What’s so special about the China FTA?

I am often asked what makes the China Australia Free Trade Agreement (ChAFTA) so special. There are varying views as to why.

Pessimists argue the agreement will not adequately strengthen Australia's relationship with China, while surveys reveal businesses are unsure of how to capitalise on the expected trading changes.

"ChAFTA is unique and businesses in Australia and China should be compelled to understand the implications of the agreement due to the opportunities they present."

The reality is that ChAFTA is unique and businesses in Australia and China should be compelled to understand the implications of the agreement due to the opportunities they present.

The agreement is significant firstly because China is Australia's largest two-way trading partner. More specifically:

  • China is Australia's number one source of goods for more than half of all major import categories, covering everything from footwear and toys to furniture and telecommunications equipment;
  • Australia receives a large share of China's outbound investment flows;
  • 800,000 Chinese visitors travel to Australia annually (up from 280,000 in 2005); and
  • 95,000 Chinese students are enrolled in Australia, representing 25 per cent of all international students in Australia.


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The ChAFTA will eventually lead to 95 per cent of Chinese goods becoming tariff free, benefitting both consumers and businesses. It will also reinforce the importance of this key trade corridor and the businesses that participate in this supply chain. Chinese businesses and investors will also be able to take advantage of capital thresholds increasing in non-agriculture areas.

To highlight the importance of the agreement and the growing Australia-China trade corridor, we have compiled an ANZ special report which includes in-depth insights on the expected windfalls for selected industries such as dairy, wine, health and beef. Now is the time for Australian businesses to determine how they can use the ChAFTA to evolve and diversify.

The agreement plays to each country's strengths. It provides meaningful benefits to key parts of Australian agriculture, reduces tariffs for resource exports and delivers preferential access to China for many service based industries, including but not limited to, healthcare, tourism, legal services, financial services and education.

Further highlighting the importance of the Australia-China relationship, last week it was announced that Australia would receive Most Favoured Nation status. This is significant as it enables Australia to improve access to goods and services should China agree to superior levels of access with other countries.

The ChAFTA should spur Australian businesses to look beyond Australia's borders and consider the opportunities that exist with China.

You can read the ChAFTA Insight report by clicking here for the screen version and here for the print version.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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