Just over five years since the ratification of the China-Australia Free Trade Agreement, a post-implementation review was released yesterday by the Department of Foreign Affairs and Trade (DFAT). At its inception in 2014, the agreement represented an unprecedented economic opportunity for both the Australian and Chinese economies and businesses to be favorably placed to benefit from the expansion of the Chinese economy. Key findings from the review include the following:
- ChAFTA has achieved its overarching objective of expanding economic opportunities between China and Australia. A reduction of tariffs and other trade barriers have liberalized economic flows and ChAFTA has underpinned the two nations burgeoning economic relationship.
- Since entry into force of ChAFTA, complementary two-way trade has markedly increased:
- Two-way goods and services trade rose at a compound annual growth rate of 13% from the end of 2015 to June 2019.
- The value of goods exports has increased 97% while trade in services exports increased by 76%.
- Financial services exports trade has strongly increased since entry into force of ChAFTA.
- Goods imports steadily rose since the implementation of ChAFTA, rising from A$61.8 billion in 2015 to A$79.5 billion in 2019.
- China is now Australia’s largest trading partner by a significant margin , whereas Australia is China’s 7th largest source of imports
ChAFTA has enabled Australian businesses a competitive advantage within the Chinese market.
- Numerous Australian industries have benefited from ChAFTA.
- The education and tourism sectors became Australia’s second and third largest export markets respectively.
- Many other businesses have indirectly benefited from ChAFTA through improved stakeholder relationships with Chinese buyers, distributors and customers.
At the time of signing the ChAFTA agreement, Australia was recognized as securing a substantial first mover advantage against competing trading nations. Although Australia still continues to enjoy various benefits derived from ChAFTA, China’s economy and markets have swiftly advanced since, many advancements of which weren’t addressed in the agreement at the time. Furthermore, the modern landscape of a globalized world has seen China continue to open its markets and economy to alternative foreign investment, and Australia faces and ever-increasing level of competitiveness in international trade.