Australia–China relations - Wikipedia
Australia–China relations, often known as the Sino–Australian relations, refers to the relations between the Commonwealth of Australia and China. . The United Kingdom proposed in that Britain, Australia and New . In early , there were over , Chinese students in Australia and they made up 26 percent of . the United States, the Chinese economy will be roughly twice the size of the The facts about Australia's trade links with China are well known. Australia and China's economic relationship has grown rapidly in recent . to the WTO, the pace of China's trade growth accelerated to an average rate of 17 .. This pales in comparison to traditional investors including the United States (
These issues are significant for several reasons. Is Kevin Rudd too optimistic? It is not as a result of hard won competition stemming from technical innovation and value-adding. For example, while Australian engineers may well be at the forefront of mineral extraction technology, we largely do well at exporting iron ore because so few other countries have such high-grade iron ore in the ground to begin with.
Second, an export strategy that relies on natural resource endowments, such as minerals in the ground, comes with a use-by date attached, albeit one that might not be reached for some time. Third, development economists have long noted that primary sectors of the economy such as mining offer fewer linkages to the rest of the economy than do other sectors such as manufacturing. Fourth, the success of exports from the mining sector comes at a cost to exports from other sectors, such as manufacturing, through higher input costs and a stronger Australian dollar.
As I have previously written on The Conversation, China has been trying to rebalance its economy for some years already, so far without success. The change in consumption patterns that an increasingly affluent and urbanised Chinese consumer population implies does not correspond to areas in which Australia has obvious competitive advantages. Iron ore will still be needed for urban construction, and education and tourism will also thrive.
But this represents more of the same, only on a larger scale. But in these areas Australia will face vigorous international competition and will be unable to rely on its unique natural advantages. All of the above is not to suggest that primary products should not feature prominently in our exports to China. Every country exports those products that are in global demand and that its companies can produce profitably at prevailing international prices.
Australian trade policy includes a strong commitment to open trade. The relaxation of iron ore trade restrictions in provided the impetus for the development of the iron ore industry in the Pilbara region. Recent moves by India to restrict iron ore exports in response to domestic concerns about their own iron smelting industry highlight the alternative approaches that can be adopted in other countries with significant iron ore reserves.
These changes will potentially limit returns to Indian miners and put upward pressure on world iron ore prices, even if they have benefits for Indian iron smelters.
The close links between Australia and China are also increasingly important for the rest of the world. Because iron is overwhelmingly the most commonly used metal in the world, the transport of iron ore from the Pilbara to Chinese ports like Qinhuangdao is one of the key trade relationships in the global economy today. Much of the metal that is found in Chinese manufactured goods started its journey in Western Australia, ending up in almost any conceivable destination.
Inwhen we established diplomatic relations, our services trade was negligible. At that time, there were fewer than arrivals from China, and there were no Chinese students in Australia. Only a few Australians either visited or studied in China. Today, tourism and education are significant Australian services exports to China and a central part of our people-to-people links, and China is our largest services export market overall Chart Trade in Services with China Source: It is currently on track to overtake the UK this year, witharrivals from China in January-October this year compared withfrom the UK.
This would place China second behind New Zealand. The number of Chinese visitors to Australia has grown strongly sincesupported in by Australia along with New Zealand becoming the first western country to be granted Approved Destination Status ADS. The ADS is a bilateral tourism arrangement between the Chinese Government and a destination whereby Chinese tourists are permitted to undertake leisure travel in groups to that destination.
Arrivals from China into Australia Source: While ADS group travel will remain important, particularly for first-time travellers to Australia, independent travel is growing strongly, with overnon-ADS tourist visas issued to Chinese citizens in The increasing number of airlines and routes between Australia and China are also expanding our tourism and people-to-people links. No longer are travellers limited to flights between Beijing, Shanghai, Sydney and Melbourne — direct flights now include Guangzhou, Brisbane and Perth, with further direct flights covering Cairns and Chengdu to commence soon.
