Eshare China Industry Insights blog

China’s FTAs around the world and their trade relations


China is currently maintaining 12 Free Trade Agreements (FTA) with different trade and investment partners around the world, not counting special regions like Hong Kong, Macao, and Taiwan. More agreements are being negotiated at the moment. FTAs are aiming to increase the import and export relation of countries and regions, removing tariffs, and improve investment among the participants.


 

Tranalysis gives an overview of each FTA and the trade relation of China and its partners. For a detailed trade analysis by country or product, please contact our team to get the analysis of import and export value, manufacturers traders, and buyers, contact information, shipping modes and more.

 

China has developed a strategic position when it comes to entering free trade agreements. Looking at the famous Belt and Road Initiative from Beijing, it is clear that free trade and mutual investment is one of the key agenda for the middle kingdom.

 

Currently, China has twelve Free Trade Agreements in operation, with another six under negotiation and another nine under consideration. Several of the current FTAs are also under upgrade negotiation or at least considered to be upgraded in the future.

 

Of all the free trade agreements involving China, many are relatively small but useful and important for companies located in them. Countries, which have a relatively small FTA scope with China are Chile, Costa Rice, Iceland and Peru.

 

Tranalysis has listed and summarized all countries or regions that China has currently FTAs with.

 

ASEAN

The FTA between China and the ten member states of the ASEAN association is one of the most important free trade agreements for China, in terms of trade volume and value. After all, the free trade area is accounting for the worldwide largest population in a free trade agreement and for the third largest agreement in terms of GDP.

 

The trade value of all ASEAN members with China is growing constantly, likely to hit USD1 trillion by the end of the decade. As China is the second largest economy in the world and ASEAN is accounting for the sixth largest economy, the trade partnership is boosting import and exports for both regions.

 

With the ASEAN bloc including the Asian Tigers of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, together with smaller regional players such as Brunei, Cambodia, Laos and Myanmar, this single agreement is reshaping how China and ASEAN manufacturing develops.

 

Without a doubt, the signing of the China-ASEAN FTA is and will continue to have a huge impact on China and Asia’s development in global sourcing and the foreign investment related to this.

 

Australia

The FTA between China and Australia is one of the key elements in the stable development of Asian-Pacific region and promotion of global trade. Since the Agreement came into effect, China-Australia bilateral economic and trade relation has enjoyed a steady development. The structure of bilateral trade in goods has been optimized continuously.

 

In fact, China is Australia’s biggest import and export partner currently. On the other side, Australia is counting for the fifth biggest supplier to China and the tenth biggest export destination for Chinese products. After all, about one-fourth of manufactured products imported to Australia are Chinese origin. The largest export product of Australia to China is thermal coal, a raw material needed massively in the development of the largest populated nation.

 

Chile

Under the free trade Agreement, China and Chile have established a zero-duty treatment to cover 97 percent of products in a ten-year time period. The two countries are also strengthening exchange and cooperation in economy, culture, education, science and technology, as well as environmental protection.

 

China is Chile’s largest trading partner, supported by the free trade agreement of the two countries. After all, in 10 years, the trade volume between the two countries has almost grown by four times from USD8.1 billion in 2005 to USD31.5 billion in 2015.

 

While copper, Chile's main raw material export, represents 79 percent of the country's exports to China, the middle kingdom is also Chile's second-largest trade partner for non-copper goods

 

Costa Rica

Costa Rica is China 's second largest trading partner in Central America while China is the second largest trading partner of Costa Rica. In recent years, bilateral trade between the two countries has grown rapidly, supported by the free trade agreement. Costa Rica is furthermore becoming one of China’s primary destinations for investment and trade in Central America.

 

The China-Costa Rica FTA features a high degree of openness. Over 90 percent of goods trade between China and Costa Rica are enjoying zero tariffs on a stage-by-stage basis. For China, goods under the agreement are from textile industry, light industry, machinery, electronics, vegetables and fruits, automobiles, chemicals, as well as hide and leather. Costa Rica is enjoying benefits for the trade of coffee, beef, pork, pineapple juice, frozen orange juice, jam, fish powder, minerals and hides.

 

Georgia

Georgia was the first country in the Eurasian region, which negotiated an FTA with China. In terms of the liberalisation level of the agreement, a majority of trade in goods products of the two sides realized duty-free mutually, made high-quality market liberalisation commitments to the service departments, optimized trade rules and clarified the major fields to strengthen cooperation. The agreement covers trade in goods, service, intellectual property, and rules. The FTA with Georgia is an important step for China in regards to the Belt and Road strategy, as Georgia connects European and Asian relations in this transit region. After all, the Caucasus country aims to become a transit hub of trade between China and Europe.

 

According to the agreement, Georgia eliminates tariffs on 96.5 percent of Chinese exports, while almost 91 percent of China's imports from Georgia have become tariff-free. A further 3 percent will be exempted from tariffs within five years.

