Beijing takes a strategic approach on free trade agreements, particularly in the face of challenges such as the TPP.
By Xiaoming Pan
June 01, 2014
The past decade saw China become deeply integrated into the global economy, following its accession to the World Trade Organization in 2001. In addition to removing trade barriers as a member of the multilateral trading system, China had concluded 14 free trade agreements (FTAs) as of April 2014, with neighboring countries and key trading partners. Recent trends suggest that China views FTAs as vital to achieving its economic, political, and strategic interests in the global context.
This post explores the motivations of China’s promotion of FTAs, and examines its FTAs to highlight underlying trends and the future strategies Beijing may pursue in the face of the challenges posed by mega-regional trade deals such as the Trans-Pacific Partnership (TPP) and Regional Economic Comprehensive Partnership (RCEP.)
FTA Strategies
China is keen to conclude more FTAs with its trade partners to lower tariffs and gain market access in order to boost the competitiveness of its exports. FTA provisions that clarify rules of origin and simplify customs procedures have facilitated trade between China and its trading partners. Over the past decade, tariff reductions coupled with the China’s tax exemption on imported raw materials and other inputs used for export goods have played an important role in China’s rise as a global production network hub. Consequently, multinational enterprises have set up business in China, helping integrate it into global production networks. The role of FTAs in bolstering China’s status within production networks is another incentive for Beijing to pursue more trade deals with more countries.
The FTAs signed by China 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. FTAs serve as a stabilizing factor in developing and maintaining peaceful relations with neighbors. And they are a useful card for China to play in strengthening bilateral ties.
Assessing China’s Trade Deals
China has one of the busiest FTA programs in Asia. Agreements in place include FTAs with countries such as Chile, Costa Rica, New Zealand, and Switzerland. Meanwhile, FTAs now in the pipeline will boost China’s economic integration with Australia, Japan, the Republic of Korea, Norway, and the Gulf Cooperation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates.

