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China’s Free Trade Agreements Framework

China has established its strategic position in the world, in part due to its signing of numerous and advantageous free trade agreements. The duty and tax reductions provided by FTAs, has helped enable China’s rise as the leading world manufacturing hub in recent decades.


Did You Know
A Free Trade Agreement (FTAs) is a type of agreement utilized by two or more countries in order to agree on the terms of trade between them. Such agreements determine the value of tariffs and duties that countries impose on imports and exports.

List Free Trade Agreements

In total, China has signed off 23 FTAs, which involve a total of 26 countries and regional blocs (including ASEAN, comprising 10 nations). A further 10 FTAs are currently under negotiation, while 8 more are under consideration.

Countries/Regions Having FTAs with China

FTA

Countries

Status

China-Ecuador FTA

Ecuador

Signed

China-Nicaragua FTA

Nicaragua

Early harvest arrangement signed

RCEP

ASEAN (10), China, Japan, South Korea, Australia, New Zealand

Signed and effective

China-Cambodia FTA

Cambodia

Signed and effective

China-Mauritius FTA

Mauritius

Signed and effective

China-Maldives FTA

Maldives

Signed

China-Georgia FTA

Georgia

Signed and effective

China-Australia FTA

Australia

Signed and effective

China-Korea FTA

South Korea

Signed and effective

China-Switzerland FTA

Switzerland

Signed and effective

China-Iceland FTA

Iceland

Signed and effective

China-Costa Rica FTA

Costa Rica

Signed and effective

China-Peru FTA

Peru

Signed and effective

China-Singapore FTA

Singapore

Signed and effective

China-New Zealand

New Zealand

Signed and effective

China-Chile FTA

Chile

Signed and effective

China-Pakistan FTA

Pakistan

Signed and effective

China-ASEAN FTA

Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam

Signed and effective

Mainland and Hong Kong Closer Economic and Partnership Arrangement

Hong Kong

Signed and effective

Mainland and Macao Closer Economic and Partnership Arrangement

Macao

Signed and effective

China-Taiwan ECFA

Taiwan

Signed and originally expired in September 2020

FTAs Under Negotiation

Partnering Country

Agreement name

Status

Gulf Cooperation Council member states (GCC)

China-GCC FTA

Negotiations launched

Israel

China-Israel FTA

Negotiations launched

Japan-South Korea

China–Japan–South Korea FTA

Negotiations launched

Korea

China-Korea FTA second phase

 

Moldova

China-Moldova FTA

Negotiations launched

Norway

China-Norway FTA

Negotiations launched

Panama

China-Panama FTA

Negotiations launched

Palestine

China-Palestine FTA

Negotiations launched

Peru

China-Peru FTA upgrade

 

Sri Lanka

China-Sri Lanka FTA

Negotiations launched

China’s major Free Trade Agreements

Here we discuss the advantages of China’s major free trade agreements.

RCEP

The Regional Comprehensive Economic Partnership, signed by 15 Asia-Pacific countries – China, Japan, South Korea, New Zealand, Australia, and the 10 Association of Southeast Asian Nations (ASEAN) member states – is the world's’ largest free trade agreement.

WATCH

The RCEP Advantage Part 4 – The Future of Trade in China

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The primary aim of the RCEP is to establish a comprehensive economic partnership based on existing bilateral ASEAN agreements with its FTA partners in the region. It is guided by a uniform set of rules and standards, lowered trade barriers, streamlined processes, and improved market access.  

RCEP will provide substantial new trade and investment opportunities within the participating countries, covering roughly 30 percent of the global GDP (US$26.2 trillion) and 30 percent of the world’s population to form Asia’s largest trade bloc to date.

China-ASEAN FTA

The China-ASEAN FTA eliminates import-export tariffs and other barriers on some 90 percent of all products traded between China and the ASEAN member states. The signing of the China-ASEAN FTA, followed by the RCEP agreement, would have a significant impact on China and Asia's’ development in global sourcing and the foreign investment.

CEPA between mainland and Hong Kong/Macao

To address differences concerning tariffs and duties, China structured the Closer Economic and Partnership Arrangement (CEPA) with Hong Kong and Macao. These CEPA agreements provide a number of incentives for businesses from each Special Administrative Region to invest in mainland China, irrespective of beneficial ownership. These include permitting fast-track investment into industry sectors in China still restricted to foreign investors, as well as large service industry concessions.

