is the largest importer in the
world for the said category, it could potentially absorb all of Pakistan’s
current exports under HS-901890. Pakistan’s current exports under HS-
901890 to the world in 2017 were $360.6 million
22
xxi 5th Review of China-Pakistan Free Trade Agreement 2019
R e c o mm e ndati o n s
• Governments of Pakistan and China must take measures to implement

live Electronic Data Interchange (EDI) of trade data to help overcome
the menace of misreporting of imports and exports. EDI should not be
confined to only consignments where concessions have been claimed
under the CPFTA.
• Pakistan’s export basket to China needs to be increased in terms of

depth and width. The ever-increasing imports from China need to be
curbed while working to enhance the export capacity.
• Products/Tariff lines recommended by the Pakistan Business Council to

be added to Category 1 (Elimination of tariffs within three years) of the
Chinese offer list in Phase 2 of the CPFTA are listed in Table 17.
• In the purview of the China-US trade tension, Pakistan can increase its
textile exports to the United States. For this purpose, Pakistani textile
industry and other stakeholders need to focus on export of those lines
which are the biggest exports by China to US as shown in Table 23 and
Annexure I.
• Pakistan is a composite and dynamic textile exporter where the entire

textile value chain is in the country. Pakistan can potentially draw
Chinese FDI to various subsectors within the textile sector, as China has
been doing so in different parts of the world.
5th Review of China-Pakistan Free Trade Agreement 2019 xxii

23
R e c o mm e ndati o n s
• From Pakistan’s perspective, this investment in the textile sector would

not only lead to inflow of capital, employment and increased exports
but also generate increased global demand for Pakistani products
through their Chinese counterparts.
• From the Chinese perspective, Chinese investors would be able to

bypass sanctions imposed by the United States as well as take advantage
of Pakistan’s GSP status to the US as well as the GSP+ status granted by
the EU.
• There is an absence of a regulatory body for the steel industry which

could potentially create and maintain standards for Pakistani producers.
This would ensure that domestic industry manufactures to quality
standards acceptable in the international market.
• In the wake of heavy rebates given to Chinese steel manufacturers

(Annexure II), the local industry needs to be safeguarded against
possible dumping practices.
• Producers of instrument and appliances used in medical, surgical or

veterinary sciences (HS-901890) should work to gain a larger share
in exports to the world and China, and take advantage of the high
demand for said product.
24
xxiii 5th Review of China-Pakistan Free Trade Agreement 2019
I ntr o d u cti o n
A free trade agreement was signed between the governments of Paki-

stan and China in November 2006. Under the China-Pakistan Free Trade
Agreement (CPFTA), both countries agreed to offer preferential market ac-
cess through tariff concessions. The first Phase of the CPFTA commenced
in 2007 and covered the period 2007-12. Under the first phase of the
CPFTA, Pakistan gained tariff concessions on 6,418 tariff lines while China
secured concessions on 6,711 tariff lines. Negotiations for Phase II of the
CPFTA are still underway.
The Pakistan Business Council (PBC), since 2007, has been documenting
trade patterns between China and Pakistan post implementation of Phase
I of the CPFTA. The main focus of the previous studies was on preferential
tariff imports from China of items with the greatest potential to damage
domestic manufacturing. The PBC, since 2013, has published the follow-
ing reports on the impact of the CPFTA on Pakistan’s economy:
1. Preliminary Study on Pakistan and China Trade Partnership Post FTA

(Published 2013)
2. Second review of Phase I of the Pakistan-China FTA and Recommen-

dations for Phase II (Published 2015)
3. Third Review of the Pakistan-China FTA and Recommendations for

Phase 2 Negotiations (Published 2016)

I ntr o d u cti o n
4. 4th Review of the China Pakistan Free Trade Agreement (CPFTA) &
Recommendations for Phase II Negotiations (Published 2018)
In addition to the above studies, the PBC has facilitated a number of inter-
actions between industry and the Ministry of Commerce on matters relat-
ing to Phase II negotiations of the CPFTA.
Since Phase II is still under negotiations, this study updates the work al-
ready done in the previous studies, while at the same time looking at po-
tential opportunities such as those created by the recent trade dispute
between China and the US.
There is a greater awareness and willingness in both China and Pakistan,

especially in China to help Pakistan get greater market access to the Chi-
nese market. In addition, with rising labour costs in China, the possibility
of using Pakistan as a manufacturing hub for Chinese textile exporters is
also under discussion. This study takes a closer look at the goods current-
ly being traded under the FTA and the investments made in Pakistan by
Chinese companies. It then identifies tariff lines where Pakistan needs to
negotiate with the Chinese for equal if not better concessions than those
offered by China to its other trading partners. The likely impact of a US
China trade war is studied in an effort to identify opportunities for Paki-
stani exporters. The final section of the study looks at the Chinese steel
industry and Pakistan’s surgical goods industry and its potential in the Chi-
nese market

D i s cr e panc y in T rad e D ata
As highlighted in all previous PBC reviews of the CPFTA, there exists huge
discrepancies in bilateral trade data reported by Pakistan and China to the
International Trade Center (ITC). Though this discrepancy has been reduc-
ing in the past few years, it is still too large to be ignored. It has been the
consistent view of the PBC that this discrepancy to a large extent reflects
under-invoicing by Pakistani importers and that this has severely impacted
domestic manufacturing in the country. Worst hit are domestic manufactur-
ing SMEs which have been all but wiped out in certain industries like light
engineering, toys, writing instruments, apparel, sports goods etc. Even
large scale manufacturing has seen its market share eroded in Pakistan
and a huge drop in investments in technology upgradation and expansion
in the manufacturing sector. In 2017, the difference between Pakistan’s
reported imports from China and China’s reported exports to Pakistan was
$2.8 billion. Similarly, the difference between Pakistan’s reported exports
to China and China’s reported imports from Pakistan was $325 million.
Furthermore, Pakistan reports a trade deficit of $13.88 billion with China,
while China reports a trade surplus of $16.42 billion with Pakistan.
Pakistan’s Reported Data 2013 2014 2015 2016 2017

Pakistan’s imports from China 6.63 9.59 11.02 13.68 15.38
Pakistan’s exports to China 2.65 2.25 1.93 1.59 1.51
Pakistan’s Reported Trade Balance with China 3.97 7.34 9.08 12.09 13.88
Table 1: Pakistan’s reported trade with China (USD Billion) (2013-17)

China’s Reported Data 2013 2014 2015 2016 2017

China’s exports to Pakistan 11.02 13.24 16.44 17.23 18.25
China’s imports from Pakistan 3.20 2.75 2.47 1.91 1.83
China’s Reported Trade Balance with Pakistan 7.82 10.49 13.97 15.32 16.42
Table 2: China’s reported trade with Pakistan (USD Billion) (2013-17)
DISCREPANCY IN PAKISTAN’S REPORTED IMPORTS FROM CHINA

(USD Billion)
6.00 5.42
5.00 4.39
3.66 3.55
4.00
2.87
3.00
2.00
1.00
0.00
2013 2014 2015 2016 2017
Figure 1: Discrepancy in Pakistan’s reported imports from China (USD Billion) (2013-17)

DISCREPANCY IN PAKISTAN’S REPORTED EXPORTS TO CHINA

(USD Billion)
0.54 0.54
0.60 0.50
0.50
0.32 0.33
0.40
0.30
0.20
0.10
0.00
2013 2014 2015 2016 2017
Figure 2: Discrepancy in Pakistan’s reported export to China (USD Billion) (2013-17)

T rad e O v e r v i e w
Pakistan’s Trade Overview:

The share of manufacturing in Pakistan’s GDP has been declining since
2008 as a result of which imports have been increasing while exports have
been more or less stagnant. Exports fell from a high of $25 billion in 2014
to $22 billion in 2017. Imports, on the other hand, increased in the same
period by $9 billion. The rise in imports has resulted in the highest ever
trade deficit of $35.6 billion in 2017.
Trade Overview - Pakistan (USD Billion)
70
57
60
48 47
42 44 44 44 44
50
38
32
40
25 25 25 25
21 22 22
20 21
30 18
20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Imports Exports
Figure 3: Pakistan’s trade overview (USD Billion) (2013-17)

Pakistan’s Exports to the World.
Pakistan has a narrow export base. Pakistan’s exports to the world are
mostly dependent on ‘Other made-up textile articles’ (HS-63), Cotton (HS-
52), ‘Articles of apparel and clothing accessories’ (HS-61&62) and Cereals
(HS-10); these product groups combined make up 65% of Pakistan’s total
exports. Exports of cotton (HS-52) have decreased significantly over the
last five years falling from $5.3 billion to $3.5 billion. The table below
shows Pakistan’s top 10 exports to the world at HS-02 level in USD Millions
for the period 2013-17.
HS Code
Description 2013 2014 2015 2016 2017
TOTAL All products 25,121 24,722 22,089 20,534 21,878
63 Other made-up textile articles; sets; worn
clothing and worn textile articles; rags 3,685 3,906 3,760 3,804 3,956
52 Cotton 5,334 4,731 4,040 3,497 3,498
61 Articles of apparel and clothing accessories,
knitted or crocheted 2,105 2,403 2,360 2,347 2,516
not knitted or crocheted 1,855 1,985 2,127 2,253 2,465
10 Cereals 2,181 2,211 1,942 1,717 1,752
42 Articles of leather; saddlery and harness;
travel goods, handbags and similar
containers; articles . . . 744 742 688 645 632
17 Sugars and sugar confectionery 634 439 358 251 512
90 Optical, photographic, cinematographic,
measuring, checking, precision, medical
or surgical . . . 348 365 369 364 411
03 Fish and crustaceans, molluscs and other
aquatic invertebrates 333 356 329 336 407
25 Salt; sulphur; earth and stone; plastering
materials, lime and cement 723 694 508 448 386
Table 3: Pakistan’s exports to the world (HS-02 level) (USD Millions) (2013-17)

Pakistan’s Imports From The World

Over the last five years, Pakistan’s imports from the world have been on an
increasing trend. The only category amongst the top 10 that decreased in
value was ‘Mineral fuels, mineral oils and products of their distillation’ (HS-
27), primarily as a result of a decline in global prices. Imports for the other
categories have increased significantly over the past five years.
HS Code
Description 2013 2014 2015 2016 2017
TOTAL All products 43,775 47,545 43,990 46,998 57,440
27 Mineral fuels, mineral oils and products of
their distillation; bituminous substances;
mineral . . . 15,247 14,822 10,031 9,529 13,712
84 Machinery, mechanical appliances, nuclear
reactors, boilers; parts thereof 3,058 3,927 4,069 5,832 6,863
85 Electrical machinery and equipment and parts
thereof; sound recorders and reproducers,
television . . . 2,682 3,346 3,802 4,431 4,745
72 Iron and steel 1,841 2,302 2,552 2,756 3,419
87 Vehicles other than railway or tramway rolling
stock, and parts and accessories thereof 1,238 1,314 1,745 2,101 2,666
29 Organic chemicals 2,016 1,964 1,864 1,944 2,372
15 Animal or vegetable fats and oils and their
cleavage products; prepared edible fats;
animal . . . 1,980 2,150 1,853 1,928 2,370
39 Plastics and articles thereof 1,570 1,952 1,933 1,938 2,296
12 Oil seeds and oleaginous fruits; miscellaneous
grains, seeds and fruit; industrial or medicinal . . . 479 781 785 1,048 1,399
07 Edible vegetables and certain roots and tubers 500 666 674 936 981
Table 4: Pakistan’s imports from the world (HS-02 level) (USD Millions) (2013-17)

China’s Trade Overview

China has had a trade account surplus with the world for the past twenty
years. Exports rose significantly during the 2009-14 period, going from
$1.2 trillion to $2.3 trillion. Exports fell after attaining their highest point
in 2014; in 2016, exports were $2.1 trillion. In 2017, exports grew again to
$2.3 trillion. The same trend is shown in China’s imports from the world.
Trade Overview - China (USD Billion)
2,342
2,273 2,272
2,209
2,500
2,098
2,049
1,950 1,959
1,898
1,818 1,841
1,743
2,000 1,680
1,578 1,588
1,431
1,369
1,500
1,202
1,133
1,006
1,000
500
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Imports Exports
Figure 4: China’s trade overview (USD Billion) (2013-17)

China’s Exports to the World:

China is the largest exporter of the world with exports worth $2.26 trillion
in 2017.Roughly 43% of Chinese exports to the world are of machinery
(HS-84 & 85). The table below shows China’s exports to the world at HS-
02 level for the period 2013-17.In line with the overall trend, exports of all
top 10 products rose in 2017 as compared to the previous year, the only
exception being ‘Articles of apparel and clothing accessories, knitted or
crocheted’ (HS61) which fell from $74.4 billion to $71.8 billion. The top
ten exports at HS-02 level made up 68% of China’s total exports in 2017.
HS Code
Description 2013 2014 2015 2016 2017
TOTAL All products 2,209,007 2,342,293 2,273,468 2,097,637 2,263,371
85 Electrical machinery and equipment
and parts thereof; sound recorders and
reproducers, television . . . 561,288 570,924 594,325 553,169 598,325
94 Furniture; bedding, mattresses, mattress
supports, cushions and similar
stuffed furnishings; . . . 86,415 93,374 98,531 87,509 88,973
not knitted or crocheted 68,252 81,445 78,440 72,065 73,409
knitted or crocheted 96,793 91,992 83,786 74,413 71,824
measuring, checking, precision,
medical or surgical . . . 74,530 74,001 73,677 67,488 70,616
87 Vehicles other than railway or tramway
rolling stock, and parts and accessories thereof 58,550 64,193 62,600 60,145 67,263
73 Articles of iron or steel 57,348 60,637 60,523 51,892 56,728
95 Toys, games and sports requisites;
parts and accessories thereof 35,847 38,553 42,627 43,707 54,593
Table 5: China’s exports to the world (HS-02 level) (USD Millions) (2013-17)

China’s Imports from the World

China is one of the largest economies in the world, and as such, it is also
one of the largest importers. Chinese imports were on a decreasing trend
up until 2016 as the value of imports fell from $1,959 billion in 2014 to
$1,588 billion in 2016. In 2017, imports rose by about $256 billion over the
previous year, reaching $1,843 billion. Machinery (HS-84 & 85) and mineral
fuels (HS-72) make up nearly 48% of China’s total imports from the world.
Top ten Chinese imports from the world at HS-02 level made up 77% of
total imports in 2017.
HS Code
Description 2013 2014 2015 2016 2017
TOTAL All products 1,949,992 1,959,235 1,679,564 1,587,921 1,843,793
85 Electrical machinery and equipment
reproducers, television . . . 439,418 424,319 428,694 412,879 457,922
27 Mineral fuels, mineral oils and products of their
distillation; bituminous substances; mineral . . . 315,232 316,788 198,601 176,536 249,625
26 Ores, slag and ash 148,772 134,661 93,720 94,479 126,478
medical or surgical . . . 107,588 105,806 99,636 92,689 97,469
87 Vehicles other than railway or tramway
rolling stock, and parts and accessories thereof 74,148 89,509 69,629 71,506 79,246
71 Natural or cultured pearls, precious or
semi-precious stones, precious metals,
metals clad . . . 18,340 41,894 96,593 79,327 65,288
29 Organic chemicals 65,877 60,313 47,758 43,906 55,838
12 Oil seeds and oleaginous fruits;
miscellaneous grains, seeds and fruit;
industrial or medicinal . . . 42,627 45,888 39,713 38,295 44,514
Table 6: China’s imports from the world (HS-02 level) (USD Millions) (2013-17)

Pa k i s tan - C h ina B ilat e ral T rad e
Trade Overview
Over the last five years, Pakistan’s exports to China have shown a declining
trend. Meanwhile, Pakistan’s imports from China are growing at a healthy
rate. This has led to an increasing trade deficit for Pakistan. In 2017, Pakistan
exported $1.51 billion worth of goods to China and imported $15.38 billion
worth of goods leading to a trade deficit of $13.88 billion1. Since 2013,
Pakistan’s trade deficit with China has increased by almost 250%. The following
figure shows Pakistan’s trade with China for the period 2013-17.
Pakistan’s trade with China (USD Billion)
18.00 15.38
16.00 13.68
13.88
14.00
11.02 12.09
12.00 9.59
9.08
10.00
6.63
7.34
8.00
6.00
2.65 3.97
2.25 1.93 1.59 1.51
4.00
2.00
-
2013 2014 2015 2016 2017
Pakistan’s exports to china Pakistan’s imports from china Pakistan’s Trade Deficit with China
Figure 5: Pakistan’s trade with China (USD Billion) (2013-17)
1
Trade data used in the study is Pakistan’s reported data to the ITC unless explicitly mentioned.

Pakistan’s exports to China

Over the past five years, Pakistan’s exports to China have decreased by
more than 40%. Between 2013 and 2016, Pakistan’s exports to China
shrunk by about 15% each year. In 2017, exports fell by 5%.
Cotton (HS-52) is Pakistan’s largest export to China and represents roughly

60% of total exports. Since cotton is such a large part of Pakistan’s exports,
any fall in the export of cotton has a significant negative impact on the
country’s exports. Exports of cotton to China fell from $1.9 billion in 2013
to $0.89 billion in 2017.The table below shows Pakistan’s top 10 exports to
China at HS-02 level for the period 2013-17 in USD millions.
HS Code
Description 2013 2014 2015 2016 2017
‘TOTAL All products 2,652.22 2,252.90 1,934.93 1,590.86 1,508.08
‘52 Cotton 1,936.01 1,525.34 1,261.71 968.23 885.41
‘26 Ores, slag and ash 129.17 91.67 70.65 77.66 98.45
‘10 Cereals 144.07 137.84 167.05 220.82 95.51
‘03 Fish and crustaceans, molluscs and
other aquatic invertebrates 35.78 55.21 46.17 47.99 60.10
‘90 Optical, photographic, cinematographic,
medical or surgical ... 14.41 8.33 8.50 14.59 39.71
‘25 Salt; sulphur; earths and stone;
plastering materials, lime and cement 63.51 52.29 47.98 37.44 38.46
‘74 Copper and articles thereof 36.56 34.50 28.00 12.28 37.80
‘41 Raw hides and skins (other than furskins)
and leather 57.06 55.42 42.13 37.12 37.04
‘63 Other made-up textile articles; sets;
worn clothing and worn textile articles; rags 26.92 34.57 26.83 25.79 25.78
‘61 Articles of apparel and clothing accessories,
knitted or crocheted 7.63 9.84 11.86 16.91 22.08
Table 7: Pakistan’s Exports to China (HS-02 level) (USD Millions) (2013-17)

The following table shows Pakistan’s top twenty exports to China at HS

06 level for the period 2013-17. From the top 10 exports to China, six are
from the broader category of cotton (HS-52). The Largest share of exports
is of ‘Single cotton yarn, of uncombed fibres, containing >= 85% cotton
by weight’ (HS-520512); it represents about 40% of total exports to China.
Furthermore, exports of the top twenty goods have fallen in value over
the last five years with the exception of “Instruments and appliances used
in geodesy, topography, hydrography, oceanography, hydrology, ... “ (HS-
901580) which rose from $3.67 million in 2013 to $23.65 million in 2017.
HS Code
Description 2013 2014 2015 2016 2017
‘520512 Single cotton yarn, of uncombed fibres,
containing >= 85% cotton by weight
and with a linear ... 1,187.59 955.60 828.92 670.31 623.96
‘261000 Chromium ores and concentrates 108.58 78.28 59.97 73.54 94.10
‘100630 Semi-milled or wholly milled rice,
whether or not polished or glazed 101.92 109.45 114.41 193.95 79.46
and with a linear ... 122.13 51.41 71.82 61.82 74.74
‘520912 Woven fabrics of cotton,
and weighing > 200 g/m², in three-thread .. 123.85 112.41 88.52 63.57 41.52
‘520532 Multiple “folded” or cabled cotton yarn, of
uncombed fibres, containing >= 85% cotton
by weight ... 71.67 97.2 53.74 34.49 33.98
‘520522 Single cotton yarn, of combed fibres,
and with a linear ... 71.04 64.14 49.87 26.84 30.96
‘520812 Plain woven fabrics of cotton,
and weighing > 100 g to 200 ... 72.19 77.00 50.97 26.97 28.77
‘901580 Instruments and appliances used in
geodesy, topography, hydrography,
oceanography, hydrology, ... 3.67 0.00 0.01 3.40 23.65
‘251512 Marble and travertine, merely cut,
by sawing or otherwise, into blocks
or slabs of a square ... 46.18 38.38 35.49 24.21 20.96
‘030339 Frozen flat fish “Pleuronectidae,
Bothidae, Cynoglossidae, Soleidae,
Scophthalmidae and Citharidae” ... 14.131 15.28 17.031 13.19 18.313
‘740319 Copper, refined, unwrought
(excluding copper in the form of billets,
wire-bars, cathodes and ... 10.069 9.395 2.43 3.301 17.01

HS Code
Description 2013 2014 2015 2016 2017
‘230120 Flours, meals and pellets of fish or
crustaceans, molluscs or other aquatic
invertebrates, ... 8.709 14.87 7.005 6.71 16.865
‘620322 Men’s or boys’ ensembles of cotton
(excluding knitted or crocheted,
ski ensembles and swimwear) 0.672 1.278 4.173 6.664 16.439
‘081340 Dried peaches, pears, papaws “papayas”,
tamarinds and other edible fruits
(excluding nuts, ... 13.791 23.698 26.725 26.311 16.19
‘100640 Broken rice 41.433 28.033 52.639 26.651 16.051
‘901890 Instruments and appliances used in medical,
surgical or veterinary sciences, n.e.s. 8.542 7.947 6.955 9.142 15.836
‘410712 Grain splits leather “incl. parchment-dressed
leather”, of the whole hides and skins of bovine ... 6.506 7.952 8.52 13.17 15.104
‘391590 Waste, parings and scrap of plastics
(excluding that of polymers of ethylene,
styrene and vinyl ... 22.278 18.405 15.719 17.865 14.072
‘740400 Waste and scrap, of copper (excluding
ingots or other similar unwrought shapes,
of remelted ... 23.051 23.263 23.214 7.145 14.046
Table 8: Pakistan’s Exports to China (HS-06 level) (USD Millions) (2013-17)

Pakistan’s Imports from China

Pakistan’s imports from China are over ten times larger than its exports to
China. Machinery (HS84 & 85) represents the largest share of imports at
45%, followed by Iron and Steel (HS-72) which represents 7% of imports
from China. The table below shows Pakistan’s top ten imports from China
at HS-02 level for the period 2013-17. Over the past five years, all the top
ten imports at HS-02 level have increased in value. The most substantial
increase was in ‘Machinery, mechanical appliances, nuclear reactors,
boilers;’ which grew by about 300% during this period. The top ten imports
at HS-02 level account for 75% of total imports from China.
HS Code
Description 2013 2014 2015 2016 2017
‘85 Electrical machinery and equipment
reproducers, television ... 1,756.32 2,264.95 2,566.00 3,363.75 3,645.86
‘84 Machinery, mechanical appliances,
nuclear reactors, boilers; parts thereof 836.77 1,369.96 1,666.32 2,940.38 3,308.37
‘72 Iron and steel 324.81 712.66 1,015.48 1,061.42 1,112.79
‘29 Organic chemicals 378.28 490.78 570.45 635.61 790.50
‘54 Man-made filaments; strip and
the like of man-made textile materials 367.79 479.43 509.56 556.29 552.08
‘73 Articles of iron or steel 252.37 292.92 413.49 525.22 534.24
‘31 Fertilisers 229.44 551.73 503.05 300.02 487.02
‘87 Vehicles other than railway or tramway rolling
stock, and parts and accessories thereof 145.38 171.66 255.08 398.18 440.48
‘39 Plastics and articles thereof 232.38 335.75 351.39 363.73 424.70
‘55 Man-made staple fibres 170.67 310.85 307.45 307.20 336.61
Table 9: Pakistan’s imports from China (HS-02 level) (USD Millions) (2013-17)
At the HS-06 level, we can see that Pakistan imports a large variety of goods
from China. Much like at HS-02 level, machinery (HS-84 &85) dominates
the list, representing twelve out of the top twenty imports.
The Largest growth in imports was seen in ‘Watertube boilers …’ (HS-

840211), ‘Generating sets’ (HS-850239)and ‘Flat-rolled products of alloy
steel …’ (HS-722530) whose imports have risen by 2,202%, 2,092%, and
1,374%, respectively, in the last five years. The top twenty imports at HS-
06 level make up only 30% of Pakistan’s total imports from China.

