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July 3, 2014

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Home » Opinion » Opinion Columns

Treasurer: Sino-Aussie ties boost economic recovery

By Ni Tao | July 3, 2014, Thursday | Print Edition

RECENT years have witnessed the dramatic growth of Australia-China relations in the form of burgeoning trade, investment and closer cooperation on global governance.

During his recent visit to China and a stopover at the China Executive Leadership Academy in Shanghai, Hon Joe Hockey, Treasurer of Australia, spoke to Shanghai Daily about the different aspects of the bilateral ties and how the two countries can better cooperate as respective hosts of the G20 and APEC this year.

China is Australia’s largest trading partner, with bilateral trade volume surging to US$150 billion in 2013.

Australia exported over US$94 billion worth of merchandise and goods to China, accounting for 36 percent of its total merchandise exports, said Hockey.

Apart from trade, people-to-people contact has also benefited from closer ties. Australia is a major destination for Chinese international students, receiving  around 30 percent of Chinese students worldwide, Hockey said.

And about 400,000 Australians, equivalent to almost 2 percent of the country’s population, visited China last year.

Behind these facts are booming institutional links encompassing family, tourism, education, sporting exchanges, science, immigration, technology and research, according to Hockey.

And China and Australia have worked closely on a coordinated response to regional crises such as the missing Malaysian Airlines flight MH370.

Hockey conceded, however, that there remain quite a few differences that need to be sorted out for the sake of increasingly symbiotic relations.

For instance, China and Australia have held over 20 rounds of talks for a Free Trade Agreement since 2005, but a breakthrough is so far elusive, bogged down by unresolved differences over technical terms about agriculture.

While Australia recently signed an FTA with South Korea, Hockey said “there is a strong determination by the Chinese president and the Australian prime minister to see through the differences and hopefully sign an FTA within this year.”

Despite lingering protectionism on both sides, Australia has been more open to Chinese investments, Hockey said, adding that he is “actively encouraging Chinese state-owned enterprises to invest in Australia.”

“I have approved for the State Grid to have its biggest investment outside of China,” he told the reporter.

While there is no timeline for when the much-anticipated FTA will materialize, Hockey said he believes “the relationship must be deeper than any individual agreement.”

Minerals like iron ores currently represent a sizeable portion of Australia’s exports to China, but Hockey hoped that the two countries can diversify from trade in commodities.

“As China tries to empower its consumers and lift its household expenditure and to lift its domestic economy, Australia can help to facilitate that through architectural, engineering, medical, health care, financial services, and a range of different things that extend beyond the traditional export of merchandise,” he said.

Chairing the G20, Australia is driving agendas to speed up global economic recovery. Infrastructure, Hockey said, will be vital to its resilience. China, with its expertise in infrastructure, is expected to play a part.

Financing infrastructure

For example, China’s recent initiative to establish an Asian Infrastructure Investment Bank (AIIB) has triggered much interest across the region.

“Australia is actively considering involvement in the AIIB, but one of the most significant pressures is we need to identify more information to form a stronger view,” said Hockey.

Amid criticism of the TPP (Trans-Pacific Partnership Agreement) as a plot to exclude China, Hockey argued that regional economic cooperation shouldn’t involve some members to the exclusion of others.

“We agree with the concept of Asia first with the AIIB. But it is important that with these multilateral agreements and forums we have everyone participate as much as possible.”

As a traditional ally of the United States, Australia does not always side with Washington, especially with regard to reform of international institutions like the IMF and World Bank.

“Both Australia and China continue to press for the completion of reforms of the IMF, which, agreed to in 2010, has been held back by the US Congress. But it is critical to the IMF’s legitimacy and effectiveness,” said Hockey.

He said that Australia, thanks to its Anglo-Saxon heritage and its proximity to Asia, has a special role to play to mediate the differences between China and the West, because “our advocacy for better understanding of Asia and China to the Europeans and Americans carries a lot of weight.”

“We are part of the region and very close to China. So Australia does not have to choose between its heritage and its geography. We can be an advocate for both in different forms,” Hockey said.

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