A newly released survey by the China Chamber of Commerce in Pakistan (CCCPK) has provided a nuanced view of the business environment for Chinese companies operating in Pakistan. The survey, which introduced the “Business Climate Index of Chinese Companies in Pakistan,” revealed a score of 49.63, just below the 50-point threshold that separates optimism from pessimism.
This initiative, guided by the Chinese embassy in Pakistan, marks the first survey conducted by the CCCPK and was launched on Sunday.
The findings highlight significant challenges faced by Chinese firms, including security risks, difficulties in remittance outflows due to foreign exchange controls, and policy and currency instability. These issues are constraining the operations of Chinese businesses in the country, underscoring the need for sustained efforts from both governments to create a more favorable business environment. Such efforts are crucial for realizing the full potential of the China-Pakistan Economic Corridor (CPEC) and broader economic cooperation.
The survey sampled 48 Chinese companies, representing about 30 percent of all Chinese businesses in Pakistan. It revealed that 83.4 percent of respondents perceive the security situation as deteriorating, with little hope for short-term improvement. Security risks emerged as the primary factor hindering business development, reflecting broader concerns about the safety of investments in the region.
“Pakistan’s current security situation is severe and complex, with a slow economic recovery,” the survey stated, emphasizing the external pressures impacting various operational aspects.
In addition to security issues, 60.4 percent of companies reported that foreign exchange controls hinder timely payments, while 58.3 percent cited a lack of policy continuity and poor policy implementation as significant obstacles affecting their business decisions. Moreover, 56.3 percent of respondents noted that the depreciation of the Pakistani rupee has eroded their net assets when measured in US dollars.
Despite these challenges, the report noted that Chinese companies have actively worked to overcome difficulties and maintained overall stability in their operations, with some showing signs of expansion. Around 54.2 percent of companies identified low administrative efficiency as a challenge.
The survey also revealed a resilient spirit among Chinese enterprises. Over 52.1 percent of firms indicated that their business volume remained stable, while 33.3 percent reported growth in their operations.
Looking forward, 70 percent of respondents expressed optimism about Pakistan’s economic development, with 47.9 percent expecting stability in new order volumes over the next three months.
Recent economic indicators suggest a potential turnaround for Pakistan. Inflation has decreased to 6.9 percent, and foreign exchange reserves have exceeded $14.7 billion, reaching a two-year high. Additionally, exports surged by 14 percent in the first two months of the new fiscal year, hinting at a stabilizing economy.
The survey highlighted that the majority of Chinese companies plan to maintain their production scale, with 58.3 percent aiming to keep their workforce stable. Meanwhile, 37 percent of firms indicated intentions to expand their production scale, although 18.8 percent projected minor layoffs.
In a positive outlook, 39 percent of respondents believe Pakistan’s overall economic situation will improve in the next three months, while 43.8 percent expect it to remain stable.
