MediumI Geo-Economics & Chokepoints27 October 2026, Tuesday
Chinese imports widen Pakistan's trade gap with its neighbours by 26.6%
SBP data show Pakistan's trade deficit with nine neighbouring countries rose 26.62% to 4.97 billion dollars in July-September 2026. China alone accounted for 82.18% of the increase.
According to a Dawn report published on 27 October, based on State Bank of Pakistan (SBP) data, exports to the nine neighbours fell 6.72% to 944.24 million dollars in the first quarter of fiscal 2027. Imports from those countries rose 19.79% to 5.92 billion dollars over the same period. Imports from China climbed 19.76% to 5.82 billion dollars; on our calculation, 98% of regional imports come from China. Exports to China rose 17.95% to 663.57 million dollars, yet the bilateral deficit still widened by 858.8 million dollars.
Trade with the other neighbours has either stopped or withered. No exports to India were recorded in the three months, while imports from India rose 68.9% to 61.74 million dollars. Exports to Afghanistan collapsed by 88.34% to 18.86 million dollars; Dawn says trade between the two countries has been suspended since 10 October 2025. Exports to Bangladesh slipped 2.96% to 174.77 million dollars. Dawn's text says exports to China rose 'slightly', a description that conflicts with the 17.95% figure in the same report.
The regional deficit makes up about half of the country's total. A Topline Securities compilation published by ProPakistani shows Pakistan's overall trade deficit rose 15% to 10.8 billion dollars in the same quarter, which puts the gap with neighbours at about 46% of the total. According to the Express Tribune, Commerce Minister Jam Kamal Khan told exporters on 22 October that tariff concessions had been requested from Beijing. The number of tariff lines involved was not disclosed.
Talay assessment
Bottom line
Pakistan's regional trade is locking on to a single supplier: as the India and Afghanistan channels close, 98% of imports from neighbours come from China. Exports to China rose 17.95%, yet the deficit grew by 858.8 million dollars, showing that the problem is import dependence rather than market access. Tariff concessions might trim the gap but will not change the structure of imports.
Likely effects
- External financingNegative1–6 months
With about 46% of the total deficit coming from neighbours, pressure on reserves is tied to the China-sourced import bill.
- Bargaining with ChinaUncertain1–6 months
A wider gap strengthens Islamabad's case for tariff concessions from Beijing, but its negotiating leverage stays limited.
- Regional tradeNegative6 months+
Zero exports to India and an 88.34% collapse with Afghanistan show overland trade routes being shut by political decisions.
Possibilities, ranked
- 1China-heavy deficit persists60%
Import dependence continues, and the regional deficit stays high in the following quarters.
Watch: SBP regional trade data for October-December
- 2Chinese tariff concessions25%
Beijing grants limited tariff cuts, exports to China accelerate and the deficit begins to narrow.
Watch: A new concession list under the China-Pakistan free trade agreement
- 3The Afghan border reopens15%
Trade resumes and exports to Afghanistan partly recover.
Watch: The Torkham and Chaman crossings reopening to trade
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Regional trade deficit▼ $4.97bn
- Imports from China▼ +19.76%
- Exports to Afghanistan▼ −88.34%