China is seeking to establish more free trade agreements (FTAs) with developed countries and regional neighbors as part of efforts to transform its economic model into one driven by domestic consumption. Free trade agreements lower the cost of imports.
The nation is also leveraging on the FTAs to project a global presence that is less threatening and more friendly to its trading partners amid worries in the developed world, including the United States and the European Union, that its rise as an economic power is more harmful than beneficial.
Currently, China is holding negotiations with 31 countries for 18 free trade deals. It has signed FTAs with 12 countries and organizations, including the Association of Southeast Asian Nations (ASEAN), Iceland and Switzerland, and is in talks with six economies, including South Korea, the Gulf Cooperation Council and Australia, the commerce ministry said in a statement on Dec. 4.
In the near future, China also plans to hold discussions for the China-South Korea FTA, China-South Korea-Japan FTA and Regional Comprehensive Economic Partnership. It is also seeking to upgrade its FTA with the ASEAN as the region is emerging as a new engine of global economic growth.
China’s small and medium-sized enterprises as well as large private firms want to expand overseas in a bid to boost their business scale. The government believes that its efforts to forge more FTAs will ultimately benefit these firms.
A global network of FTAs will mean more goods and services are traded and investment flows are facilitated.
China’s rise as a global economic power has been raising concerns among incumbent powers. US President Barack Obama’s strategy to shift its focus back to the Asia-Pacific is a manifestation of this concern.
He has also proposed the establishment of a Trans Pacific Partnership, a sort of trade bloc with nations friendly with the US, in an apparent bid to compete with China in winning over the region economically.
South Korea, China’s neighbor and a close American ally, has expressed interest in joining the TPP, even as it is in the thick of discussions with China for an FTA.
Beijing has handled the situation diplomatically, indicating that it doesn’t see the TPP move as having any bearing on plans to establish a China-South Korea FTA or a China-Japan-South Korea FTA. Any impact will depend on South Korea’s specific moves to join the TPP and the progress of the FTA discussions.
China has an “open attitude” toward the TPP and welcomes any regional trade pacts as long as they can boost regional economic integration, the commerce ministry said.
Meanwhile, FTA talks between China and Australia have been going on for eight years with more than 19 rounds of negotiations conducted. Australian Mining Minister Ian Macfarlane has said his country aims to sign an agreement in the first half of 2014.
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