[Photo/VCG]

The free trade agreement between China and Nicaragua will come into effect on Jan 1, which holds great potential for fostering economic growth, enhancing cooperation as well as benefiting businesses and people in both countries, the Ministry of Commerce said on Friday.

As per the provisions of the agreement, both countries will achieve a high level of mutual openness in areas such as trade in goods and services and investment market access, the ministry said in a statement.

In terms of trade in goods, over 95 percent of items that originate in either nation will eventually be subject to zero tariffs. Notably, upon the trade agreement's implementation, about 60 percent of products will be duty-free right away, the ministry said.

Moreover, the trade deal represents China's first FTA that adopts a negative-list approach for the opening up of cross-border trade in services and investment, the ministry said.

Additionally, the agreement encourages economic and technological cooperation between the two countries in such sectors as agriculture, textiles, logistics and tourism, as well as among small and medium-sized enterprises, the ministry added.

The pact, inked in August, marked China's 21st FTA with another country. Meanwhile, Nicaragua becomes China's 28th free trade partner, and the fifth in Latin America following Chile, Peru, Costa Rica and Ecuador.