HS Code
Description 2013 2014 2015 2016 2017
‘854140 Photosensitive semiconductor devices,
incl. photovoltaic cells whether
or not assembled in ... 109.94 181.81 434.87 469.67 627.01
‘851712 Telephones for cellular networks
“mobile telephones” or for other
wireless networks 621.64 609.57 552.60 504.30 513.25
‘310530 Diammonium hydrogenorthophosphate
“diammonium phosphate”
(excluding that in tablets or similar ... 137.76 290.47 325.02 280.83 450.29
‘840211 Watertube boilers with a steam
production > 45 t/hour 18.69 13.12 57.90 212.67 430.16
‘722530 Flat-rolled products of alloy steel
other than stainless, of a width of >= 600 mm,
not further ... 27.27 169.96 325.81 367.00 401.98
‘850231 Generating sets, wind-powered 79.71 2.19 216.16 329.83 319.03
‘851762 Machines for the reception, conversion
and transmission or regeneration of voice,
images or ... 148.07 248.09 161.65 228.92 257.14
‘401120 New pneumatic tyres, of rubber, of a kind
used for buses and lorries
(excluding typres with ... 121.01 143.17 164.95 166.71 168.72
‘841430 Compressors for refrigerating equipment 43.04 62.44 75.39 102.47 148.75
‘850239 Generating sets (excluding wind-powered
and powered by spark-ignition internal
combustion piston ... 5.68 114.65 149.23 284.64 124.52
‘540233 Textured filament yarn of polyester
(excluding that put up for retail sale) 144.928 178.473 173.072 162.299 120.241
‘550410 Staple fibres of viscose rayon, not carded,
combed or otherwise processed for spinning 9.454 27.721 27.242 72.758 119.547
‘540331 Yarn of viscose rayon filament, incl.
monofilament of < 67 decitex, single,
untwisted or with ... 79.973 100.75 96.968 110.088 116.524
‘600192 Pile fabrics of man-made fibres, knitted or
crocheted (excluding “long pile” fabrics) 20.566 39.552 76.097 97.943 112.2
‘292690 Nitrile-function compounds
(excluding acrylonitrile, 1-cyanoguanidine
“dicyandiamide”, fenproporex ... 25.435 29.729 56.551 79.238 110.117

HS Code
Description 2013 2014 2015 2016 2017
‘841590 Parts of air conditioning machines,
comprising a motor-driven fan and
elements for changing ... 31.724 39.904 48.241 70.867 107.389
‘853710 Boards, cabinets and similar combinations
of apparatus for electric control or
the distribution ... 11.569 24.884 18.207 58.778 106.287
‘847130 Data-processing machines, automatic,
portable, weighing <= 10 kg, consisting
of at least a ... 20.188 113.167 28.216 111.804 101.9
‘850440 Static converters 22.839 49.303 55.765 64.562 101.837
‘853720 Boards, cabinets and similar combinations
of apparatus for electric control
or the distribution ... 9.683 12.597 30.579 78.927 101.272
Table 10: Pakistan’s Imports from China (HS-06 level) (USD Millions) (2013-17)

Utili z ati o n o f c o nc e s s i o n s u nd e r
C h ina - Pa k i s tan F r e e T rad e
A g r e e m e nt ( C P F TA )
The table below shows bilateral trade over the last five years. Pakistan’s
trade deficit with China has been increasing. In 2017, the trade deficit was
$13.89 Billion. In 2017, Pakistan’s imports from China were at an all-time
high of $15.40 Billion.
USD Billion 2013 2014 2015 2016 2017

Imports from China 6.63 9.59 11.02 13.68 15.40
Exports to China 2.65 2.25 1.93 1.59 1.51
Pakistan’s Trade Deficit with China 3.97 7.34 9.08 12.09 13.89
Table 11: Pakistan’s trade with China (USD Billions) (2013-17)

Utili z ati o n o f c o nc e s s i o n s u nd e r ( C P F TA )
Pakistan’s Imports from China

This upward trend in both, imports from and the trade deficit with China,
can partially be attributed to the CPFTA which was signed in 2006 and
which allowed the entry of Chinese goods into Pakistan at concessional
rates.Pakistan’s concession list of 6711 products in total, was divided in to
the following categories:
• Category 1: Elimination of tariff (3 years)
• Category 2: 0-5% (5 years)
• Category 3: Reduction ofMargin of Preference: 50% (5 years)
• Category 4: Reduction on Margin of Preference 20% (5 years)
• Category 5: No concession
• Category 6: Exclusion
Pakistan’s imports from China (2017)
16%
84%
Concessionary items Non-concessionary & other items
Figure 6: Pakistan’s import from China (% of concessionary items) (2017)

Analysis of trade data shows that majority of Pakistan’s imports from China
in 2017 were those that had received concessions from Pakistan under the
CPFTA. Out of $15.4 billion imports from China, 84% of imports enjoyed
tariff concession while the remaining 16% were non-concessionary & other
items 2.
Over the last five years, concessionary items have accounted for the majority
of Pakistan’s imports from China. The contribution of non-concessionary &
other items has fallen from 22% in 2013 to 16% in 2017.
Pakistan’s exports to China
100%
90% 84%
81% 82%
78% 79%
80%
70%
60%
50%
40%
30%
22% 19% 21%
20% 18% 16%
10%
0%
2013 2014 2015 2016 2017
Figure 7: Pakisan’s import from China (Concessionary and Non-concessionary items) (2013-17)
2
Other items are those that either do not fall under any of the categories or in more than one defined in the CPFTA.

The following table shows a breakup of Pakistan’s imports from China by

categories defined under the CPFTA. The largest percentage of imports
are from goods defined under Category 1 (Zero Tariff) which represents
about 42% of total imports from China. The second largest percent of
imports are from Category 4 (20% Reduction) accounting for 24% of total
imports from China.
Percentage of Tariff lines Percentage

in the category Value in 2017 share of
(USD Million) Total Value
Category 1 – Zero Tariff (2,423 tariff lines - 35.6%) 6,488 42%
Category 2 – 0-5% (1,338 tariff lines - 19.9%) 2,497 16%
Category 3 – 50% reduction (157 tariff lines - 2%) 162 1%
Category 4 – 20% reduction (1,768 tariff lines – 26.1%) 3,738 24%
Category 5 – No Concession (1025 tariff lines – 15%) 1,883 12%
Category 6 – Exclusion (92 tariff lines – 1.4%) 3 0%
Others 626 4%
Total 15,399
Table 12: Break-up of Pakistan’s imports from China by categories defined under the CPFTA (USD Millions) (2017)
The following tables show the top twenty imports under each category.
Category 1 – Zero tariff (2,423 tariff lines - 35.6%)

Category 1 consists of those goods where Pakistan has granted China
duty-free access. Although this category consists of 35.6% of tariff lines; in
terms of import value, it accounted for 42.1% of total imports from China.
Furthermore, the top twenty imports from this category contributed 52.8%
to total imports from this category.
HS-08 Code Description Pakistan’s Pakistan’s China’s

imports imports exports to
from China from the the world
(USD Mn) World (USD Mn) (USD Mn)
(2017) (2017) (2017)
85414000 Photosensitive semiconductor devices,
incl. photovoltaic cells whether or not
assembled in ...629.69 659.25 16,469.24
85171210 Telephones for cellular networks
“mobile telephones” or for other
wireless networks: cellular ... 509.67 756.94 126,629.55
72253000 Flat-rolled products of alloy steel
other than stainless, of a
width of >= 600 mm, not further ... 402.95 403.21 5,661.85


(2017) (2017) (2017)
84021190 Watertube boilers with a
steam production > 45 t/hour: other 326.15 348.35 21.81
85023100 Generating sets, wind-powered 319.16 322.58 409.53
84143010 Compressors for refrigerating
equipment: used with hcfc and
non-cfc gases 148.64 209.58 2,843.18
40112090 New pneumatic tyres, of rubber,
of a kind used for buses and lorries
(excluding typres with ... 143.71 209.70 7,390.08
85023900 Generating sets (excluding wind-powered
and powered by spark-ignition internal
combustion piston ... 124.14 170.97 72.18
29269050 Nitrile-function compounds (excluding
acrylonitrile, 1-cyanoguanidine
“dicyandiamide”, fenproporex ... 110.17 113.40 591.77
84713010 Data-processing machines, automatic,
of at least a ... 82.58 120.29 20,884.42
84748090 Machinery for agglomerating, shaping or
moulding solid mineral fuels, ceramic paste,
unhardened ... 80.30 95.84 178.45
74031100 Copper, refined, in the form of cathodes
and sections of cathodes 71.70 95.78 2,054.80
86031000 Self-propelled railway or tramway coaches,
vans and trucks, powered from
an external source ... 71.61 71.61 673.17
84068200 Steam and other vapour turbines, of
an output <= 40 mw
(excluding those for marine propulsion) 70.53 118.79 71.47
70320000 Garlic, fresh or chilled 67.59 68.08 2,185.44
84068100 Steam and other vapour turbines,
of an output > 40 mw
(excluding those for marine propulsion) 66.54 118.79 28.03
29349990 Nucleic acids and their salts, whether
or not chemically defined; heterocyclic
compounds (excluding ... 55.06 72.71 1,675.52
29291000 Isocyanates 52.14 95.51 663.16
32061100 Pigments and preparations based on
titanium dioxide of a kind used for
colouring any material ... 49.56 85.40 1,985.46
84479010 Machines for making gimped yarn,
tulle, lace, embroidery, trimmings,
braid or net and machines ... 49.51 54.31 6.28
Total of Top 20 Imports of Category 1 3,431.41 4,191.07 190,495.38
Total Imports of Category 1 6,488.17 22,008.62

Category 2 – 0-5% (1,338 tariff lines - 19.9%)

Category 2 consists of all those tariff lines where duties were brought
down to between 0 and 5 percent. The most substantial share of imports
is of Diammonium hydrogenorthophosphate (HS-31053000) worth $450
million. Moreover, imports from the category account for 16% of total
imports from China.

(2017) (2017) (2017)
31053000 Diammonium hydrogenorthophosphate
“diammonium phosphate”
(excluding that in tablets or similar ... 450.68 647.96 2,207.82
55041000 Staple fibres of viscose rayon, not carded,
combed or otherwise processed for spinning 119.88 293.60 604.17
72111990 Flat-rolled products of iron or non-alloy steel,
of a width < 600 mm, simply hot-rolled, not .. 90.23 90.3 149.45
85044090 Static converters: other 83.69 113.7 -
85177000 Parts of telephone sets, telephones for
cellular networks or for other wireless
networks and ... 70.89 84.81 50,776.28
72107090 Flat products of iron or non-alloy steel,
of a width of >= 600 mm, hot-rolled
or cold-rolled ... 70.55 70.88 712.25
72104990 Flat-rolled products of iron or non-alloy
steel, of a width of >= 600 mm, hot-rolled
or cold-rolled ... 57.06 65.66 5,275.93
29419090 Antibiotics (excluding penicillins and their
derivatives with a penicillanic acid structure, ... 54.27 78.41 1,060.14
54033200 Yarn of viscose rayon filament, incl. monofilament
of < 67 decitex, single, with a twist of ... 53.28 53.34 5.79
95030090 Tricycles, scooters, pedal cars and similar
wheeled toys; dolls’ carriages; dolls; other toys; ... 49.08 50.59 373.57
9101100 Ginger, neither crushed nor ground 40.47 63.29 402.37
of a width of >= 600 mm, in coils, simply ... 40.22 345.97 15.25
84821000 Ball bearings 36.59 60.13 2,557.19
94054090 Electric lamps and lighting fittings, n.e.s: other 30.98 32.94 13,954.71
72139190 Bars and rods, hot-rolled, in irregularly wound
coils, of iron or non-alloy steel, of circular ... 29.81 30.49 11.77


(2017) (2017) (2017)
70134900 Glassware for table or kitchen purposes
(excluding glass having a linear coefficient
of expansion ... 29.12 30.64 998.59
54024410 Synthetic filament elastomeric yarn, single,
untwisted or with a twist of
<= 50 turns per metre ... 23.48 43.06 285.40
38089310 Herbicides, anti-sprouting products and
plant-growth regulators
(excluding goods of subheading .. 23.12 54.76 1,326.38
85022000 Generating sets with spark-ignition
internal combustion piston engine 22.48 60.45 1,188.25
38170000 Mixed alkylbenzenes and mixed
alkylnaphthalenes produced by the
alkylation of benzene and naphthalene .. 21.77 87.46 215.53

Category 3 – 50% reduction (157 tariff lines - 2%)

Category 3 consist of goods where Pakistan has offered 50% reduction
in the MFN tariff rates. As one of the smaller categories, it only accounts
for 1% of the total imports from China. Furthermore, the imports of the
category are mostly dependent on the top 20 goods which make up 84%
of total imports from China under the category. Moreover, the largest
import from this category in 2017 was insecticides (HS-38089170).

(2017) (2017) (2017)
38089170 Insecticides (excluding goods of
subheading 3808.50): products registered
under the agricultural ... 37.17 59.99 438.00
50079000 Woven fabrics containing predominantly,
but < 85% silk or silk waste by weight 23.71 23.71 30.89
70109000 Carboys, bottles, flasks, jars, pots, phials
and other containers, of glass, of a kind used ... 12.03 14.78 1,523.01
96190010 Sanitary towels (pads) and tampons, napkins
and napkin liners for babies, and similar articles, ... 6.86 12.01 0.18
70099100 Glass mirrors, unframed (excluding rear-view
mirrors for vehicles, optical mirrors, optically ... 6.83 6.89 452.88
34029000 Surface-active preparations, washing preparations,
incl. auxiliary washing preparations and ... 6.74 18.35 417.63
51119000 Woven fabrics containing predominantly, but
< 85% carded wool or carded fine animal hair by ... 5.25 5.27 9.98
32089090 Paints and varnishes based, incl. enamels and
lacquers, on synthetic polymers or chemically ... 4.71 16.46 206.05
37013020 Photographic plates and film in the flat, sensitised,
unexposed, with any side > 255 mm: photo .. 4.07 4.74 420.48
69021090 Refractory bricks, blocks, tiles and similar refractory
ceramic constructional goods containing, ... 3.92 12.33 758.12
68069000 Mixtures and articles of heat-insulating,
sound-insulating or sound absorbing
mineral materials .. 3.32 3.67 94.69
34021110 Anionic organic surface-active agents, whether
or not put up for retail sale (excluding soap): ... 3.30 16.34 242.22
50072000 Woven fabrics containing >= 85% silk
or schappe by weight 3.22 3.28 537.24
68061000 Slag-wool, rock-wool and similar mineral wools,
incl. intermixtures thereof, in bulk, sheets ... 2.90 3.10 184.90


(2017) (2017) (2017)
51111900 Woven fabrics containing >= 85% carded wool
or carded fine animal hair by weight
and weighing ... 2.64 2.89 28.27
69022090 Refractory bricks, blocks, tiles and similar
refractory ceramic constructional
goods containing, ... 2.35 4.88 418.26
but < 85% combed wool or combed fine
animal hair by .. 1.81 1.90 5.30
68109900 Articles of cement, concrete or artificial stone,
whether or not reinforced
(excluding prefabricated .. 1.65 1.86 1,464.27
33049190 Make-up or skin care powders, incl. baby
powders, whether or not compressed
(excluding medicaments): ... 1.60 2.09 282.85
33041000 Lip make-up preparations 1.39 2.09 361.76
Total of Top 20 Imports of Category 3 135.44 216.64 7,876.97

Total Imports of Category 3 162.15 400.29

Category 4 – 20% reduction (1,768 tariff lines – 26.1%)

Category 4 consists of goods in which China received a 20% reduction
over the MFN tariff rates. More than half of the top twenty goods under
this category are from machinery group (HS-84 & HS-85). Furthermore, the
total imports under this category account for 24.2% of total imports from
China.

(2017) (2017) (2017)
85176290 Machines for the reception, conversion
and transmission or regeneration of voice,
images or ... 222.55 242.85 18,163.58
60019290 Pile fabrics of man-made fibres, knitted or
crocheted (excluding “long pile” fabrics): other 111.06 111.89 2,567.69
85371090 Boards, cabinets and similar combinations of
apparatus for electric control or the distribution ... 105.94 130.97 5,695.85
84021130 Watertube boilers with a steam
production > 45 t/hour: heat recovery
steam generators (hrsg’s) 104.74 144.15 21.81
85372000 Boards, cabinets and similar combinations of
apparatus for electric control or the distribution ... 100.96 116.53 1,312.17
73082000 Towers and lattice masts, of iron or steel 94.79 96.24 537.44
73089090 Structures and parts of structures, of iron or
steel, n.e.s. (excluding bridges and
bridge-sections, ... 87.26 104.76 8,352.15
84199090 Parts of machinery, plant and laboratory
equipment, whether or not electrically
heated, for ... 84.76 94.13 579.00
84195000 Heat-exchange units (excluding instantaneous
heaters, storage water heaters, boilers
and equipment ... 77.10 83.82 946.34
85043400 Transformers having a power handling
capacity > 500 kva (excluding liquid
dielectric transformers) 73.76 80.24 194.29
85042300 Liquid dielectric transformers, having a
power handling capacity > 10.000 kva 68.04 80.97 875.42
64041900 Footwear with outer soles of rubber or plastics
and uppers of textile materials (excluding ... 60.50 63.51 12,670.26


(2017) (2017) (2017)
48109200 Multi-ply paper and paperboard, coated on
one or both sides with kaolin or other inorganic .. 58.51 118.11 1,031.81
72279000 Bars and rods of alloy steel other than stainless,
hot-rolled, in irregularly wound coils (excluding ... 57.77 61.10 2,803.97
85444990 Electric conductors, for a voltage <= 1.000 v,
insulated, not fitted with connectors, n.e.s: ... 53.33 70.03 -
60063200 Dyed fabrics, knitted or crocheted, of synthetic
fibres, of a width of > 30 cm (excluding warp ... 48.00 49.56 4,121.85
85393110 Discharge lamps, fluorescent,
hot cathode: energy saving lamp 46.67 46.83 5.48
63014000 Blankets and travelling rugs of synthetic fibres
(excluding electric, table covers, bedspreads .. 43.14 44.35 3,230.75
72142010 Bars and rods, of iron or non-alloy steel, with
indentations, ribs, groves or other deformations .. 39.29 39.81 106.90
84818090 Appliances for pipes, boiler shells, tanks, vats or
the like (excluding pressure-reducing valves, ... 37.72 88.71 4,119.59

Category 5 – No Concession (1025 tariff lines – 15%)

Category 5 is the ‘No concessions’ List. It includes all the tariff lines which
would be unaffected by Phase I of the CPFTA, in other words, imports
into Pakistan would be at Pakistan’s MFN tariff rate. The tariff lines in this
category however, may enjoy preferential treatment under Phase II of
the FTA. Imports under this category account for 12.2% of total imports
from China. Furthermore, 8 out of the top 20 goods fall under manmade
filaments and staple fibers (HS-54 & HS-55) .

