Australia, S Korea FTAs bear fruit, still expanding
In a year of constant attacks on free trade and globalization, China's free trade agreements (FTAs) with Australia and South Korea have shed some light on the benefits of liberalizing trade, albeit with slow progress in certain areas due to a challenging global market.
The China-Australia FTA (ChAFTA) and the China-S Korea FTA, which both celebrated their first anniversary on December 20, have shown positive initial results in benefiting industries and consumers and helping strengthen bilateral trade, Shen Danyang, spokesman for the Ministry of Commerce (MOFCOM) told a briefing on Friday.
The ChAFTA has helped optimize the structure of China-Australia bilateral commodity trade and has sparked significant growth in the import and export of both countries' "superior products," Shen said.
In the first 11 months of the year, exports of China-made engines and power equipment to Australia grew by 143 percent year-on-year and exports of Chinese cranes and mobile transportation frames rose by 76 percent, according to Shen. During the same period, exports of Australian healthcare products to China grew ninefold and exports of fresh fruit from Australia doubled, he said.
Under the China-S Korea FTA, bilateral trade "basically remained stable," however trade in certain areas saw very fast growth, the MOFCOM spokesman said.
In the first 11 months, exports of Chinese beverages and vinegar to South Korea rose by 80.3 percent year-on-year, and exports of cooper and related products grew by 117.2 percent. Also in the same period, South Korean fishery product imports to China were up 35 percent year-on-year, while imports of some cosmetics increased 59 percent, according to Shen.
Though the FTAs haven't been able to reverse declines in overall China-Australia and China-South Korea bilateral trade, they have brought improvements that are benefiting industries and consumers in all three countries, Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Sunday.
In the first 11 months of 2016, South Korea's exports to China dipped 10.9 percent year-on-year, while imports from China declined 4.8 percent, the Korea Times reported on December 19.
In the 2015-16 fiscal year, Australia's merchandise exports to China fell 0.3 percent from the 2014-15 fiscal year, however imports from China rose 7.7 percent on year, according to official data.
"The FTAs no doubt helped bilateral trade, but under the weak global trade conditions, it couldn't reverse the downturn trend," Bai said. "But the benefits for industries and consumers are real."
The FTAs are also helping other aspects of the countries' economies such as bilateral investments and economic cooperation, said Chen Fengying, an expert at the Institute of World Economics Studies under the China Institute of Contemporary International Relations.
From January to September, Chinese non-financial investment to Australia grew by 73.3 percent year-on-year to .79 billion, and in South Korea non-financial investment rose 60.7 percent to 0 million in the first 11 months of the year, according to Shen, the MOFCOM spokesman.
"They are trade deals, but we have to look at them from a more broad perspective," Chen told the Global Times on Sunday. The ChAFTA and China-Korea FTA will bring the three economies closer and help facilitate regional and global trade.
Further benefits from the FTAs are anticipated, as more tariff cuts under the agreements are expected in the beginning of 2017, according to experts.
"The FTAs have only been implemented for a year, and not all agreed terms went into effect this year," Bai said. "It's a gradual process and the FTAs will be expanded over the years, with more tariff cuts and other trade facilitating measures."
The Chinese government has already announced a new round of tariff cuts under a slew of FTAs, including the ChAFTA and the China-S Korea FTA, which will go into force on January 1, according to the MOFCOM website.
Starting on January 1, tax rates will be lower on a number of imported commodities, including hydraulic actuators for aircrafts, and tuna and arctic shrimp, the Ministry of Finance said in a statement on Friday.