An Empirical Analysis of Pakistan's Agriculture Trade with China: Complementarity or Competition?

This paper examines the bilateral trade flows between Pakistan and china with particular focus on the trade of agricultural goods. It observes the trends and characteristics of China-Pakistan trade relations after both countries signed the China-Pakistan Free Trade Agreement in 2006. We use trade complementarity index, revealed comparative advantage index, trade integration index and export similarity index to empirically analyse trade complementarity and competition of thirty five agricultural products. Furthermore, we investigate the future prospects of agriculture sector by calculating indicative trade potentials of top agriculture products. The findings of this study show that there exist competition and complementarity for few products; however, complementarity is strong.. The indicative trade potentials show that Pakistan has higher exports potentials in products rice, seafood and cotton, which however have not reached up to their potentials due to various barrier and nonbarrier tariffs. Thus it is important that these challenges are addressed in order to increase the bilateral trade in future.