The FTA agreement is an icebreaking one between China and Europe that offers an example of one-on-one trade negotiations for other EU countries, said Zhao Junjie, a researcher on European studies with the Chinese Academy of Social Sciences.
China and the EU began a new round of trade negotiations in 2007, but achieved few results because any agreement needs to be approved by all 27 members of the EU, which have various interests and concerns.
Iceland is not a member of the EU, so it's easier for Beijing and Reykjavik to reach the agreement, Zhao said.
"The China-Iceland FTA will show other European countries China's sincerity and large potential in trade cooperation, and that cooperation will bring more advantages than disadvantages to European countries," Zhao said.
China has 14 FTA partners comprising 31 economies. There are six agreements still under negotiation with other economies, including Norway and Switzerland. Denmark is also seeking FTA cooperation with China.
"The FTA with Iceland may bring pressure to other European countries and they will think about the advantages of holding bilateral FTA negotiations with China," said Cui Hongjian, a researcher on European studies with the China Institute of International Studies.
Cui said the agreement is a win-win deal. Iceland is among the countries with the most advanced geothermal technologies and applications in the world and China can learn from it.
Stocks linked to the geothermal industry in China's A-share market surged on the signing of the free trade agreement on Monday despite a slump in the market as a whole.
In return, China can offer a large market for Icelandic products, which can better help Reykjavik out of its financial difficulties, Cui added.
Before leaving for China, Sigurdardottir told China Daily that she expects the agreement to diversify trade and reduce her country's deficit.
China will play an important role in Iceland's recovery from the economic crisis, and the free trade agreement with China will certainly be important for Iceland's economic growth, debt reduction and job market, she said.
"For Iceland this is a very important agreement, with one of the largest economic powers in the world," Sigurdardottir said.
She also believes the agreement will lower the price of Chinese products in Iceland, calling it "a landmark agreement" for both countries.
Icelandic Foreign Minister Ossur Skarphedinsson said earlier that the FTA is a natural continuation of bilateral cooperation and will bring immeasurable opportunities to economic cooperation in the future.
China has been Iceland's biggest trade partner in Asia since 2006, and bilateral trade reached $152 million in 2011.
Two-way trade increased by more than 21 percent in 2012, despite the global economic crisis.
Sigurdardottir arrived in Beijing on Saturday, kicking off a six-day visit to China.
She will address a business seminar on Tuesday. The seminar will focus on opportunities brought by the FTA.
Sigurdardottir will fly to the financial hub of Shanghai after meeting President Xi Jinping and former premier Wen Jiabao in the capital. Wen invited Sigurdardottir to visit China during his visit to Iceland in April 2012.
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