Export to China exceeded USD 200 million in 2017
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On 17 January 2018, the Minister of Economy and Sustainable Development of Georgia, Dimitri Kumsishvili, stated: “We have an important capability to increase export to China. Last year, that figure exceeded USD 200 million.”

FactCheck took interest in the accuracy of the statement.

In accordance with the information of the National Statistics Office of Georgia, Georgia’s trade turnover in 2017 was USD 10.7 billion, which is 13.8% more as compared to the same figure of 2016. Of that amount export is USD 2.7 billion, whilst import is approximately USD 8 billion and they are 29.1% and 9.4% more respectively as compared to the same figures of the previous years. Of importance is that since 2013, export to trade ratio is the highest and amounts to 25.5%.

As of 2017, China is Georgia’s third largest trade partner after Turkey and Russia. Trade with China totalled at USD 939 million in 2017. Of this amount export is USD 207 million, whilst import takes the remaining USD 732 million. As compared to 2016, in 2017 export to China increased by 23%, import from China increased by 33%, whilst trade with China increased by 24%.

 

Graph 1: Georgia’s Trade Partners in 2017 (USD million)

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 Source: National Statistics Office of Georgia

 

Of exported goods to China, Georgia received the biggest income from exporting copper core (USD 169.6 million). Georgia’s top export goods to China include wine, vehicles, copper waste as well as medicine and veterinary tools.

Georgia concluded free trade agreement with China on 13 May 2017. The aforementioned agreement went into force on 1 January 2018 and therefore it is impossible to measure the results at this moment. As of today, apart from China, Georgia has concluded mutual free trade agreements with the European Union (DCFTA), Turkey, Commonwealth of Independent Countries and European Free Trade Association (EFTA). At the present moments, there are ongoing talks with India to sign a free trade agreement.

China’s market has 1.4 billion customers. In 2017, China’s economy was nearly USD 11.5 trillion, whilst China’s exports equalled USD 1.5 trillion. In accordance with the Georgia-China free trade agreement, 91% of Georgia’s export goods will be immediately free from taxes since the moment of the free trade agreement going into force, whilst 3% of Georgia’s export goods will no longer be taxed after expiration of transitional period. As stipulated by the Chinese side, 6% of Georgia’s export goods remains outside the scope of the aforementioned agreement. In turn, Georgia has revoked taxes on 96.5% of China’s export goods since 1 January 2018, whilst 3.5% of China’s export goods will remain outside the scope of the agreement. Georgia has not introduced the transitional period.

In 2007-2016, trade between Georgia and China increased by 534%. Of importance is that free trade agreement with Georgia is 14th document of this kind for China, whilst this agreement is unprecedented in terms of time limits imposed on transit period and scale of freeing export goods from taxes.

 

Graph 2: Export of Georgian Goods to China (USD million)

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Source: National Statistics Office of Georgia

 

 

Conclusion

In 2017, Georgia trade turnover was USD 10.7 billion, which is 13.8% more as compared to the previous year. As of 2017, China was Georgia’s third largest trade partner after Turkey and Russia. Total amount of income received from trade between China and Georgia was USD 939 million, which is 24% more as compared to 2016. Of that amount, export is USD 207 million (+23%), whilst import equals USD 732 million (+33%).

On 13 May 2017, Georgia and China signed a free trade agreement which went into force on 1 January 2018. In accordance with the agreement, 91% of Georgia’s export goods will be freed from taxes immediately, whilst 3% of Georgia’s export goods will have the similar treatment after expiration of transitional period (4 years). Access to market with 1.4 billion customers, creates new trade opportunities for Georgia and logically, it entails the prospects of deepened economic relations with China.

FactCheck concludes that Dimitri Kumsishvili’s statement is TRUE.

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