(2017) (2017) (2017)
54023300 Textured filament yarn of polyester
(excluding that put up for retail sale) 120.35 172.12 1,390.17
54033100 Yarn of viscose rayon filament, incl.
monofilament of < 67 decitex, single,
untwisted or with ... 116.66 120.78 320.98
54075200 Woven fabrics of yarn containing >= 85%
by weight of textured polyester filaments,
incl. monofilament ... 74.14 89.31 5,172.40
87112010 Motorcycles, incl. mopeds, with reciprocating
internal combustion piston engine of a cylinder ... 71.90 102.74 93.14
55032010 Staple fibres of polyesters, not carded, combed
or otherwise processed for spinning:
of polyesters ... 50.44 67.26 1,028.40
84159099 Parts of air conditioning machines, comprising
a motor-driven fan and elements for changing ... 41.46 45.16 2,918.00
55161400 Woven fabrics containing >= 85% artificial
staple fibres by weight, printed 36.35 36.56 1,116.88
55161200 Woven fabrics containing >= 85% artificial
staple fibres by weight, dyed 33.23 33.35 550.77
69089010 Glazed ceramic flags and paving, hearth or
wall tiles; glazed ceramic mosaic cubes and the ... 32.93 55.64 N/A
54075400 Woven fabrics of yarn containing >= 85% by
weight of textured polyester filaments, incl.
monofilament ... 30.95 32.30 1,653.60
40111000 New pneumatic tyres, of rubber, of a kind used for
motor cars, incl. station wagons and racing ... 28.59 48.09 5,031.72
40112010 New pneumatic tyres, of rubber, of a kind used for
buses and lorries (excluding typres with ... 25.24 44.33 7,390.08


(2017) (2017) (2017)
but < 85% artificial staple fibres by weight, other ... 23.27 23.82 12.27
84159030 Parts of air conditioning machines, comprising a
motor-driven fan and elements for changing ... 23.07 23.72 2,918.00
76071100 Aluminium foil, not backed, rolled but not further
worked, of a thickness of <= 0,2 mm (excluding ... 22.85 31.55 2,047.19
39199090 Self-adhesive plates, sheets, film, foil, tape, strip
and other flat shapes, of plastics, whether ... 22.34 39.95 1,815.36
84159011 Parts of air conditioning machines, comprising a
motor-driven fan and elements for changing ... 22.15 25.21 1,373.36
87021090 Motor vehicles for the transport of >= 10 persons,
incl. driver, with compression-ignition ... 21.99 60.19 1,688.01
84151020 Window or wall air conditioning machines,
self-contained or “split-system”: self contained ... 21.25 34.45 7,093.84
10061010 Rice in the husk, “paddy” or rough: seed for sowing 20.73 20.73 N/A
Total of Top 20 Imports of Category 5 839.90 1,107.28 43,614.17

Category 6 – Exclusion (92 tariff lines – 1.4%)

Category 6 is the ‘exclusion list’. Goods under this category have been
excluded from the CPFTA concessions and hence imports into Pakistan
would be at Pakistan’s MFN tariff rate. This is the smallest category defined
under the CPFTA and its trade accounts for only $3.45 million.

(2017) (2017) (2017)
40129090 Solid or cushion tyres, interchangeable
tyre treads and tyre flaps, of rubber: other 1.11 1.45 89.40
72044920 Waste and scrap of iron or steel (excluding
slag, scale and other waste of the production of ... 0.49 10.25 163.71
36030000 Safety fuses; detonating fuses; percussion or
detonating caps; igniters; electric detonators ... 0.47 1.03 46.02
85123030 Electrical sound signalling equipment for cycle
or motor vehicles: anti-theft alarm system ... 0.38 0.67 N/A
40129020 Solid or cushion tyres, interchangeable tyre treads
and tyre flaps, of rubber: rim flaps, mud ... 0.24 0.25 22.54
39159000 Waste, parings and scrap of plastics (excluding that
of polymers of ethylene, styrene and vinyl ... 0.20 8.57 97.97
72041020 Waste and scrap, of cast iron (excluding radioactive):
waste and scrap of auto parts 0.18 1.09 10.97
36041000 Fireworks 0.17 0.17 719.70
25249000 Asbestos (excluding crocidolite and products
made from asbestos) 0.16 3.58 9.46
25241000 Crocidolite asbestos (excluding products
made from crocidolite) 0.01 0.01 N/A
40121200 Retreaded pneumatic tyres, of rubber, of a kind
used on buses or lorries 0.01 0.07 3.33
22072000 Denatured ethyl alcohol and other spirits of
any strength 0.01 0.05 1.62
85129030 Parts of electrical lighting or signalling equipment,
windscreen wipers, defrosters and demisters ... 0.00 0.00 1,162.73
84384000 Brewery machinery (excluding centrifuges and
filtering, heating or refrigerating equipment) 0.00 0.00 138.27


(2017) (2017) (2017)
38252000 Sewage sludge 0.00 0.00 -
85481090 Waste and scrap of primary cells, primary batteries
and electric accumulators; spent primary ... 0.00 16.13 N/A
39153000 Waste, parings and scrap, of polymers of vinyl
chloride 0.00 8.31 13.64
22030000 Beer made from malt 0.00 0.05 227.60
40129010 Solid or cushion tyres, interchangeable tyre treads
and tyre flaps, of rubber: flaps for use ... 0.00 0.00 13.16
Total of Top 20 Imports of Category 6 3.45 51.71 2,720.13

Total Imports of Category 6 3.451 60.016

Pakistan’s Exports to China

China extended concessions on 7550 products in total, which were divided
into the following categories:
• Category 1: Elimination of tariff (3 years)
• Category 2: Tariff reduced to 0-5% (5 years)
• Category 3: 50% reduction in tariff rates (5 years)
• Category 4: 20% reduction in tariff rates (5 years)
• Category 5: No concession
Pakistan’s Exports to China
100%
86% 87%
90%
80%
80%
70%
60%
50%
40%
30%
20%
20% 14% 13%
10%
0%
2015 2016 2017
Figure 8: Pakistan’s exports to China (% of concessionary items) (2015-17)

Pakistan’s total exports to China in 2017 were $1.5 billion out of which 87% of
the goods were those that received concession from China under CPFTA. The
remaining 13% were non-concessionary & other items 3.
Over the last three years, concessionary items have accounted for a majority of
Pakistan’s exports to China. Moreover, the contribution of non-concessionary &
other items grew from 14% in 2015 to 20% in 2016. Although, this percentage
fell to 13% in 2017. The following graph shows Pakistan’s exports to China
categorized as either concessionary or non-concessionary.
Two of the largest categories defined under CPFTA are Category 1 (Zero Tariff)
and Category 2 (0-5%) both of which together make up 70% of all tariff lines
andin value terms these categories represent more than 80% of Pakistan’s total
exports to China. The following table shows the breakup of each category
defined under the CPFTA for the period 2015-17.
Pakistan’s Exports Pakistan’s Exports Pakistan’s Exports

to China (2017) to China (2016) to China (2015)
Value (USD Mn) Value (USD Mn) Value (USD Mn)
Category 1 – Zero tariff

(2,681 tariff lines - 35.5%) 438 29% 346 22% 510 26%
Category 2 – 0-5%
(2,604 tariff lines - 34.5%) 825 55% 869 55% 1,087 56%
Category 3 – 50% Reduction
(604 tariff lines - 8%) 17 1% 16 1% 13 1%
Category 4 – 20% Reduction
(529 tariff lines - 7%) 24 2% 23 1% 18 1%
Category 5 – No Concession
(1,132 tariff lines - 15%) 199 13% 326 20% 277 14%
Total Exports to China 1,508 1,591 1,935
Table 13: Break-up of Pakistan’s exports to China by categories defined under the CPFTA (USD Millions) (2015-17)
3
Other items are those that either do not fall under any of the categories or in more than one defined in the CPFTA.

The following tables show the top twenty exports under each category.
Category 1 – Zero tariff (2,681 tariff lines - 35.5%)

Exports under Category 1 of the CPFTA consists of goods where China has
granted Pakistan duty-free access. These goods represent nearly 29% of
Pakistan’s exports to China.

exports exports imports to
(2017) (2017) (2017)
26100000 Chromium ores and concentrates 94.29 104.53 3,443.68
52091200 Woven fabrics of cotton, >= 85% cotton
by weight & weighing > 200 g/m²... 41.59 134.19 57.41
52081200 Plain woven fabrics of cotton, >= 85%
cotton by weight, weighing > 100 g to 200 ... 28.78 213.42 30.68
90158000 Instruments and appliances used in geodesy,
topography, hydrography, oceanography.. 23.34 33.32 442.91
25151200 Marble and travertine, merely cut,
by sawing or otherwise … 20.99 25.09 1,452.82
74031900 Copper, refined, unwrought
(excluding copper in the form of billets ... 16.98 17.51 47.30
23012010 Flours, meals and pellets of fish or
crustaceans, molluscs ... 16.52 19.30 2,216.58
90189090 Instruments and appliances used in medical,
surgical or veterinary sciences, n.e.s: other 15.82 359.61 1,448.49
22071000 Undenatured ethyl alcohol, of actual
alcoholic strength of >= 80% 12.11 361.98 9.36
74040090 Waste and scrap, of copper (excluding ingots
or other similar unwrought shapes ... 12.04 74.72 9,152.48
13023210 Mucilages and thickeners, derived from locust
beans, locust bean seeds or guar seeds, whether ... 11.05 35.41 35.09
3061700 Frozen shrimps and prawns, even smoked, whether
in shell or not, incl. shrimps and prawns in ... 10.49 54.70 472.71
89051000 Dredgers 10.43 15.21 5.32


(2017) (2017) (2017)
52091900 Woven fabrics of cotton, containing >= 85% cotton
by weight and weighing > 200 g/m², unbleached ... 9.91 70.29 15.37
52091100 Plain woven fabrics of cotton, containing >= 85%
cotton by weight and weighing > 200 g/m², ... 7.48 28.05 15.26
95066210 Inflatable balls: footballs, soccer balls 7.15 154.71 20.42
52081300 Woven fabrics of cotton, containing >= 85% cotton by
weight and weighing <= 200 g/m², in three-thread ... 6.99 33.53 7.89
63023130 Bedlinen of cotton (excluding printed, knitted or
crocheted): bed covers, mill-made 6.27 234.52 0.40
63023190 Bedlinen of cotton (excluding printed, knitted or
crocheted): other 5.80 333.61 21.95
25051000 Silica sands and quartz sands, whether or not
coloured 5.06 5.16 43.96
Total of Top 20 Exports of Category 1 363.137 2,308.90 18,940.09
Total Exports of Category 1 437.52 8,505.80

Category 2 – 0-5% (2,604 tariff lines - 34.5%)

Category 2 consists of all those tariff lines where duties were brought
down to between 0 and 5 percent. Half of the top twenty goods in this
category are from cotton (HS-52), the highest item value wise being HS-
52051200 (Single cotton yarn, of uncombed fibres, containing >= 85%
cotton by weight) with exports to China worth $624 million in 2017. The
top twenty goods make up about 97.5% of the total exports to China from
this category.

(2017) (2017) (2017)
52051200 Single cotton yarn, of uncombed fibres,
and with a linear ... 624.56 812.80 2,312.72
containing >= 85% cotton by weight and
with a linear ... 74.85 92.78 221.65
52053200 Multiple “folded” or cabled cotton yarn,
of uncombed fibres, >= 85% cotton ... 34.04 129.46 53.51
52052200 Single cotton yarn, of combed fibres,
containing >= 85% cotton by weight and... 30.96 97.17 269.69
03051000 Flours, meals and pellets of fish, fit for
human consumption 12.16 13.74 0.31
84269900 Ships’ derricks; cranes, incl. cable cranes
(excluding overhead travelling cranes 6.52 6.55 32.10
03031900 Frozen salmonidae (excluding trout and
pacific, atlantic and danube salmon) 6.46 76.14 9.08
56012900 Wadding of textile materials and articles thereof
(excluding of cotton or man-made fibres; ... 2.32 5.37 2.04
with a linear ... 2.28 12.09 149.56
52054200 Multiple “folded” or cabled cotton yarn, of combed
fibres, containing >= 85% cotton by weight .. 1.93 13.53 82.07
3032900 Frozen, nile perch (lates niloticus)
and snakeheads (channa spp.) 1.87 21.87 0.04


(2017) (2017) (2017)
39151000 Waste, parings and scrap, of polymers of ethylene 1.59 3.63 1,099.47
28044000 Oxygen 1.21 1.21 1.50
and with a linear ... 0.66 21.20 310.41
and with a linear ... 0.64 7.54 711.76
and with a linear ... 0.63 4.42 797.36
84262000 Tower cranes 0.52 0.52 1.23
73269090 Articles of iron or steel, n.e.s. (excluding cast
articles or articles of iron or steel wire): ... 0.44 2.67 493.97
5079090 Tortoiseshell, whalebone and whalebone hair,
horns, antlers, hooves, nails, claws and beaks, ... 0.43 1.45 6.42
52053100 Multiple “folded” or cabled cotton yarn, of
uncombed fibres, containing >= 85% cotton
by weight ... 0.35 5.20 0.85


Category 3 – 50% Reduction (604 tariff lines - 8%)

Category 3 consist of goods where China has offered 50% reduction in the
MFN tariff rates. The top twenty goods from the category make up 67%
of total exports to China in the category. Furthermore, fifteen out of the
top 20 goods in the category are from ‘Articles of apparel and clothing
accessories, knitted or crocheted’ (HS-61).

exports exports imports from
to China to the the world
(2017) (2017) (2017)
61034900 Men’s or boys’ trousers, bib and brace
overalls, breeches and shorts of textile materials, ... 3.12 175.84 6.16
61033900 Men’s or boys’ jackets and blazers of textile
materials (excluding of wool, fine animal hair, ... 2.11 146.70 3.44
61046200 Women’s or girls’ trousers breeches and
shorts of cotton, knitted ... 1.05 32.19 68.26
61046900 Women’s or girls’ trousers breeches and shorts
of textile materials, ... 0.78 59.10 11.09
63053300 Sacks and bags, for the packing of goods, of
polyethylene or polypropylene strip or the like ... 0.78 0.92 10.02
61033300 Men’s or boys’ jackets and blazers of synthetic fibres,
knitted or crocheted (excluding wind-jackets ... 0.59 10.89 16.11
05069090 Bones and horn-cores and their powder and waste,
unworked, defatted, degelatinised or simply ... 0.58 1.85 10.65
61043900 Women’s or girls’ jackets and blazers of textile
materials, knitted or crocheted (excluding ... 0.56 39.72 6.89
61034300 Men’s or boys’ trousers, bib and brace overalls,
breeches and shorts of synthetic fibres, knitted ... 0.50 29.11 64.47
61034200 Men’s or boys’ trousers, bib and brace overalls,
breeches and shorts of cotton, knitted or ... 0.36 47.07 105.14
61069000 Women’s or girls’ blouses, shirts and shirt-blouses
of textile materials, knitted or crocheted ... 0.36 71.71 0.52
61059000 Men’s or boys’ shirts of textile materials, knitted or
crocheted (excluding of cotton or man-made ... 0.17 310.81 4.57


(2017) (2017) (2017)
61033200 Men’s or boys’ jackets and blazers of cotton, knitted
or crocheted (excluding wind-jackets ... 0.14 33.79 19.90
61121100 Track-suits of cotton, knitted or crocheted 0.14 2.60 2.13
61029000 Women’s or girls’ overcoats, car coats, capes,
cloaks, anoraks, incl. ski jackets, windcheaters, ... 0.09 2.90 0.35
35030090 Gelatin, whether or not in square or rectangular
sheets, whether or not surface-worked or coloured, ... 0.08 0.44 3.00
62105000 Women’s or girls’ garments of textile fabrics,
rubberised or impregnated, coated, covered or ... 0.07 0.47 21.86
62031910 Men’s or boys’ suits of textile materials
(excluding of wool, fine animal hair or synthetic ... 0.03 11.87 0.16
61061000 Women’s or girls’ blouses, shirts and shirt-blouses
of cotton, knitted or crocheted (excluding ... 0.03 20.97 10.94
61121900 Track-suits of textile materials, knitted or crocheted
(excluding cotton or synthetic fibres) 0.02 8.19 0.27
Total of Top 10 Exports of Category 3 11.54 1,007.13 365.93
Total of Exports of Category 3 17.23 2,365.78

Category 4 – 20% Reduction (529 tariff lines - 7%)

Category 4 consists of goods which received a 20% reduction in tariff rates
over China’s MFN tariff. This is the smallest category in the CPFTA and
only covers 529 tariff lines. Total value of exports to China from Pakistan in
this category were a mere $24 million in 2017.

(2017) (2017) (2017)
62032200 Men’s or boys’ ensembles of cotton (excluding
knitted or crocheted, ski ensembles and swimwear) 16.45 1,294.52 1.17
62046290 Women’s or girls’ trousers, bib and brace overalls,
breeches and shorts of cotton (excluding ... 2.10 196.40 214.22
61159500 Full-length or knee-length stockings, socks and
other hosiery, incl. footwear without applied ... 1.54 200.19 79.85
13023900 Mucilages and thickeners derived from
vegetable products 1.33 2.11 -
63053900 Sacks and bags of man-made textile materials
(excluding of polyethylene ... 1.32 20.76 13.54
03011900 Live ornamental fish (excluding freshwater) 0.23 0.44 2.93
62045200 Women’s or girls’ skirts and divided skirts of
cotton (excluding knitted or crocheted and ... 0.19 3.46 33.15
39041090 Poly”vinyl chloride”, in primary forms, not
mixed with any other substances: other 0.16 0.58 711.14
63052000 Sacks and bags of cotton 0.11 13.78 5.15
63059000 Sacks and bags of textile materials (excluding
man-made, cotton, ... 0.10 3.70 2.82
62033200 Men’s or boys’ jackets and blazers of cotton
(excluding knitted or crocheted, and wind-jackets ... 0.09 25.82 48.81
62042200 Women’s or girls’ ensembles of cotton (excluding
knitted or crocheted, ski overalls and swimwear) 0.09 14.79 0.54
62041200 Women’s or girls’ suits of cotton (excluding knitted
or crocheted, ski overalls and swimwear) 0.07 11.25 0.13


(2017) (2017) (2017)
73102900 Tanks, casks, drums, cans, boxes and similar
containers, of iron or steel, for any material, ... 0.06 37.80 -
42021290 Trunks, suitcases, vanity cases, executive-cases,
briefcases, school satchels and similar containers, ... 0.03 1.42 179.83
61012000 Overcoats, car coats, capes, cloaks, anoraks, incl.
ski jackets, windcheaters, wind-jackets ... 0.02 6.03 12.71
92059000 Wind musical instruments (excluding
brass-wind instruments) 0.02 0.72 -
62043200 Women’s or girls’ jackets and blazers of cotton
(excluding knitted or crocheted, wind-jackets ... 0.02 5.98 63.55
85219090 Video recording or reproducing apparatus, whether
or not incorporating a video tuner (excluding ... 0.01 0.01 18.95
74199990 Articles of copper, n.e.s: other 0.01 0.13 -


Category 5 – No Concession (1,132 tariff lines - 15%)

Category 5 is the ‘No concessions’ List. It includes all the tariff lines which
would be unaffected by Phase I of the CPFTA, in other words, imports
into China would be at China’s MFN tariff rate. The table shows the top
20 exports under category 5. The largest export in the category is Semi-
milled or wholly milled rice (HS-10063090) which accounts for 40% of the
total exports in the category.

