Pakistan hopes to sign the second phase of the Free Trade Agreement (FTA) with China in April. Under the first phase of FTA, Pakistan’s trade balance with China worsened, and it registered the $12 billion mark in the last financial year 2016-17.

In February 2018, China had agreed to revise the FTA and provide tariff concessions for increasing Pakistan’s exports. Pakistan had suggested incorporating clauses for safeguarding its industries and the economy from any undue pressure on the balance of payments position. Pakistan exporters wanted tariff concessions equivalent to Asean countries. China also agreed on electronic data exchange, which would help reduce the chances of under-invoicing, another major concern of Pakistan’s industry.

Pakistan’s major exports to China are: cotton yarn, chemical material, crude vegetable material, rice, raw hides and skins, fish and fish preparations. Major imports are machinery and spare parts, manufactured fertilizer, yarn and thread of synthetic fiber, iron and steel, chemical materials and products, vegetable and synthetic textile fiber, road vehicles and their parts, non-ferrous metals, tires and tubes of rubber etc.

Meanwhile China is helping Pakistan's spinning mills become more cost efficient and competitive. China also wants to relocate its textile units to Pakistan to benefit from Pakistan’s low paid and well-experienced textile labor.