Strengthening the Chinese & Australian Trade Relationship – Stockwell International

Fifteen years after China’s ascension to the WTO, China is now clearly integrated into the global economy, first as a result of goods flow, and now increasing investments and services. In 2000, the Chinese government clearly stated a strategy, with the intention to adjust China’s foreign economic development strategy from one that ‘brings in’ technology, to a combination of ‘brings in’ and ‘go global’. This strategy not only contributes to China’s domestic market development, but also benefits the overall global economy.

From 2009-2014, the last full year where data is available, the total value of outbound investment by Chinese companies grew at an average of 16.8% per annum, and exceeded USD100 billion for the first time in 2013. An all-time high of Chinese outbound investment of USD123 billion was reached in 2014, with 192 cross-border M&A’s accounting for one quarter of the investments.

As a percentage of GDP, foreign direct investment (FDI) in Australia reached 39% in 2014 on the back of continued economic expansion and integration with trading partners, especially in the Asian region.  Australia is an economy that attracts and welcomes foreign investment, and China has responded by investing USD25 billion in Australia in 2014, a 25% CAGR over the past five years, to reach the top five spot among Australia’s investors.

The China-Australia Free Trade Agreement (ChAFTA) enacted in November 2014 will undoubtedly further expand the China and Australia trade relationship and strengthen the Australian investment in China. China is already Australia’s largest goods export and import partner, with the two-way trade of goods and services valued at USD 150 billion in 2014, accounting for almost one quarter of Australia’s total import/export value. The agreement enhances China’s access to Australia’s key industries, especially agriculture, resources and energy – and now healthcare – and is aimed to meet the needs of China’s growing economy.

Referenced from Higher View Business Magazine (p.85, issue seven, August 2016)

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