Trade and Investment Performance of Australia and China - Example

Student Name: Tutor: Title: Trade and investment performance under recent policy development between two countries (Australia and China) Course: Introduction Trade and investment policy among trading partners guides the nature of the relationship that exist between them. Australia and China have talks about development of a free trade area in order to enhance trade and investment in the two countries. Trade and investment policy guides the foundation governing framework for the conduct in engaging in international commerce. It encompasses regulations and laws which regulates the competition conditions in the markets between the foreign and domestic operators (Chenggang, 2011). These constitute part of the wider national economic policies. They are further subject to international arrangement and treaties such as bilateral Free Trade Areas (FTAs), World Trade Organization (WTO), and regional forums such as APEC. Trade and investment policy is basically focused on making sure that international investment and trade is liberalized, promotes competition, and does not promote protectionism (Zhao, 2011). It is concerned with the eradicating of impediments impairing cross border operation to enhance access of international markets for the purpose of business. The basic principles at the core of trade policy are that of trade openness, living standards and economic performance have a strong connection. The economy’s economic welfare is enhanced through efficient and open markets that maximize benefits to consumer while minimizing distortions to the business. These offer a stable foundation for growth that is sustained in investment and trade over medium and long term. Policy reforms in both the European Union and the US will remain important to the future course for the liberalization of global trade and investment (Sally, 2010). They are important to Australia for their broader impact in both driving the speed of multilateral liberalization as well as utility of the WTO in achieving this. This essay explores trade and investment under policy development between Australia and China. Australia and China bilateral trade and investment China is Australia’s biggest trading partner, responsible for $71.5 billion of goods exports as well as $5.7 billion worth of services exports according to the 2011 figures (Chenggang, 2011). Australia is huge exporter of minerals, resources, fibre and food the market in China and was ranked as the fifth largest overall supplier of China in 2011. Whereas growth has reduced to a moderate level in the recent decades, China remains a potential market for Australian firms, a significant source of international students and expanding source of productive investment. Growing urbanization, industrial expansion, an emphasis on clean energy as well as environmental remediation, and the expansion of the service sector provides a broad variety of opportunities for companies in Australia (ABS, 2010). Austrade applies its badge of the government in broad network of offices in regional China to aid Australian as well as educational institutions in this essential but challenging market. Austrade organized the Australia China trade mission in August 2011 mission led by Dr. Craig Emerson, Minister for Trade and Competitiveness, and Parliamentary Secretary for Pacific Island Affairs, Hon. Richard Marle MP. The mission of one hundred delegates from 92 Australian institutions and businesses focused in the emerging centers of growth in Western China. The delegates in the mission comprised representatives from a wide range of industries, including, architecture and engineering design, education and training, financial services, clean technology, legal services and business and professional services. The objectives of the missions targeted to highlight strong capability of China in the service sector to local Chinese official as well as business leaders, and for delegates from China to learn about the quick development second-tier cities within China. The seven-day mission travelled Changsha, Guangzhou, Wuhan, Chongqing, and Chengdu (Drysdale & Findlay, 2009). Austrade organized visits to commercial and industrial sites in each city for the Australian delegates, seminars with local players on doing business in China, as well as a reception to engage Chinese government officials together with business representatives. Australia is the most preferred destination for Chinese students who choose to study abroad and China is the largest market for Australia international education with about 160,000 enrolments in 2011 (Zhao, 2011). In 2012 April, Austrade organized the inaugural Australia-China Career Fair within Shanghai city in collaboration with Zhaopin Limited which one of the biggest online recruitment Chinese companies. The event portrayed the value of Australian education using job outcomes as well as career development and was attended by Chinese parents, students, government officials and corporate human resources representatives. China relationship with China is based on mutual respect together with shared interests as well as differences. The relationship has grown and continues to mature as Australia engages with Australia