(2017) (2017) (2017)
10063090 Semi-milled or wholly milled rice, whether or not
polished or glazed: other 78.28 1,033.52 597.73
3033900 Frozen flat fish “pleuronectidae, bothidae,
cynoglossidae, soleidae, scophthalmidae
and citharidae” ... 18.34 157.41 261.59
10064000 Broken rice 16.15 182.65 325.88
8134030 Dried peaches, pears, papaws “papayas”,
tamarinds and other edible fruits (excluding nuts, ... 16.12 25.47 0.05
41071200 Grain splits leather “incl. parchment-dressed
leather”, of the whole hides and skins of bovine ... 15.13 114.58 578.13
41131000 Leather further prepared after tanning or crusting
“incl. parchment-dressed leather”, of goats ... 9.04 83.08 136.44
incl. parchment-dressed leather”, of sheep ... 8.14 32.33 121.18
61091000 T-shirts, singlets and other vests of cotton, knitted
or crocheted 4.43 197.84 429.06
3062400 Crabs, even smoked, whether in shell or not, live,
fresh, chilled, dried, salted or in brine, ... 3.64 4.87 -
12074000 Sesamum seeds, whether or not broken 3.16 43.56 734.40
17019910 Cane or beet sugar and chemically pure sucrose,
in solid form (excluding cane and beet sugar ... 3.09 342.57 239.15
12073000 Castor oil seeds 2.49 2.49 9.47
41079200 Grain splits leather “incl. parchment-dressed
leather”, of the portions, strips or sheets of ... 2.05 50.77 839.79


(2017) (2017) (2017)
“incl. parchment-dressed leather”, of antelopes, ... 1.53 36.79 6.66
39076090 Oth polyethylene terephthalate 1.42 2.19 -
52010090 Cotton, neither carded nor combed: other 1.31 60.99 2,185.78
52029900 Cotton waste (excluding yarn waste, thread waste
and garnetted stock) 1.29 41.21 72.54
61051000 Men’s or boys’ shirts of cotton, knitted or crocheted
(excluding nightshirts, t-shirts, singlets ... 1.20 168.63 98.42
48043900 Kraft paper and paperboard, uncoated, in rolls of
a width > 36 cm or in square or rectangular ... 1.11 1.87 88.60
41044900 Hides and skins of bovine “incl. buffalo” or equine
animals, in the dry state “crust”, without ... 0.94 14.22 17.41

PBC’s Recommendation for inclusion of products in

Category 1 of the CPFTA
The list provided below shows the products recommended by the Pakistan
Business Council to be added to Category 1 (Elimination of tariffs within
three years) to the Chinese offer list in Phase 2 of the CPFTA currently
under negotiations.
The PBC’s recommendations are based on an analysis of current Pakistani

exports to China of a product, Pakistan’s exports to the world of the said
product, China’s current imports of the product from the world, the current
Chinese tariffs on imports from Pakistan, China’s preferential tariff for
ASEAN, and the likely increase in Pakistan’s exports to China if China was
to give zero tariff access to Pakistan for the product.
Pakistan’s China’s
Pakistan’s exports to Imports Equivalent Export
exports to the world from the ad valorem Equivalent Potential
China (USD (USD world (USD tariff ad valorem (USD
Product Million) Million) Million) faced by tariff faced Million)
Code Lable (2017) (2017) (2017) Pakistan by ASEAN (2017)
10063090 Semi-milled or wholly milled rice,

whether or not polished or glazed 78.28 1,033.52 597.73 65 35 519.45
62034290 Men’s or boys’ trousers, breeches, nes,
of cotton 0.74 410.25 348.76 8 0 348.03
61091000 T-shirts, singlets and other vests of cotton,
knitted or crocheted 4.43 197.84 429.06 9 0 193.41
62046290 Women’s or girls’ trousers, bib and brace
overalls, breeches and shorts of cotton
(excluding ... 2.10 196.40 214.22 13 0 194.30
10064000 Broken rice 16.15 182.65 325.88 65 20 166.50
52051200 Single cotton yarn, of uncombed
fibres, containing >= 85% cotton by
weight andwith a linear ... 624.56 812.81 2,312.72 4 0 188.25
41071200 Grain splits leather “incl. parchment-
dressed leather”, of the whole hides
and skins of bovine . . . 15.13 114.58 578.13 4 0 99.45
61099090 T-shirts, singlets and other vests, knitted
or crocheted: Of other textile materials:
Other 0.06 106.29 222.60 9.3 0 106.23
61051000 Men’s or boys’ shirts, knitted or crocheted:
Of cotton 1.20 168.63 98.42 13.6 0 97.23

62046290 Women’s or girls’ trousers, bib and brace

overalls, breeches and shorts of cotton
(excluding ... 2.10 196.40 214.22 13 0 194.30
10064000 Broken rice 16.15 182.65 325.88 65 20 166.50
52051200 Single cotton yarn, of uncombed
fibres, containing >= 85% cotton by
weight and with a linear ... 624.56 812.81 2,312.72 4 0 188.25
41071200 Grain splits leather “incl. parchment-
dressed leather”, of the whole hides
and skins of bovine . . . 15.13 114.58 578.13 4 0 99.45
61099090 T-shirts, singlets and other vests, knitted
or crocheted: Of other textile materials:
Other 0.06 106.29 222.60 9.3 0 106.23
61051000 Men’s or boys’ shirts, knitted or crocheted:
Of cotton 1.20 168.63 98.42 13.6 0 97.23
03033900 Frozen flat fish “Pleuronectidae, Bothidae,
Cynoglossidae, Soleidae,
Scophthalmidae and Citharidae” . . . 18.34 157.41 261.59 8 0 139.07
41131000 Leather further prepared after tanning or
crusting “incl. parchment-dressed
leather”, of goats . . . 9.04 83.08 136.44 9.8 0 74.04
48115900 Paper and paperboard, surface-
coloured, surface-decorated or printed,
coated, impregnated or . . . 0.21 81.28 219.66 8 0 81.07
64039900 Footwear with outer soles of rubber,
plastics or composition leather, with
uppers of leather . . . 0.00 69.02 901.60 5 0 69.02
61159500 Full-length or knee-length stockings,
socks and other hosiery, incl. footwear
without applied . . . 1.54 200.19 79.85 11.2 0 78.31
15162000 Vegetable fats and oils and their fractions,
partly or wholly hydrogenated,
inter-esterified, . . . 0.00 39.83 161.30 25 0 39.83
overalls, breeches and shorts of cotton,
knitted or . . . 0.36 47.07 105.14 8 0 46.71
62046300 Women’s or girls’ trousers, bib and
brace overalls, breeches and shorts of
synthetic fibres . . . 0.00 1.78 82.03 8.8 0 1.78
52010090 Other Cotton, neither carded nor combed 1.31 60.99 2,185.78 20 10 59.67
62046900 Women’s or girls’ trousers, bib and
brace overalls, breeches and shorts of
textile materials . . . 0.07 31.78 38.62 8 0 31.71

17049000 Sugar confectionery not containing

cocoa, incl. white chocolate (excluding
chewing gum) 0.10 61.80 187.24 8.2 0 61.70
39249000 Household articles and toilet articles,
of plastics (excluding tableware,
kitchenware, baths, . . . 0.00 15.45 127.89 5 0 15.45
63071000 Floorcloths, dishcloths, dusters and
similar cleaning cloths, of all types of
textile materials 0.24 407.62 29.88 7 0 29.64
61059000 Men’s or boys’ shirts of textile materials,
knitted or crocheted (excluding of cotton
or man-made ... 0.17 310.81 4.57 8 0 4.40
overalls, breeches and shorts of
textile materials, ... 3.12 175.84 6.16 8 0 3.03
Table 14: Values in USD Millions
Pakistan’s total exports to the world Pakistan’s total exports to China Potential increase in exports
after tariff exemptions
21,878 1,508 2,981
Table 15: Values in USD Millions
Note: There exists a significant variance in HS-08 codes between China and Pakistan,
which have been reconciled to the best of abilities.

C h ina’ s trad e w it h I ndia
China’s Exports to India

China’s exports to India are on an increasing trend. Over the last five years,
exports grew by 40%, going up from $48.4 billion in 2013 to $67.9 billion
in 2017. The largest export category in 2017 was HS- 85, i.e. ‘Electrical
machinery and equipment and parts thereof’ which accounted for 32%
of total Chinese exports to India. Furthermore, Machinery (HS-84) and
Organic chemicals (HS-29) represented another 18% & 10% of Chinese
exports to India. The following table shows China’s top ten exports to
India at HS-02 level for the period 2013-17.
HS Code
Description 2013 2014 2015 2016 2017
‘85 Electrical machinery and equipment and
parts thereof; sound recorders and
reproducers, television ... 10,195.77 10,978.53 13,376.53 16,902.97 21,707.14
‘84 Machinery, mechanical appliances, nuclear
reactors, boilers; parts thereof 10,221.13 10,066.56 10,197.95 10,367.16 12,093.26
‘29 Organic chemicals 5,234.09 6,239.76 5,950.16 5,671.32 6,572.05
‘39 Plastics and articles thereof 1,791.66 2,238.23 2,128.76 2,245.07 2,673.55
‘90 Optical, photographic, cinematographic,
measuring, checking, precision, medical
or surgical ... 1,315.21 1,415.93 1,537.16 1,691.70 1,821.28
‘94 Furniture; bedding, mattresses, mattress
supports, cushions and similar stuffed
furnishings; ... 1,258.62 1,473.46 1,964.54 1,656.87 1,698.45

HS Code
Description 2013 2014 2015 2016 2017
‘72 Iron and steel 1,006.31 2,333.56 2,260.46 1,496.25 1,510.08
‘73 Articles of iron or steel 1,604.95 1,541.20 1,411.65 1,308.40 1,468.11
‘87 Vehicles other than railway or tramway
rolling stock, and parts and accessories
thereof 1,076.52 1,214.86 1,156.21 1,165.88 1,276.89
‘31 Fertilisers 1,895.24 2,338.37 3,541.51 1,540.32 1,031.83
Table 16: China’s exports to India (HS-02 level) (USD Millions) (2013-17)
At the HS-06 level, seven out of the top 20 goods belong to HS- 85,
i.e. ‘Electrical machinery and equipment and parts thereof’. The following
table shows China’s top exports to India at the HS-06 level for the period
2013-17. The top twenty goods at the HS-06 level made up 33% of China’s
total exports to India.
HS Code
Description 2013 2014 2015 2016 2017
‘851770 Parts of telephone sets, telephones for
cellular networks or for other wireless
networks and ... 794.81 781.46 1,352.52 3,278.29 6,195.01
‘854140 Photosensitive semiconductor devices, incl.
photovoltaic cells whether or not
assembled in ... 611.47 577.65 1,466.86 2,584.98 3,558.95
‘847130 Data-processing machines, automatic,
of at least a ... 2,067.00 1,819.46 2,132.38 1,600.65 2,383.72
‘851712 Telephones for cellular networks “mobile
telephones” or for other wireless networks 1,438.37 1,967.71 2,344.70 2,326.76 2,024.90
‘852990 Parts suitable for use solely or principally
with transmission and reception
apparatus for ... 196.54 269.01 287.08 534.11 749.15
‘901380 Liquid crystal devices, n.e.s. and other
optical appliances and instruments not
elsewhere specified ... 522.63 596.55 613.31 709.79 698.20
‘310530 Diammonium hydrogenorthophosphate
“diammonium phosphate” (excluding that
in tablets or similar ... 878.45 688.44 1,780.58 941.85 687.10
‘851762 Machines for the reception, conversion and
transmission or regeneration of voice,
images or ... 455.02 544.60 610.27 643.77 663.66

HS Code
Description 2013 2014 2015 2016 2017
‘852872 Reception apparatus for television, colour,
whether or not incorporating radio-broadcast
receivers ... 164.14 411.70 391.15 521.15 589.03
‘850760 Lithium-ion accumulators (excluding spent) 324.588 217.24 301.91 407.405 546.235
‘847330 Parts and accessories of automatic
data-processing machines or for other
machines of heading ... 393.334 386.655 343.293 311.12 474.019
‘950300 Tricycles, scooters, pedal cars and similar
wheeled toys; dolls’ carriages; dolls;
other toys; ... 83.962 90.243 142.266 202.881 445.363
270400 Coke and semi-coke of coal, of lignite or of
peat, whether or not agglomerated; retort
carbon 388.131 454.196 310.065 343.864 425.89
‘293499 Nucleic acids and their salts, whether or not
chemically defined; heterocyclic
compounds (excluding ... 302.555 349.871 419.647 362.601 401.256
‘294190 Antibiotics (excluding penicillins and their
derivatives with a penicillanic acid structure, ... 284.736 318.848 312.32 342.522 398.273
‘841430 Compressors for refrigerating equipment 265.029 309.136 307.235 362.773 374.18
‘852580 Television cameras, digital cameras and
video camera recorders 244.773 185.463 187.858 176.299 371.583
‘871410 Parts and accessories of motorcycles, incl.
mopeds, n.e.s. 385.53 427.576 339.556 344.519 358.925
‘841510 Window or wall air conditioning machines,

self-contained or “split-system” 179.306 158.078 194.069 220.649 351.475
Table 17: China’s exports to India (HS-06 level) (USD Millions) (2013-17)

China’s imports from India

China’s imports from India declined from $16.8 billion in 2013 to $11.8
billion in 2016. In 2017 however, imports increased to $16.3 billion. The
largest share of imports are HS-71 ‘Natural or cultured pearls, precious or
semi-precious stones, … ; coin’ followed by Copper (HS-74) and Ores, slag
and ash (HS-26). The table below shows China’s top imports from India at
HS-02 level for the period 2013-17.
HS Code
Description 2013 2014 2015 2016 2017
‘71 Natural or cultured pearls, precious or
semi-precious stones, precious metals,
metals clad ... 1,776.52 2,522.25 1,960.99 2,495.33 2,605.06
‘74 Copper and articles thereof 1,824.65 2,338.37 1,646.05 997.01 2,154.79
‘26 Ores, slag and ash 2,202.77 1,317.46 650.05 1,256.86 2,037.66
‘29 Organic chemicals 1,094.76 1,052.76 1,101.92 906.59 1,731.81
‘52 Cotton 4,347.86 3,218.14 2,275.20 1,271.97 1,294.65
‘25 Salt; sulphur; earths and stone; plastering
materials, lime and cement 678.06 958.70 843.45 738.55 983.24
‘84 Machinery, mechanical appliances, nuclear
reactors, boilers; parts thereof 560.07 638.98 561.96 520.40 633.32
‘85 Electrical machinery and equipment and
parts thereof; sound recorders and
reproducers, television ... 380.85 440.58 362.66 465.21 577.97
‘72 Iron and steel 336.97 206.69 157.60 173.88 474.49
‘39 Plastics and articles thereof 596.76 499.68 367.95 269.46 437.76
Table 18: China’ s imports from India (HS-02 level) (USD Millions) (2013-17)
At HS-06, Diamonds (HS-710239) accounted for nearly 16% of China’s total

imports from India. Furthermore, during the last three years, imports of
diamonds from India have increased even though total imports have been
on a decreasing trend.The following table shows China’s top 20 imports
from India at HS-06 level for the period 2013-17.

HS Code
Description 2013 2014 2015 2016 2017
‘710239 Diamonds, worked, but not mounted or set
(excluding industrial diamonds) 1,703.09 2,224.80 1,917.65 2,474.33 2,585.05
‘740311 Copper, refined, in the form of cathodes and
sections of cathodes 1,801.13 2,332.42 1,636.21 992.24 2,144.53
‘260112 Agglomerated iron ores and concentrates
(excluding roasted iron pyrites) 109.56 116.86 22.81 323.88 907.39
‘260111 Non-agglomerated iron ores and concentrates
(excluding roasted iron pyrites) 1,358.37 715.26 78.41 528.41 840.46
‘251611 Granite, crude or roughly trimmed (excluding
already with the characteristics of setts,
curbstones ... 453.18 739.00 630.14 552.68 676.82
‘290243 P-Xylene 23.67 69.60 236.29 116.45 673.17
‘720241 Ferro-chromium, containing
by weight > 4% of carbon 306.94 174.93 123.85 135.87 456.10
‘151530 Castor oil and fractions thereof, whether or
not refined, but not chemically modified 307.68 237.86 283.54 272.53 378.45
‘520524 Single cotton yarn, of combed fibres,
and with a linear ... 451.68 355.32 604.09 297.26 311.43
with a linear ... 553.09 451.26 437.11 279.19 307.95
‘271012 Light oils and preparations, of petroleum
or bituminous minerals which >= 90% by
volume “incl. ... 87.713 212.345 337.392 141.924 269.543
‘790111 Unwrought zinc, not alloyed, containing
by weight >= 99,99% of zinc 64.025 50.922 184.178 26.278 235.797
‘520100 Cotton, neither carded nor combed 2239.55 1528.648 364.324 189.695 192.893
with a linear ... 531.602 543.6 505.469 225.159 177.545
‘250100 Salts, incl. table salt and denatured salt,
and pure sodium chloride, whether or
not in aqueous ... 99.202 94.617 75.432 63.567 162.663
‘290611 Menthol 253.8 187.036 125.529 137.983 161.588
‘390120 Polyethylene with a specific
gravity of >= 0,94, in primary forms 57.665 28.494 36.02 50.278 152.686
‘520523 Single cotton yarn, of combed fibres
and with a linear ... 156.474 132.799 132.353 105.537 147.471
‘670300 Human hair, dressed, thinned, bleached
or otherwise worked; wool, other
animal hair or other ... 251.072 204.22 176.088 133.379 125.593
Table 19: China’s Imports from India (HS-06 level) (USD Millions) (2013-17)

T h e US – C h ina T rad e War ,
an Opp o rt u nit y f o r Pa k i s tan ?
On March 22, 2018, President Trump signed a memorandum announcing

that the United States would take multiple steps to protect American
technology and intellectual property from certain alleged discriminatory
and burdensome trade practices by China.These actions were announced
following a report by the Office of the U.S. Trade Representative (USTR)
regarding China’s acts, policies and practices with respect to technology
transfer, intellectual property and innovation.
As part of the United States continuing response to China’s alleged theft

of American intellectual property and the forced transfer of American
technology, the Office of the United States Trade Representative (USTR)
released a list of approximately $200 billion worth of Chinese imports that
would be subject to additional tariffs.In accordance with the directives of
President Trump, the additional tariffs became effective on September 24,
2018 at initially 10 percent.Starting January 1, 2019, the additional tariffs
were supposed to increase to 25 percent in addition to the existing MFN
duties that they were subjected to prior to September 24th. However, on
December 14, 2018, the USTR deferred the imposition of additional duty
till March 2, 2019 to allow for a negotiated settlement.

The US list contains 5,745 full or partial lines of which 937 lines pertain to
textiles and apparel. As of 2017, the US imports from China comprised of
806 of the 937 tariff lines on which the additional tariff has been applied.
The United States in 2017 imported from China $3.57 billion worth of
textile and apparel items that are currently subject to the 10% additional
tariff. What is important to note is that the total textile imports from China
by the US for the year were in excess of $41 billion of which a mere $3.57
billion or 8.7% of textile imports have currently been subject to additional
tariff.
Pakistan’s exports to the world in 2017 for the 806 tariff lines on which
the US has imposed additional tariffs on China were $1.64 billion of
which $176 million worth of exports were to the US. However, Pakistan
has export capability for just 189 of the 806 tariff lines that China is now
facing additional tariffs on. Furthermore, it is only in 66 lines that Pakistan’s
exports to the world exceed $1 million clearing showing insufficient export
capability.
Pakistan has GSP status with the United States along with 119 other
countries. US allows duty free access for the GSP countries on the eligible
products. However, textiles are heavily protected by the US. In the GSP
eligible product list, there are only 81 lines pertaining to textiles and
apparel. Of the Chinese tariff impacted lines, Pakistan has duty free access
under GSP to US on just ‘1’ item – HS-51032000 (Waste of wool or of fine
animal hair, incl. yarn waste).
The following table shows China’s top 20 textile exports to the United
States affected by additional tariffs, US imports from Pakistan for these
products and Pakistan’s world exports for these items.

T h e US – C h ina T rad e War , an Opp o rt u nit y f o r Pa k i s tan ?
HS-Code Description US Total US Imports US Imports PAK’s Total

Imports from China from PAK Exports
in 2017 in 2017 in 2017 in 2017
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$)
60063200 Dyed knitted or crocheted fabrics
of synthetic fibers, nesoi 113,995 68,475 25 466
56031300 Nonwovens, of man-made filaments,
weighing >70 but not >150 g/square m 205,696 54,887 - 5
56039200 Nonwovens (not of man-made filaments),
weighing >25 but not >70 g/square m, 189,342 54,521 - 11
60064200 Dyed knitted or crocheted fabrics of
artificial fibers, nesoi 50,016 42,738 - 92
60053700 Other wrap knit fabrics of synthetic fibers,
dyed,not specified innote 1 to 79,788 41,053 - 101
57039000 Carpets and other textile floor coverings,
tufted, whether or not made up, of other 121,678 37,780 79 86
56012100 Wadding of cotton and other articles of
cotton wadding nesoi 70,373 29,368 95 93
60063400 Printed knitted or crocheted fabrics of
synthetic fibers, nesoi 44,933 28,979 - 27
50072000 Woven fabrics containing 85 percent or
more by weight of silk or of silk waste 64,842 19,420 1 289
55111000 Yarn of synthetic staple fibers,
containing >85% synthetic fibre 70,719 19,174 2 2,516
56031100 Nonwovens, of man-made filaments,
weighing not >25 g/square m 145,427 16,947 - 9
58089000 Ornamental trimmings in the piece,
without embroidery 29,701 16,096 10 89
60053900 Other wrap knit fabrics of synthetic fibers,
printed, not specified innote 1 22,747 14,120 - 214
55161200 Woven fabrics of artificial staple fibers,
containing 85% or more by weight of such 15,352 13,745 - 17
55121900 Woven fabrics containing 85% or more by
weight of polyester staple fibers 32,328 12,494 13 15,687
58062000 Narrow woven fabrics (not goods of
heading 5807), not pile 18,618 11,889 1 4
58063100 Narrow woven fabrics (other than goods of
heading 5807), not pile, not cont by wt 5% 14,721 10,482 23 3
57024110 Wilton, velvet and like floor coverings of pile
construction, woven, not tufted or 24,616 8,967 - 5
54075100 Woven fabrics, containing 85 percent or
more by weight of textured polyester 20,349 8,918 299 1,225
57029920 Carpets & other textile floor coverings, not
of pile construction, woven, made up, of 44,911 8,773 32 7
Total of Top 20 Tariff Impacted Lines 1,380,152 518,826 580 20,946
Total of All (806) Tariff Affected Items 14,141,032 3,565,443 176,439 1,643,832
Total of All Textile Lines (HS-50 to HS-63) 114,128,389 40,832,054 2,936,469 13,018,414
Table 20: China’s top 20 textile exports to the United States affected by additional tariffs. (2017) (Thousands USD)
Annexure II shows the top 40 Chinese textile tariff lines which are currently not impacted by additional tariffs.

The following table shows additional potential for Pakistan’s current top
textile exports to the US in case additional tariff is imposed on all textile
imports from China. As can be seen, the incremental increase for Pakistan
is limited if it remains focused on the HS codes that it presently exports to
the US. The challenge for Pakistan is to move to those codes that China
exports. This will entail primarily a change in fabric to man-made and to
apparel that Pakistan currently does not export.

