Mutually beneficial agreements help foster growth in business, exchanges
Cars await shipment to Australia at a port in Shanghai. (FANG ZHE / XINHUA)
Business relations between Australia and China, two major Asia-Pacific economies, will be boosted by complementary industrial structures, trade in services and free trade deals such as the Regional Comprehensive Economic Partnership agreement in the coming years, according to market watchers and business leaders.
With the two countries' governments willing to work together to narrow differences through constructive dialogues, they will be able to advance the steady growth of bilateral ties, said Dong Yan, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.
They will also carry out more cooperation on topics such as climate change, green development, trade and the economy, which are all in the interests of both countries.
This year marks the 50th anniversary of the establishment of diplomatic relations between Australia and China, and Dong said the mutually beneficial economic cooperation will enable the two countries to establish a deeper relationship in the next stage.
China-Australia trade amounted to $184.33 billion between January and October, according to data from China's General Administration of Customs.
China exports mainly computers, transport equipment, vessels, mechanical and electrical products, electric vehicles, chemical products, shoes, textiles, garments and household appliances to the Oceanian country.
In addition to iron ore, coal, alumina, copper ore and wool, Australian exports to China include wine, timber, grains, fruits and aquatic and dairy products,
Multilateral and bilateral free trade deals including the China-Australia Free Trade Agreement and the RCEP are beneficial for both countries, as they help businesses create more export value, foster the next-level interaction of upstream and downstream industries, jobs and innovative activities on both sides, said Liu Chenyang, a researcher at the APEC Study Center at Nankai University in Tianjin.
Since the pace of regional integration is accelerating in the Asia-Pacific region, the China-Australia FTA has helped contribute to this notable trend.
China and Australia signed a bilateral free trade agreement in June 2015, which came into effect in December that year. The agreement brought down tariffs for Australian beef, wine, fruits and other products, providing easier access to the Chinese market.
For instance, tariffs on Australian wines imported to China under the China-Australia FTA have dropped 2.8 percent at the beginning of every year since the signing of the agreement.
Originally, the rate was 14 percent. By 2019, China started to levy zero tariffs on wines imported from Australia.
"To China, its companies and consumers can have more access to natural resources and finished products like food and dairy products from Australia," he said. "Australians have also benefited from China-made garments and electronic gadgets under favorable tariff terms."
Thanks to the FTA, Australia's service businesses, such as education, tourism, telecommunications, healthcare, banking and insurance services, have more market access to China, either by partnering with Chinese companies or, in some situations, being able to access these markets directly, according to Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges.
Xu Ningning, chairman of the RCEP Industry Cooperation Committee and executive president of the China-ASEAN Business Council, said the implementation of the RCEP will generate even more impetus and room for China and Australia to reinforce trade and economic cooperation.
Officially taking effect on Jan 1, the RCEP comprises 15 Asia-Pacific economies, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, the Republic of Korea, Australia and New Zealand.
It is the world's largest free trade bloc, promoting regional economic integration through tariff concessions and other trade and investment liberalization and assistance.
For China, its economic and trade cooperation with the other RCEP countries, including Australia, has embarked on a fast growth track in recent years, with close collaboration seen across manufacturing industrial chains, Xu said.
"Amid the disruption period caused by the COVID-19 pandemic and rising protectionism, the creation of RCEP carries significant implications for economic recovery in the Asia-Pacific region," he said, noting the RCEP's unified rules of origin will help facilitate regional supply chains and reduce cross-border transaction costs to boost inter-regional exports and investments.
Australia's rich experience in project financing and design, construction, management and maintenance allows the Belt and Road Initiative to bring tangible growth opportunities for Australian companies, Xu noted. It will result in even stronger potential for bilateral cooperation.
Eyeing the busy service routes between China and Australia, China COSCO Shipping, the country's largest shipping service provider by sales revenue, launched its first customized service to Australia from Qinzhou Port in South China's Guangxi Zhuang autonomous region in July, transporting engineering vehicles manufactured by Guangxi Liugong Machinery, or Liugong Machinery, a local construction machinery manufacturer, to Australia.
The customized shipping service for Liugong Machinery has considered characteristics of the Australian market.
The ship was scheduled to carry back wood, which realizes balanced transport of goods on the return voyage and cuts logistic costs to Australia, said Mei Jianghong, vice-president of Guangzhou-headquartered COSCO Shipping Specialized Carriers, a subsidiary of State-owned China COSCO Shipping.
COSCO Shipping Specialized Carriers also began to ship giant wind power equipment form Taicang Port in East China's Jiangsu province to Australia in August, marking the official launch of a large-scale wind power transportation project that will take two years to complete.
"China's economic reforms and consumption upgrading will also prove beneficial to many Australian companies. There is strong potential for more deals in various industries, particularly in mining operation, healthcare, vocational education and innovation, as well as high-end consumer and agricultural products," said Wang Xueling, a researcher specializing in regional economic development at the University of International Business and Economics in Beijing.
"With the doors opening in areas such as trade in services and e-commerce activities, Australia's small and medium-sized enterprises — the biggest drivers and the biggest innovators in the country — have more opportunities to avoid second and third parties and start a business with a market potential of over 1 billion consumers," said Fang Qiuchen, president of the China International Contractors Association, which helps Chinese construction companies expand their business overseas. "Besides service and investment conditions, people-to-people exchanges and tourism cooperation will also be on the agenda," he said.
JD Logistics, an arm of Chinese e-commerce platform JD, launched self-operated warehouses in Australia in recent years.
"Overseas warehouses serve as vital infrastructure that boosts growth in the nation's cross-border e-commerce sector," said Zhang Zhouping, a senior analyst of business-to-business and cross-border activities at the Internet Economy Institute, a domestic consultancy. Zhang added that such facilities enable quicker customs clearance, faster delivery and lower costs.