An increasingly visible facet of China's commercial diplomacy has been its pursuit of preferential trade agreements (PTAs) with small and medium-sized economies outside Asia. China's PTAs, completed or under negotiation, have indicated both a conservative approach and an increasing comfort level with cross-regional trade negotiations. The China–Iceland PTA negotiations since 2006 illustrate this new thinking. Although the island state has a considerably smaller economy, China has perceived the negotiations as being undertaken between equals as well as an important bilateralism model. A successful deal will further demonstrate a new stage in Chinese commercial diplomacy and its approach to bilateral trade as well as a determination to engage the European economy even through a “side door” approach. However, in light of Iceland's banking crisis and deep recession in late 2008, Beijing has also had to address the uncertainties of negotiating with small states in a time of global economic uncertainty.
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58 The author wishes to thank Silja Bára Ómarsdóttir and Alda Sigmundsdóttir for their assistance with this section.
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* The author wishes to thank the Carnegie Trust of Scotland, the British Academy, London, the Universities' China Committee in London, and the Centre for Small State Studies, University of Iceland, Reykjavik, for their invaluable assistance during the research for this article.
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