A qualifying period and minimal tax contribute requirements are essential in either Hong Kong or Macao.

CEPA regulations allow foreign businesses to acquire a Hong Kong business and utilize it to participate in markets that are subject to restrictions on total foreign ownership in mainland China in some industries (primarily the services sector).

China-Singapore FTA

Under the China-Singapore FTA, the two countries accelerated the liberalization of trade in goods based on the Agreement on Trade in Goods of the China-ASEAN FTA. However, the Singapore agreement goes beyond the China-ASEAN FTA in liberalizing trade in services between the two countries. Singapore investors should examine both the China-ASEAN FTA and the China-Singapore FTA to fully comprehend the numerous benefits available to them under these respective agreements with China.

China-Republic of Korea (ROK) FTA

The China-ROK FTA aims to further expand bilateral trade and two-way investment, improve trade facilitation levels, and increase the predictability and transparency of two-way investment. It also strives to promote free flow of goods, capital, and personnel between China and ROK, and create an easier, opener, and fairer trade and investment environment.

Bilateral Investment agreements (BITs)

China currently has a total of 107 BITs in force - including Austria, the Belgium-Luxembourg Economic Union, Canada, France, Germany, Italy, Japan, South Korea, Spain, Thailand, and the United Kingdom. Another 17 BITs are under negotiation.

BITs are signed between two countries or regions that set out terms and regulations for private investors in the partner country. 

China’s bilateral trade agreements seek to promote and facilitate bilateral foreign investment by protecting foreign investors from unfair treatment in the host country. This helps ensure they can enjoy the same rights as domestic investors for the scope of investments detailed in the agreement.

Did You Know
Among others, BITs are a useful starting point to clarify legal and tax treatments under bilaterally agreed conditions and should be understood as a bilateral document of first resort when understanding the investment environment, and protection mechanisms that China offers its many trading partners.

Countries/Regions Having BITs with China (as of March 2022)

Algeria

Mali

Argentina

Guyana

Cameroon

Mauritius

Barbados

Jamaica

Cape Verde

Morocco

Bolivia

Mexico

Democratic Republic of Congo

Mozambique

Canada

Peru

Egypt

Nigeria

Chile

Trinidad and Tobago

Ethiopia

South Africa

Colombia

Uruguay

Equatorial Guinea

Sudan

Cuba

Papua New Guinea

Gabon

Tanzania

Australia

Lithuania

Ghana

Tunisia

New Zealand

Macedonia

Madagascar

Zimbabwe

Albania

Malta

Armenia

North Korea

Austria

Moldova

Azerbaijan

Oman

Belarus

Netherlands

Bahrain

Pakistan

Belgium/Luxembourg

Norway

Bangladesh

Philippines

Bosnia and Herzegovina

Poland

Cambodia

Qatar

Bulgaria

Portugal

Georgia

Saudi Arabia

Croatia

Romania

Iran

South Korea

Cyprus

Russia

Israel

Sri Lanka

Czech Republic

Serbia

Japan

Syria

Denmark

Slovakia

Kazakhstan

Tajikistan

Estonia

Slovenia

Kuwait

Thailand

Finland

Spain

Kyrgyzstan

Turkey

Germany

Sweden

Laos

Turkmenistan

Greece

Switzerland

Lebanon

United Arab Emirates

Hungary

United Kingdom

Malaysia

Uzbekistan

Iceland

Ukraine

Mongolia

Vietnam

Italy

 

Myanmar

Yemen

Latvia

 

Double Tax Avoidance agreements (DTAs)

Double Tax Avoidance Agreements treaties effectively eliminate double taxation by identifying exemptions or reducing the amount of taxes payable in China.

Global investors often find themselves in an unfavorable position of having to face being double taxed – taxed by two different countries on the same income – unless there is a double tax avoidance agreement in places. For example, a company might be subject to taxes in its country of residence and also in the countries where it raises income through foreign investments for the provision of goods and services.

It is therefore extremely worthwhile for foreign investors to be aware of which double taxation avoidance agreements (DTAs) between China and other countries might be applicable to their situation, as well as understand how these agreements are applied.

As of 2022, China has signed DTAs with 110 countries or regions.

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