Chinese President Xi Jinping. Image: commons.wikimedia.org

Chinese President Xi Jinping. Image: commons.wikimedia.org

he long path towards a free-trade agreement with China is drawing to an end. After almost a decade of negotiations President Xi Jinping will arrive in Australia next week expected to sign off and open China’s staggering $10 trillion economy.

Australia has signed similar deals with Japan and Korea in the past three months. But the Chinese economy is still growing, at a mighty 7.7 per cent.

Australia and China already trade $150 billion worth of goods each year. An FTA will enlarge this considerably. This is because getting rid of tariffs will make it cheaper for companies to import and export goods to partner nations. Improved efficiency leads to cheaper prices. The 1.36 billion Chinese community is keen to get its hands on Australian products like wine, dairy products, meat, minerals, wool and agricultural produce; while Australians will benefit from cheaper manufactured goods like textiles, clothes and foreign investment.

Put simply, both sides win.

Tim Harcourt. Image: 2smsupernetwork.com

Tim Harcourt. Image: 2smsupernetwork.com

Tim Harcourt, a former Austrade economist, said: “It’ll benefit both (Australia and China). Free trade agreements are not like a footy scoreboard where you get a ‘winner’. It’s about building exports and imports simultaneously and building investment both ways.

“A lot of it will be agricultural sectors. I think when you look at companies that export to China they pay higher wages than those that don’t. There could be some real benefit to workers in terms of wages and jobs.

“Those prices will come down and the services and tourism sector will go quite well because we’ll see a big influx of Chines tourists and students at our universities.”

But some Australian industries will suffer.

Dr Jane Qiu, senior lecture of International Business at UNSW, said, “The nature of free trade agreements is that they follow economic principles. For things like agriculture and minerals where Australia has a comparative advantage over China, the FTA will enhance their success. But other sectors, like manufacturing, could find themselves doing it even tougher.

“We will for sure lose employment in manufacturing sectors for products that can be transported. But we will have employment in other sectors namely agriculture and mining, but the argument is those sectors are not labour intensive.”

“We will have increases in the service sector, especially tourism. So it depends on how much we can boost tourism. The Chinese are keen to go out, but we need to pitch in what they really like.

“One of the few sectors that will gain for both countries is logistic providers, transportation. So people in this industry will be happy, especially the cold chain. Providers required for meat products, dairy and wine. For cold chain providers it will be very good news.”

The FTA is expected to increase Australia’s GDP, further the job rate, strengthen ties between our two nations, create opportunities for businesses, and drop the prices of many goods.

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