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Free Trade Agreements, a force for change.

As part of it`s continued efforts to reduce the dominance of the US dollar for International trading and increase its own export growth, China is to increase the pace of its free trade negotiations in 2015.



China will launch Free Trade agreement (FTA) negotiations with Israel and initiate FTA feasibility studies with Colombia, India, Nigeria, Nepal, Maldives and the South Pacific island nations. FTA`s help companies to both diversify their business` and increase their exposure to global markets as well reducing basic cost of goods due to the removal of tariffs: the New Zealand dairy industry is reported to have achieved a fivefold growth as a result of the China-New Zealand FTA.



Currently standing at some 2.32 trillion USD (2014) the slowdown in export growth in China is seen as a clear risk to the stability of the economy in 2015. With the deterioration of international consumption, low global employment rates and rapidly increasing competition from Asia: China has realized it must complete a restructuring to its manufacturing base. Key to stabilizing this slowdown is increasing the number of FTA`s, pushing the Chinese currency to play a bigger role in foreign trade, developing new trading routes in neighboring regions, and exporting more value added products onto the global market.



FTAs are also of significance to its foreign policy. While strengthening economic ties with its trade partners, China is able to maintain friendly and cooperative relations with many countries. Most FTAs include provisions calling for dialogue and cooperation among the trade pact parties.



Currently China has FTA`s will the following countries: Chile, New Zealand, Pakistan, Singapore, Peru, Costa Rica, Iceland, Switzerland,


Negotiations have concluded with: Australia (expected to be signed in May 2015) and South Korea


Info Graphic Source:


FTA`s currently under negotiation with: The Gulf Cooperation Council, Norway, Sri Lanka


And is undertaking feasibility studies with: India, Colombia, Israel, Moldova, Nigeria, Nepal, Maldives and the South Pacific Island Countries.



A further force for change is the rapid growth of the 12 member Trans Pacific Partnership, dominated by the USD and US financial policy: seen by China as restricting its exports due to currency issues.



In order to protect the value of the RMB China must encourage more use of its currency in international trade, swap arrangements between central banks, bank deposits and bond trades. The aim being, implementation of currency settlement agreements, effectively promoting more currency exchanges between different markets to stimulate export and reduce foreign governments dependence on the USD.


China is now demonstrating a greater determination to engage in a higher level of liberalization of trade and integration with its trade partners. FTAs are bolstering China’s status within global production networks and integrating it within the global hub.




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