Pakistan analyzes reasons for decline in textile exports to China

According to a commentary published in Pakistan’s “Business Record” on April 8, it is believed that the reason for the sharp decline in exports to China is that the proportion of low value-added textiles is too large and the value of the rupee is overvalued. The article stated that Chinese President Xi Jinping plans to visit Pakistan this year and will promote the construction of the China-Pakistan Economic Corridor. However, some people are overly optimistic and predict that all aspects of China-Pakistan trade will also grow. In fact, the current status of bilateral trade is not satisfactory. In the first eight months of this fiscal year (July 2014 to February 2015), Pakistan’s exports to China fell by 20%, mainly due to the decline in low value-added textile exports, which accounted for 64% of exports to China: cotton yarn exports to China were 742 million US dollars, a year-on-year decrease of 23%. During this period, Pakistan’s total cotton yarn exports decreased by US$252 million, of which US$222 million was from exports to China; exports of woven pure cotton fabrics to China were US$79 million, a year-on-year decrease of 31%; non-carded cotton yarn exports to China were Cotton exports were only US$3 million, a year-on-year decrease of 93%. The above three products accounted for 81% of the decline in exports to China. Analysts believe that the main reason for the decline in Pakistan’s textile exports is that the proportion of low value-added products is too large and domestic production costs are too high, making it difficult to negotiate prices. The overvaluation of the rupee has further damaged the international competitiveness of Pakistani products. The decline in Pakistan’s exports to China is just a symptom. It is normal for trade volume to change from time to time in the global market. The crux of the problem is that Pakistan exports too much low-value-added textiles to China and has made no progress in export diversification. Moreover, China’s demand for imported ores, livestock, gemstones, chemicals, and fruits is growing, but the Pakistani government has done nothing to promote non-textile exports. Only by changing the government’s lazy mentality can Pakistan’s over-reliance on cotton textile exports be reduced.