Prime Minister Imran Khan has directed the Ministry of Commerce and the State Bank of Pakistan (SBP) to explore the avenue of encouraging imports from China in Chinese Yuan (CNY) instead of US Dollars, reported Business Recorder.
The central bank and the ministry were given these instructions during a meeting on 9 November 2021, with relevant developments to be reported in two weeks.
The premier also directed the Federal Board of Revenue to develop a detailed plan on temporarily limiting luxury imports. He further told the government bodies to take action and show progress within the set time limit.
The institutions have already started working as per the given instructions, with the Commerce Ministry and State Bank of Pakistan already holding consultation sessions regarding the change in the currency for imports.
Meanwhile, the Ministry of Commerce has also started working on the export strategy, specifically pertaining to the removal of Chinese non-tariff barriers.
After the implantation of FTA-II with the Chinese government, the exports to China experienced a surge in January 2020, which carried on for a couple of months. However, with the spread of the pandemic, the exports declined in the next few months. Recently, the exports to China have started to gain momentum.
The Ministry of Commerce is carrying out a study to understand the Chinese market. Through the study, the ministry will also look into the details of well-performing exports and exports of sectors that have been stagnant or declined.
The Commerce Ministry has also been working to improve the imports from China by setting up a Special Cell for China, in which bilateral trade between the countries will be studied.
Although the first four months of the current fiscal year have shown a sharp rise in exports to China, the ministry is still concerned about several non-tariff barriers in China which were damaging Pakistan’s exports.
The officials from the ministry discussed the details of imports in the country and the increase in imports. They stated that the major rise in imports was because of the consumption of energy, including POL products, RLNG, etc. If these products were to be limited, then it would affect Pakistan’s growth.
This would have been a viable option only if Pakistan had a source of earning Yuan, otherwise you would just use other foreign currency to exchange for Yuan. Since we don’t export to China, rather import heavily from there, this idea seems like a wild goose chase!