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Imports set to soar on China-Peru FTA
By Ding Qingfen and Bao Chang (China Daily)
Updated: 2010-03-02 11:07
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BEIJING - China's imports of resource-related products from Peru, especially copper and iron ore, will see faster growth this year thanks to the China-Peru Free Trade Agreement (FTA) which came into effect on Monday.
The FTA is eighth that China has signed so far, and it is the second with a Latin American country, following Chile in April 2008.
"China-Peru trade will see robust growth as a result of the agreement, higher than the level registered before the global economic crisis," Zhu Hong, deputy director of the Ministry of Commerce's Department of International Trade and Economic Affairs, told China Daily.
In 2008, bilateral trade reached $7.5 billion, up 24 percent year-on-year. But the figure dropped to $6.4 billion in 2009 due to the global economic crisis.
This is the second time China has signed a package of agreements including commodities, services and investment under the FTA framework, following the one with New Zealand in April 2008.
Under the China-Peru FTA, tariffs on 60 percent of commodities were scrapped from Monday, and tariffs on another 30 percent will be gradually reduced to zero in five to 10 years.
China has long had a trade deficit with Peru due to its huge demand for resource-related products, such as copper and iron ore, which account for more than 80 percent of imports from the South American nation.
While both the bilateral trade and exports decreased in 2009, the trade deficit, increased to $2.2 billion from $1.9 billion in 2008, according to the ministry.
Due to China's continuously growing demand for the commodities and the rising prices, the nation's imports will increase and the trade deficit situation will "remain for sometime", said Zhu.
"China isn't intentionally seeking a trade balance with some specific regions, but we expect that exports to Peru could get a lift as a result of the FTA," he added.
Harold Forsyth, Peru's ambassador to China, said Chinese imports will grow, predicting that "by 2015, Peru's exports to China will reach $15 billion", 3.5 times that in 2009. But "Peru will try to increase investment in China to narrow the deficit".
"The FTA is an efficient weapon to resist or scale down regional trade protectionism," said Zhu.
Major target
China has been a major target of trade remedy cases worldwide during the past two years, launched particularly by the United States and the European Union.
Before China and Peru initiated FTA talks in 2008, Peru annually launched "two to three" trade remedy cases against China, but now, there are "none", Zhu said.
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But FTA talks with developed nations are always "more complicated" as "more issues are at stake", Zhu said.
China and Australia began FTA in May 2005. Although the two sides have yet to reach a consensus, the ministry revealed on Monday that "substantive progress" had taken place in the talks.
China-South Korea FTA talks remain in limbo although an earlier feasibility study has shown that an FTA will benefit both sides.
