Australia-China FTA a stepping stone rather than an end point

Australia-China FTA a stepping stone rather than an end point

By Kerry Brown

According to him, China needs to raise domestic consumption, deepen its urbanisation from 50% to perhaps 70% of the population by 2020, reduce capital investment in fixed assets, and (the objective of critical interest to Australia) raise its services from 40% contribution to GDP growth at the moment to closer to 50% or 55%.

The structure of Australian trade to China has to change, and the services and finance strengths of Australia need to be used to address this.

An FTA which lays the foundations for higher service and trade provision between China and Australia, and a more diverse investment relationship will be tough, but is a fight worth engaging in.

Smart Australian companies in sectors as diverse as agribusiness and hi-tech manufacturing, or services, may well consider selling equity to a Chinese partner to have someone to help them get access to the Chinese market.

It is into this market of urban living, service sector-using, higher-consuming Chinese that Australian companies have to find ways to sell their services and goods.

This is important not just because of their potential as a source of job creating capital, but also because strategically they can serve as potential partners for Australian companies trying to find ways to get into the domestic market referred to above with its potential for demand and growth.

There was an imbalance in the inward and outward investment figures too, though less dramatic, with Australia having slightly less than A$30 billion newly deployed in China, and China slightly more than the A$30 billion back in Australia.

Read more here: Business Spectator


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