China, Iceland set to sign free trade agreement

Associated Press

BEIJING (AP) -- Iceland and China are to sign a free trade agreement that should boost exports from the isolated Nordic state to the world's second-largest economy.

The signing expected Monday will make Iceland the first European nation to have a free trade deal with China. It comes at the start of a five-day visit to China by Icelandic Prime Minister Johanna Sigurdardottir that highlights her country's attempts to diversify an economy that was badly mauled by the bursting of a massive financial bubble in 2008.

Iceland also has unique importance to China as it attempts to gain a foothold in the Arctic, where melting ice is opening passages for shipping and could create a boom in extraction of resources such as gas, oil, diamonds, gold and iron.