China has undeniable importance in the global market, as the country has grown to be the top trade partner with many countries in the world. China's international trade is strongly backed by the country's growing FTA Network (Free Trade Agreement Network). An FTA Network is made up of countries who have signed an FTA with one another.
Goals of FTAs:
- Reducing trade barriers
- Increasing multilateral trade
- Lower tariffs
- Increased transparency
- Ease the flow of products
(The following data can be found on mofcom.gov)
Countries/regions that have signed and implemented FTAs with China:
- Republic of Korea
- Costa Rica
- New Zealand
- Mainland and Hong Kong
- Manland and Macau
Countries/regions that have FTAs under negotiation:
- Gulf Cooperation Council
- Japan – Korea
- ASEAN FTA Upgrade Negotions
- Sri Lanka
Countries/regions that have FTA's under consideration:
Trade Between China and the United States
The United States and China have negotiated trade relations for decades. In 2015, President Obama and President Xi Jinping held a meeting in Washington D.C. to discuss a possible trade and investment deal. The press release published by the White House outlining the commitment each side had made is available for view online. However, a formal FTA has yet to be signed.
While the United States does not have an FTA with China, the economy of each country is deeply intertwined with the economy of the other. According to the Office of the United States Trade Representative's website, in 2015 alone, the good and services exchanged between the two countries totaled $659.4 billion. Exports from China to the U.S. were $161.6 billion; imports were $497.8 billion, leaving a deficit for the United States of $336.2 billion.
The total trade between China and the U.S. are divided in two categories: goods and services.
In 2015, the exchange of goods totaled $598 billion. Goods exported from China to the U.S. totaled $598 billion, whereas goods imported to China from the US totaled $116 billion in comparison. In 2015, the trade deficit for the United States for the goods exchanged between the two countries was $366 billion.
In the same year, the exchange of services totaled approximately $61.3 billion. China's exports of services totaled $15.9 billion. Meanwhile, imports from the U.S. totaled $45.4 billion. In regards to services for 2015, the United States had a surplus with China of $29.5 billion.
The service surplus from the U.S. to China is logical, almost expected, as the United States moves away from its manufacturing past to be the service economy it is involving into today. The question now is: How do we develop our services into something more profitable? How do we close the surplus-deficit gap between goods and services exchanged by not only China, but also other top trade partners of the United States?
In 2015, the U.S. had a goods and services trade deficit with China of $336.2 billion. With such a deficit, the United States could benefit greatly from an FTA. As we grow to rely on products imported from China, an FTA would help to ensure costs remain low and supply and demand remain high. Additionally, this would build much needed trust between the two nations, allowing for more businesses to expand.
China in the Global Economy
According to Trading Economics of the world economy, China made up 17.53 percent in 2015. Their total economy was estimated to be worth $10,866.44 billion.
With China's growth in the world economy, the increasing list of countries signing Free Trade Agreements does not come as a surprise. Look for more to find their way on the list in the coming years.
"China FTA Network." mofcom.gov. 10 Jul. 2016. Web. 8 July. 2016
"China GDP." Trading Economics. Web. 9 Jul. 2016.
"FACT SHEET: U.S. -China Economic Relations." The White House. 25 Sept. 2015. Web. 9 Jul. 2016.
Mauldin, William and Magnier, Mark. "U.S., China Make Progress Toward Trade and Investment Deal." The Wall Street Journal. 25 Sept. 2015. Web. 9 Jul. 2016.
"The People's Republic of China." ustr.gov. 8 Jul. 2016.