Imports from China from PAK Exports Applied
in 2017 in 2017 in 2017 in 2017 Tariff
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$) on PAK
52094200 Denim containing 85% or more

cotton by weight, 68,612 6,923 549 483,072 8.40
52093200 Dyed 3- or 4-thread twill fabrics of
cotton, including cross twill 9,372 1,308 78 156,140 8.40
52091200 Unbleached 3 or 4 thread twill
fabrics of cotton >85% of cotton 4,920 195 684 134,190 6.50
52053200 Multiple or cabled cotton yarn, 85%
or more cotton by weight 3,645 73 981 129,462 7.30
55134100 Printed plain weave fabrics of poly
staple fib,< 85% by weight polyester 4,404 781 162 107,085 14.90
52052200 Single cotton yarn, 85% or more
cotton by weight, of combed fibers 10,781 154 249 97,174 7.30
52091900 Unbleached woven fabrics of cotton
containing 85% or more cotton 21,144 1,509 4,654 70,287 6.50
52114200 Denim containing < 85% cotton by
wt, mixed mainly man-made fibers 17,904 8,682 38 50,782 8.10
52111200 Unbleached 3- or 4-thread twill
fabrics of cotton , < 85% cotton 921 474 242 35,180 7.70
52081300 Unbleached 3- or 4-thread twill
fabrics of cotton, 624 66 384 33,533 7.90
52091100 Unbleached plain weave fabrics of
cotton, 85 percent or more cotton 10,861 187 982 28,047 6.50
52092200 Bleached 3- or 4-thread twill fabrics
of cotton, 85 percent or more cotton 7,810 310 2 23,244 7.70
52093900 Dyed woven fabrics of cotton, nesoi,
containing 85% or more cotton by wt 16,971 2,477 488 19,079 8.40
55095300 Yarn of polyester staple fibers 15,441 7,302 - 16,241 13.20
55121900 Woven fabrics containing 85% or
more of polyester staple fibers 32,328 12,494 13 15,687 13.60


in 2017 in 2017 in 2017 in 2017 Tariff
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$) on PAK

or more cotton, of combed fibers 5,271 5 1,033 13,533 6.5
52103200 Dyed 3 or 4 thread twill fabrics of
cotton, < 85% cotton, mixed 214 9 - 13,232 10.00
52021000 Cotton yarn waste (including thread
waste) 474 5 30 9,122 -
52061200 Single cotton yarn, less than 85%
cotton, of uncombed fibers 4,968 3 1,351 8,552 9.20
52029100 Cotton garnetted stock 1,683 - - 7,620 4.30
cotton, of combed fibers 10 6 2 7,206 9.20
60069090 Other knitted or crocheted
fabrics nesoi 5,875 2,844 - 6,788 -
52092900 Bleached woven fabrics of cotton,
containing 85% or more cotton by wt 4,622 1,379 1,206 6,149 7.70
52095900 Printed woven fabrics of cotton,
containing 85% or more cotton 8,523 1,433 1,053 6,009 8.40
55142300 Woven fabrics of polyester staple fib,
< 85% polyester staple fibers, mixed 1,334 610 2 5,560 14.90
56012900 Wadding of textile materials and articles 696 189 - 5,371 4.00
52053100 Multiple or cabled cotton yarn, 85% or
more cotton, of uncombed fibers 2,922 9 395 5,199 5.80
cotton, of combed fibers 996 - 73 4,999 9.20
cotton, < 85% cotton by wt, mixed 3,911 379 - 4,776 8.10
52095200 Printed 3- or 4-thread twill fabrics of
cotton, containing 85% or 1,069 341 3 4,648 8.40
54071000 Woven fabrics obtained from high
tenacity yarn of nylon 42,863 6,876 5 4,528 13.60
58064000 Narrow fabrics consisting of warp
without weft 4,102 61 - 3,964 8.00
52115100 Printed plain weave fabrics of
cotton, < 85% cotton 859 131 - 3,912 -
52054300 Multiple or cabled cotton yarn,
>85% cotton, of combed fibers, yarn 1,851 106 88 3,812 8.60
52111100 Unbleached plain weave fabrics
of cotton, < 85% cotton 733 123 142 3,699 7.70
or more cotton, of uncombed fibers 1,180 - 612 3,690 8.60


in 2017 in 2017 in 2017 in 2017 Tariff
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$) on PAK
52054400 Multiple or cabled cotton yarn, >85%

cotton, of combed fibers, yarn 969 30 68 3,674 9.90
cotton, 85% or more cotton 928 170 82 3,553 10.30
55144100 Printed plain weave fabrics of
polyester staple fiber 320 5 112 3,199 14.90
52111900 Unbleached woven fabrics of cotton,
containing < 85% cotton, 4,735 436 1,581 3,082 7.70
cotton by weight, of combed fibers 574 36 115 2,987 5.80
52082300 Woven cotton fabric, >= 85%
cotton,<= 200 g/m2, bleached 479 60 102 2,884 9.10
58021900 Terry toweling and similar woven
terry fabrics 3,507 950 292 2,864 9.40
52041100 Cotton sewing thread, containing >
85% of cotton, not put up 5,767 886 1 2,855 4.40
51032000 Waste, other than noils, of wool or
of fine animal hair, including yarn waste 694 - - 2,827 -
52113900 Dyed woven fabrics of cotton, nesoi,
< 85% cotton by weight 9,321 2,737 68 2,718 8.10
< 85% cotton, of uncombed fibers 492 - 59 2,550 9.20
55111000 Yarn (other than sewing thread) of
synthetic staple fibers 70,719 19,174 2 2,516 7.50
52061300 Single cotton yarn, < 85% percent
cotton, of uncombed fibers 416 57 - 2,481 9.20
52092100 Bleached plain weave fabrics of
cotton, >85% cotton by weight 5,581 508 183 2,445 7.70
52113100 Dyed plain weave fabrics of cotton,
containing < 85% cotton, mixed 3,550 1,161 - 2,335 8.10
52115900 Printed woven fabrics of cotton, nesoi,
< 85% cotton by weight 1,518 109 263 2,234 8.10
or more cotton, of uncombed fibers 55 - 55 1,939 9.90
55142200 Wov 3-or 4-thread twill fabric of poly
staple fib, < 85% poly staple 2,336 2,138 2 1,557 14.90
53101000 Unbleached woven fabrics of jute or
of other textile bast fibre 30,406 2,900 14 1,423 -
55101100 Yarn (other than sewing thread)
containing >85% of artificial staple 19,927 4,613 35 1,411 9.00
52052800 Single cotton yarn, 85% or >
cotton, of combed fibers 53 - - 1,410 12.00
54078200 Woven fabrics, < 85 percent by
weight of synthetic filaments, mixed 5,682 2,052 162 1,327 14.90


in 2017 in 2017 in 2017 in 2017 Tariff
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$) on PAK
52061100 Single cotton yarn, <85 percent

cotton, of uncombed fibers 2,761 719 54 1,282 9.20
85% or more cotton, of combed fibers 988 - - 1,253 5.00
54075100 Woven fabrics, containing >85 % of
textured polyester 20,349 8,918 299 1,225 14.90
55122900 Woven fabrics containing >85% of
acrylic or modacrylic staple fibers 30,546 2,748 - 1,203 12.00
55141910 Woven fabric of polyester staple
fiber, < 85% wt polyester 4,851 376 1,109 1,106 14.90
52054800 Multiple or cabled cotton yarn, >85%
cotton, of combed fibers, >120nm 289 - - 1,054 12.00
TOTAL OF 66 ITEMS 575,958 108,797 20,212 1,621,701
Table 21: Pakistan’s top potential exportable textile articles to the United States (2017) (Thousands USD)
NOTE: The highlighted text indicates that the article is covered under GSP; and therefore has duty-free access to US for Pakistan.

C h in e s e O u t ward F D I
Overview
Over the last decade, Chinese outward Foreign Direct Investment (FDI)
has been on an increasing trend. In 2017, Chinese companies invested
$178 billion in various sectors around the world.
The upsurge in FDI is largely due to acquisitions by private Chinese

firms. Energy remains one of the most important sectors for FDI; in 2017,
however, Agriculture, Transport and Logistics took the largest share of
FDI. According to research by the American Enterprise Institute, China’s
investment boom can’t last. Its financial resources are still massive but
decreasing. “Lack of reciprocal access to the Chinese market will begin to
alienate recipient countries.”

CHINESE OUTWARD (USD Billion)
178
200 171
180
160
140 115
103
120
80 80
100 70
66
80 56 56
60
40
20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Figure 9: Chinese outward FDI (USD Billions) (2008-17)
FDI by Sector
Over the last ten years, Chinese businesses have invested around $973
billion outside of China. One third of this total investment, $325 billion, over
the last ten years, was directed towards the energy sector. Furthermore,
real estate has been gaining favor as investment in this sector has been
increasing since 2011; though in 2017, investment in the real estate sector
fell to 12.6 billion from its high of $16.4 billion in 2016.
Entertainment was not a major avenue for investment till 2013. However,
since then, investments have grown reaching a high of $22 billion in 2016
and then falling back to $6.8 billion in 2017. Investments in metals are on
a declining trend since 2008, representing a shift in focus away from this
sector. Highest investment in the sector was $22 billion back in 2008 while
the lowest investment in the last decade was $3.6 billion in 2017.

10-Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
Agriculture 340 370 1,580 2,830 3,750 9,640 7,030 2,080 5,610 45,870 79,100
Transport 6,020 910 5,680 4,020 2,920 2,780 6,240 22,460 15,920 27,440 94,390
Logistics 1,610 790 770 800 4,310 330 23,880 32,490
Energy 21,840 34,480 35,970 36,950 43,040 37,700 29,170 29,830 33,970 22,770 325,720
Finance 4,650 3,100 3,030 2,280 2,900 1,020 6,150 12,530 4,100 15,990 55,750
Real estate 390 4,880 5,060 3,720 7,000 14,250 16,150 16,400 16,210 12,660 96,720
Other 350 1,550 970 1,720 900 2,020 1,780 12,260 7,460 29,010
Entertainment 100 400 3,170 350 2,110 3,740 22,180 6,800 38,850
Health 360 270 120 980 590 1,420 1,370 5,550 10,660
Metals 22,220 10,300 11,020 11,000 10,870 7,950 15,430 7,910 6,120 3,660 106,480
Technology 1,500 300 1,680 2,440 310 8,390 8,840 22,740 3,270 49,470
Tourism 250 130 2,440 7,630 2,480 24,330 2,420 39,680
Chemicals 1,200 4,190 1,260 620 3,460 10,730
Utilities 1,120 100 800 730 1,930 4,680
Total 55,820 56,140 65,760 69,650 79,970 80,450 103,130 114,510 170,530 177,770 973,730
Table 22: Chinese FDI by Sector (2008-18) (USD Millions)
FDI in Textiles
The table below shows total Chinese outward FDI in the textile sector for
the six-year period ending 2017. The USA has been the largest recipient
of Chinese investment in textiles in this period with investments totaling
$2.26bn followed by France and India with investments of $1.48bn and
$0.8bn, respectively.
Among Chinese investors, the Ruyi Group has been the single largest source
of outward FDI in the textile sector. The group has accounted for nearly
59%, or $3.64bn, of the $6.18bn investment over the past 7 years. This
includes the acquisitions of the US-based, Invista Corporation’s Apparel
and Advanced Textile Business, a majority stake in the French SMCP Group
and a 25% stake in Masood Spinning, a Pakistani manufacturer.

Total Investment
Country 2012 2013 2014 2015 2016 2017 (2012-17)
USA 220 2,040 2,260
France 1,480 1,480
India 790 790
Switzerland 700 700
Ethiopia 350 350
Malaysia 200 200
Japan 160 160
Vietnam 120 120
Pakistan 120 120
Total 700 500 320 790 1,830 2,040 6,180
Table 23: Chinese outward FDI in the Textile Sector (USD Millions)
Top Destinations for Chinese FDI

The table below shows top ten destinations for Chinese FDI. Most of the
Chinese investment is concentrated in high income countries; amongst the
top ten destinations for FDI, eight are high income countries. Although,
Switzerland has not been a very attractive avenue for the Chinese investors,
2017 can be regarded as an anomaly, owing to the acquisition of the Swiss
agro-based company Syngenta for $43 billion.
USA, however, has had constant inflows of Chinese capital over the past
decade adding up to more than $160 billion during the period 2008-17.
In 2016, USA witnessed a steep influx of Chinese investment equaling
$53.9 billion; this was due to increased investment of about $50 billion in
Technology and Tourism, most notable by HNA, a Chinese conglomerate.
Britain also attracted increased investments in 2017, mainly focused on
logistics and finance.

Countries 2013 2014 2015 2016 2017
Switzerland 400 4,000 2,070 45,370

Britain 6,260 6,950 3,280 10,390 28,800
USA 15,850 17,950 14,570 53,910 24,770
Singapore 1,370 790 4,470 3,590 13,220
Brazil 2,900 2,400 3,220 12,960 9,620
Germany 800 1,620 620 12,380 7,010
Australia 8,580 9,860 10,480 6,530 5,600
Sweden 2,200 5,460
Laos 180 130 100 1,360 3,070
UAE 450 1,360 2,960
Table 24: Top Destinations of Chinese FDI (USD Millions) (2013-17)
FDI in Low and lower middle income countries

Amongst the low and lower middle income economics, Pakistan ranked
third in FDI inflow from China. Laos managed to attract the most
investment in 2017 worth $3.07 billion. Out of the $3.07 billion, $2.56
billion were invested in railways by the China Railway Corp and China
Railway Engineering.
India, a close second to Laos, managed to secure $2.92 billion in Chinese

investments. Largest share of these investments were aimed at the
consumer and health sector by the Chinese giants Alibaba and Fosun.
As for Pakistan, almost 90% of the investment done in 2017 was by
China’s State Power Investment in the energy sector in a joint venture with
HUBCO. Amongst the low income economies, Nepal secured the most
investment from China. The $1.2 billion investment was done in the hydro
power generation sector by the Three Gorges Corporation.

Country 2013 2014 2015 2016 2017 Income Group

Laos 180 130 100 1,360 3,070 Lower Middle Income
India 600 2,420 910 2,920 Lower Middle Income
Pakistan 1,650 640 4,400 580 1,680 Lower Middle Income
Indonesia 420 2,520 3,760 450 1,510 Lower Middle Income
Nepal 250 1,200 Low income
Kenya 120 240 310 Lower Middle Income
Uzbekistan 300 Lower Middle Income
Democratic Republic of the Congo 170 220 3,790 250 Low income
Vietnam 230 210 3,260 420 250 Lower Middle Income
Liberia 160 250 Low income
Table 25: Top Low and Lower Middle Income Destinations of Chinese FDI (USD Millions) (2013-17)
Chinese FDI in Sub-Saharan Africa

Chinse FDI in the Sub--Sahara Africa has been in a decline. In 2013, the
region managed to attract $12.3 billion worth of investments. In 2017,
however, FDI in the region was only $980 million. Sectors which attracted
most of the investment in the region were energy and metals. The table
below shows the sectoral breakup of Chinese FDI in Sub-Sahara Africa.
Country 2013 2014 2015 2016 2017
Sub-Saharan Africa 12,290 8,590 6,870 6,980 980

Agriculture 420
Chemicals 1,150 620
Energy 7,880 1,300 1,640 250 170
Finance
Logistics
Metals 2,550 3,950 4,100 4,890 500
Other 350
Real estate 710 2,300 1,010 200 310
Transport 120 1,290
Table 26: Sectoral Break-up of investment in Sub-Saharan Africa (USD Millions) (2013-17)

As we look at the country wise breakup of these investments we see that
over the last ten years, the Democratic Republic of the Congo (DRC) has
attracted $8.6 billion of Chinese FDI or about 13% of total Chinese FDI
in Sub-Saharan Africa. The following table shows top ten destinations of
Chinese investments in Sub-Saharan Africa sorted by their total investment
over the 10 year period (2008-2017). In 2017, the investment trend
changed; most of the Chinese FDI was directed towards Kenya, Liberia,
and Guinea-Bissau, which had not been attractive destinations for Chinese
FDI over the last ten years.
10-Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
Total 7,830 1,580 4,610 7,970 7,210 12,290 8,590 6,870 6,980 980 64,910
Democratic
Republic of
the Congo 2,540 1,280 350 170 220 3,790 250 8,600
South Africa 450 2,330 480 110 230 490 1,290 5,380
Niger 5,180 5,180
Mozambique 210 4,710 4,920
Nigeria 2,060 2,630 4,690
Uganda 1,570 2,180 920 4,670
Guinea 3,460 1,100 4,560
Sierra Leone 260 1,490 1,700 770 4,220
Angola 1,190 2,120 120 3,430
Table 27: Country-wise Break-up of investment in Sub-Saharan Africa (USD Millions) (2013-17)
Impact of Chinese FDI in Sub-Saharan Africa

China being the world’s largest consumer of steel, copper, coal and
platinum, is also Africa’s largest trading partner since 2008, replacing the
European Union (EU) and the United States (US).
China has used its trade and investment policies to build alliances
in Africa, some examples of this include China’s involvement in the oil
sector in Nigeria, Angola and Sudan and its influence in the mining
sector in Zimbabwe and Congo. Chinese State Farms have invested in
the agricultural sector in several African countries, including Senegal and

C h in e s e I n v e s tm e nt in S u b - Sa h aran A frica and A s ia
Zambia. Furthermore, in the current year, China has pledged $60bn in

financing for projects in Africa in the form of grants, interest-free loans,
concessional loans and credit lines.
(Van Dijk, 2009) presents several objectives with respect to trade policies
being pursued by China in Africa, these include; assuring supply of raw
materials for China including agricultural products, creating a market for
Chinese products and services, to allow for the transfer of Chinese people
to Africa, to gain diplomatic support from African countries, to present an
alternative to the Western development model, and lastly to emphasize
China’s status as a superpower.
The developmental projects in Africa have shown steady progress in the

last few years and have helped advance improved infrastructure, means of
communication and telecommunications. Several African countries such as
Ethiopia have recently seen the benefits of rising investments by Chinese
manufacturers where Huajian, a Chinese shoe producer, has increased
employment from 600 to 3,500.
A major proportion of China’s FDI in Africa has been in the primary sector.
However, during recent years the Chinese have diversified their portfolio
with investments in real estate and manufacturing along with investments
in the energy sector.These investments have also enabled knowledge-
transfer from China and as a result complete value-chains with vertically
integrated industries have been set-up. Regarding investment in the oil
and gas sector, Angola, Niger, Nigeria, Sudan and Uganda have seen
major Chinese investments. Local industries in many countries in Africa
have been affected by the growing Chinese influence in the local markets.
For instance, the textile industry has been severely affected in South Africa
after Chinese companies set up their own production facilities in the country.
In addition, all new infrastructure has been designed and constructed to
enable Chinese corporations to extract natural resources, such as minerals
and oil. Unfortunately, many of these projects and ventures failed to meet
the regulatory, environmental, and ethical standards because of which a
hype has been created around the moral and ethical boundaries of China’s
developments in Africa.

China impacts many aspects of the African economy:in finance, the Chinese
state provides major resource-backed loans to African states, in corporate
control, many of the small- and medium-sized enterprises that invest in
Africa are State Owned Enterprises. One obvious motive that has been
pointed out by various observers is China’s need for energy, resources and
access to African markets.
Chinese FDI in Asia

Major destinations for Chinese investments in Asia are Singapore, Laos, UAE,
India, Japan, and Pakistan. Over the last five years, Singapore and Malaysia
have managed to attract $23 billion and $16 billion, respectively, of Chinese
FDI. Laos and the UAE attracted investments worth $3 billion each.
Country 2013 2014 2015 2016 2017 5-Year Total

Singapore 1,370 790 4,470 3,590 13,220 23,440
Laos 180 130 100 1,360 3,070 4,840
UAE 450 1,360 2,960 4,770
India 600 2,420 910 2,920 6,850
Japan 160 1,340 670 2,350 4,520
Pakistan 1,650 640 4,400 580 1,680 8,950
Indonesia 420 2,520 3,760 450 1,510 8,660
Nepal 250 1,200 1,450
Malaysia 3,200 580 7,370 4,340 930 16,420
Iran 350 600 730 1,680
Total 22,580 20,470 43,350 29,740 32,920 149,060
Table 28: Country-wise Break-up of investment in Asia (USD Millions) (17-2013)
Energy has been the most attractive investment for Chinese firms in Asia;
in the last five years, Chinese businesses invested over $61 billion in the
energy sector. Real estate and Transportation have also been popular
sectors for investment, both bringing in over $15 billion.
In 2017, the highest investment was done in the logistics sector worth
$10 billion followed by Energy and Transport worth $7.5 and $6 billion
respectively. Investments in agriculture and finance were $280 and $230
million in 2017. The table below shows the sectoral break-up of Chinese
investments in Asia.

Sector 2013 2014 2015 2016 2017 5-Year Total

Agriculture 2,040 1,560 440 1,940 280 6,260
Chemicals 110 110
Energy 12,460 10,860 19,970 10,530 7,570 61,390
Entertainment 500 5,160 110 5,770
Finance 200 320 2,530 1,360 230 4,640
Health 240 1,320 1,560
Logistics 800 150 190 10,090 11,230
Metals 1,920 1,190 2,700 290 350 6,450
Other 570 530 1,470 1,840 3,760 8,170
Real estate 2,890 1,080 6,160 2,860 2,460 15,450
Technology 110 1,600 3,560 450 800 6,520
Tourism 1,430 1,100 150 2,280 4,960
Transport 610 930 5,490 2,840 5,950 15,820
Utilities 730 730
Grand Total 22,580 20,470 43,350 29,740 32,920 149,060
Table 29: Sectoral Break-up of investment in Asia (USD Millions) (2013-17)
Impact of Chinese FDI in Asia

China has always had a major impact on the region to which it belongs. The
Belt and Road Initiative (BRI) has led to major infrastructure investments in
the region with the potential to altering the traditional economies of Asia.
Especially significant is China’s attempt to establish a number of road and rail
networks to bypass the Strait of Malacca and directly integrate countries in the
region. China’s engagement of Southeast Asia through BRI and the expansion
of its regional presence in Asia through investment provides it with strategic
and economic leverage.
The major chunk of Chinese FDI in Vietnam and Cambodia has been in the
energy sector. However, China which is the global market leader in apparel
and textile has seen its costs rise (labor costs) in recent years. In order to retain
buyers, Chinese investors have invested in the textile sector of Cambodia
and Vietnam. In this manner, not only did the Chinese not lose their business,
but they managed to lower their cost of labor as well as enjoy increased
market access owing to the preferential market access that Cambodia enjoys

as an LDC. Garments being a labor-intensive industry, has been a source of

employment for a large number of locals in both countries. However, there
are concerns that knowledge and technology transfers are not taking place
and the locals are majorly employed in low to medium skilled positions and
the upper management predominantly comprises of Chinese expats. Despite
that, both countries are now regarded as garment producing hubs which are
also a source of precious forex for their respective governments.
Though the energy sector is the largest recipient of Chinese FDI in the region,
the rail transport systems have attracted a significant amount of investments
making it the second biggest FDI attraction. The rail projects which are part of
the BRI are not only of strategic importance to China but will also be a source
of jobs in Laos and other countries. In Laos, 60% of the total investment in
the rail project is provided by China Railway Corp. whereas the remaining
will be covered by the Chinese government and the government of Laos,
with the latter bearing 30% of the remaining cost. To ensure the successful
implementation of the project China has also promised to provide loans up to
$500 MN at low-interest rates if need be.
Top Chinese investors

Over the last five years, HNA has invested more than $47 billion throughout
the developed world in various sectors such as aviation, finance, real estate,
and tourism. Largest share of investment has been made in Aviation worth
$10.7 billion most of which was directed towards the USA.
China Reform Holding’s Chem China was the largest Chinese investors in 2017.
Their investment was directed towards the acquisition of the Swiss agro firm
Syngenta for $43 billion. Furthermore, China Investment Corporation (CIC) in
2017, invested $14.5 billion in Britain, Singapore and USA; this included the
acquisition of European warehouse firm Logicor for $13.8 billion.
The $15.2 billion investment by the China National Petroleum Corporation

(CNPC) in 2013 focused mainly on the energy sector; most significant of
which were done in Kazakhstan, Mozambique, and Peru worth $5.3 billion,
$4.2 billion, and $2.9 billion, respectively.The table below shows top Chinese
investors for the period 2013-17.

