Asia’s Free Trade Agreements

Asia’s Free Trade Agreements

How is Business Responding?

ADBI series on Asian Economic Integration and Cooperation

Edited by Masahiro Kawai and Ganeshan Wignaraja

The spread of Asia’s free trade agreements (FTAs) has sparked an important debate on the impact of such agreements on business activity. This pioneering study uses new evidence from surveys of East Asian exporters – including Japan, the People’s Republic of China, the Republic of Korea and three ASEAN economies of the Philippines, Singapore and Thailand – to shed light on the FTA debate.

Chapter 4: People’s Republic of China

Zhang Yunling

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics


Zhang Yunling INTRODUCTION The People’s Republic of China (PRC) has emerged as a major player in the global economy and considers free trade agreements (FTAs) an important part of its global trading strategy. The PRC’s export industries are embedded in the existing regional and global production networks in that they rely on foreign direct investment (FDI) flows and external supplies of materials and intermediate goods. Immediately after its accession to the World Trade Organization (WTO) in December 2001, the PRC adopted a regional approach to trade and began taking part in FTAs. The PRC’s firms view FTAs as a way to increase their access to partner markets. Despite the government’s regional approach, PRC firms remain oriented toward traditional markets like the United States. As rebalancing of growth takes place, market orientation may shift toward the Association of Southeast Asian Nations (ASEAN) and regional markets and the use of FTAs may intensify. This chapter analyses the results of a survey of 232 firms in the PRC from October to December 2008 on the impact of FTAs. The survey addressed questions on FTA utilization, perceived costs and benefits, perceptions of multiple rules of origin and policy and institutional support mechanisms. This study produces several recommendations to increase FTA use on the part of PRC firms, including the expansion of support services for firms, the promotion of larger regional FTAs and the creation of more opportunities for collaboration between the government and the private sector. 4.2 FTA STRATEGY AND TRADE TRENDS The PRC...

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