on various issues of mutual interest like climate change, development aid in the South Pacific and nuclear non-proliferation. China and Australia have frequent bilateral dialogues on consular issues, climate change, regional security and human rights, and work together via a variety of multilateral institutions (Kerner, 2009). The significance of China to Australia has grown with China’s growing economic, strategic, and political influence in the Asia-Pacific region as well as the wider global economy. There are direct flights to Brisbane from a number of Chinese cities such as Shanghai, Beijing, Guangzhou and Hong Kong. China Southern Airlines has started commercial flights from Guangzhou to Perth as by November 2011 (ABS, 2010). China Southern Airlines has located its pilot training facilities within Australia for many years. They are in Merredin and Jandakot and were built in 1993. China is the biggest trading partner of Australia owing to the strong demand of coal, iron ore, and liquefied gas by China. Many Australian mining companies heavily rely on China and other expanding economies like India for their exports. The bilateral trade between China and Australia amounted to $105 billion in the period 2010/2011 (Song, Storesletten & Zilibotti, 2011). Australian has been a major source of high technology required by China to make real its claims to the large reaches in the western Pacific. The future of China is linked with that Of China since China accounted for 27% of all the value of exports of goods and services from Australia, whereas important from China market represented 18% of the total value of imports of goods and services from Australia (ABS, 2010). The economy of China is very complex in nature and economic analysis is impaired by a variety of factors. For instance, there is the measurement challenges with regard to the authenticity of economic data reported the agencies of Chinese government. There have been negative and positive aspects of high speed game of catch up by China, but the general living standards in terms of the GPD per capita have quadrupled as compared to the period before reforms. Major imports from China to the Australian market comprised of detailed transformed materials which Australia is unable to competitively produce with China’s comparative advantage like computers, telecom equipment and clothing. The high demand for Australia resources by China is due to Australia proximate location as well as availability plenty of natural resource. The growing energy demands by China assure exporters from China of a reliable income. Australia possesses less decisive influence on economy of China but offers 4.7% of China’s imports (Drysdale & Findlay, 2009). Australia and China have been in the process of coming up with a FTA that target to reduce or remove regulatory and trade barriers, and further enhance investment between Australia and China. The FTA will increase trade between China and Australia. Conclusion Trade and investment performance under recent policy between and Australia and China has been growing over the years. China remains as the largest trading partner of Australia and Australia exports most of its energy resources to China. China exports to Australia telecommunication products due to its comparative advantage. The Chinese students have found Australia as the most attractive destination when pursuing education abroad. The regional growth and dominance of China in the Asia-Pacific region has necessitated the cooperation with Australia. Removal of trade barriers will increase trading and investment across the two nations. China is an important market for Australia technology and it sees to improve its growth to western Pacific. There is a future between the trade and investment between Australia and China. As long as companies in China still need energy, Australia will remain to be an important energy exporter to China. Efficiency of production of household products in China makes it easier for them to find a ripe market in Australia. Policy development in terms of Free Trade Area guides the interaction between Australia and China. Discussion about reduction or removal of trade barriers is important in defining the future of trade relations between Australia and China. Currently the bilateral links between China and Australia is based on mutual respect. References ABS (Australian Bureau of Statistics) 2010, Characteristics of Australian Exporters2008-09, Cat. No. 5368.0, Canberra. Chenggang, X., 2011. The Fundamental Institutions of China’s Reforms and Development, Journal of Economic Literature, p. 1077. Drysdale, P. & Findlay, C. 2009, Chinese foreign direct investment in the Australian resource sector, China's New Place in a World in Crisis, ANU, Canberra, Australia: Kerner, A. 2009, Why Should I Believe You? The Costs and Consequences of Bilateral Investment Treaties, International Studies Quarterly, 53, pp. 73–102. Sally, R. 2010, Regional economic integration in Asia: the track record and prospects, ECIPE Occasional Paper, no. 2/2010. Song, Z., Storesletten, K. & Zilibotti, F., 2011, Growing like China, American Economic Review, 101 (2), p. 200. Zhao, S., 2011, The China model and the authoritarian state, East Asia Forum, 3(2), p. 13. Read More