China Vice Minister lauds Sri Lanka free trade moves; says FDI needed for exports
ECONOMYNEXT – China’s Vice Minister of Commerce Wang Shouwen praised Sri Lanka’s plans to freer trade and said joining a global information technology agreement and foreign direct investment was vital for countries looking for fast export growth.
A series of free trade agreements outlined by Sri Lanka’s Prime Minister Ranil Wickramasinghe was praiseworthy, he said.
"It is very important for developing economies to actively join in regional economic integration efforts," Vice Minister Wang told World Export Development Forum sessions in Colombo.
"…It is a meritorious effort by Sri Lanka to initiate several important FTAs with other countries," he said referring to Prime Minister Ranil Wickremesinghe’s comments on planned free trade agreements with Singapore and China, and economic deals with India and China.
"FTAs between countries with different levels of development promote industrial co-operation, trade and investment flows to the benefit of all participants," he said.
Wang said ‘open and transparent’ FTAs with individual countries supplemented the World Trade Organization’s efforts, but was not a substitute.
China was actively engaging with the WTO, he said.
Signing the World Trade Organization’s Information Technology Agreement was vital for countries to join global value chains (global production networks), he said echoing calls by top economists.
In China and the rest of East Asia, components particularly in electronics are manufactured in different countries with low unit value added but in large volumes, and finally assembled in China or Vietnam, where there are large labour pools.
"Developing countries integration into global value chains produces opportunities to access international markets," Wang said.
"Joining the Information Technology Agreement in the framework of the WTO has been very helpful for local companies to participate and move up the ladder."
ITA allows free trade in electronic goods.
He said the Asia Pacific Trade Agreement (Bangkok Agreement), which covered Sri Lanka, China, India and Bangladesh, had reduced tariffs by a small portion.
China has concluded FTAs with 32 countries and regions, Wang said. The partner countries have seen increased trade with China, he said.
Foreign Direct Investment
A key driver of trade was foreign direct investment, he said.
"FDI brings not only money, markets and technological know-how, but also the latest ideas in management that helps drive indigenous innovative growth in host countries."
China had more than 850,000 foreign firms, which had invested $1.7 trillion in the country.
"These FDIs account for about half of China’s trade, 44 percent of China’s exports, 10 percent of tax revenues, 40 percent of total employment."
Sri Lanka is also joining the China mooted One Belt One Road (OBOR) scheme, Prime Minister Wickramasinge said.
Wang said countries in the OBOR had greater economic links with China than others. (Colombo/Oct13/2016 – update II – CORRECTED "These FDIs account for about half of China’s trade, 44 percent of China’s exports, 10 percent of tax revenues, 40 percent of total employment." )