Agreement seals historic opening of China’s market

THIS is a moment of transformation in Australia-China ties.

THIS is a moment of transformation in Australia-China ties. In his speech to the Australian parliament, President Xi Jinping has planted Australia within his dream for a renewed China while in practical terms the bilateral free-trade agreement is unprecedented for both nations.

China has chosen its FTA with Australia to send a message to the world: it seeks to empower its domestic economy by opening new markets at home, with Australia as the test case granted access unrivalled by any other developed nation.

There was a deeply shared Australia-China vision on display yesterday. Its consequences will touch every Australian household and most Australian industries for many years. The gift China can offer other nations is access to the biggest growing market on earth and that gift has been extended to Australia on a privileged basis.

In an upbeat speech to parliament, Xi focused exclusively on the glorious future. He predicted the China-Australia partnership would span “mountains and oceans” in an everlasting capacity. Its dual foundations were the formal strategic partnership and the new FTA.

FTA: The key industries affected

The message from events in Canberra yesterday is the sheer dynamic driving the complementary Australia-China partnership. This mutual self-interest is going to pull Australia far closer into China’s orbit in coming years. And this process is being authorised by a pro-US conservative, Tony Abbott.

The FTA means 85 per cent of Australian products exported to China will be tariff free at its inception, rising to 93 per cent in four years. And some of these tariffs are as high as 40 per cent.

The agreement makes the choice of Andrew Robb as Trade and Investment Minister a masterstroke and affirms him as one of the government’s most successful figures.

Robb said yesterday that when negotiations were stalled he suggested to the Chinese they think of Australia as a “special economic zone” small enough to be given access yet not large enough to provoke too much disruption.

The upshot is that China has gone beyond most Australian expectations in the FTA. This is a strategic economic decision by Beijing that constitutes the platform for a wider partnership. It contradicts again so much of the misguided local commentary suggesting the Abbott government was risking relations with China.

INTERACTIVE: Australia’s bilateral FTA agreements

In his speech an astute Xi bypassed any potential source of trouble. He declined to address Barack Obama’s ringing declaration two days before about the US role in Asia, Australia’s balancing task between the US and China or climate change.

For Abbott, this speech was pure upside. China is playing a long and clever game with Australia.

Xi has made a hefty investment in this partnership, confident in the long run that the weight of mutual self-interest will reap its own reward for China. The message is writ large: Australia and China are going places together.

The big winners from the FTA are agriculture and services, long seen by Australia as the areas of most potential. The dairy industry gets New Zealand plus access to China, a rolled gold result. Beef, sheep, horticulture and seafood win hefty new access.

On services, Robb said “this is the best ever deal China has done by a country mile”. It means fresh opportunities for legal, financial, education, telecommunication, construction, engineering and manufacturing services. Offering a classic example Robb said our private hospital and healthcare providers could now establish their own operations in China.

The Abbott government can project buckets of economic hope from these events. And hope is the commodity it badly needs.