 

Georgia's main exports to China are copper ore, iron ore, nuts, wine, spirits, gold and semi-finished products. China ships construction machinery, manufacturing equipment, steel, electronics, textiles, garments and household appliances to Georgia.

 

Trade between China and Georgia amounted to USD717 million from January to September 2-16, while Georgia imported goods worth USD547 million from China in the same period, which is the country's fifth-largest trade partner after Canada, Turkey, Russia and Ireland, according to Georgia's statistics agency.

 

Iceland

Iceland was the first developed European country to recognize China as a full market economy as well as the first European country to negotiate a free trade agreement with China. The establishment of China-Iceland Free Trade is significantly promoting the mutually beneficial cooperation between the two countries, and facilitate the healthy development of bilateral economic and trade relations.

 

New Zealand

Covering such areas as trade in goods, trade in services and investment, the free trade agreement with New Zealand was the first comprehensive FTA that China has ever signed as well as the first FTA that China signed with a developed country. The two parties agreed to make efforts in launching the upgrading negotiation as soon as possible with practical attitude, through full consultation and in pursuit of win-win results.

 

The upgrading negotiation will cover many fields including service trade, competition policy, e-commerce, agricultural cooperation, environment, technical trade barrier, custom procedure cooperation and trade facilitation, as well as rule of origin, which will promote China-New Zealand FTA to upgrade to a higher level trade agreement.

 

The close bilateral relation brought the rapid growth of bilateral trade value. The annual growth rate of bilateral trade was over 15% since 2008. China has become the largest goods trade partner and the largest export market of New Zealand for several years in a row, and the largest import source of New Zealand for the past decade.

 

Pakistan

China and Pakistan reached the Free Trade Agreement in November 2006. The Agreement took effect in July 2007.

 

However, in recent times, Pakistan is pushing for a review of its relatively old free trade accord with Beijing before it moves toward further expansion and liberalization, amid a burgeoning trade and current account deficit.

 

China signed several bilateral and regional FTAs, which limited the benefit of preferences to Pakistan. China’s FTA with the Association of Southeast Asian Nations countries has also made the preferential treaty for Pakistan mostly irrelevant. For example, China charges 3.5% duty on the import of yarn from Pakistan under the FTA while it also charges the same duty on imports from India without any treaty.

 

Peru

The China-Peru Free Trade Agreement is the first comprehensive FTA China has signed with a Latin American country. At present, China has become Peru’s largest trade partner, largest export market and largest import source and Peru has become China’s fifth largest trade partner in the Latin American region.

 

The two countries representatives recently signed an MOU on Upgrading China-Peru Free Trade Agreement, announcing to launch the joint study on upgrading bilateral free trade agreement.

 

China recently overtook the United States as Peru's top trading partner. Bilateral trade was worth USD7.1 billion in the first half of 2017.

 

Singapore

The China-Singapore FTA came into force on Jan 1, 2009, and was the first comprehensive bilateral FTA that China has signed with an Asian country. According to the MTI, China is currently Singapore's third largest trading partner and the largest investment destination.

 

The two countries recorded USd66 billion in two-way trade 2016, representing 13% of Singapore’s global total. Singapore is also China’s second-largest investor, with USD6.18 billion invested in the country last year, according to official Chinese data.

 

South Korea

The China-South Korea FTA is a significant event along with the development of trade and economic relations. It is further expanding the bilateral trade and two-way investment, improve trade facilitation level, increase the predictability and transparency of two-way investment, promote the free flow of goods, capital and personnel between China and South Korea, and create easier, opener and fairer trade and investment environment.

 

During the last 25 years, solid economic links have made China-South Korea relations one of the most important bilateral relationships in Asia and in the world. In 2015, bilateral trade turnover hit USD227.4 billion.

 

South Korea exports to China more than any other nation in the world, its goods accounting for more than a tenth of the latter’s total imports. China’s share of South Korea’s total exports exceeds one fourth, twice as high as the share of the United States. Chinese goods comprise a fifth of South Korean imports, roughly equaling the share of American and Japanese goods combined. South Korea is among the top five foreign direct investors in China.

 

Switzerland

The agreement is one of the highest-level and most comprehensive FTA China has signed with foreign countries, besides being the first FTA that China signed with Continental European countries

 

Trade in goods enjoys a high zero-tariff ratio, and favourable mechanisms for bilateral cooperation in many fields including horologe are established. A number of new rules on environmental protection and intellectual property rights are also included. The agreement will further improve China-Switzerland economic and trade cooperation and deepen China-EU economic and trade cooperation.

 

On January 16, 2017, the representatives of the two countries signed The MoU on the Upgrading of China-Switzerland FTA, announcing that the joint study on China-Switzerland FTA upgrading was launched. Switzerland is one of the few European countries to enjoy a trade surplus with China, and the deal was China’s first with a continental European nation.

 

 


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