China, Australia to gain more from growing, diversifying economic ties

 Chinese Premier Li Keqiang's official visit to Australia is expected to create new opportunities for the two countries to expand and deepen their current thriving cooperation in various fields.

The economic relationship between the two countries, with the China-Australia Free Trade Agreement (ChAFTA) in particular, has brought tangible benefits and win-win results for both sides, and helped Australia survive and thrive against the backdrop of a sluggish world economy.

China, which is pursuing a transition to a consumption- and service-led economy, and Australia, boasting rich resources, fine agricultural products and advanced education, are highly complementary in their economies and strategies.

Their cooperation will be full of potential if China's Belt and Road Initiative, which is aimed at promoting common development along and beyond the ancient land and maritime Silk Road trade routes, can be aligned with Australia's ambitious plan for developing Northern Australia.

DIVERSIFIED COOPERATION

In recent years, the cooperation between the two countries has shifted from a mining boom to the "dining room," as China has been conducting an economic structural reform and consumption upgrade and Australia is seeking diversification.

Areas such as services, agriculture and infrastructure construction have turned into new growth points of cooperation between the two countries.

Services have witnessed the greatest change in two-way trade, rising 20 percent in the 2015-2016 fiscal year, with new fields being explored such as financial cooperation, which has seen the opening of branches in Australia of Bank of China as well as Industrial and Commercial Bank of China.

Particularly since the implementation of ChAFTA, Australia's exports of milk powder, red wine and dietary supplements to China have witnessed more than 50 percent year-on-year growth, becoming the most sought-after overseas products for Chinese consumers.

ChAFTA, which went into effect on Dec. 20, 2015, has brought down tariffs for Australian beef, wine, fruits and other products to enable their easier access to the Chinese market.

Moreover, China's investment in Australia has increased rapidly over recent years, and has expanded to new areas including commercial real estate, medical treatment and renewable energy.

China has been Australia's largest trading partner, market for exports and source of imports for eight years in a row. Their bilateral trade reached some 108 billion U.S. dollars last year.

Ruan Zongze, vice president of the China Institute of International Studies (CIIS), attributed Australia's growth for 26 years in a row partly to its close economic and trade ties with China.

Particularly, he added, after the two countries reached ChAFTA, convenience in trade and investment between the two countries has generated more opportunities for their businesses and brought tangible benefits to the two peoples.

In his opinion, the ChAFTA is a high-quality agreement that China has achieved with a Western country.

FUTURE FULL OF POTENTIAL

Officials and pundits see new opportunities in economic ties between the two countries, and especially great potential in the alignment between China's Belt and Road Initiative and Australia's vision for developing Northern Australia.

The initiative, which comprises the Silk Road Economic Belt and the 21st Century Maritime Silk Road, was put forward by Chinese President Xi Jinping in 2013.

The vision for developing Northern Australia is a plan to be rolled out over the next 20 years. The area accounts for 40 percent of the country's landmass but is sparsely populated.

Jan Adams, Australia's ambassador to China, has said that the Belt and Road Initiative and the Northern Australia development plan are highly complementary on a strategic level, and that the two sides have achieved consensus on aligning the two efforts.

Australian Trade Minister Steve Ciobo said recently that Australian businesses have a keen interest in and want to be part of the Belt and Road Initiative.

Wang Zhenyu, an associate research fellow at the CIIS, said Australia is an important part of the Belt and Road Initiative, and the services sector is "a gold mine" which could benefit both sides. He also called for Australia to further open up to Chinese investment.

Liu Qing, a researcher on Asia-Pacific studies with the CIIS, said there are "two potential areas that enjoy broader space": infrastructure construction and service trade, including overseas study consultation, law firms, financial services, investment consultation and retired elder support.

In the future, Ruan said, the two countries need to continue to enhance political mutual trust, and especially Australia needs to recognize that the development of bilateral ties is in line with its interests.

As the Chinese premier said in a signed article published Wednesday on The Australian, a leading national newspaper, China and Australia may further open up their markets for each other to generate greater FTA-driven prosperity and make their economic cooperation and trade more diverse and sustainable.

"More cooperation can be explored in new areas such as industrial capacity and third-party markets, energy and mining technologies, infrastructure, agriculture and animal husbandry, which will bring more benefits to our peoples and help boost world economic growth," said Li in the article.

Source: Xinuha