Julia and China-Australia trade relations
Prime Minister Julia Gillard’s recent trip to China has set a new precedent for China-Australia relations.After attending discussions with Premier Li Keqiang, Gillard signed what’s being hailed as “the deal of the decade”, a Strategic Partnership Agreement between the two countries.
Gillard’s deft handling of the talks resulted in the historic deal that guarantees annual talks between the two powers, and reciprocal cooperation to tackle issues such as climate change and economic ties head on together. The move sees Australia join the likes of Germany, Russia and the UK who also have similar talks in place with China.
The historic deal comes on the tail of 40 years of diplomatic ties, clearly outlining important policies and paving the way for annual leadership dialogue that will be mutually beneficial.
As China’s economy heats up, an increasing number of countries are vying for their attention. By securing annual talks, Gillard has moved Australia from just another competitor to a valued partner. The Australian government appears to have finally ramped up plans to engage with China.
Addressing reporters, Gillard proclaimed, “When the history of this relationship is written, I think this will be remembered as a day that a big step forward was taken.” She continued, “Right around the world countries are competing for China’s attention … we won’t have to compete every time to get to the table, we’ll be there at the table working on the issues that deeply matter to both of us.”
What does it mean for Australian businesses?
Gillard’s success in Beijing holds many ramifications for businesses both large and small in Australia.
One primary result is the change in the cost of doing business with China. Australia will become the third country to have direct currency trading, meaning that businesses will no longer have convert into USD first. Companies can enjoy direct trading with the Chinese Yuan, and two major banks – Westpac and ANZ – have already been granted trading licenses. The result is faster, more convenient and less expensive currency deals for small, medium and large businesses.
Two-way trade between Australia and China is worth approximately $128 billion, making China our biggest trading partner. With the two countries working together to increase import and export reliance and trade, Australian businesses are able to cast wider nets, broaden productivity and unlock lucrative opportunities within Asian markets. And with the possibility of a free trade agreement looming, currently under discussion between to the two parties, it looks like those opportunities could yield huge results for companies adept at navigating the market.
But the deal isn’t one sided – companies aren’t relegated to foreign investment if they want to reap the benefits of the agreement. According to Gillard, it provides “clear potential for expanded Chinese investment in Australia.” Over the past five years, hundreds of deals amassing over $81 billion have been approved, and with clearer lines of communication finally open, the likelihood of that number increasing is high.
Securing annual talks with the super power has huge ramifications for Australian business interested in doing business in China, or bringing their business here. More than just being an impressive feat for Gillard’s foreign policy legacy, the partnership deal is a sign that Australia-China relations are moving forward on a positive note, signifying an abundance of economic and trade opportunities to come.