Updated: January 3, 2024 10:26 Xinhua
The expansion of China's free trade agreements with multiple countries will enhance the competitiveness of its products globally and facilitate its companies' entry into more markets this year, said analysts and exporters on Tuesday.
With the China-Nicaragua FTA — China's 21st free trade deal with another country — taking effect on Monday, they said multilateral and bilateral FTAs can be powerful tools to boost China's foreign trade. FTAs, they said, can help open up new markets, streamline trade procedures, bolster economic diversification and adapt to new global trade norms this year.
For instance, the China-Nicaragua FTA marks the first time China opened up its cross-border trade in services and investment through a negative list. This list specifies the industry sectors that are off limits to foreign investors. Global businesses can operate in any sector that is not on the list, according to information released by the Ministry of Commerce.
The negative list facilitates greater economic liberalization, said Cui Fan, a professor of foreign trade at the University of International Business and Economics in Beijing.
"As China and Singapore have made notable progress to further upgrade their FTA in recent years, the upgraded version of the China-Singapore FTA may become the second agreement to adopt a full negative list approach between China and other countries," Cui said.
About 60 percent of goods in the China-Nicaragua trade are now exempt from tariffs, and the tariffs on over 95 percent will be gradually reduced to zero.
Guo Fangkun, director of the administration office at Shandong Cachland Tyres Co Ltd, a Linyi, Shandong province-based tire manufacturer, said the China-Nicaragua FTA has lowered the tariff rate for Nicaragua's tire imports from 10 percent to 9 percent, and will eventually reach zero.
"Based on our projected sales worth 4 million yuan ($560,632) to Nicaragua in 2023, we can expect to save nearly 40,000 yuan in tariffs this year," said Guo.
China and Nicaragua saw their trade value surge more than 11 percent year-on-year to 88.62 billion yuan in the first 11 months of 2023, data from the General Administration of Customs showed.
Even though the size of the China-Nicaragua FTA does not compare with mega free trade deals such as the Regional Comprehensive Economic Partnership pact, the importance of FTAs with smaller economies cannot be underestimated, said Wu Hongmei, director of tariff department at the Ministry of Finance. China's trade volume with Serbia and Ecuador, she said, would grow after they finalize their domestic procedures for bilateral FTAs this year.
To further enrich bilateral business ties, China signed FTAs with Serbia and Ecuador in 2023. Once these FTAs come into effect, as much as 90 percent of the goods traded between China and Ecuador will be exempted from tariffs, while 60 percent of them will immediately enjoy zero tariffs, data from China's Ministry of Commerce showed.
As for the FTA with Serbia, around 10,500 Serbian and 9,000 Chinese products are on the free trade list, meaning there will be no import duties on trading those items between the two countries.
To expand high-standard opening-up and make better use of the resources and markets both domestically and internationally, China started to implement provisional import tariff rates lower than the most-favored-nation rates on 1,010 items on Monday, according to a statement issued by the Customs Tariff Commission of the State Council.
China had signed 22 FTAs with 29 countries and regions, covering Asia, Oceania, Latin America, Africa and Europe by the end of 2023. The country's trade with these free trade partners accounts for one-third of its total foreign trade, said the Ministry of Commerce.
By combining unilateral tariff cuts with reciprocal tariff reductions through FTAs, China aims to expand its degree of opening-up, and further advance trade and investment liberalization and globalization, said Gao Lingyun, a researcher at the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences.