These links open up regional development opportunities for both our countries.
Australia-China: Not just 40 years
The Tourism Forecasting Committee estimates that arrivals from China will continue to grow, to reach over 1 million arrivals by Education Students also make up a significant proportion of visitors to Australia. The first five Chinese students to study in Australia after the establishment of diplomatic relations arrived in Rudd, The number of Chinese students studying in Australia increased rapidly from the late s, following the introduction of policies in Australia that allowed universities and other educational institutions to offer places to full fee-paying overseas students and the lifting of limits on the number of international students Hall and Hooper, There has been a further significant increase in the number of Chinese students coming to Australia over the past decade.
The high number of Chinese students in Australia has led to strong links between Australian and Chinese institutions. A study by Universities Australia has recently found that with formal agreements between Australian and Chinese institutions, Australia now has more links with Chinese institutions than with any other nationality.
There are also offshore programs offered in China by Australian institutions and their Chinese partners Evans, These links between our universities and our students are likely to continue to develop over time and contribute towards the building of relationships between future leaders of our two countries.
Enrolments in higher education in China grew from an estimated 2. This ongoing rapid growth presents a challenge for domestic Chinese educational institutions to meet the growing demand. However, student visa applications have now stabilised. Going forward, Chinese and indeed world demand for education services is likely to continue to grow, but in an increasingly competitive market, Australia will need to work to ensure it remains an attractive destination for Chinese students.
These tourism and education links are not just one-way. Absolute Australian student numbers in China appear small at only 3, but this is roughly twice as many on a per capita basis than Chinese students in Australia. Numbers are likely to increase further with the focus on Asian languages as set out in the Australia in the Asian Century White Paper. The Westpac Banking Corporation Westpac was the first Australian bank to establish a presence in China with the opening of a representative office in Beijing in The Australia and New Zealand Banking Group ANZ now has the largest presence, with four branches, three sub-branches, stakes in two Chinese banks, and a fully-owned rural bank.
As China opens its financial services sector further, Australian institutions should be well placed to build on their businesses in China. Other Australian professional services — accounting firms and law firms, for example — are also represented in China, as are environmental services, the food and beverage industry, and others. Investment A thriving bilateral investment relationship is emblematic of deeper economic integration between two countries.
Investment flows enable both countries to expand on established trade ties, with the recipient country gaining access to among other things additional capital, expertise and overseas markets, and the investor country benefiting from among other things local experience, expanded global networks and greater integration with its trade partner. Some of the earliest examples date back to the large influx of Chinese migrants during the gold rushes of the s and s, when many Chinese set up businesses providing accommodation, food, equipment, medicine and tailoring services to name a few.
The investment agreement took many years to negotiate and required its own state government legislation. The rapid increase in Chinese investment in a short span of time has generated much attention in the Australian public, with concerns in some parts of the community Henry, ; Hurst, Cai and Findlay, ; and Cai, This is in spite of the positive impact that foreign investment has had on the Australian economy, leading Ken Henry to comment that it is a little ironic that these concerns should be expressed so loudly in Australia.
But caution amongst some sectors of the public towards foreign investment is nothing new. In the s, Japanese investment was also under the spotlight. Share of stock of investment in Australia by source country Source: Australia also has an abundance of a lower grade iron ore called magnetite but, because of the abundance of hematite, Australia has not exploited magnetite. Chinese investors, however, have shown the necessary skill and willingness to mine and process magnetite in Australia.
Effectively, a new iron ore industry is being established because of Chinese investment. The overall result is that iron ore production in Australia increases. This increases the potential supply of iron ore to China while benefiting the Australian economy.
An example of this is the Karara iron ore project in Western Australia, which is being developed through a partnership between Gindalbie Metals Ltd and Chinese enterprise AnSteel. Under the agreement, the remaining 25 per cent equity will be retained by current shareholders, including Roy Manassen.
