ISLAMABAD: The Chinese government has agreed to consider a request to amend the existing Free Trade Agreement (FTA), supply trade finance in yuans and provide loans to assist industry relocation to Pakistan.

The requests were made during Pakistan’s Interim Commerce Minister Gohar Ejaz’s visit to China, where he is leading a 20-member group. Pakistan and China have come to a mutual understanding to revise the FTA.

This revision aims to extend comparable preferences to Pakistani products, aligning them with the existing agreement between China and the Association of Southeast Asian Nations (ASEAN) countries, Mr Ejaz told Dawn on Monday.

He said Pakistan will submit a priority list after consultation with the relevant stakeholders. “We will evolve the list in consultation with all stakeholders”, he said, adding that his Chinese counterpart has agreed to the requests.

Pakistan has formally approached the Chinese government urging them to allocate a substantial sum of $5 billion equivalent to RMB for financing investments aimed at facilitating the relocation of Chinese companies. The proposed funding would be structured under a “Pay as You Earn” framework allowing for repayment through the utilisation of export proceeds.

The relocation will be only made to the Special Economic Zones (SECZ) or Export Processing Zones (EPZ) in Pakistan. Chinese investors will actively pursue investment funds from their government and generate revenue in US dollars through the export of goods. These proceeds will then be utilised to offset the loan amount.

If the proposed scheme is given the green light, the minister has assured that Pakistan’s foreign exchange reserves will remain unaffected, thus alleviating any potential burden.

Yet another development, it was also agreed that an amount of $5bn equivalent to 30bn RMB will be available for trade finance immediately. The Chinese currency will be used for export and import to minimise reliance on US dollars.

Both sides also agreed to align import valuation data to remove discrepancies in trade figures.

Published in Dawn, December 12th, 2023

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...
Islamabad protest
Updated 20 Nov, 2024

Islamabad protest

As Nov 24 draws nearer, both the PTI and the Islamabad administration must remain wary and keep within the limits of reason and the law.
PIA uncertainty
20 Nov, 2024

PIA uncertainty

THE failed attempt to privatise the national flag carrier late last month has led to a fierce debate around the...
T20 disappointment
20 Nov, 2024

T20 disappointment

AFTER experiencing the historic high of the One-day International series triumph against Australia, Pakistan came...