Negotiations on a free trade agreement (FTA) between China and Pakistan are expected to move forward during Premier Wen Jiabao's visit to the South Asian neighbor. 

Premier Wen's trip to Pakistan, the first stop in an eight-day tour of four countries in the region, is expected to see the signing of a number of economic and trade agreements.

Among them is an Early Harvest Program, which would see tariff-free trade in a number of goods, paving the way towards an FTA between the two countries.

A possible FTA would facilitate trade and further consolidate bilateral trade relations, said Xu Changwen, a trade researcher at the Chinese Academy of International Trade and Economic Cooperation, a think-tank under the Chinese Ministry of Commerce.

"Chinese goods, which are of good quality and have competitive prices, match the growing demand of Pakistani consumers," he said.

And Pakistani goods will enjoy easier access to the Chinese market as China gradually cuts its tariff rates in line with its commitments to the World Trade Organization.

"Pakistan hopes to attract more investment from China with the stable growth of its domestic economy," said Pakistani Prime Minister Shaukat Aziz.

By establishing factories in Pakistan, Chinese enterprises would cash in on the geographic advantage in terms of exporting to the Middle East and Africa, he pointed out.

Bilateral trade between China and Pakistan has been enjoying fast growth since 2000, and Pakistan has grown into China's second-largest trade partner in South Asia following India.

The two countries chalked up a record trade volume of some US$3.06 billion last year, an increase of 26 percent.

China's exports to Pakistan reached US$2.47 billion, up 33 percent year-on-year.

China's imports from Pakistan reached US$5.95 billion, 3.5 percent up year-on-year.

China mainly exports machinery equipment and components, mechanical and electrical equipment, audio-visual products, and vehicles, accounting for over 40 percent of the nation's total exports to Pakistan.

The growth rate of China's exports to Pakistan exceeded that of nation's imports from the country.

The growth in China's exports was due to Pakistan's roaring demand resulting from its economic recovery and development, said Xu.

China's imports from Pakistan grew much slower over the past two years because the country only imports some raw materials, such as cotton, feathers and fur.

Economic cooperation between the two countries had been diversifying into sectors such as services, technology, investment, resource exploitation and contracting projects, Xu said.

For example, Chinese enterprises have signed a number of contracts to build roads and harbors in Pakistan.

But Xu added that some obstacles remain in the development of bilateral trade.

Xu said both sides should make more efforts to develop each other's market.

First, Chinese enterprises should carefully study the Pakistani market in order to produce products that better match local people's requirements.

Second, Pakistan has lagged behind some other South Asian countries, such as India and Bangladesh, in the promotion of its exports.

"Pakistani enterprises should further promote the influence of their products in China," he said, adding that expos were a good way to do this.

(China Daily April 5, 2005)