The Bright Food Group is a multinational food and beverages manufacturing company headquartered in Shanghai, and was the second-largest China-based food manufacturing company measured by revenues.
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It has an extensive network of production, distribution and retail stores, as well as large farms, dairy farms and tea plantations across China. It has an established nationwide network for food production, distribution logistics and retailing businesses and trading arrangements with many multinational companies. Bright Food has signalled its commitment to building its presence in Australia by working in partnership with Australian growers, suppliers, customers and the shareholders and management team of Manassen Foods.
The partnership provides growth opportunities for both companies and the opening of a permanent Bright Food office in Sydney signals its commitment to long-term investment in Australia. In the other direction, Australia started to invest in China in — one of the earlier countries to do so Yu, But our investment in China remains low compared to our trade relationship.
While Australian investment in China has increased in recent years, at 1. Mining services companies such as Worley Parson also have a significant presence. Australian investment successes Following are two examples of Australian investment successes in China, which exemplify the diversity of our investment and expertise. They do this by delivering advanced technology to managers of open channel irrigation networks that enables them to operate and manage their water resources at high levels of efficiency and control.
Rubicon Water is the only company in the world designing and manufacturing technology specifically for gravity-fed irrigation management, and conducts ongoing research with the University of Melbourne.
OEC - Australia (AUS) Exports, Imports, and Trade Partners
After three years, TCC technology is now installed in six irrigation districts in four provinces. The implant can enable a profoundly deaf person to achieve almost normal hearing. Cochlear entered the Chinese market in and has established itself in Beijing and Shanghai. There are currently more than 11, Cochlear implant recipients in China, and around 70 medical centres capable of undertaking Cochlear implant surgery. They set up two Cochlear Education and Training Centres to train the teachers from specialised schools for the deaf and the parents of the young recipients.
CSL CSL Behring is a global leader biopharmaceutical company that researches, develops and manufactures speciality life-saving and life-enhancing therapies for people with primary immune deficiencies, bleeding disorders, hereditary angioedema and inherited respiratory disease. CSL products are also used to prevent haemolytic disease in newborns, speed recovery from heart surgery, prevent infection in people undergoing solid organ transplant and help victims of shock and burns.
CSL Behring has been supplying the China healthcare sector with speciality products for over 25 years and is the leading supplier of serum albumin to clinicians and patients within the National China Hospital network albumin is the main protein of human blood plasma and medically prescribed in the critical care setting.
Australian — and other foreign — investment in China will likely increase as China continues to open up its economy to foreign investment. Looking ahead The economic relationship between our two countries is expected to continue to grow.
Most forecasters, including Treasury, expect continuing strong economic growth in China in the years to come. Whilst the pace of economic growth has moderated, this is only partly due to structural factors. The weak external environment has been a more important factor, amid the ongoing fallout from the global financial crisis and the European sovereign debt crisis. It must be remembered though that China remains an emerging economy and fluctuations around this underlying potential are to be expected, due to the emergence of imbalances and policy missteps.
However, these fluctuations are likely to be around a solid trend growth line. Within this decade, the International Monetary Fund projects China to overtake the United States to become the largest economy in the world on a real purchasing power parity basis although on a market exchange basis, this will occur much later.
Moreover, this robust pace of growth appears to be much more sustainable than the continuation of the double-digit pace of past decades. Even at this more moderate rate of growth, China continues to be one of the fastest growing economies in the world and remains a key contributor to global economic growth. Amongst Chinese authorities, there is a growing awareness that such economic growth projections cannot be realised under the current economic growth model which was appropriate in the initial stages of developmentacknowledging that th e economy is unbalanced and unsustainable.
Australia is expected to remain a significant supplier of resources to China, particularly of iron ore, because of our position as a low-cost source.
With further economic liberalisation in China, financial and other professional services such as legal and accounting services can also look forward to expanding their presence and operations in China.