Investor 2013 2014 2015 2016 2017 5-Year Total

China
Reform Holdings,
Chem China 43,060 43,060
HNA 780 180 8,440 18,930 19,440 47,770
CIC 3,800 1,550 6,220 7,580 14,450 33,600
Ping An 390 480 210 9,900 10,980
Vanke, Hopu,
Hillhouse,
Bank of China 9,060 9,060
Geely Auto 150 200 870 4,710 5,930
Tencent 350 500 130 8,600 4,290 13,870
State Power
Investment 2,200 230 3,740 6,170
State Grid 5,760 2,500 5,370 3,730 17,360
Three Gorges 2,030 530 930 6,620 2,850 12,960
CNPC 15,210 2,680 2,060 2,810 22,760
China Railway
Corp, China
Railway Engineering 2,560 2,560
Yankuang 2,960 2,420 5,380
Shandong Ruyi 120 1,480 2,040 3,640
Legend 1,540 390 1,900 3,830
Total 80,450 103,130 114,510 170,530 177,770 646,390
Table 30: Top 15 Chinese investors (USD Millions) (2013-17)
Chinese FDI in Pakistan

Over the past ten years, China has invested over $10.5 billion in various
sectors of Pakistan.Investment is mostly focused on Energy; out of the 16
Chinese FDI projects, eleven are in the energy sector. Other sectors that have
attracted Chinese investments are shipping, telecom and textiles. The table
below shows the sectoral breakup of Chinese investment in Pakistan from
2009 to 2017.

Sector Subsector 2009 2011 2012 2013 2014 2015 2016 2017 Grand Total
Alternative 130 1,560 220 1,910
Coal 1,070 1,480 2,550
Energy Gas 200 200
Hydro 1,650 360 2,010
N/A 750 150 900
Other Textiles 120 120
Technology Telecom 500 520 200 ,1220
Transport Shipping 1620 1620
Total 500 880 200 1,650 640 4,400 580 1,680 1,0530
Table 31: Sectoral break-up of Chinese investment in Pakistan over the period 2009-17 (USD Millions)
The following table shows the top Chinese investors in Pakistan

over the last 10 years. The Three Gorges Corporation is the largest
Chinese investor with investments worth $2 billion; all of which are in
the energy sector. Zhuhai Port Holdings is also a major investor but
has made only one investment in the Transport sector which was in
2015. Furthermore, the third and fourth largest investors have also
invested only in the energy sector.
10-Year
Investor 2009 2011 2012 2013 2014 2015 2016 2017 Total
Total 500 880 200 1,650 640 4,400 580 1,680 10,530
Three Gorges 130 1,650 220 2,000
Zhuhai Port Holdings, State
Construction Engineering 1,620 1,620
State Power Investment 1,480 1,480
ZTE 1,440 1,440
China Mobile 500 520 200 1,220
Power Construction Corp 1,190 1,190
United Energy 750 200 950
China Energy Engineering 360 360
Sinomach 150 150
Shandong Ruyi 120 120
Table 32: Top Chinese Investors in Pakistan over the period 2009-17 (USD Millions)
Note: China’s FDI figures have been retrieved from the data reported by the World Heritage Foundation.

Chinese FDI in Greenfield Projects

Over the last 10 years, 16 Chinese projects have been launched in
Pakistan. Out of the 16 projects, 10 were green field projects and
accounted for %77 of the 10.5$ billion investment. Furthermore,
nine out of these ten investments were financed by Chinese state
owned enterprises. These investments were carried out in the
energy, telecom and transport sectors. The table below shows the
Chinese Greenfield FDI projects over the last 10 years.
Quantity
Year Month Investor Ownership in Millions Sector Subsector
2017 March State Power Investment State Owned 1,480 Energy Coal
2017 February China Mobile State Owned 200 Technology Telecom
2016 July Three Gorges State Owned 220 Energy Alternative
2015 April Power Construction Corp State Owned 1,070 Energy Coal
2015 August Power Construction Corp State Owned 120 Energy Alternative
2015 August ZTE Private Owned 1,440 Energy Alternative
Zhuhai Port Holdings,
2015 November State Construction State Owned 1,620 Transport Shipping
Engineering
2013 August Three Gorges State Owned 1,650 Energy Hydro
2011 December Three Gorges State Owned 130 Energy Alternative
2009 December China Mobile State Owned 500 Technology Telecom
Table 33: Chinese greenfiled FDI projects in Pakistan (USD Million) (2009-17)
Note: China’s FDI figures have been retrieved from the data reported by the World Heritage Foundation.

T h e C h in e s e St e e l I nd u s try
Overview
Steel plays a major part in our lives. From the agricultural fields to the vast
mega projects including skyscrapers, airplanes, bridges, railway tracks, and
cars, our lives are greatly influenced by steel and its products.
Methods for manufacturing steel have evolved significantly since production

began on a mass scale in the late 19th century. Modern methods, however,
are still based on the same principle as the original Bessemer process, which
uses oxygen to lower the carbon content in iron. The two major processes
for producing steel include, basic oxygen steelmaking and electric arc
furnaces, together these two account for nearly the entire world production
of steel today.
If one tries to break down the process of modern steelmaking, it can

be divided into the following steps. First and foremost, melting the raw
inputs of iron and lime in a blast furnace. Second, treating the molten steel
produced by the two processes to adjust composition of the steel. This is
usually done by adding or removing certain elements and/or manipulating
the temperature and production environment. Continuous casting sees the
molten steel cast into a cooled mould causing a thin steel shell to solidify
whereas in primary forming, the steel that is cast is formed into various

Manufacturing Process for Iron and Steel

Iron making Steelmaking Continuous casting Rolling Main products
Rall
Sheet pile
Shape
Pellet Coke Section mill Bar
Wire rod
Iron ore Sintered Limestone
ore Wire rod mill
Plate
Hot
Plate mill
direct
Hot metal Billet rolling Hot rolled coll
(HDR) and sheet
Hot strip mill
Basic oxygen furnace
Bloom Cold rolled coil
(BOF)
and sheet
(also for plating)
Cold rolling tandem mill
Blast furnace Slab
(BF) Welded pipe
Butt welded pipe
Welded pipe mill
Scrap Electric arc furnace
(EAF) Seamless pipe
Seamless pipe mill
Reheating furnace
Steel castings
Figure 10: Manufacturig process for iron and steel.
shapes, often by hot rolling, a process that eliminates cast defects and
achieves the required shape and surface quality. Hot rolled products
are further divided into flat products, long products, seamless tubes,
and specialty products. Finally, the manufacturing, fabrication and
finishing take place during which steel is given its final shape and
properties. These include cold rolling, drilling, welding, galvanizing,
tempering and carburizing.
According to the World Steel Association, there are over 3,500

different grades of steel, each possessing distinctive physical, chemical
& environmental properties. The very nature of steel comprises of
iron & carbon, but the properties of any grade of steel is determined
by the amount of carbon, its composition, level of impurities or any
additional alloy elements that it has. Various grading systems are used
to distinguish steels based on these properties, these include density,
elasticity, melting point, thermal conductivity, strength & hardness etc.
According to the American Iron and Steel Institute (AISI), the various
types of steel can be broadly categorized into four groups: carbon,
alloy, stainless and tool steels. Being one of the most important

materials across various industries, steel, possesses high tensile

strength, ductility and durability which makes its uses very efficient
in terms of cost. It isa material which can be recycled easily due to
its unique magnetic characteristics; it can be used to create lighter
and more efficient vehicles, to generate renewable energy and more
efficient power stations or itcan be used in the creation of energy-
efficient homes and in the construction of massive structures.
History of the Chinese steel industry

The Chinese steel industry was built with the support of the Soviet
Union during the 1950s. However, the Soviets withdrew their technical
support following the beginning of the Sino-Soviet rift in 1960 leaving
China with old and outdated technology. Subsequent attempts
at modernising steel production during the Cultural Revolution
were hampered by Mao’s national security-motivated ‘Third Front’
industrial programme which decentralised industry by building
small-scale (and relatively inefficient) steel mills in each of China’s 29
provinces (Sugimoto 1993). The state lacked financial muscle to back
these reforms in the early years and the industry failed to provide the
mass steel quantities required for China’s ambitious industrialisation
programme.
Contract Responsibility System (CRS)
Lacking the financial resources to directly fund new steel projects,

the Chinese state found a solution in a new ‘contract responsibility
system’ (CRS) for state-owned enterprises. This programme was first
tested in 1981 before being extended to the entire steel sector in 1984
(Steinfeld 1998). Under the CRS program, autonomy over production
decisions was for the first time devolved to enterprise managers, who
in turn ‘contracted’ with the State over firm-level production plans.
These contracts translated national-level production plans to the firm
level by specifying output and profit remittance targets, which would
increase at a set rate (usually 7 per cent) each year to encourage
growth (Byrd 1992). However, the CRS was also designed to promote
growth in steel output beyond the levels called for in these contracts –
by allowing firms to sell any above-plan output onto newly established

steel markets and retain all associated profits which could then be reinvested
into capacity expansions (Chen 1995). As an import-substitution policy, the
CRS was also backed by tariff & trade protection with a 33 per cent tariff
and a trade licensing system deployed during the mid-1980s as a means
to protect the nascent steel industry from foreign imports (Nolan 1998). In
terms of expanding steel output and substituting imports at low cost to the
state budget, the CRS programme was a major success – with investment
surging seven-fold by the early 1990s and production increasing to match
growing domestic demand.
Despite this, the CRS program had its drawbacks; it offered no incentive
to upgrade technology or to ensure that the products were of the correct
mix required by customers, it also failed to demarcate the level of the
government (either central, provincial or municipal) which was responsible
for steel firms, with various state agencies vying to exercise regulatory control
with often-contradictory results (Steinfeld 1998), and finally though the CRS
allowed firms to retain profits, it did not devolve financial responsibility for
losses, which began to mount as a result of excess production of low-value
products in the late 1980s resulting in operating losses. These were initially
absorbed by the state banking system. (Hassard et al. 1999).
Contract Responsibility system

Years Production (mtpa) Net trade (mtpa) Investment (Real RMB Billion)
1981-85 40.6 -9.5 18.1
1886-90 59.2 -9.1 30.2
1991-95 85.9 -12.3 51.2
Modern Enterprise System (MES)

The first set of steel industry reforms in the 1990s involved the extension of
greater autonomy (and responsibility) to firms. The complete marketization
of the steel sector began in 1993 with the cancellation of the CRS and
its replacement with the ‘modern enterprise system’ (MES) of enterprise
management. Under the MES, steel firms were devolved full managerial
autonomy, including financial responsibility for all profits and losses
(Hassard et al. 1999). National steel planning was also terminated in 1997
when the last of the CRS contracts expired (Tse 1997: 17). Nonetheless,
governmental oversight was maintained – if indirectly – by rules which

mandated the placement of Chinese Communist Party (CCP) officials in all

top management positions (Bai & Bennington 2007). As a consequence
of devolving full financial responsibility to firms, the MES quickly threw
the steel industry into a debt crisis. Given its strategic importance to the
national industrialisation programme the state was left with little choice
but to financially bail out steel firms.
A second component of state-led reform attempted to address the

industry’s technical difficulties. This began under the Ninth Plan of 1996,
when the Chinese government abandoned its prior policy of decentralised
industrial development in favour of a new programme referred to as
‘grasp the large, let go of the small’ (Zheng & Chen 2007). The policy
involved a process of consolidation under ongoing state ownership for
heavy industries considered a strategic part of the national economy,
and the privatisation of all remaining non-strategic sectors (Green & Liu
2005). As steel was amongst the strategic industries to be ‘grasped’ by
the state, in 1997 eight major steel firms were named in an ‘enterprise
groups’ policy that sought to create large-scale steel conglomerates.
These conglomerates were initially formed by the state extending finance
through the state banking system to large state owned enterprises for the
purpose of acquiring smaller steel firms (Sutherland 2001: Chapter 3).
Rationalisation and technology upgrading was then followed by a third

set of bureaucratic reforms that sought to clarify the role of the state as
both owner and regulator of the steel industry. This began in 1998, when
the ownership of a majority of Chinese steel firms was devolved from the
national Ministry of Metallurgical Industry to either their local or provincial
governments (Tse 1997).
Modern Enterprise System

Years Production (mtpa) Net trade (mtpa) Investment (Real RMB Billion)
1996-2000 115.4 -10.1 43.6
2001 151.6 -12.5 50.5
2002 182.2 -19 68.6
2203 222.3 -30.2 138
2004 272.8 -15.1 170.6
2005 355.8 -5.3 221

The 21st Century

The reforms of the 1990s paid dividends and the Chinese steel industry
resolved most of the issues it had faced. As a result of the MES reforms,
by 2000 the Chinese steel industry had become fully independent of the
national planning system both financially and operationally, albeit still
subject to ‘oversight’ by the state through personnel linkages between
enterprise management and the CCP. The result of the state-led reform
addressing the industry’s technical difficulties resulted in consolidation
and upgrading of the conglomerates and in doubling the size of the ten
largest steel firms during the 1990s. A set of bureaucratic reforms led to
the number of regulatory authorities being streamlined in 2003. Various
Chinese planning bodies were abolished and replaced by two newly
formed organisations with a clear division of regulatory authority; the
State-owned Assets Supervision and Administration Commission (SASAC)
and the National Development and Reform Commission (NDRC). The
SASAC’s role was to exercise direct ‘ownership’ functions on behalf of the
state, and it took responsibility for issues relating to enterprise financing,
mergers and managerial appointments. Four steel firms considered
‘nationally strategic’ were retained by the central branch of SASAC, with
ownership of the rest devolved to its provincial branches (SASAC 2009).
The NDRC’s role was to act as a national planning body, setting broad
industrial goals which were then to be implemented at the firm level at
the discretion of the various SASAC branches (Voss et al. 2008: 4). The
effect of these bureaucratic reforms was to finally achieve a separation
between the state’s ownership (SASAC) and regulatory (NDRC) functions
in the steel industry, notwithstanding ongoing state ownership and CCP
control of managerial appointments.
The Chinese government had thus moved back to an interventionist

approach to the steel industry – reassuming planning powers it had
previously devolved, directly intervening in firms’ investment decisions, and
using control of the state banking system to ensure industrial development
targets would be met. The key variable explaining this reversal in course
is the fact that during the 2000s the crisis in the Chinese steel industry

was international in character following the structural crisis of 1990 which

led to an increase in labour costs and more steel being produced around
the world and less demand for steel. Thrust into competition with foreign
firms for the first time, a need existed for national-collective action to
rectify the industry’s competitive disadvantages. Indeed, the shift back
towards intervention was expressly justified by the government as aimed
at ensuring ‘…the overall competitiveness of China’s steel industry can
reach an advanced international level, with the aim of making China one
of the largest and the most competitive steel producing countries’ (NDRC
2005: Article 1). While such interventions proved instrumental in improving
the competitiveness of Chinese steel firms, they demonstrate the extent
to which the industry had come to rely on state leadership (and attendant
financial support) to solve its difficulties.
These interrelated reforms set the stage for a Chinese steel boom that took
off from around 2000. While in part the result of policy reforms, this boom
was equally associated with the Chinese economy shifting from light- to
heavy-industrialisation around this time, this led to increased demand for
steel from the construction, and machinery and automobile sectors rapidly
increase (Rothman 2005). Growth in the Chinese steel industry rapidly
accelerated from 2000, and within a decade national steel consumption
had quadrupled, production increased five-fold, investment increased
six-fold, and the country shifted from being a net steel importer to an
aggressive exporter. Consistent with the government’s goal of ‘grasping
the large’, the bulk of this production was concentrated in state-owned
enterprises (SOEs). In 2006, SOEs accounted for just over half of Chinese
steel production (OECD 2006), and only one of the 20 largest firms –
which were the most technologically sophisticated and internationally
competitive – was privately owned (Price et al 2007: 8–9). The Chinese steel
boom also quickly catapulted the industry to a position of unprecedented
global dominance, rising from a 15 per cent share of world steel production
in 2000 to 45 per cent by 2011. Its dominance in Asia was even more
pronounced, accounting for 77 per cent of regional steel production in
2011 (WSA 2012). Within three decades, policy reforms had seen the

Chinese steel industry transform from a small-scale and technologically

backward industry to becoming the world’s fastest growing steel sector,
capable of capturing almost half of the global steel market.
In response to the recent tariff imposition by the Trump administration on

the imports from China. The Chinese government, in a bid to keep steel
exports competitive, increased the percentage of tax rebate on 397 tariff
lines. Out of the 397 tariff lines, 88 are from Iron and Steel and its Articles
(HS-72 & HS 73) with the tax rebate ranging from 9% to as high as 16% as
shown in Annexure II. At the surface level, this retaliatory measure will for
sure be beneficial for the Chinese exporters, however, since the rebates
are not country-specific it might lead to Chinese producers engaging
in dumping practices which would pose a severe threat to a small-scale
producer such as Pakistan.
Global Steel Production

China is the largest producer of Steel in the world. In 2017, China produced
over 831 million tons of Steel, which was almost half of the world’s total
production. Japan has been the second largest producer but its production
has been decreasing over the last 10 years. Furthermore, India has become
the third largest producer of steel followed by the United States and Russia.
By 2017, India had registered a growth of over 75% since 2008.
Country 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
China 512.3 577.1 638.7 702.0 731.0 822.0 822.3 803.8 807.6 831.7
Japan 118.7 87.5 109.6 107.6 107.2 110.6 110.7 105.1 104.8 104.7
India 57.8 63.5 69.0 73.5 77.3 81.3 87.3 89.0 95.5 101.5
United States 91.9 59.4 80.5 86.4 88.7 86.9 88.2 78.8 78.5 81.6
Russia 68.5 60.0 66.9 68.9 70.2 69.0 71.5 70.9 70.5 71.5
South Korea 53.6 48.6 58.9 68.5 69.1 66.1 71.5 69.7 68.6 71.0
Germany 45.8 32.7 43.8 44.3 42.7 42.6 42.9 42.7 42.1 43.3
Turkey 26.8 25.3 29.1 34.1 35.9 34.7 34.0 31.5 33.2 37.5
Brazil 33.7 26.5 32.9 35.2 34.5 34.2 33.9 33.3 31.3 34.4
Italy 30.6 19.8 25.8 28.7 27.3 24.1 23.7 22.0 23.4 24.1
Table 34: Top 10 Steel Producers (Million Metric Tons)

Similarly, in terms of usage of steel, China ranks at the top; utilizing 767.5
million tons of steel. The following table shows the top 10 steel users in
the world. US and India were the 2nd and 3rd largest users of steel in
2017. However, consumption in Japan, South Korea and Italy has declined
over the years.
Country 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
China 465.5 574.4 612.1 667.9 687.6 772.3 740.4 700.4 709.4 767.5
United States 110.5 69.4 92.4 101.0 108.3 106.3 121.6 108.3 102.6 109.7
India 56.2 64.4 69.1 73.2 77.4 80.7 87.1 89.3 94.5 100.9
Japan 83.2 56.0 67.4 69.6 68.8 70.8 72.9 67.8 67.5 70.1
South Korea 61.0 47.3 54.6 58.7 56.3 53.9 57.8 58.1 59.5 58.8
Russia 40.9 28.5 41.4 48.0 49.5 49.7 49.4 44.7 43.4 44.4
Germany 44.9 29.1 40.5 45.1 40.8 41.7 43.1 42.6 42.8 43.3
Turkey 22.9 19.2 25.1 28.7 30.3 33.3 32.8 36.6 36.3 38.4
Mexico 24.5 17.6 20.6 23.1 23.7 22.9 26.2 27.9 28.5 29.5
Italy 35.3 21.3 27.2 28.1 22.8 23.2 23.2 26.0 25.2 26.1
Table 35: Use of Steel by Country (Million Metric Tons)
The following table represents the steel use per capita (kg) of the top 10
countries in the world. South Korea takes the lead because of its lower
population, and its large automotive and ship building industry. However,
China has a larger population due to which it ranks as the 10th country in
terms of usage per capita.
Country 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
South Korea 1239.6 958 1101.3 1180.8 1127.5 1074.7 1147.8 1148.9 1171.8 1152.4
United Arab Emirates 1948.7 904.5 890.4 875.4 860.2 823.1 856.7 847.3 918.5 917
Taiwan (R.o.C.) 884.9 587.8 924.1 936.6 917 954.8 1002.4 895.5 931 896.6
Czech Republic 724.8 496.5 605.4 660.9 637.3 638.5 674.2 719.6 727.6 765.1
Qatar 1253.2 1068.7 725.5 565.2 569.9 610.2 666.4 669.9 637.7 621.4
Singapore 871.1 712.9 660.2 946.7 907.2 997 879.4 906.8 629.6 610.2
Djibouti 173.5 173.3 172.1 181.1 242.9 142.7 186.3 675.3 767.5 575.7
Japan 647.2 435.6 524.3 541.6 535.7 551.8 568.8 529.8 528.4 549.9
Slovenia 672.9 469.9 529.7 545.7 476.3 468.4 483.9 510.4 544.8 548.8
P.R. China 346.2 424.8 450.1 488.4 500 558.5 532.6 501.3 505.5 544.5
Table 36: Apparent Steel Use per Capita (Kg)

