Australia: Growing bilateral trade with China - 带一路

There is an old Chinese proverb that talks to missed opportunities and the ability to make amends: The best time to plant a tree was twenty years ago. The second best time is today.

China's economic and political ambitions are shifting and Australia may well miss today's opportunity. As policy has evolved in Beijing, Australia has constantly strived to adapt. But are the existing policy mechanisms sufficient to support China's latest transition? This may be an oversight we're struggling to rectify in twenty years' time. Sowing the seeds begins now.

There are few more important economic relationships for Australia than the one it has with China. It's a country that's exploring how to adjust to a services-based economy, how to exert its influence on a world stage and how to shape global trade policies in a way that suits its needs. This comes as Australia evolves, in a complementary direction. While continuing to rely heavily on the export of mineral resources, greater emphasis is now being placed on new service-based export opportunities. These range from technology to financial services, education to agriculture, health and aged care to tourism. Service exports have grown by an average of 3.2% over the last five years and account for almost a fifth of our total exports.

Evolving this portfolio of export-led growth demands a change in thinking, cultivating our relationship with China. If we are to complement each-others' transformation, then government and business need to address this changing landscape at policy level, ensuring the community is engaged effectively.

MUTUALLY BENEFICIAL

A critical factor will be establishing common reference points rather than relying on gut-instinct or hunches. We know that China's transformation into a more services-based economy is necessary for sustaining its economic development. As part of the ARC Linkage Project on Chinese Overseas Direct Investment (ODI), Corrs takes a particular interest in the differing Chinese economic reform scenarios. The alternative outcomes that might result will affect Australia as an exporter of goods and services and as an importer of capital.

While the effects are manageable for the Australian economy, they are matters that are of concern for us and our clients. As our CEO John Denton recently commented: "The number one concern of the C-suite is global geopolitical insecurity. One of the big questions centres on the consequences of the Xi Jinping regime in China. What does it mean for global or economic growth? China is fundamental to that growth and different pathways may emerge."

While this conversation takes place in the boardroom, it appears to be falling on deaf ears outside it, as Australia drags its feet. This at a time when barriers have never been lower. When the China Australia Free Trade Agreement is fully implemented, 96 per cent of all tariffs in goods will be eliminated. So Australia must invest, trade and create growth. This is an opportunity to create jobs, deliver value and bring economic prosperity to both countries for years to come.

ONCE IN A LIFETIME

In the coming decade, China's ongoing capital account liberalisation will profoundly alter the global investment landscape. According to World Bank projections, China could account for almost 30 per cent of global investment by the end of the next decade, as its huge and ever-increasing pool of savings looks offshore for broader investment opportunities.

The next stage of China's development and integration with global financial markets will broaden its trade and investment ties with the rest of the world. Australia must ensure policy settings enhance the opportunity for sustainable Chinese investment. If these settings aren't in place, investment will flow to those countries where policies are more open.

Quite simply, China's transition is a once in a lifetime opportunity. As it negotiates its reform challenges, there will be a greater onus on Australia to collaborate, share business practices and its institutional knowhow. One of these initiatives is our role on the ambitious One Belt One Road (OBOR –一带一路).

ONE BELT ONE ROAD

As our China Business Group Co-Chair Dr Geoff Raby recently commented, many Australians fail to appreciate that Australia is a part of the One Belt One Road.

Since becoming President, Xi has made OBOR central to his vision of China's greater standing and influence in the world. The official Xinhua report on the Malcolm Turnbull/Xi Jinping meeting highlighted Xi's call for the "alignment of China's Belt and Road initiative with Australia's Northern Development Plan". Despite the "noise" over the sale of the Port of Darwin to private investors from China, Xi still went ahead with this giant step forward in the bilateral relationship – putting Australia firmly on the OBOR map is a very big deal.

According to some estimates, in today's money, OBOR and the Asian Infrastructure Investment Bank could be more than 12 times larger than the Marshall Plan - America's aid contribution to post-second-world-war Western Europe.


Australia has a place on the One Belt One Road Strategy (Image Source: Charting the Belt and Road)

In a recent visit to Xinjiang in China's far west, the Corrs China Business Group met with numerous officials who enthusiastically shared their role in the China-Pakistan Economic Corridor (CPEC). This initiative (one of a number of initiatives encompassed by OBOR) is intended to promote connectivity across Pakistan with a network of highways, railways and pipelines accompanied by energy, industrial and other infrastructure development projects to address critical energy shortages needed to boost Pakistan's economic growth. Eventually, CPEC will also facilitate trade along an overland route that connects China to the Indian Ocean, linking the Chinese city of Kashgar to the Pakistani port of Gwadar.

In a world that is increasingly interconnected and as a trading nation, Australia has a significant role to play in the policy thinking on global maritime economic issues. Australia is working with Chinese officials as they develop the country's maritime economy strategy. As a maritime trading nation, these strategic issues of vital importance to us, including their political dimensions. Attracting capital to Northern Australia as part of OBOR will be a key focus. Darwin is intended to be a crucial link in China's new 21st Century Maritime Silk Road. The recent Darwin Port deal will provide Chinese shipping and naval vessels with facilitated access to Australia, the Indian Ocean and the South Pacific, as well as to Indonesia and PNG over the coming century.

PART OF THE FABRIC

Chinese ODI will bring considerable benefits to the Australian community. Many quarters recognise this, indeed, recently the chief executive of the Northern Territory Cattlemen's Association, Tracey Hayes said: "Foreign investment is part of the fabric, it's not new, it's not something to be afraid of and our experience is that it adds to rural economies." While the ABC Vote Compass shows that 80 per cent of Australians want even greater restrictions on foreign investment in agriculture, it does not accord with the reality of Australian agriculture. Yet how many of these survey participants would know that in 2015 Australians acquired Chinese assets worth $10.5 billion? That's some $2.7 billion more than the value of Australian assets acquired by the Chinese!

As the Northern Territory Chief Minister Adam Giles says: "The Federal Government needs a consistent policy on foreign investment or it risks missing 'opportunities' for the country. I want to see a food policy developed for Australia that ensures Australia's food security and recognises the opportunities that exist to meet emerging demand from Asia's growing middle class." There is no problem in setting rules for foreign investment but they need to be clear.

Indeed, we have previously commented that Australia's agricultural sector is on the verge of a boom. Foreign investment is needed to ensure the industry can meet its full potential. As the Australian economy transitions, there is a need to ensure foreign investors and entrepreneurs bring more funds and expertise. This is particularly so in agriculture. It is estimated $600 billion will be needed to fund capital upgrades to improve farm productivity and foreign investment will go a long way towards bridging that gap. Foreign investment in Australian agriculture provides access to new technologies and grows local skills in agriculture and agribusiness, as well as providing greater links to global food chains.

By international standards, Australia's total level of FDI is not particularly high with our inflow well behind NZ and the UK. Australia should be under no illusions that it is in a race for capital. If we are to derive the immense benefits from the Asian Century and make good on the promise to be an innovation nation, then we need to work at being seen to welcome foreign investment in Australian agriculture and promote Australia as an investment destination. Planting the seeds today will reap a rich harvest for years to come.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions