Third Review of the Pakistan-China FTA and Recommendations for Phase 2 Negotiations

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Following the PBC’s previous studies on the Pakistan-China Free Trade Agreement, there has been great discourse on how Phase II should be negotiated. The current study by the PBC updates the findings of the PBC’s ‘Second Review of Phase I of the Pakistan-China FTA and Recommendations for Phase II Negotiations’ (published in 2015). This study further analyzes trade patterns and, where necessary, updates the recommendations made in 2015 for negotiating Phase II of the FTA.

USD (millions)


The PBC’s Second Review showed that Pakistan’s exports to China were $2.6 billion in 2013, and imports from China were $6.6 billion, leading to a trade deficit of $3.9 billion. This study shows that in 2015, these figures stand at $1.9 billion and $11 billion respectively, with the trade deficit rising sharply to $9.1 billion. Additionally, in 2015, Pakistan’s exports to China made up 8.8% of Pakistan’s total exports, while Chinese imports made up over 25% of total imports into Pakistan, further confirming China’s place as one of Pakistan’s top trade partners.

In addition to export and import trends and patterns, this study also examines high-potential export products, tariff comparisons with China’s other FTA partners and analyses of Pakistan’s major trade commodities. Also included in this study are a variety of sectorial perspectives, showcasing the effects of the FTA on various local industries and manufacturers, such as textiles, cotton, paper and polyester products, amongst others.

The Pakistan Business Council (PBC) is a private sector not-for-profit advocacy platform set up in 2005 by 14 (now 58) of Pakistan’s largest businesses. The PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives, activities and a soft-copy of this report can be found on our website: