Premier Li’s upcoming visit to Australia reflects deepening ties with China in the face of global trade protectionism
Chinese Premier Li Keqiang’s visit to Australia at the end of this month reflects the deepening economic and strategic ties between the two countries.
The trip comes amid calls by many Australians and some political parties for greater protectionism along with the scaling back of free trade and foreign investment.
According to analysts, the importance of Li’s trip should not be understated as it follows Foreign Minister Wang Yi’s successful visit earlier this month, which saw both countries agreeing to upgrade economic cooperation and diversify trade.
“Li’s (upcoming) visit comes at a time when there is a great deal of noise, not only here (in Australia) but overseas, against globalization and calls for greater protectionism,” said James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology Sydney.
He said Australia and China both agree that there should be “greater openness, not only of the domestic economies but of the global economy as well”.
Laurenceson told China Daily Asia Weekly that there is a protectionist tendency among minor political parties in Australia, “but the two major parties (Labor and the Liberal-National coalition) both share the same view — more openness of the global economy, not less”.
Analysts say the significance of the Australia-China relationship is growing, pointing out that 10 years ago Australia’s exports to China were from the energy and resources sectors. These industries still play a key role in the bilateral economic framework, but China has since become Australia’s biggest market for agricultural products and services.
Su Hao, a professor of Asia-Pacific studies at China Foreign Affairs University, said that closer trade and economic ties have led to mutual benefits for the two countries.
Since the China-Australia Free Trade Agreement (ChAFTA) came into force on Dec 20, 2015, more than 85 percent of Australian exports to China enter duty-free or at preferential rates. And the figure is set to rise in the coming years.
According to data from China’s General Administration of Customs, trade between China and Australia totaled 712.38 billion yuan ($103.52 billion) last year, up 0.9 percent year-on-year.
Han Feng, a researcher at the National Institute of International Strategy in the Chinese Academy of Social Sciences, said both countries have plenty of opportunities to align their industries and strategies.
“China could help to renovate Australia’s out-of-date infrastructure facilities with its leading expertise, while learning from the country’s advanced technologies in transportation, telemedicine and distance education,” he said.
Han noted that Australia’s strategy to develop its north presents opportunities, as does China’s Belt and Road Initiative — an extensive project to build a modern infrastructure network across the ancient Silk Road routes.
Su at China Foreign Affairs University said China and Australia can work with the 10-member Association of Southeast Asian Nations to develop the 21st Century Maritime Silk Road that forms part of the Belt and Road.
“The two countries also share broad common interests in multilateral regional economic mechanisms such as the Regional Comprehensive Economic Partnership,” he said. Su added that this is especially important to boost regional economic integration and to address trade protectionism.
According to Su, regional security is another potential area for bilateral cooperation, as peace and stability in the South China Sea benefits all countries in the region. “Beijing and Canberra can conduct maritime security cooperation, such as rescue and relief operations as well as fighting piracy,” he said.
But observers said it takes time to overcome the frictions that exist due to a lack of full understanding between the two sides, citing concerns among the public over Chinese investments in Australia.
According to the Ministry of Commerce, China’s outbound direct investment into Australia surged 56.1 percent year-on-year to $3.6 billion in 2016, exceeding the growth rate of the country’s overall ODI.
The investment mainly flowed into sectors including real estate, transportation, and leasing and commercial services.
“Australia’s current economic reform and transition needs large-scale investment from foreign countries. However, the scale of investment from China, the world’s second-largest economy, will inevitably cause concerns,” Han at the Chinese Academy of Social Sciences said.
According to Han, with more and more Chinese enterprises “going global”, they should also learn from other countries’ experiences on how to make their investments more acceptable to the Australian people.
“After a period of adjustment, such cooperation is expected to be smoother in the future,” he said.