Pakistan and China: report underscores need for strengthening financial cooperation

The report on internationalization of RMB states that future financial cooperation between China and Pakistan in capital market needs to be strengthened, especially in the bond market. The advantages of China's third party e-payment and fintech into full play will help Pakistan build and improve its financial infrastructure and broaden its financial development space.

The report on RMB Internationalization 2019 was prepared by International Monetary Institute, Renmin University of China, and released at the launch of the China Pakistan Economic 50 Forum organized by University of Lahore.

The launch ceremony was attended by Chairman University of Lahore Awais Raoof, Advisor to chief minister Punjab on Economic Affairs and Planning and Development Dr Salman Shah, Professor School of finance Renmin University and deputy director, International Monetary Institute Renmin University Dr Tu Yonghong, Researcher CPEC Research Center University of Lahore, President SABRI Tsinghua University Dr YU Xiao, Chairman Shahid Javed Burki Institute of Public Policy Shahid Javed Burki, Vice chairman Shahid Javed Burki Institute of Public Policy Shahid Najam, Director Center for Governance and Public Policy Dr Saeed Shafqat and Director Center for Security, Strategy and Policy Research University of Lahore Dr Rabia Akhtar.

According to the report, the use of RMB in Pakistan favours the avoidance of US dollar fluctuation risks, and favours the new round of financing for both China and Pakistan enterprises which have benefited from the infrastructure projects. It will also reinforce the financial stability of both sides.

As per report by the end of 2019, China is the second largest export destination and the first largest import source country of Pakistan, accounting for 8 percent of Pakistan's export share and 29 percent of Pakistan's import share, respectively.

Since the first phase of China-Pakistan Free Trade Agreement (FTA) came into force 15 years ago, the bilateral trade volume has increased from US $2 billion in 2005 to US $19.08 billion in 2018. On January 1, 2020, the second phase protocol of China Pakistan FTA entered into force which is another major measure in the field of China-Pakistan economic and trade cooperation.

Advisor to chief minister Punjab on Economic Affairs and Planning and Development Dr Salman Shah while speaking on the occasion said that China Pakistan Economic Corridor will prove to be a game changer for Pakistan. New avenues of development will open in the country. The people of the areas which are part of CPEC will benefit from the project.

He also said that that Chinese engineer completed their work in Orange Line Project which is a proof of their expertise. However, the government has to give the subsidy of Rs25 billion to Rs30 billion to run the project. The provincial government will use the Orange Line Project for the development of the city by developing economic corridors around the route of the project.