Sri Lanka and China have embarked on a joint feasibility study of a Free Trade Agreement (FTA) and an agreement is expected to be sealed by the end of the year according to a number of reports in the media recently. However, there has been little analysis or discussion about the potential for trade expansion under a Sri Lanka-China FTA beyond general statements on how it would potentially boost bilateral trade. This blog takes a first attempt at addressing this gap.
China’s rebalancing towards consumption will have positive impacts for those looking to sell into the Chinese market, with the right products at the right price. With a booming Chinese middle-class, there could be niche markets available for Sri Lankan exporters. Overall, it will be interesting to see how China’s rebalancing pans out. The global economy’s reaction to it will certainly give a good indication of to what extent China’s economy is now ‘systemically important’ than before. But whichever side you’re on – the panda-huggers or dragon-slayers, one thing is clear – the Sri Lankan private sector and policy planners must keep a close eye on the developments in the Chinese economy.