China and Switzerland sign free-trade pact

PUBLISHED : Sunday, 07 July, 2013, 12:00am
UPDATED : Sunday, 07 July, 2013, 5:50am

China and Switzerland yesterday signed a free-trade agreement (FTA) - Beijing's first with a nation in continental Europe - in a deal that comes against a backdrop of trade tensions between the Asian giant and the European Union (EU).

Commerce Minister Gao Hucheng and Swiss Economy Minister Johann Schneider-Ammann toasted champagne at the Commerce Ministry in celebration of the agreement, which aims to increase the US$26.3 billion in bilateral trade they recorded in 2012.

China in April signed its first FTA with a European country - non-EU member Iceland - but yesterday's deal marks the first with an economy in mainland Europe.

The deal would facilitate Switzerland's efforts to become an offshore yuan trading centre in Europe, competing with Frankfurt and London to corner trade in the currency.

"It is in Swiss interest to have a renminbi hub in the centre of Europe," Schneider-Ammann said. While no official talks have taken place, the minister hoped the idea would become "more serious" in the coming weeks or months.

Leaders of the world's second-largest economy are promoting greater use of the yuan in international trade and finance to decrease the country's dependence on the US dollar and move toward making the currency convertible for investment purposes. Zurich is vying with London, Paris and Frankfurt for the top spot in Europe.

"The Swiss side, the Swiss financial system, in particular the Swiss National Bank, we are interested in getting the chance to negotiate with the Chinese about a renminbi hub in the centre of Europe, in Switzerland," Schneider-Ammann said.

"This free-trade agreement has an important significance for the relationship between the two countries."

Agence France-Presse, Bloomberg