At a collaborative webinar on 5 November 2021, The Hon. Dan Tehan Minister for Trade, Tourism and Investment, accompanied by Australia Consul General to Shanghai Dominic Trindade, David Olsson, National President of ACBC, and Simon Woods, AustCham Shanghai General Manager, briefed the Australia-China business community on current China market opportunities and challenges generated by the Australia-China relationship.
The Minister emphasised the Australian Government’s stance on bilateral diplomatic engagement at the ministerial level, highlighting the open line on the Australian end for ministerial contact. Minister Tehan emphasised the complementarity between the two nation’s economies and mutual benefits garnered from maintaining strong global trading systems via multilateral forums such as the WTO and recent G20 and COP26 meetings. He spoke to the benefits for Australia of maintaining an open and transparent trading system and how emerging areas of collaboration in new energy solutions provide mutually beneficial and globally supported platforms for long-term engagement.
In the leadup to one of the world’s most important trade fairs, the China International Import Expo (CIIE) provides an opportunity to showcase Australian products to the world. Hosting nearly 3,000 exhibitors from 127 countries, speakers discussed opportunities, roadblocks, market access requirements, policy environments and evolving brand perception.
Australian industry maintains a deep and mutually beneficial relationship with the PRC however businesses are increasingly aware that market access must be maintained to take advantage of market complementarity. The members represented by the ACBC and the AustChams on the ground in the Mainland and Hong Kong are well supported by the council and chambers. High level government engagements such as this continue to bring the trading relationship and broader two-way diplomatic communications back on track.
The need for Government and business to work together in a team Australia effort has never been more important and the value of ACBC membership never more apparent.
On the CIIE 2021…
- The 4th CIIE kicked off on 5 November in Shanghai. Nearly 3,000 exhibitors from 127 countries and regions are showcasing their latest products, technologies, and services. The Expo will last until Nov 10.
- The CIIE’s goal is a clear and demonstrable example of China opening to the world. 2021’s Expo will be smaller (due to the COVID travel restrictions) but no less important.
- Australian brands that have an existing presence in China are well represented by their local representatives. For others that have not been able to attend in person, Austrade (and several of the state government trade and investment offices) are playing an active role in representing them.
- Austrade’s message is clear “By investing in the China market and Chinese people there is no reason why businesses should not continue to find success in China.”
- There have been over 100 million impressions on Austrade’s digital campaign for the CIIE 2021 with 90% positive sentiment showing the power and reputation of the Australian brand.
On ACBC/AustCham membership from David Olsson…
- Together the council and chambers represent and advocate for several thousand member companies, and through them, tens of thousands of individuals involved in the Australia China trade relationship.
- It is these personal and business relationships (developed over many decades) that form the fabric of the bilateral relationship and underpin our ability to connect and engage in the long term.
- In a rapidly changing world, the need for government and business to work together collaboratively has never been greater. ACBC and the AustChams are doing more work together, and at a government level, the relationship with Austrade continues to strengthen. ACBC also works closely with state and territory trade representatives in China.
- ACBC also maintains a good working relationship with the Chinese Embassy in Canberra and its consulates around the country.
- ACBC and AustChams remain firm in their commitment to trade and investment in China but do so with a much clearer understanding of the emerging risks and the factors that have driven the government’s management of the bilateral relationship.
On the Australia-China relationship from Dan Tehan…
- 1 in 4 regional jobs and 1 in 5 total in Australia are maintained through trade and investment with China and with the support of the Australian government and the business chambers.
- The ongoing work and professionalism of the council and chambers has enabled the business communities of Australia and China to stay connected and engaged over a very difficult period.
- The Australian stance on China continues to be a consistent one. Working together on mutually beneficial areas and continuing to pursue dialogue and cooperation.
- A growing list of goods subject to formal and informal restrictions emphasises the need for dialogue and a coordinated whole of nation approach that reinforces regional security.
- There has been no recent bilateral ministerial contact between Australia and China but there is regular engagement with the Chinese Embassy in Canberra.
