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Five Year Plan of China: Laws applicable to Australian business operating in China

   

Added on  2020-04-21

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Running head: CHINESE TRADE AND INVESTMENT LAWChinese trade and Investment lawName of the Student:Name of the University:Author’s Note:

1CHINESE TRADE AND INVESTMENT LAWTable of ContentsIntroduction:....................................................................................................................................2Discussion:.......................................................................................................................................3China Australia free trade agreement:.............................................................................................3Five year plan of China:..................................................................................................................5Laws applicable to Australian business operating in China..........................................................13Conclusion:....................................................................................................................................17References and Bibliography:........................................................................................................19

2CHINESE TRADE AND INVESTMENT LAWIntroduction:The provincial and central government of China in recent years have created specialzones that have offered several benefits to the countries who are doing business poor operating inChina. Such areas include free trade zone, special economic zones and trade development zones.One of the factors that can be considered by Australian sector for doing business in China is thebenefits offered by different economic zones and free trade zone. Australian business is requiredto check with their state trade office for seeing that it has any relationship with special trade zonefor setting up operations in China. Free economic zone has been opened by the city of China.Free trade zone of China has created business opportunities for Australian business1. One of themost important international business hubs that is Shanghai is recent development. The Shanghai free trade zone was launched on 29th September 2013. Establishment ofChina’s national exhibition and trading centre is one of the first initiative of special free tradezone of china. Opportunities will be created for Australian business due to economic reforms andsignificant opportunities created by national exhibition and trading centre. For the private foreigninvestments, six service sectors have been opened up under the free trade zone. These sectorsinvolve shipping services, financial services, business services, cultural services, social servicesand professional services 2. It is indicative of the fact that Chinese government has signalledunprecedented level of economic liberalization. An innovative approach for promoting theexports of Australian country to China is represented by Australian national exhibition and1AOne-SpeedWorld:2017ValueCreatorsReport(2017)https://www.bcg.com<https://www.bcg.com/en-in/publications/2017/engineering-construction-infrastructure-value-creators-report-one-speed-world.aspx>2Assets.Kpmg.Com(2017)Assets.kpmg.com<https://assets.kpmg.com/content/dam/kpmg/pdf/2016/06/china-outlook-2016-v1.pdf>

3CHINESE TRADE AND INVESTMENT LAWtrading centre. The fast growing Chinese market can be accessed by Australian business withoutany complex procedures involved in registration of company in China 3. Discussion:China Australia free trade agreement:China has ratified and initiated implementing free trade agreements with Australia in year2015 as it is the largest trading partner. This free trade agreement will help in encouraginginternational investment and trade by relaxing regulator barriers on foreign investments,eliminating and reducing tariffs by lowering trade barriers. Australia will face increased exportcompetition in domestic markets by allowing free flow of cheaper goods across trade barriers.Investment in Australia by private Chinese investors will be stimulated to $ 1094 million due toincrease in threshold in non-sensitive sectors by foreign investment review board. Investment and trade will be boosted between China and Australia as per the agreement.As per the agreement, tariff is eliminated on the vast majority of goods between the tradingpartners. Authorities of China has remained cautious about Trans pacific partnership and therewill not be immediate negative impact on trade and investment due to implementation ofagreement. Second largest source of foreign investment for Australia in year 2014 is China withthe total value of investment stock amounts to AUD 64.5 billion 4. ChAFTA is expected tostimulate trade flows between China and Australia will witness increase investment by China. 3 Aggarwal and Urata,Bilateral trade agreements in the Asia-Pacific: Origins, evolution, andimplications(Routledge, 2012)Agrifutures.Com.Au(2017)Agrifutures.com.au<http://www.agrifutures.com.au/wp-content/uploads/2017/08/rirdc_ar1516_final-8.pdf>4 Ayodele and Sotola, China in Africa: An evaluation of Chinese investment.(Initiative for Public Policy Analysis,pp.1-20. 2014)

4CHINESE TRADE AND INVESTMENT LAWChinese companies will further incentivise to make investment in China due to lower costof exports brought by tariffs reduction. For securing the supply of high quality of products,Australia will have investments from china. This will assist Australian companies to tap intoevolving trend of Chinese consumption. Prior to the agreement, Chinese market was accessed byAustralian business for increasing the processing capacity and agricultural production. There hasbeen increase in investment value that is an encouraging factor for Chinese companies. Realestate of Australia has been witnessing increasing investment from the Chinese companies inaddition to consumer related sectors. Investment facilitation arrangement made under ChAFTAunder which Chinese workers will be entering Australia in temporary basis for participating ininfrastructure projects of Chinese companies. Furthermore, tariffs on all types of pharmaceuticalproducts will be removed. Overseas investment has been stepped into by Chinese companies inhealthcare sector of Australia. Australian market access by Chinese companies will help inaccessing technology, high quality trends and expertise5. This would help in satisfying thegrowing demand of Chinese market. The investment targets by Chinese companies in Australia under the free trade agreementwould be mainly in the sector of financial services, computer and electronics, food, agribusiness,textiles, healthcare and transportation. A range of commitment has been agreed by china underChAFTA that would provide assistance to service providers in Australia for establishing theircommercial presence in territories of China. Some of the sectors includes sector of shipping,health aged care, architecture, mining and legal services, urban planning, fund managementsectors, insurance and banking 6. A clause of most favoured nation is involved in agreement that5 Berger, Busse, Nunnenkamp, and Roy, Do trade and investment agreements lead to more FDI? Accounting for keyprovisions inside the black box.(International Economics and Economic Policy,10(2), pp.247-275. 2013)6 Bin, China-Russia relations: into the Syrian storm: between alliance and alignment.(ComparativeConnections,17(3), p.137. 2016)

5CHINESE TRADE AND INVESTMENT LAWwill help in protecting the competitive position of Australia provided the condition that ifbeneficial treatment is extended by China to their trade partners. Under ChAFTA, investors inAustralia are provided with the opportunities of establishing wholly foreign owned entities. 13thfive year plan provides the Australian investors with further liberalization opportunities. Due to increase in import competition, the merger clearance rates in Australia is likely tohave a favourable impact. Further growth in import competition in areas such as manufacturing,electronics and household products, is likely to be supported by elimination and reduction oftariffs under ChAFTA. Australian companies can source cheaper supply from China with thisagreement. Import competition effectiveness can be softened by the applications of anti-dumpingpolicies and using standards of Australia to impose additional trade barriers on importing ofgoods. Increasingly global nature of competition can provide with the remote side effect ofChAFTA as it seeks that Australian companies intend to merge for creating efficiencies andcompeting effectively with counter parts 7. The international competitiveness can be relatedunder the provisions of formal merger authorization. It will help Australia in becoming moreexposed to export market and import competition and seeking and eliminating trade barriers. Five year plan of China:The economic development of China is achieved through a plan of five years in the mostrecent year from March 2016 to March 2021. Realising of national and economic developmentplan in form of the five year plan has outlined several targets and economic policies for drivingdevelopment of industry inn China by year 2020. The main focus of plan is continued efforts inreforming measures and maintaining social stability and economic growth. Some of the key7 Bloom, Draca and Van Reenen, Trade induced technical change? The impact of Chinese imports on innovation, ITand productivity.(The Review of Economic Studies,83(1), pp.87-117. 2016)

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