US-China trade war benefitting Pakistan’s value-added sectors

Since mid-2018 the United States of America and China have been locked in a trade confrontation which has resulted in several rounds of retaliatory tariffs. The US-China trade war has severely impacted Chinese exports to the largest market in the world.  While US consumers are paying higher prices, Chinese exports have dropped drastically by 25%  in the first half of 2019.

 According to a recent research paper by UNCTAD, United States tariffs on China are resulting in an increase in imports from the rest of the world, but only when imports from China declined.  China’s export losses in the United States have resulted in trade diversion effects to the advantage of Taiwan Province of China, Mexico, the European Union, Viet Nam, India and Pakistan among others.

Pakistan is one of the beneficiaries from these tariffs against Chinese goods by the US.  The trade diversion effect in Textiles and Apparel for Pakistan is US$25 million in the first half of 2019 while India, (US$ 41 million), European Union (US$ 66 million), Republic of Korea (US$ 41 million) are other beneficiaries. 

These facts are also validated by the recent statistics released by the Trade Development Authority of Pakistan for the first quarter 2019-20. Knitwear and Readymade Garments have shown double-digit growth of 11.14% and 11.48% while home textiles have also shown a 2.84% increase. It is also encouraging to note the recovery of synthetic textile exports with an increase in exports of 8.3%.  Despite difficult times, these are positive indications for the textile industry. 

In the current issue, you will find special reports on ITMA, Belgian companies and also an introduction to the VDMA German textile machinery seminar organised by the German Pakistan Chamber of Commerce and Industry, representing the best of the textile machinery manufacturers from Germany.  We shall report on the sessions in Karachi and Lahore in our coming issues.

 

 
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