The deal with the world’s largest trading economy marks a new phase in Australia’s relationship with North Asia, building on recent agreements with Japan and Korea.
It will benefit the Australian resources sector by providing new opportunities for METS providers in China’s minerals sector and by removing almost all tariffs on commodities exports.
These apply to a wide range of products including alumina, zinc, nickel, copper, uranium and coal, with some tariffs to be removed immediately and others, such as for thermal coal, in the near future.
Pearson said this was great news for industry, particularly as an MCA policy paper released that same day found Chinese imports from Australia already accounted for more than 5% of the Australian economy.
“The report dismisses suggestions that a moderation in China’s growth rate will significantly slow demand for Australian resources and energy exports,” he said.
“The report argues that Chinese demand for Australian resources and energy, already worth $80 billion annually, will continue to grow.”
Indeed the reports’ authors at Trading Nation Consulting forecast that the absolute growth of the Chinese economy in the next decade “could be twice as great as when its economy was surging during the first decade of the century”, leaving room for sheer excitement over future export opportunities.
This is particularly true for the resources sector, which made up four of the top five Chinese exports in 2013-14. This was led by iron ores and concentrates worth a total $57 billion, followed by coal ($9.3 billion), gold ($8.1 billion) and copper ($2.1 billion).
ChAFTA will come into effect after the completion of domestic legal and parliamentary processes in China and Australia, including review by the Australian Parliament’s Joint Standing Committee on Treaties and the Senate’s Foreign Affairs, Defence and Trade References Committee.
Both countries are working to complete these steps and bring the ChAFTA into effect as soon as possible.
When done, the deal is expected to make more than 85% of Australian goods exports tariff free, rising to 95% after full implementation.
