Pakistan’s Cotton Yarn Exports to China: Navigating a Shifting Trade Landscape in 2025

Pakistan’s textile sector, a cornerstone of the national economy, continues to demonstrate robust trade relations with China despite facing notable challenges in 2025. According to the General Administration of Customs of China (GACC), Pakistan exported cotton yarn worth 203.29milliontoChinainthefirsthalfof2025.Whilethisfiguremarksa19203.29milliontoChinainthefirsthalfof2025.Whilethisfiguremarksa19251.51 million in the same period last year, the trade momentum between the two countries remains resilient.

Understanding the Decline in Export Value

The decrease in Pakistani cotton yarn exports to China is an important development for stakeholders in both nations. Under commodity code 52051200, uncombed single cotton yarn exports reached 112millionfromJanuarytoJune2025,downfrom112millionfromJanuarytoJune2025,downfrom144.85 million during the same period in 2024. The average price for this category stood at $2.40 per kilogram, with 46.48 million kilograms exported.

This downward trend can be attributed to several factors, including increased competition, higher production costs, and shifting market dynamics. Despite these challenges, Pakistan maintained its position as the second-largest exporter of this category to China, with Vietnam leading the market at 340.69million.Forcommoditycode52051100,Pakistan’sexportstotaled340.69million.Forcommoditycode52051100,Pakistan’sexportstotaled90 million, a decrease from $102.96 million last year.

Industry Transformation and Supply Chain Advancements

Sajjad Mazahir, Director of Marketing at Keywin Trading Ltd., China, highlights the transformation within the industry. Pakistani cotton yarn exports under HS code 5205 have evolved from surplus production of generic commodities to a more sophisticated, supplier-brand-based approach. Factories are increasingly adopting supply chain management principles and securing intellectual property rights and trademarks both domestically and internationally. This shift is bringing recognition to Pakistani brands and enhancing the country’s reputation as a reliable supplier of raw materials.

The improved branding and supply chain management have enabled Pakistani exporters to secure transactions primarily through Letters of Credit from Chinese banks, ensuring financial security and transparency. This mechanism is crucial for maintaining Pakistan’s valuable foreign exchange reserves, as international transactions are conducted under a secure financial system.

Trade Dynamics and Domestic Shifts

Currently, about 10-15% of Pakistan’s cotton yarn production capacity is exported, reflecting a growing shift toward domestic manufacturing, particularly for garments intended for export. The rise in manufacturing casual wear and finished goods is partially driven by the China Pakistan Free Trade Agreement (CPFTA), which provides incentives for shipping higher-value products to China.

The export landscape is also impacted by high energy, logistics, and financing costs, which present ongoing challenges for Pakistani producers. Nevertheless, Pakistan’s cotton yarn continues to enjoy strong acceptance in China’s denim market, attributed to its quality and competitive pricing. This is a testament to the enduring demand for traditional Pakistani cotton varieties, which offer a competitive edge for producing high-quality yarns used in denim, towels, knitwear, and socks.

Strategic Cooperation and Future Prospects

Despite the recorded decline, the steady trade in cotton yarn between Pakistan and China underscores the importance of textile commerce in bilateral economic cooperation. Mazahir views the reduced export volume as a positive development, noting that Pakistan is progressively shipping more finished goods to China under the CPFTA. This strategic shift aims to add greater value to exports, boosting the domestic industry and offering new opportunities for growth.

Continued efforts at both government and private business levels are essential for Pakistan to maximize its share in the Chinese market and leverage its advantages in textile exports. Strong bilateral ties, evolving trade agreements, and ongoing industry innovation are expected to shape the future of Pakistan’s cotton yarn exports.