- There has also been recent joint participation in multinational forums and networks. Minister Tehan was in Rome for the G20 which included two smaller meetings on the side involving the Chinese Ambassador among others promoting strong global trading systems.
- The Minister is working to build Australia’s reputation as a safe and well-regarded investment destination.
- Addressing supply chains is a priority for the Australian government. COVID has highlighted potential vulnerabilities and driven a push to secure domestic supply chain.
- Minister Tehan encouraged businesses to engage with the Chinese market but to be aware of the risks, as they would in any market. Investigating other markets will help expand and diversify trade and forms part of the ACBC supported China Plus trade model.
- China remains a valued market for students and international tourists and ATAGI recognition of Sinopharm and Sinovac vaccines will help facilitate the gradual return of Chinese students and travellers.
- Over 60% of international students enrolled in Australia are currently outside of Australia. A strong signal to the power of Australian education.
On emerging long-term opportunities…
- As the world looks to decarbonise and solve climate change, we will have to collaborate globally. New energy sources will become a key global trade market.
- As Australia is a historical supplier of energy to China, hydrogen provides a huge opportunity over time for Australia to work with China and other global partners.
- Other forms of renewable energy will also provide opportunities.
How can businesses act now to protect future trade with China?
- Remain nimble and look at the opportunities as they arise. Events such as the Olympics bring investors and business together.
- Look at historical areas of strength for guidance.
- International education for example. Not only are there commercial benefits from education exports but the soft power diplomacy that comes from international students is also highly valuable.
- David Olsson emphasised the need for dialogue. “It’s an overused and little understood word”. It’s more than a meeting; it’s a way of engaging around a topic of mutual interest, with a view to finding a solution to a problem or a way forward.
- David cited ACBC’s national industry summits as practical examples of productive dialogues. He also provided an update on a proposal for ACBC and CCPIT to host several senior-level business dialogues around industry sectors.
On global trade frameworks…
- Australia and China both share a common interest that the global trading environment stays stable and reliable and provides certainty and predictability.
- Both benefit from membership of the World Trade Organisation (WTO). But with membership comes responsibilities.
- The WTO is a big benefit to Australia as a smaller economy to prevent a ‘law of the jungle’ global trading environment.
- The Regional Comprehensive Economic Partnership (RCEP) involving both Australia and China will come into force on 1 Jan 2022, after Australia and New Zealand ratified the agreement last week.
- Minister Tehan’s hope is that everyone abides to the spirit of the trade deal and the reality of the rules that are set out. In the same way that he wants ChAFTA to continue. “It is a very important bilateral trade relationship that we have, and we want to use it in a way that can benefit Australia and China.”
- The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – China has indicated its desire to join, and Australia is working with members on this accession.
- All parties in the CPTPP must adhere to the gold standard. “It is the trade deal that shines more brightly than most in our region.”
- David Olsson said from a member perspective, the one area we need to spend some time on is digital trade.
- Australia is a leader in many areas, but the speed with which Chinese businesses and consumers are moving into a fully digitised world requires Australian firms to continue to stay fully engaged in these areas. “It’s not just about e-commerce platforms and on-line deliveries, but also about social media engagement, digital currencies, digital finance and trade mechanisms.”
Are there particular Australian industries that are going to be affected by FIRB restrictions?
- Australia remains open for FDI. Global FDI flows have dropped by more than 50% during COVID.
- Minister Tehan stated that foreign investment will be a key component of Australia’s economic recovery.
- As a matter of sovereign integrity, all sensitive areas will be overseen by FIRB. FIRB will give a clear indication of what a sensitive area is and how to navigate investment on a case-by-case basis.
- David Olsson spoke to ACBC’s submission to the FIRB review and the feedback from investor roundtable discussions about the need for simplicity and clarity in the assessment process, especially as the competition for global capital grows.
- David urged the government to explore the scope for ‘non-strategic’ investments to be assessed within a short time frame, and the importance of having a sophisticated engagement program to stay connected to international investors. The Minister stated that this is consistent feedback that they have seen.