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Print Edition> World
UPDATED: April 21, 2014 NO. 17 APRIL 24, 2014
Siding With Sydney
Sino-Australian ties are to comprehensively deepen starting with speedier FTA negotiations
By Ding Ying

BOND TO BE INTENSIFIED: Chinese President Xi Jinping shakes hands with visiting Australian Prime Minister Tony Abbott in Beijing on April 11 (HUANG JINGWEN)

Australia has been covered by a dual insurance for the past decade—it has both enjoyed economic development driven by close economic cooperation with China and also been protected under the framework of the U.S.-Australian Alliance. Entering 2014, the China-Australia relationship became tense at one point because the Tony Abbott administration chose to offend China's sovereignty by supporting Washington and its Japanese ally's stance on territorial disputes.

Things may yet change, however. Australian Prime Minister Tony Abbott showed sincerity and a desire to strengthen Sino-Australian strategic partnership in various areas when he visited Beijing in early April.

Establishing an FTA

The most positive aspect of Abbott's China tour was the consensus on accelerating a Free Trade Agreement (FTA) negotiation process. Initiated in 2005, bilateral negotiations on the FTA have lasted 19 rounds so far. If the deal is signed, it would be the first FTA between China and a major developed economy, giving Australian agricultural producers easier access to the enormous Chinese market, while opening opportunities to Chinese investors Down Under.

"Now it comes to the phase of making political decisions. At this phase, the China-Australia FTA can be inked at any minute once the leaders set their foot down," Wang Zhenyu, a researcher on Asia-Pacific studies with Chinese Institute of International Studies (CIIS) said to Beijing Review. He explained that this is an arduous process because both sides are aggressively pursuing their own interests using a win-win approach.

Meeting with the visiting Australian Prime Minister in Beijing on April 11, Chinese President Xi Jinping called on the two sides to speed up negotiations on a bilateral free trade deal, and expressed hope that Australia could offer good conditions for investment by Chinese enterprises in Australia. Abbott echoed that Australia is ready to work with China to accelerate talks for a free trade deal and welcomes Chinese enterprises to invest in Australia. The Australian Prime Minister promised in his electoral commitment last year that once he was chosen to lead the country, his government would end FTA negotiations with China within a year. In May, the 20th round of China-Australia negotiations will be held in Canberra.

Observers believed that investment is by far the biggest difference between the two sides in FTA negotiations. Abbott's China tour seemed on track to break the bottleneck.

"The main issue for the FTA between China and Australia is inward investment from China and the conditions that might be placed on it," Kerry Brown, Professor of Chinese Politics and Director of the China Studies Center at the University of Sydney, told Beijing Review.

"Frankly speaking, Australia has been alerted to Chinese investment in past years, especially in the agriculture and mining sectors. Besides, different interest groups in Australia hold different attitudes toward Chinese investment, so much so that the Australian Government has been in a difficult place to make relevant policy decisions," said Wang. Comparing its investment arrangement with the United States, Australia is very discriminatory against investment from China. American investors can invest with a much higher amount in Australia in more areas, but when Chinese investment reaches a certain amount, it will be subject to a strict review process, he added.

With the goal of building a community with Asia and sharing development potential there, Australia has been expanding its economic cooperation with Asian nations. Previously, Abbott reached a basic agreement with Japan on its FTA on April 7, according to which Japanese automobile and Australian agricultural products can be sold to each other at cheaper prices. Japan is Australia's second biggest trade partner in Asia. The two sides started FTA negotiations seven years ago. On April 8, Australia and South Korea signed a formal FTA during Abbott's visit, ending their 88-month long FTA negotiations.

The economic complementarity between China and Australia will be higher than that between Japan and Australia. Australia's trade volume with China exceeded that with Japan several years ago and became Australia's No.1 trade partner. "China is one of the few economies that Australia would like to engage with greatest efforts," said Wang. China is Australia's largest trade partner and biggest export market, while Australia is Chinese enterprises' largest overseas investment destination country. According to statistics from the Chinese Ministry of Commerce, bilateral trade reached $136.44 billion in 2013, up 11.5 percent from 2012.

On the other hand, Australia is one of the key neighbors on which China's development relies heavily, Wang stressed, hence, setting plans for an FTA in motion is a matter of necessity and urgency.

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