Raw Materials Required by the Steel Industry

China’s steel producing sector has emerged as a powerful global player
contributing more than half to the world’s production of steel. The three
basic elements required for steel production are iron ore, coke (a form of
coal) and scrap steel. However, raw material is also extracted from ship
breaking which is in the form of scrap steel.
Out of the above-mentioned raw materials, iron ore and its concentrates
are the most imported items by the Chinese steel industry. The domestic
Iron Ore Mining Industry in China has reported a declining revenue of
6.4% per year on average. The sharp fall in demand and iron ore prices
in 2014 and 2015 resulted in a decline of 4.9% and 20.4%, respectively .
The industry operates with 3,700 enterprises and employs a labor force of
585,267.
Australia ($46.50 billion) followed by Brazil ($17.36 billion), South Africa

($3.52 billion), India ($1.75 billion) and Iran ($1.39 billion) are the top 5
import origins of iron ore for China. Australia accounted for 61% of China’s
total iron ore imports in 2017. Following are the top 10 countries from
which China imported iron ore (HS-2601) in 2017 for its steel industry over
the last five years. Due to a fall in iron ore prices since 2012, imports have
decreased from $106.17 billion in 2013 to $76.5 billion in 2017.
Import Partners 2013 2014 2015 2016 2017

World 106,175 93,439 57,393 58,033 76,500
Australia 55,153 54,264 35,757 35,671 46,500
Brazil 21,606 17,955 12,077 12,743 17,365
South Africa 6,039 4,853 3,049 2,834 3,527
India 1,468 832 101 852 1,752
Iran, Islamic Republic of 2,374 1,857 690 824 1,392
Ukraine 2,331 2,271 1,518 959 976
Peru 1,315 994 595 585 837
Chile 1,359 1,272 663 720 833
Canada 2,125 1,383 683 610 581
Mauritania 1,163 943 406 482 478
Table 37: Chinese imports of Iron ores and concentrates (HS-2601) (USD Millions)

The second most important raw material used by the steel industry is coke
(HS-2704) however, its import value has remained much lower since most
of the production of coke takes place in China. The leading import partners
of coke are listed below, these made up nearly 98% of China’s total coke
imports from the world in 2017.
Import Partners 2013 2014 2015 2016 2017

World 6.61 0.53 0.40 0.29 2.36
South Africa - 0.02 0.01 0.02 1.89
Japan 0.16 0.18 0.13 0.14 0.21
United Kingdom - 0.01 0.03 0.03 0.10
Germany 0.08 0.09 0.04 0.06 0.10
United States of America 0.00 0.00 0.03 0.03 0.02
Table 38: Chinese imports of Coke (HS-2704) (USD Millions)
The following figure shows the local coke production in China from 2008
to 2017 in million metric tons. During the 2008-17 period, production of
coke in China grew by 37% from 327 million metric tons in 2008 to 448
million metric tons in 2017.
CHINESE COKE PRODUCTION (Million Metric Tons)
600
476.91
441.62 449.11
500
473.05
384.06 447.78 448.00
427.79
400 327
355.10
300
200
100
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Figure 11: Production of Coke in China (Million Metric Tons)

The following table shows the top 5 import origins of China for ferrous
waste and scrap (HS-7204) from 2013 to 2017; Japan (84.8%) was the
leading import partner followed by the USA (5.17%) and the Republic of
Korea (3.63%). These countries accounted for 96% of China’s total imports
of HS-7204 in 2017. The import bill was $1,238 million in 2017 which was
52.3% less than that for 2013.
2013 2014 2015 2016 2017

World 2,598 1,685 1,189 930 1,238
Japan 1,818 1,454 1,025 813 1,050
United States of America 465 45 23 14 64
Korea, Republic of 60 52 48 39 45
Hong Kong, China 87 27 11 8 18
Australia 69 10 12 7 15
Table 39: Chinese imports of Ferrous waste and scrap (HS-7204) (USD Millions)
Chinese export of Iron & Steel and its Products

(HS 72 &73)
The following table shows China’s country-wise exports of Iron and Steel
(HS-72) for the period 2013-17 in USD millions. South Korea is the largest
destination for Chinese exports followed by Viet Nam and Thailand. Total
Chinese exports of the category are almost $43 billion. Furthermore, India
was the 7th largest destination of Chinese Iron and Steel, in 2017, followed
by Pakistan with imports valued at $1.18 billion.
Importers 2013 2014 2015 2016 2017

World 38,621 55,479 49,197 43,244 42,984
Korea, Republic of 6,528 8,339 6,331 6,069 6,760
Viet Nam 2,424 3,791 4,151 4,531 4,336
Thailand 1,840 2,074 2,011 2,390 2,007
Philippines 1,481 2,573 2,172 2,329 1,945
Taipei, Chinese 2,092 2,956 1,960 1,886 1,845
Indonesia 1,263 1,768 1,911 2,017 1,704
India 1,006 2,334 2,260 1,496 1,510
Pakistan 474 813 1,001 1,047 1,177
Malaysia 1,157 1,484 1,445 1,258 1,086
Japan 1,154 1,478 963 789 983
Table 40: China’s country-wise exports of Iron and Steel (HS-72) (2013-17) (USD millions).

Product wise Breakup

The table below shows China’s exports of Iron and Steel (HS-72) for the
period 2013-17 in USD millions. The largest chunk of exports, 13%, are
of ‘Flat-rolled products (FRP) of alloy steel of width >=600mm, only hot-
rolled, in coils’ (HS-722530) followed by ‘FRP of Iron or non-alloy steel of
width >=600mm, hot or cold rolled not corrugated, plated or coated with
zinc’ (HS-721049) representing 12% of exports.
Code Product label 2013 2014 2015 2016 2017

722530 FRP of alloy steel other than stainless,
of a width of >= 600 mm, not further
worked than hot-rolled, in coils (excluding
products of silicon-electrical steel) 3,046 6,010 5,291 4,798 5,662
721049 FRP of iron or non-alloy steel, of a
width of >= 600 mm, hot-rolled or
cold-rolled «cold-reduced», not
corrugated, plated or coated with
zinc (excluding electrolytically plated
or coated with zinc) 3,733 4,851 4,379 4,368 5,274
722830 Bars and rods of alloy steel not
stainless, not further worked than
hot-rolled, hot-drawn or extruded
(excluding … wound coils) 4,777 9,161 10,715 9,312 4,499
of a width of >= 600 mm, hot-rolled or
cold-rolled «cold-reduced», painted,
varnished or coated with plastics 3,692 4,796 4,285 4,052 4,498
722790 Bars and rods of alloy steel other than
stainless, hot-rolled, in irregularly wound
coils (excluding products of high-speed
steel or silicon-electrical steel) 4,207 5,484 4,350 3,507 2,775
722540 FRP of alloy steel other than stainless, of
a width of >= 600 mm, not further worked
than hot-rolled, not in coils(excluding
products of silicon-electrical steel) 2,313 3,712 2,881 2,256 2,321
721913 FRP of stainless steel, width >= 600 mm,
not further worked than hot-rolled, in
coils, 4,75 mm > thickness >= 3 mm 1,077 1,701 1,300 1,348 1,743
721061 FRP of iron or non-alloy steel, width
>= 600 mm, hot-rolled or cold-rolled,
plated or coated with aluminium-zinc alloys 733 904 706 779 1,078
722870 Angles, shapes and sections of alloy
steel other than stainless, n.e.s. 1,920 2,006 1,599 1,359 984
721012 FRP of iron or non-alloy steel, width
>= 600 mm, hot-rolled or cold-rolled
«cold-reduced», tinned, thickness < 0.5 mm 873 1,084 824 784 892
Table 41: China’s product-wise exports of Iron and Steel (HS-72) (2013-17) (USD millions).

Chinese Exports of Iron & Steel and its Articles (HS-72

& HS-73) to Pakistan 4
China, in 2017, exported over $56.7 billion worth of goods under Articles
of iron or steel (HS-73). Largest share of exports was destined for the USA
i.e., 18% followed by Japan and North Korea. Even though Pakistan is not
amongst the top ten export destinations for Chinese exports of articles of
Iron and Steel, yet it still imported over $755 million worth of articles of iron
and steel from China. Pakistani imports of the category have increased by
110% in the last five years. The following table shows Chinese exports of
‘Articles of Iron and Steel’ (HS-73) for the period 2013-17 in USD millions.
Importers 2013 2014 2015 2016 2017

World 57,348 60,637 60,523 51,892 56,728
United States of America 8,571 9,280 10,499 8,977 10,218
Japan 3,141 3,367 3,165 2,994 3,119
Korea, Republic of 2,781 2,818 2,997 2,615 2,586
Australia 2,246 2,008 1,812 1,610 1,895
Hong Kong, China 1,633 1,600 1,582 1,493 1,732
Germany 1,481 1,669 1,651 1,466 1,686
Malaysia 1,394 1,353 1,375 1,255 1,503
India 1,605 1,541 1,412 1,308 1,461
Viet Nam 1,121 1,407 1,516 1,239 1,418
Canada 1,439 1,670 1,546 1,044 1,340
Table 42: China’s country-wise exports of Articles of Iron and Steel (HS-73) (2013-17) (USD millions).
The following table showwws China’s product-wise exports of articles of

iron and steel (HS-73) for the period 2013-17 in USD millions. The top ten
categories at HS-06 level accounted for about $29.5 billion i.e. more than
50% of total exports under (HS-73).


730890 Structures and parts of structures, of iron
or steel, n.e.s. (excluding bridges and
bridge-sections, towers and lattice masts,
doors and windows and their frames,
thresholds for doors, props and similar
equipment for scaffolding, shuttering,
propping or pit-propping) 8,394 8,390 9,196 8,074 8,308
732690 Articles of iron or steel, n.e.s. (excluding
cast articles or articles of iron or steel wire) 5,504 5,814 5,933 5,207 5,716
732393 Table, kitchen or other household
articles, and parts thereof, of stainless
steel (excluding cans, boxes and similar
containers of heading 7310; waste baskets;
shovels, corkscrews and other articles of
the nature of a work implement; articles of
cutlery, spoons, ladles, forks etc. of
heading 8211 to 8215; ornamental
articles; sanitary ware) 1,878 2,685 3,487 2,928 3,486
731815 Threaded screws and bolts, of iron or
steel, whether or not with their nuts and
washers (excluding coach screws and
other wood screws, screw hooks and
screw rings, self-tapping screws, lag
screws, stoppers, plugs and the like,
threaded) 2,111 2,307 2,304 2,141 2,401
732111 Appliances for baking, frying, grilling
and cooking and plate warmers, for
domestic use, of iron or steel, for gas
fuel or for both gas and other fuels
(excluding large cooking appliances) 1,772 1,918 2,110 1,981 2,248
732399 Table, kitchen or other household articles,
and parts thereof, of iron other than cast iron
or steel other than stainless (excluding
enamelled articles; cans, boxes and
similar containers of heading 7310; waste
baskets; shovels and other articles of the
nature of a work implement; cutlery, spoons,
ladles etc. of heading 8211 to 8215;
ornamental articles; sanitary ware) 2,918 2,456 2,401 1,891 2,222
730419 Line pipe of a kind used for oil or gas
pipelines, seamless, of iron or steel
(excluding products of stainless
steel or of cast iron) 2,046 1,972 1,611 1,255 1,552
731210 Stranded wire, ropes and cables,
of iron or steel (excluding electrically
insulated products and twisted fencing
wire and barbed wire) 1,246 1,417 1,346 1,276 1,487
731700 Nails, tacks, drawing pins, corrugated
nails, staples and similar articles of iron
or steel, whether or not with heads of
other material (excluding such articles
with heads of copper and staples in strips) 1,211 1,338 1,384 1,099 1,175
732620 Articles of iron or steel wire, n.e.s. 968 971 985 868 976
Table 43: China’s product-wise exports of Articles of Iron and Steel (HS-73) (2013-17) (USD millions).

Chinese exports of Iron and steel and its products

(HS-72 & 73) to Pakistan.
Steel and its products accounted for 11% of Pakistan’s total imports from
China in 2017. Considering China’s significance as an import source for
Pakistan, it is not surprising that China is also the largest source of imported
steel for Pakistan. Over the last five years’ steel imports from China
registered a staggering growth of 131%. Furthermore, in the near future
Pakistan’s steel demand is expected to increase due to various reasons;
firstly, the growth of the automobile sector with 8 new entrants, Hyundai,
Renault, and Kia to name a few, and secondly, the current government in
its pre-election agenda announced a plan to build 5 million housing units
which may add significantly to steel demand. The following table shows
China’s Top 20 exports of HS-72 and HS-73 to Pakistan at HS-06 level for
the period 2013-17 in USD Millions.

Total 835 1,214 1,638 1,819 1,932
722530 Flat-rolled products of alloy steel other than
stainless, of a width of >= 600 mm, not
further worked than hot-rolled, in coils
(excluding products of silicon-electrical steel) 152 290 364 427 446
730890 Structures and parts of structures, of iron or steel,
n.e.s. (excluding bridges and bridge- sections,
towers and lattice masts, doors and windows
and their frames, thresholds for doors, props
and similar equipment for scaffolding,
shuttering, propping or pit-propping) 57 88 121 209 227
cold-rolled «cold-reduced», painted,
varnished or coated with plastics 35 51 51 76 106
721119 Flat-rolled products of iron or non-alloy
steel, of a width < 600 mm, simply
hot-rolled, not clad, plated or coated, of a
thickness < 4,75 mm (excluding «wide flats») 0 0 0 1 90
730820 Towers and lattice masts, of iron or steel 11 20 43 52 72
stainless, hot-rolled, in irregularly wound
coils (excluding products of high-speed
steel or silicon-electrical steel) 25 52 60 74 70
cold-rolled «cold-reduced», not corrugated,
plated or coated with zinc (excluding
electrolytically plated or coated with zinc) 39 67 80 70 60


721420 Bars and rods, of iron or non-alloy steel, with
indentations, ribs, groves or other
deformations produced during the
rolling process 14 15 13 24 52
722540 Flat-rolled products of alloy steel other than
stainless, of a width of >= 600 mm, not further
worked than hot-rolled, not in coils (excluding
products of silicon-electrical steel) 18 21 26 42 42
stainless, not further worked than hot-rolled,
hot-drawn or extruded (excluding products of
high-speed steel or silico-manganese steel,
semi-finished products, flat-rolled products
and hot-rolled bars and rods in irregularly
wound coils) 15 92 127 91 39
732690 Articles of iron or steel, n.e.s. (excluding cast
articles or articles of iron or steel wire) 13 13 22 27 36
721934 Flat-rolled products of stainless steel, of a
width of >= 600 mm, not further worked than
cold-rolled «cold-reduced», of a thickness
of >= 0,5 mm but <= 1 mm 30 32 30 33 35
721935 Flat-rolled products of stainless steel, of a
width of >= 600 mm, not further worked
than cold-rolled «cold-reduced», of a
thickness of < 0,5 mm 37 36 32 29 32
730419 Line pipe of a kind used for oil or gas
pipelines, seamless, of iron or steel
(excluding products of stainless steel
or of cast iron) 38 29 37 32 28
720916 Flat-rolled products of iron or non-alloy steel, of a
width of >= 600 mm, in coils, simply cold-rolled
«cold-reduced», not clad, plated or coated,
of a thickness of > 1 mm but < 3 mm 3 15 27 18 25
732111 Appliances for baking, frying, grilling, cooking
& plate warmers, for domestic use, of iron or
steel, for gas fuel or for both gas and other
fuels (excluding large cooking appliances) 5 8 17 19 20
731815 Threaded screws and bolts, of iron or steel,
whether or not with their nuts and washers
(excluding coach screws and other wood...,
plugs and the like, threaded) 10 9 21 18 20
730429 Casing and tubing, seamless, of iron or steel,
of a kind used in drilling for oil or gas
excluding products of cast iron) 16 23 18 23 19
731210 Stranded wire, ropes and cables, of iron or
steel (excluding electrically insulated products
and twisted fencing wire and barbed wire) 6 7 8 9 18
730799 Tube or pipe fittings, of iron or steel
(excluding cast iron or stainless steel
products; flanges; threaded elbows, bends
and sleeves; butt welding fittings) 4 6 7 18 17
Table 44: China’s Top 20 exports of HS-72 and HS-73 to Pakistan at HS-06 level (2013-17) (USD millions).

Pa k i s tan I nd u s try analy s i s
Optical, photographic, cinematographic, measuring,

checking, precision, medical or surgical instruments
and apparatus; parts and accessories thereof (HS-90)
Pakistani exports of HS-90 were on a fluctuating trend between 2013 and

2016. In 2017, however, exports grew by about 13% and were recorded
at $411 million. One of the reasons for this growth can be attributed to an
increase in exports to China which rose by 172% over the previous year;
exports to China reached $40 million in 2017. Whereas, the US, which is
the largest export destination for Pakistan, recorded a decline.
Although, the CPFTA provides Pakistan with duty-free access, so do the

US, UK and Germany, all of which are Pakistan’s major exports markets.
However, China not only exceeds these countries in terms of population
but is also the second largest economy and the largest importer of HS-90.
Figure 10 shows a comparison between the actual and potential exports
to China of HS-90 from Pakistan. In 2017, Pakistan had an untapped
potential of $370 million against which it only exported goods worth $40
million. Needless to say, if Pakistan wanted to take full advantage of this
opportunity it would need to address the supply side issues and enhance
production capacities.

PAKISTAN’S EXPORTS OF HS-90 (USD Million)
411
420
410
400
390
369
380 365 364
370
360
348
350
340
330
320
310
2013 2014 2015 2016 2017
Figure 12: Pakistan’s export of HS 90 (2013-17) (USD millions).
EXPORT POTENTIAL TO CHINA (USD Million)
370.87
360.70
349.64
400.00 356.23
333.67
350.00
300.00
250.00
200.00
150.00
100.00 39.71
14.59
14.41 8.33 8.50
50.00
0.00
2013 2014 2015 2016
2017
Pakistan’s exports to China Potential Exports to China
Figure 13: Pakistan’s export potential of HS 90 to China (2013-17) (USD millions).

The following table shows the top five categories at HS-06 level of ‘Optical,
photographic, … ; parts and accessories thereof’ (HS-90). Largest share
of exports is attributed to ‘Instruments and appliances used in medical,
surgical or veterinary sciences, n.e.s.’ (HS-901890) which made up 88%
of the exports in HS-90. Furthermore, Pakistan only exports $15.8 million
worth of ‘Instruments and appliances used in medical, surgical or veterinary
sciences, n.e.s.’ to China while its total potential is $344.7 million.
HS-Code Description Pakistan Pakistan China

export to exports to imports from Exports
China the world the world potential
(‘000 US$) (‘000 US$) (‘000 US$) (‘000 US$)
901890 Instruments and appliances used in medical,
surgical or veterinary sciences, n.e.s. 15.84 360.58 2,462.79 344.74
901580 Instruments and appliances used in geodesy,
topography, hydrography, oceanography,
hydrology, . . . 23.65 33.70 440.47 10.05
901849 Instruments and appliances used in dental
sciences, n.e.s. 0.12 4.31 159.14 4.20
901590 Parts and accessories for instruments and
appliances used in geodesy, topography,
photogrammetrical . . . - 2.57 107.37 2.57
903089 Instruments and apparatus for measuring or
checking electrical quantities, without recording . . . - 2.26 232.43 2.26
Table 45: Top five categories at HS-06 level of ‘Optical, photographic, … ; parts and accessories thereof’ (HS-90).
USA has been the top export market for Pakistani producers. However,
Pakistani exporters have started to diversify their market portfolio. Despite
total exports of HS-90 registering a growth of 12.7% in 2017, exports to
the US fell by 5.7%. Moreover, exports to China have grown by about
170% while exports to the UAE rose by 178% over the previous year.
Importers 2013 2014 2015 2016 2017

World 348,075 364,565 369,205 364,223 410,573
United States of America 81,975 90,584 102,542 102,452 96,606
Germany 45,363 47,243 50,743 49,289 52,950
China 14,406 8,334 8,501 14,585 39,706
United Kingdom 35,743 39,140 36,070 33,610 34,674
United Arab Emirates 6,506 16,620 13,068 6,706 18,623
Table 46: Top destinations of Pakistani export of HS-90 (2013-17) (USD Million)

Instruments and appliances used in medical, surgical or

veterinary sciences, n.e.s. (HS-901890)
Pakistan’s exports of Instruments and appliances used in medical, surgical
or veterinary sciences (HS-901890) have been on an increasing trend over
the last five years with the exception of 2016 when exports dropped to
$326.0 million. In 2017, however, exports regained their momentum and
were worth $360.6 million.
PAKISTAN EXPORTS TO THE WORLD (HS-901890) (USD Million)
360.6
400 326.0
319.5 332.6
296.8
350
300
250
200
150
100
50
0
2013 2014 2015 2016 2017
Figure 14: Pakistani Exports of HS-901890 (USD Millions) (2013-17)
China is the 4th largest destination of Pakistan’s exports of HS-901890 i.e.

‘instrument and appliances used in medical, surgical or veterinary sciences,
n.e.s.’ its share in the Pakistani export basket of the said category is a mere
4.4%. Top exports markets for Pakistan in the same category include USA,
followed by Germany and the UK. The fact that almost 50% of Pakistan’s
exports are destined to developed economies is evidence of the quality
standards maintained by Pakistani exporters. Although, Pakistan enjoys
duty free access through the CPFTA to the Chinese market, it has been
able to secure just 0.32% of China’s import of HS-901890.

