BEIJING (AFP) — China signed a free-trade agreement with Singapore on Thursday, its seventh such pact widely seen as aimed at building political as well as commercial ties with other countries.
Chinese Premier Wen Jiabao and Singaporean Prime Minister Lee Hsien Loong witnessed the signing ceremony in Beijing, with Singapore hailing the deal as a an economic boon for the tiny Southeast Asian city-state.
"China is one of the largest and fastest growing markets in the world," the Singaporean government said in a statement.
"The agreement will enhance Singapore companies' access to the vast Chinese market and further boost our excellent bilateral trade and investment relations."
Singapore's trade with China climbed to a record high of 91.6 billion Singapore dollars (62 billion US) last year and Thursday's agreement, due to come into force at the start of 2009, was sure to see that rise further.
China is already Singapore's third largest trading partner and biggest investment destination. Singapore is China's eighth-largest trading partner.
Under the agreement, Singapore will abolish tariffs on all products imported from China from the beginning of 2009, the Chinese commerce ministry said in a statement.
In return, China will reduce the tariff to zero on 97.1 percent of goods imported from Singapore by January 1, 2012, it said.
The Singaporean government said all goods from the city-state, except for about 260 products, would enjoy tariff-free access to China by 2010.
These make up about 95 percent of Singapore's exports to China, with petrochemicals, processed foods and electrical products among the key items.
Singapore also pointed out the agreement sought to open up various services sectors beyond World Trade Organisation commitments.
"The sectors for which Singapore gets preferential access include business services and hospital services," the Singaporean government said.
Song Seng Wun, a Singapore-based regional economist with CIMB-GK Research, said the FTA with China was of particular benefit to Singapore as it sought to cope with the economic downturn and climb out of recession.
"Singapore is heavily dependent on external demand for goods and services," Song told AFP.
"If there is a country on Mars, Singapore would have been the first to sign an FTA with the Martians."
For China, it is another box ticked in its campaign over the past decade to pursue free-trade deals that go beyond its WTO commitments, especially in Asia.
Thursday's deal is China's seventh free trade agreement, a Chinese commerce ministry official told AFP.
In April, New Zealand signed a free-trade agreement with Beijing, making it the first developed economy to enter such a pact with the Asian giant.
China is also aiming to set up the world's largest free trade area with the 10 member Association of Southeast Asian Nations by the end of the decade.
Other nations China is in free trade talks with include Japan, South Korea and Australia, as well as Russia and some Central Asian states.
Jia Qingguo, vice dean with the school of international relationship at Beijing University, said the FTAs with Singapore and other nations were a good way for China to build warmer political relations.
"The symbolic, or political, significance is probably more important in terms of signing an FTA with Singapore," Jia said.
"It will certainly bring economic benefits... but it will also help build a closer relationship for political cooperation. FTAs give a sense of economic integration, which requires closer political cooperation."
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