Pakistan continues to increase its relationship with China through expanded military ties in order to boost security in the country. Discussion of joint military exercises was announced while the issue of a base at the Gwadar port remains a rumor. Against his backdrop Pakistan continues to appear to be preparing for an IMF bailout by devaluing its currency on November 30th by 5% with the Rupee/USD rate falling to 141 before strengthens to 136.50. This appeared to slow offtake of imported cotton early in the week but improved as the week progressed. Thoughts of the size of the domestic crop continue to be no more than 10.0 - 10.5 million bales. Arrivals as of November 30th reached only 9.366 million local bales which compares to 10.1342 million bales last year on the same date.
Last week the local press called for Chinese investment in cut and sew operations in Pakistan which would allow China to import Chinese fabric and then cut and sew as made in Pakistan. One of the most unusual aspects of the massive Chinese investment in Pakistan has been the lack of deals in textiles and apparel. The investment appears to be much more focused on setting the stage for China’s use of the Gwadar Port, increasing its military footprint and developing the infrastructure necessary to connect to Xinjiang. So far the aggressive Xinjiang clampdown and imprisonment camps of local Muslims has not caused any significant uprising or discussion in Pakistan, which appears to illustrate the amount of economic power China exerts over the country, one is left to surmise that economics are more important than religion.
Source: Jernigan Global