File Photo:VCG

Bilateral trade between China and Ecuador may enter a golden period of fast growth as the two countries take a further step toward signing a free trade agreement (FTA).

China and Ecuador formally began negotiations for a free trade deal, following the conclusion of a feasibility study in January, China's Ministry of Commerce (MOFCOM) announced on Sunday.

The development on Sunday marked an important step on the trade relations between the two countries as another Latin American country steeres its path to ride on China's development. Ecuador's efforts are to secure a golden key for its products to enter China's vast market of 1.4 billion consumers which greatly demand its seafood, crude oil and agricultural products.

According to trade data, after Chile, Peru and Costa Rica signed free trade agreements, their bilateral trade with China expanded by double digits annually.

China's trade with Ecuador already bucked the negative impacts of the coronavirus. In 2021, bilateral trade reached $10.95 billion, an annual increase of 44.5 percent. Trailing the US, China has been Ecuador's second largest trade partner for two consecutive years. The rapid growth is in part due to bilateral cooperation in fighting the virus which has allowed the country to have one of the highest inoculation rates in Latin America.

China is already the largest market for Ecuadorian frozen shrimps and prawns accounting for 46 percent of all its exports. In 2021, Ecuador's shrimp exports soared up 41 percent year-on-year to $5.09 billion yuan, according to data from the Ecuadorian Aquaculture Association. 

That explosive growth of Ecuadorian shrimp exports to China is a direct result of China's lowering relevant import tariffs on the product. A FTA deal in the foreseeable future will definitely increase trade of these traditional products although more items will benefit from the trade deal.

For instance, China's trade with Chile accounted for 20 percent of Chile's total foreign trade in 2012. By 2020, the figure jumped to about 33 percent. Chile is also the first Latin American country to enjoy an upgraded version FTA with China.

The trade agreement is also set to boost investment and cooperation in digital economy and green development.

FTAs expand trade and investment between countries and recent experience has shown that China's trade with its FTA partners was far more resilient than with non-FTA trade partners under the economic onslaught of the COVID-19 pandemic. Having a FTA will provide a cushion for bilateral trade in the post-virus world.

In 2020, even as the pandemic decimated global trade by 8 percent, China's trade with its FTA partners actually increased by 3.2 percent, data from MOFCOM show. 

On the same day of MOFCOM's communication, China and Argentina announced they signed a Memorandum of Understanding on the Belt and Road Initiative, agreeing to continue to expand trade.

It is no coincidence that increasing numbers of Latin American countries are working with China on pragmatic cooperation as this helps countries brace for headwinds.