The free trade regime introduction between Georgia and China raises questions in several directions: First, will Chinese imports sweep out domestic production? Secondly, what kind of investments will China make in Georgia? And How competitive are Georgian products in the Chinese market and will Georgia’s exports-imports balance with China grow or decline?
Let’s answer these questions in the suitable order:
The free trade regime introduction with China will flood the Georgian retail network with Chinese products and domestic production will bear serious losses in terms of sales. Similar assessments are frequently outspoken in our society. Should we expect real threats in this direction? The Chinese production with huge enterprising potential and low fixed expenditures will always defeat Georgian enterprises, economics expert Emzar Jgerenaia asserts.
This is a significant challenge for the Georgian business, because Chinese products are competitive with low prices and fixed expenditures… Therefore, we should determine what problems may be created to our enterprises in terms of competition. Moreover, Chinese products have been already widely represented in the Georgian market. Everything is labeled by MADE in CHINA. Georgian market is open for China, in practice. Therefore, no particular threats should be expected.
-Emzar Jgerenaia noted.
What sort of investments should Georgia expect? The Chinese party plans to implement large-scale projects in several directions. First of all, the construction of a new locomotive building plant in Tbilisi, Anaklia deepwater seaport construction and the Silk Road project implementation. It should be noted, the Hualing free industrial zone is located on 35.92 hectares in Kutaisi. The Chinese company has arranged the zone as part of the Georgian law on free industrial zone creation. According to the official information, for 5 years Hualing Group has already created wood processing enterprises equipped with modern technologies that successfully operate. The products of these enterprises are exported to the neighboring countries. Prime Minister Irakli Gharibashvili assures the free trade regime with China signifies a huge potential for our country, according to his statement in Beijing.
“The Chinese PM has put forward the initiative for introducing a free trade regime with Georgia. This is a huge potential for our country, our businessmen. This is a 1.600 billion market”.
There is no bigger market in the world. This year we have paved the way to the EU 500 million markets. Earlier, we have returned to the Russian market thanks to our pragmatic policy.
The free trade regime with China will increase Georgia’s trade by 9%, while the Chinese imports to Georgia will grow by only 1.7%”.
– The Georgian PM noted.
Economic expert Emzar Jgerenaia also makes focus on China-Georgia trade relations. His attitude is negative in this respect – „The Georgian export is insignificant and neither 9% nor 90% growth will improve this situation. The country should develop the economy and upgrade the economy to innovative stage. Contemporary economic directions and fields should be strengthened and promoted, despite the free trade regime is introduced or not. The country with destroyed economy and 16 billion economy cannot make benefit from this free trade regime.
„Georgia has nothing to sell, except trash. Georgia’s exports are unimportant, especially the exports to China. It is even appropriate to count it. Fruits constitute one of the main sources of our exports and neither our relations with China nor EU associate membership nor strategic partnership with the USA will assist similar economy.
– Jgerenaia noted.
Georgia records extremely negative trade balance with China. According to the January-September 2015 report, Georgia’s negative trade balance with China constitutes 360 125 USD. Moreover, China is Georgia’s third major trade partner after Turkey and Azerbaijan. The Time will show whether Georgia’s export strengthens after the country signs a free trade regime agreement with China and customs and tariff duties are removed. However, the government has to do its best to stimulate the domestic entrepreneurship to avoid the experience with Turkey, when only Turkey received benefits from the Georgia-Turkey free trade agreement.
“Georgian Wines will Receive Access to the Huge Wine Market”
Vasil Revishvili a member of the Free Democrats’ economic team.
We welcome an establishment of free trade regime with any country; in general, because the opener the country is in terms of trade, the more interesting it is for investors. But the China’s economic might suggests to expect more opportunities than threats from the free trade regime. Our products must be competitive and must make our country competitive in relation to the Chinese products. Stereotypes that China produces low-quality products are outdated. Today Chinese products are traded worldwide and they satisfy high standards.
As to Georgian products and our potential in this respect, I would name wine, because along with economic growth Chinese citizens give preference to wines compared to beer and consequently, China is reported to be consuming more wine. Hence, high-quality Georgian wines will receive access to the huge wine market.
China produces so many goods that Georgia cannot surprise it by anything, but we can transfer Chinese production to Georgia, the so-called Georgian labeling in the contexct of Geoirgia-EU free trade agreemnent.
And this factor will provide Georgia’s economic growth.
“China is interested in Exporting Products to EU Through Georgia”
Giorgi Ghaghanidze Tbilisi State University full professor
A free trade agreement represents a bilateral interstate agreement on customs-free trade and removing quotation mechanisms. These aspects are main and fundamental sides and we will have free trade, i.e. free access to the Chinese market, and China will have a free access to our market. This decision will integrate both economies and fuel an implementation of other sorts of economic projects too.
We can export the products to China that our country produces, i.e. nobody thinks that Georgia will export TV sets to China. The issue is of domestically manufactured products that will easier enter the Chinese market after the free trade regime enactment. First, we should imply wine, alcoholic beverages in general and partly, mineral waters. The Chinese market may be interested only in these products at this stage.
Their interest consists in the intention of rapprochement of two economies and this will give certain priorities to the Chinese business. For example, is China interested in the free trade regime with the EU? Who has this regime with the EU? We have this regime. Hence, Chinese investors are interested in this opportunity to organize a certain basis in Georgia and arrange production in Georgia and export their products to the EU market through the Georgia-EU free trade regime agreement. Naturally, the products must be labeled as MADE IN GEORGIA.
“Georgia-China Free Trade Enables Businessmen to use their own Potential”
Paata Sheshelidze Economics Expert
It is a positive event to set up a free trade regime with any country. The Georgia-EU free trade agreement has enlarged the potential of Georgian exporters. We should expect the same benefits from the Chinese market.
The Georgia-China free trade regime will enable this or that category of Georgian businesspersons to find their own niche and make a use of the existing potential in this direction. It is not necessary that we produce some exports goods today. However, tomorrow and the day after tomorrow we can identify what to do and we will do it, but we should have the opportunity and this window must open.
In previous years automobiles were Georgia’s major export items, but could anybody imagine automobiles would become Georgia’s first export item? Nobody would say this, but this situation has changed. The situation has changed because Azerbaijan set certain restrictions on imports of automobiles. As a result, Georgia’s export items structure has changed and other products have advanced positions in the rating. Therefore, before we sign a free trade regime agreement with China, the situation may change again and therefore, today it is difficult to name Georgia’s major export item in the Chinese market. We should make focus on acquiring as many opportunities as possible. We have received similar opportunities in the European market and we should work to acquire similar preferences in the USA too. Georgia has unilaterally opened doors to everybody.