TBUS401: International Trade and Investment between Australia & China

This report provides an in-depth analysis of the economic relationship between Australia and China, focusing on the evolution of trade and investment between the two countries. It begins by examining the historical context of their relationship, including pre- and post-trade dynamics, and highlights the growth in cultural, economic, and political engagement. The report then delves into the impact of the China-Australia Free Trade Agreement (ChAFTA), exploring its implications for various sectors, including agriculture, resources, and manufacturing. It discusses the key benefits of ChAFTA, such as reduced tariffs and increased market access for Australian goods, while also addressing the current challenges in the relationship due to Chinese political influence. The analysis includes data on trade volumes, investment flows, and the impact of these factors on both economies, supported by relevant references. The report concludes with a discussion on the future of the Australia-China trade relationship, considering the evolving political and economic landscape.

Running head: ECONOMICS
Economics
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Introduction
Relation between Australia China before trade
Australia and China had always shared a goof relationship before and after trade. The
relationship between Australia and China is often termed a s the Sino Australian relations that is
referred to the relations between China and commonwealth of Australia. The relationship
between both these countries known to have grown considerably all over these years. Both the
countries are known to engage culturally, economically as well as politically. The Chinese
traders had already been present in Australia since 1750s. however the bilateral trade did not
begin until the 20th century (Berger and Skovgaard Poulsen 2015).
The trade relations of Australia were heavily geared towards the British empire where at
that time Australia used to mainl6 import tea, rice and silk from China. However, during the
early 20th century the agricultural production started to make up a larger share of Australian
exports to China. By the end of 1918, Australia had been exporting more than 900,000 pounds of
butter to China. During the 20th century, the demand for silk and other textile materials have
started to increase from Australia. Although the world war II known to have disrupted the trade
between Australia and China. After the war although, will have known to become one of the
essential Australian good imported by China. After the diplomatic relations started taking place,
there had been an expansion of bilateral trade between Australia and China.
After that China became the biggest trading partner because of the China’s strong
demand for coal, iron ore and the liquefied natural gas. In order to encourage Australian
entrepreneurship in China, the Australian chamber of commerce of greater China known to
organize every year the Australia China business awards (Armstrong 2015). It has become more

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than 45 hears since China and Australia formerly established the diplomatic relations since 1972.
The relationship between both these countries known to have grown considerably all over these
years. Both the countries are known to engage culturally, economically as well as politically.
Although the bilateral trade relationship is in a strong position, the diplomatic relationship had
been a challenge. During 1972, the trade between China and Australia was worth less than $100
million.
Relation between Australia China after trade
Currently Chinese investment in Australia declined by 36 percent. The free trade
agreement between China and Australia is termed as chAFTA is known as a bilateral free trade
agreement between the governments of both Australia and China. The deal was known to
complete in 17th November in 2015. According to the reports published by Australian department
of foreign affairs and trade in the year 2014, China had been Australia’s largest export market for
both services and goods that is known to account for nearly a third of total exports with a
growing source of foreign investment (Berger and Skovgaard Poulsen 2015). The China-
Australia Free Trade Agreement (ChAFTA) entered into force on 20 December 2015. Presently
the relations between China and Australia have deteriorated a lot because of Chinese political
influence in various Australian society including government, society as well as universities. The
free trade agreements is known to establish a preferential framework. ChAFTA had been one of
the famous free trade agreement that cina has negotiated wwith any of its trading partners.
Investment is the key to any country’s growth which is known to fuel productivity,
employment as well as expands the economy China had been Queensland largest merchandise

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trading partner where exports were known to be valued at A$11.400 billion (Jayanthakumaran
and Liu 2016). China is also a major source of foreign investment in Queensland property,
resources and agricultural sectors. ChAFTA is known to provide large market access for
Australia where more than 85 percent of Australia’s goods had been exported to China. A large
number of barriers to Australian agricultural exports will be removed across a wide range of
products like beef, lamb, pork, hides, wine and other processed food. As a result of tariff
reductions, Queensland will be reaping benefits from the agreement. There will be a removal of
12 to 25 percent tariff on beef for nine years, 30 percent tariff removal on horticulture within
four years, 15 percent removal of tariff on natural honey and a lot more. More than ninety
percent of Australia’s exports of resources, manufacturing products as well as energy will be
entering China duty free (Li., Wang and Whalley 2017). There will be also zero future tariffs on
the liquefied natural gas, crude petroleum, gold as well as iron ore.
Presently the relations between China and Australia have deteriorated a lot because of
Chinese political influence in various Australian society including government, society as well as
universities. Investment is the key to any country’s growth which is known to fuel productivity,
employment as well as expands the economy. Chinese investment in Australia quadrupled in
value between 2010 to 2016 (Bath and Nottage 2015). Currently the Australian investment in
China have also declined. Chinese investment in Australia dropped by more than 36 per cent in
2018 which had been the second lowest since the global financial crisis. The huge land mass
highly urbanized population rich resources invite huge amount of investment in Australia. The
foreign capital also allows huge amount of investment in the Australian economy. The increase
in the range of investment in the domestic assets along with potential for huge access to the

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foreign market for the Australian business can translate into increased completion, job creation
and capital formation.

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Reference list
1. Jayanthakumaran, K. and Liu, Y., 2016. Bi-lateral CO2 emissions embodied in
Australia–China trade. Energy Policy, 92, pp.205-213.
2. Li, C., Wang, J. and Whalley, J., 2017. China’s regional and bilateral trade agreements.
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China and India—The International Context and Economic Growth, Manufacturing
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4. Wise, C., 2016. Playing both sides of the Pacific: Latin America's free trade agreements with
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8. Cui, C. and Chen, S., 2016, December. A RCA Analysis of China's Competitive
Advantage to Export Textile and Apparel to Australia. In 2016 International Conference
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9. Berger, A. and Skovgaard Poulsen, L.N., 2015. The Transatlantic Trade and Investment
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