Trade relations between Australia and China Australia’s establishment of diplomatic relations with China was in 1972 by the Whitlam Government, together with Australia’s One China policy. China and Australia’s bilateral relationship continues to grow, as do both the countries. The relationship is built a strong trade interests and location of our two countries. The Chinese are our largest two-way trade partners valued at almost 160 billion in 2013-14. Australia and China are both part of APEC the Asia Pacific Economic Cooperation which was established in 1989.
APECS main purpose is to facilitate economic growth and prosperity in the region. They are able to do this by trade and investment liberalisation, business facilitation, and economic and technical cooperation. China has a population of 1. 357 billion which opens up many economic opportunities for Australia. In April 2013, Australia and China commenced direct trading between the Australian dollar and the Chinese renminbi, this will lower currency conversion costs, ultimately promoting and raising the amount of trading between both of our profiting countries.
China and Australia still continue to improve the financial relationship. From these beginnings, and starting with trade in minerals resources from Western Australia, a good trade relationship has developed. The relationship between Australia and China is now broadly based and very productive. Our leaders and our governments are committed to taking this relationship to an even higher level. Map of China The Australia-China economic and trade relationship continues to steadily expand.
China is now Australia’s largest two-way trading partner in goods and services (valued at more than A $160 billion in 2013-14), our largest goods export destination (A $100 billion in 2013-14), and our largest source of merchandise imports (A$50 billion in 2013-14). The Government is pursuing a number of initiatives to strengthen and diversify this relationship. Economic diplomacy is very important and is a main focuslof the governments international commitments. This is why we are bringing together activities in trade, growth, investment, and business.
On 17 November 2014, Prime Minister Tony Abbott and President Xi Jinping announced the conclusion of the negotiations for the China-Australia Free Trade Agreement (CHAFTA). CHAFTA is the Chinese Australia free trade agreement (FTA) between the two countries will bring FTA into action as soon as it can be done. This sets a base for a new era of trade with China. It will allow for new opportunities for Australia. China is Australia’s largest export market for good and services. This agreement will enhance the growing trade and investment relationship between our economies.
The graph above shows that we make the largest amount of money in exports with our natural resources while we buy clothing, technology and household goods. The Government has been promoting its open investment policy and Foreign Investment Review Board process, which continues to attract Chinese investors. The stock of Chinese investment in Australia is now more than fourteen times the level it was in 2005 at $31. 9 billion, with net new investments of $8. 8 billion in 2013. the graph above it shows the relations between Australia and China since 1990 all the way to 2011.
It shows that China has almost always been Australia’s largest export buyer In April 2013, Australia and China commenced direct trading between the Australian dollar and the Chinese renminbi. Direct trading should help to lower currency conversion costs, facilitate the currencies’ use in bilateral trade and investment, and promote financial cooperation between our two countries. TABLE SHOWING AUSTALIA’S EXPORTS TO COUNTRIES China has had a continuously growing gross domestic product at a growth rate of 10 percent in the past two decades.
Products that Australia exports to China from 1995-2012 This graph of Australia’s exports to China starting from 1995 to 2012. It shows that in just a short period of 17 years Australia has boomed phenomenally with at the start barely exporting anything then boosting some products to almost 80 billion dollars to China alone. This is an amazing statistic as China is Australia’s largest two-way trade partner and the two countries are continuing to allow our countries to trade and promote growth.
MIGRATION Immigration for Chinese nationals has become easier and the number of Chinese migrants to Australia has steadily increased in the past decade. At the end of June 2013, 427 590 Chineseborn people were living in Australia, 70 per cent more than 30 June 2006. That is a huge increase of one nationality of people in such a short period of time. After the United Kingdom and New Zealand, China is the third largest migrant community in Australia, equivalent to 6. 7 per cent of Australia’s overseas-born population and 1. 8 per cent of its total population.
The Australian migration pathway to permanent residence is non discriminatory, it is not based on religion or race but on the contribution to Australia. Positive contribution to Australia through their skills, qualifications, entrepreneurial spirit and employment potential. Family migration facilitates the entry of close family members of Australian citizens, In the above are a wide variety of occupations that potential migrants can nominate, which are acceptable for permanent and temporary skilled migration to Australia. The following table shows the main occupations for permanent skilled migrants
There is a large majority of migrants who are becoming well paying white collar jobs rather than manual labor. This shows where Australia is heading in the coming years as the government are trying to adopt more white collar workers by primarily allowing those qualified for these jobs to be allowed into Australia. b. Australian Dollar plummets as China drop the Yuan again The Australian dollar has reached a new low that it has not been at for 6 years. It was slammed by Chinese authorities devaluing its currency against the US dollar for the second time this week.
The dollar had just started to recover and surge to reach US73. 2? , before the Beijing lowered the midpoint of its yuan currency by 1. 6per cent to 6. 3306 per US dollar. This caused the dollar to drop almost more than a full cent to US72. 15?. It recovered slightly to US72. 3? in late trading. The Chinese government had already begun devaluing its currency the day before by dropping it by 1. 9 percent against the US dollar, which is the largest drop on record. The peoples bank of China described it as a “one off move” before dropping the dollar.
Graph showing the drop in the Australian dollar The Australian dollar on Tuesday fell from an intra-day high of US74. 36? to US73. 17? and all the way to US72. 85? overnight. The devaluations created a rush in purchasing of the US dollar, driving the Australian currency downwards. Credit Suisse analysts are forecasting a further ongoing decline of the yuan, which will likely trigger similar effects of the Aussie dollar, based on their estimates the yuan is 5 to 10 per cent overvalued.
The yuan devaluation has also hit Asian stock markets, several of hich are major trading partners of Australia and significant customers of Australia’s stock exchange topping resource companies. In conclusion the close Australian bilateral relation ship with China as it has its pros and cons. Australia is able to trade large amounts of goods and services and also import large amounts, but in this instance we can see a problem that the government would have with this partnership, which drops our dollar which makes our prices much lower and has a flow on effect to the rest of our economy.