POTENTIAL EXPORT TO CHINA (HS-901890) (USD Billion)
344.7
400.00 325.7
311.6 316.9
350.00 288.3
300.00
250.00
200.00
150.00
100.00
9.1 15.8
8.5 7.9 7.0
50.00
0.00
2013 2014 2015 2016
2017
Pakistan’s exports to china Potential Exports to china
Figure 15: Pakistan’s potential exports to China of HS-901890 (USD Millions) (2013-17)
USA has been the biggest destination for Pakistani exports. However,
during the last year, US imports of the said category declined both in value
and share. Similarly, exports to France also fell in 2017. Meanwhile, exports
to China, Germany and the UK rose during the year. Moreover, Pakistan
enjoys Duty-free access to all countries in the table below, so in terms of
duty, China doesn’t provide any additional benefits. The following table
shows Pakistan’s top five export destinations of HS-901890 i.e. ‘instrument
and appliances used in medical, surgical or veterinary sciences, n.e.s.’.
Share of total
Importers 2013 2014 2015 2016 2017 exports (%)
World 296,808 319,526 332,642 326,028 360,575
USA 79,066 88,082 99,570 100,296 95,177 26%
Germany 43,272 44,697 48,261 45,992 49,218 14%
United Kingdom 34,447 37,481 34,195 31,778 33,893 9%
China 8,542 7,947 6,955 9,142 15,836 4%
France 13,946 15,447 14,218 14,332 12,193 3%
Table 47: Pakistan’s top five export destinations of HS-901890 i.e. ‘instrument and appliances used in medical,
surgical or veterinary sciences, n.e.s.’. (2013-17) (USD Million)

China is the largest importer of HS-901890 i.e. ‘instrument and appliances

used in medical, surgical or veterinary sciences, n.e.s.’ in the world. Largest
portion of imports originate from the USA, 28%, followed by Germany, 21%.
The following table shows China’s top five import partners for HS901890.
Currently Pakistan ranks as the 18th largest supplier to China. Through the
CPFTA, China has also granted Pakistan duty-free access while the rest of
the top exporters of this product face a tariff of 3.6%. The proximity and
size of the Chinese markets are also added advantages.
Share of total
Importers 2013 2014 2015 2016 2017 imports (%)
World 1,607,105 1,907,251 2,116,668 2,367,233 2,462,790
USA 605,085 658,074 650,139 704,916 680,875 28%
Germany 415,919 478,026 475,885 554,442 506,596 21%
Japan 303,566 370,387 364,474 378,720 418,223 17%
Mexico 41,286 115,259 238,312 280,928 329,728 13%
Israel 39,721 49,540 68,024 72,701 93,556 4%
Table 48: Top destinations of Pakistani export of HS-901890 (2013-17) (USD Million)
The following table shows the top 3 Pakistani exports at HS-08 for the
tariff lines covered under HS-901890 i.e. ‘instrument and appliances used
in medical, surgical or veterinary sciences, n.e.s.’. The major chunk of the
Pakistani exports in this category lies under ‘others’ while only $1.4 million
worth of surgical scissorswere exported and only $5000 worth of surgical
knives.
HS-Code Description 2013 2014 2015 2016 2017

90189090 Other 288,210 313,062 329,508 325,026 359,615
90189030 Surgical scissors 8,457 6,124 3,131 988 1,405
90189040 Surgical knives 119 213 2 0 5
Table 49: Top 3 Pakistani exports for the tariff lines covered under HS-901890 (2013-17) (USD 000’)

S o u rc e s
Asia Regional Integration Center

Business Recorder
Crowell & Moring
CPEC
CPEC: Long Term Plan for China-Pakistan Economic Corridor (2017-2030)
Daily Mirror
Dawn
EU SME Centre: Business Opportunities and Challenges in The Textile
and Apparel Market in China
Euro Monitor
Financial Times
ITC - Market Access Map
ITC - Trade Map
Ministry of Commerce China
Ministry of Commerce Pakistan
National Data – National Bureau of Statistics of China
The Diplomat
The Economist
The News
The World Bank – Data
UN Comtrade
Wikipedia
World Integrated Trade Solutions (WITS)
WTA /WTO and GATT Uruguay 1994
WTO Tariff Data Base

A nn e x u r e 1
The top 40 Chinese textile and Apparel exports not effected by the
additional tariffs imposed by US account for $23.5 billion, i.e. 58% of total
exports under the textile and Apparel categories (HS 50-HS63). The table
below shows the top 40 goods, in 2017, not effected by the additional
tariffs at the tariff line in USD millions.
HS-08 Code Description US Imports US Imports US Imports

from China from the from Pak
(2017) (2017) (2017)
61102020 Boys’ or girls’ garments imported as parts of
playsuits of cotton, containing less than 23% ... 2,270.81 7,073.13 186.45
63079098 Furniture movers’ pads of cotton 2,264.11 3,010.40 25.72
62046280 Girls’ blue denim trousers and breeches of cotton,
imported as parts of playsuits, not knitted ... 1,803.31 4,597.38 217.84
61103030 Boys’ and girls’ garments, imported as parts of
playsuits, of man-made fibers, knitted or crocheted, ... 1,581.12 6,111.52 6.28
61159690 Socks and other hosiery, etc., knitted or crocheted,
of syn fibers: cont 23% or more by weight ... 952.79 1,273.86 33.51
62121090 Brassieres, not containing lace or net or embroidery,
of cotton, whether or not knitted or ... 886.65 2,183.63 0.86
62034245 Boys’ blue denim trousers and breeches of cotton,
imported as parts of playsuits, not knitted ... 861.82 5,206.36 204.70
63014000 Blankets and traveling rugs, of synthetic
fibers, other than woven 792.74 853.54 0.45

A nn e x u r e 1

(2017) (2017) (2017)
62044340 Girls’ dresses, of synthetic fibers, not knitted,
with less than two colors in the warp 789.56 1,327.51 0.44
63039220 Curtains (including drapes) and interior blinds;
curtain or bed valances of synthetic fibers, ... 658.22 1,081.54 20.56
61112060 Babies’ garments and clothing accessories of
cotton, knitted or crocheted (excl. Hats) , NOT ... 620.08 1,223.20 4.23
62052020 Boys’ corduroy shirts of cotton, imported as
parts of playsuits, not knitted or crocheted 602.01 2,696.30 5.53
61044320 Girls’ dresses, knitted or crocheted, of synthetic
fiber, containing less than 23 percent by ... 538.54 1,245.30 0.27
63026000 Toilet linen and kitchen linen, of terry toweling
or similar terry fabrics, of cotton: dish ... 519.10 2,117.41 533.18
62114310 Girls’ coveralls, jumpsuits, and similar apparel,
of man-made fibers, not knitted nesoi 510.86 1,152.41 9.59
62064030 Girls’ blouses, shirts, and shirt blouses, of
man-made fibers, not knitted, with less than ... 494.19 1,469.90 0.54
61124100 Girls’ swimwear, knitted or crocheted, of synthetic
fibers, containing by weight 5 percent ... 457.73 916.53 0.03
61082290 Girls’ briefs and panties, knitted or crocheted,
of man-made fibers 439.89 906.27 0.05
62101050 Garments, made up of fabrics of heading 5602 or
5603: nonwoven disposible apparel designed ... 434.23 686.56 0.02
61083200 Girls’ nightdresses and pajamas, knitted or
crocheted, of man-made fibers, blanket sleepers 398.40 605.41 0.43
62019360 Men’s or boys’ anoraks, wind-breakers and similar
articles, not knitted, of man-made fibers: ... 370.77 651.05 0.08
63023220 Bed linen: other than printed, not knit man-made
fiber bolster cases, not embroidered, lace, ... 364.09 400.72 16.43
61091000 Boys’ cotton other t-shirts, knitted or crocheted,
except underwear 352.87 3,941.03 125.27
61046220 Girls’ shorts, knitted or crocheted, of cotton,
imported as parts of a playsuits 329.08 1,491.94 25.19
61089200 Girls’ bathrobes, dressing gowns, negligees, and
similar articles, knitted or crocheted, of ... 326.04 489.04 0.04
61046320 Girls’ shorts, knitted or crocheted, of synthetic
fibers, containing less than 23 percent of ... 320.01 1,696.19 0.74
62029348 Women’s or girls’ anoraks, wind-breakers and
similar articles, not knitted, of man-made fibers, ... 311.45 514.68 0.43
63023190 Other bed linen nesoi, not printed/knit/napped,
not containing embroidery, lace, braid, edging, ... 309.76 1,406.62 179.12
63079075 Other made up articles, including dress patterns:
toys for pets, of textile materials 290.85 298.59 0.01

A nn e x u r e 1

(2017) (2017) (2017)
61099010 Boys’ tanktops and singlets, knitted or crocheted,
of other textile materials: of man-made ... 271.83 1,865.06 9.32
61101210 Men’s or boys’ pullovers, sweatshirts, and similar
articles, wholly of cashmere, knitted or ... 269.97 324.16 0.00
61101100 Boys’ sweaters, of wool, knitted or crocheted 266.48 369.92 0.00
62063030 Girls’ blouses, shirts and shirt-blouses of cotton,
imported as parts of playsuits, not knitted ... 265.44 967.70 4.87
63079089 Cotton pillow shells 261.38 296.08 1.23
63071020 Other made up articles, including dress patterns:
dish cloths, of cotton 256.77 379.85 45.82
62121050 Brassieres, containing lace or net or embroidery,
of cotton, whether or not knitted or crocheted 233.16 478.22 0.21
61023020 Girls’ overcoats, carcoats, capes, cloaks, anoraks,
windbreakers, and similar articles, knitted ... 215.61 479.74 0.64
61143010 Men’s or boys’ other garments, knitted or
crocheted, of man-made fibers: tops 211.60 512.60 0.33
62044230 Girls’ dresses, of cotton, not knitted, containing
less than 36 percent of flax fibers, corduroy 207.79 540.23 0.81
61044420 Girls’ dresses, knitted or crocheted, of artificial
fibers, containing less than 23 percent ... 207.77 493.53 0.01
Total of top 40 Chinese exports not under Section 301 23,518.86 63,335.09 1,661.21

A nn e x u r e I I
The following table shows the steel exports benefiting from the increase in
Chinese tax rebate policy released on 5th September 2018.
Adjusted China’s exports China’s China’s

tax to Pakistan exports to US exports to
Product rebate in 2017 in 2017 world in 2017
Code Description rate (%) (USD Bn) (USD Bn) (USD Bn)
72052100 Powders of alloy steel 9 0.07 33.34 33.34

72091510 Flat rlld prod, a yield strength exceed
355N/mm2, w > =600mm,thk > =3mm 13 - 0.38 0.38
72124000 Flat rlld prod,i/nas,w 9 1.05 46.38 46.38
72173090 Wire, of iron/nonalloy steel, coated
with other base matals 13 0.04 34.45 34.45
72221100 Bars/rods, stainls stl, nfw th ht rl/drwn/extrud,
of circ cros sectn 9 1.50 26.93 26.93
72221900 Bars/rods, stainless steel, nfw than
hot rld/drawn/extrud, nes 9 0.20 6.43 6.43
72222000 Bars/rods, stainless steel, nfw than
cold formed/cold finished 9 0.34 42.58 42.58
72223000 Bars/rods, stainless steel, nes 9 0.14 17.46 17.46
72224000 Angles, shapes & sections, stainless steel 9 0.76 65.02 65.02
72230000 Wire of stainless steel 9 1.61 235.23 235.23
72292000 Wire of Si-Mg steel 9 1.60 244.88 244.88
73021000 Rails, iron/steel(i/s) 13 16.10 167.83 167.83
73023000 Switch blades/crossng frogs/point
rods/oth crossng pieces,iron/stl 13 3.33 39.59 39.59

A nn e x u r e I I

73024000 Fish plates & sole plates, iron/steel 13 0.13 18.96 18.96
73029010 Sleepers (cross-ties) 13 - 4.52 4.52
73029090 Rail/tramway construction material of iron/steel, nes 13 0.05 24.90 24.90
73030090 Tubes, pipes & hollow profiles of cast iron, nes 13 1.52 199.49 199.49
73043110 Boiler tube/pipe, i/non alloy s, smls, circular cs,
cold drw/rld 13 0.58 30.07 30.07
73043120 Geo casng/drill pipe, i/non alloy s, smls,circul cs,
cold drw/rld 13 0.51 2.44 2.44
73081000 Bridges & bridge sections, i/s 13 3.98 144.44 144.44
73082000 Towers & lattice masts, i/s 13 71.95 537.44 537.44
73083000 Doors, windows & their frames & thresholds for
doors of i/s 13 11.49 892.73 892.73
73084000 Equipment for scaffolding, shuttering,
propping/pit-propping, i/s 13 7.03 875.89 875.89
73089000 Structure/parts nes, prepd plate,rods etc
for struct, i/s 13 225.71 8,352.15 8,352.15
73090000 Reservoirs, tanks, vats & sim ctnr, cap > 300L, i/s 9 10.50 281.74 281.74
73101000 Tanks, casks, drums, cans, boxes&sim
contr, i/s, cap. > =50L but<300L 9 0.31 57.88 57.88
73102110 Tear tab ends and bodies, closed
by soldering or crimping 9 0.75 24.34 24.34
73102190 Other cans of iron or steel, capacity<50l 9 2.33 403.93 403.93
73110010 Containers for compressd/liquefied gas,
i/s, for retail packng 9 0.57 51.36 51.36
73121000 Stranded wire,ropes & cables of i/s,
not electrically insulated 9 17.69 1,489.40 1,489.40
73129000 Plaited bands, slings & the like of i/s,
not elec insulated 9 0.18 44.15 44.15
73130000 Wire,barbed,twisted hoop,sgl flat/twisted
double of i/s,for fencing 9 1.29 66.35 66.35
73141200 Woven endless bands for machinery of stainless steel 9 - 1.20 1.20
73141400 Other woven cloth of stainless steel wire 9 0.60 162.25 162.25
73141900 Other woven cloth of i/s wire (including endless
bands), for technical use 9 0.17 46.51 46.51
73142000 Grill,netting,fencing,i/s,welded inter,
cs dim > =3mm,ms > =100 scm 9 0.81 40.99 40.99
73143100 Grill/nettng/fencng, i/s, weldd at intersectn,
coatd with zinc 9 2.67 207.30 207.30
73143900 Grill/nettng/fencng, i/s, weldd at intersection, nes 9 1.00 94.88 94.88
73144100 Grill/netting/fencing, i/s, nes, zinc platd/coat 9 2.07 203.57 203.57
73144200 Grill, netting, fencing, i/s, plastic coated 9 0.66 60.03 60.03

A nn e x u r e I I

73144900 Grill, netting, fencing, i/s, nes 9 0.99 148.07 148.07

73145000 Expanded metal, i/s 9 0.53 44.06 44.06
73151120 Roller chain, i/s, for motorcycles 16 9.77 244.17 244.17
73151190 Roller chain, i/s, nes 16 3.48 345.95 345.95
73151200 Chain, articulated link, i/s, nes 16 0.32 85.62 85.62
73170000 Nails, stpl & sim art, i/s,excl art of head
No 8305 &art w/Cu hd 9 10.69 1,195.93 1,195.93
73181100 Screws, coach, i/s 9 0.14 20.82 20.82
73181200 Screws, wood, i/s, nes 9 0.08 107.57 107.57
73181300 Screw hooks & screw rings of i/s 9 0.55 27.43 27.43
73181400 Screws, self-tapping, i/s 9 2.72 477.57 477.57
73181510 Other screws and bolts, tensile
strength > =800MPa 9 5.46 605.23 605.23
73181590 Other screws and bolts, tensile
strength<800MPa 9 14.35 1,808.20 1,808.20
73181600 Nuts, i/s, nes 9 5.68 925.48 925.48
73181900 Threaded articles of i/s, nes 9 1.49 412.14 412.14
73182100 Washers, spring/lock, i/s 9 0.17 51.08 51.08
73182200 Washers, i/s, nes 9 1.14 323.92 323.92
73182300 Rivets, i/s 9 0.34 56.29 56.29
73182400 Cotters & cotter-pins, i/s 9 0.41 150.35 150.35
73182900 Non-threaded articles of i/s, nes 9 0.86 113.47 113.47
73194010 Pins, safety, i/s 9 0.17 8.61 8.61
73194090 Pins, i/s, nes 9 1.07 33.54 33.54
73199000 Articles for use in the hand, i/s, similar
to sewing needles/pins 9 1.04 48.46 48.46
73201010 Leaf-springs and leaves, of i/s, for railway vehicles 9 - 0.27 0.27
73201020 Leaf-springs and leaves, of i/s, for motor vehicles 9 0.10 119.25 119.25
73201090 Other leaf-springs and leaves, of i/s, nes 9 0.11 27.35 27.35
73202010 Helical springs, i/s, for railway vehicles 9 0.06 4.24 4.24
73202090 Helical springs, i/s, other than for railway vehicles 9 0.96 218.95 218.95
73209010 Other springs, i/s, nes, for railway vehicles 9 - 1.32 1.32
73209090 Other springs, i/s, nes, other than for railway vehicles 9 0.60 100.73 100.73
73211210 Kerosene cooking stoves, i/s 9 0.00 26.68 26.68
73218100 Household/camping appliances,i/s, nes,
for gas or gas/oth fuels 9 0.22 237.77 237.77
73218200 Household/camping appliances,i/s, nes, for liquid fuel 9 0.02 10.57 10.57
73221100 Radiators & parts thereof, cast iron 9 - 38.84 38.84

A nn e x u r e I I

73221900 Radiators & parts thereof, i/s, other than cast iron 9 0.00 40.21 40.21
73229000 Air heaters,hot air distributors,parts,
non-electrical-heated 9 0.04 61.90 61.90
73231000 I/s wool,incl pot scourers, polishing pads,
gloves & like,i/s 9 8.51 203.22 203.22
73251010 Cast articles of non-malleable cast iron, nes,
for technical use 9 0.46 90.11 90.11
73251090 Cast articles of non-malleable cast iron,
nes, not f technicl use 9 0.91 344.99 344.99
73259100 Balls, grinding & similar articles of i/s, cast for mills 9 2.89 58.20 58.20
73259910 Cast articles of i/s, nes, for technical use 9 0.05 121.16 121.16
73259990 Cast articles of i/s, nes, not for technical use 9 0.17 71.64 71.64
73261100 Balls,grinding & similar art. of i/s,
forged/stamped, not f/wkd 13 0.45 538.87 538.87
73261910 Forged/stamped articles of i/s, nfw,
nes, for technical use 9 1.39 178.30 178.30
73261990 Forged/stamped articles of i/s, nfw,
nes,not for techncl use 9 1.37 302.94 302.94
73262010 Articles of iron/steel wire, nes, for technical use 9 0.42 92.58 92.58
73262090 Articles of iron/steel wire, nes, not for technical use 13 3.77 893.31 893.31
73269011 Steel fibres and articles thereof for technical use 9 0.01 22.33 22.33
73269019 Articles, i/s, for technical use,nes 9 15.41 906.91 906.91

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5th Review of the

China-Pakistan Free Trade Agreement

For any queries or feedback regarding this report, please contact;

i2 5th Review of China-Pakistan Free Trade Agreement 2019

The Pakistan Business Council (PBC) is a business policy advocacy platform,

The PBC is a not-for-profit entity, registered under Section 42 of the

5th Review of China-Pakistan Free Trade Agreement 2019 3

The PBC works closely with relevant government departments, ministries,

The PBC’s Founding Objectives:

To provide for the formation and exchange of views on any question

To conduct, organize, set up, administer and manage campaigns,

To acquire, collect, compile, analyze, publish and provide statistics,

To promote and facilitate the integration of businesses in Pakistan

To interact with governments in the economic development of

5th Review of China-Pakistan Free Trade Agreement 2019 5

6v 5th Review of China-Pakistan Free Trade Agreement 2019

ASEAN Association of Southeast Asian Nations

5th Review of China-Pakistan Free Trade Agreement 2019 vi

5th Review of China-Pakistan Free Trade Agreement 2019 9

Table 27: Country-wise Break-up of investment in Sub-Saharan Africa

5th Review of China-Pakistan Free Trade Agreement 2019 11

In November 2006, the governments of Pakistan and China signed

Pakistan’s exports to the world are mostly dependent on ‘Other made-up

5th Review of China-Pakistan Free Trade Agreement 2019 13

Pakistan’s trade with China (USD Billion)

On March 22, 2018,following a report by the Office of the U.S. Trade

5th Review of China-Pakistan Free Trade Agreement 2019 15

CHINESE OUTWARD (USD Billion)

Interestingly, most of the Chinese FDI is concentrated in high-income

Chinse FDI in Sub--Sahara Africa has decreased substantially in the last

have been set-up.Chinese developmental projects in Africa have shown

5th Review of China-Pakistan Free Trade Agreement 2019 17

Five Year Plan launched in 1996, the Chinese government abandoned

In response to the recent additional tariffs imposed by the Trump

Pakistani exports of ‘Optical, photographic, cinematographic, measuring,

5th Review of China-Pakistan Free Trade Agreement 2019 19

• Bilateral trade figures reported by Pakistan and China to the International

• Pakistan’s overall trade deficit in calendar year 2017 amounted to $35.6

• Similarly, analysis of Pakistan’s exports to China showed that 87% of the

• In the event of additional tariffs being levied on Chinese imports by

• In 2017, Chinese companies invested $177.7 billion in various countries

• The Chinese investment in the US and France in the area of textiles

• Chinese investment in Vietnam and Cambodia’s textile and apparel

5th Review of China-Pakistan Free Trade Agreement 2019 21

• China is the largest producer of Steel in the world. In 2017, China

• Governments of Pakistan and China must take measures to implement

• Pakistan’s export basket to China needs to be increased in terms of

• Products/Tariff lines recommended by the Pakistan Business Council to

• Pakistan is a composite and dynamic textile exporter where the entire

5th Review of China-Pakistan Free Trade Agreement 2019 xxii

• From Pakistan’s perspective, this investment in the textile sector would

• From the Chinese perspective, Chinese investors would be able to

• There is an absence of a regulatory body for the steel industry which

• In the wake of heavy rebates given to Chinese steel manufacturers

• Producers of instrument and appliances used in medical, surgical or

A free trade agreement was signed between the governments of Paki-

1. Preliminary Study on Pakistan and China Trade Partnership Post FTA

2. Second review of Phase I of the Pakistan-China FTA and Recommen-

3. Third Review of the Pakistan-China FTA and Recommendations for