Australia will serve as a guinea pig in China’s services market, bringing expertise to the world’s second-largest economy without dominating it, Trade Minister Andrew Robb said.
In negotiations with China on a free-trade agreement, concluded this week, Robb told his counterparts to view Australia as a test case to trial the opening up of Chinese services to outside competition.
“I said think of us as ‘a special economic zone,’ which has been a very effective tool of public policy in China,” Robb told executives and economists at a Bloomberg function in Sydney today.
“I don’t know whether that was conclusive, but in the last two months the services door just opened.”
Robb said while agriculture and resources were important, Australia’s export future will rely on providing services to Asia, where the middle class of 600 million people is forecast to expand to 3 billion.
“There are literally hundreds of services across the economy that are in demand in China and so many other parts of the region,” he said.
Australia is the most China-dependent developed economy in the world, with exports to the nation accounting for 5.3 percent of gross domestic product according to Commonwealth Bank of Australia.
While resources have dominated exports, Australia will need to adjust as the government in Beijing engineers a transition to consumption-led growth from fixed investment.
“There was nervousness through much of the negotiations, or for the first six months, when I’d be saying we’ve got to open up services,” Robb said. “And they kept saying ‘but we would have to give this to much bigger countries’,” if they’re given to Australia, he said.
Parts That Work
Robb said that by using the notion of a “special economic zone”, China could take the parts of the agreement with Australia that worked and include them in negotiations with larger countries.
It could also exclude the parts that didn’t work and say those were an experiment. His focus stems from a structural imbalance whereby services account for about 80 percent of Australia’s economy and just 15 percent of its exports. He argues that a knowledge-based economy like Australia must harness its expertise in the field.
“Twenty percent of the world’s population is in China, seven percent of the world’s water, and most of it’s polluted,” Robb said as an example.
“We’ve got an enormous opportunity, because of our skill set, to contribute to fixing that problem over the next few decades with the Chinese. Contributing to their growth. And they see it.”
bloomberg.com
In negotiations with China on a free-trade agreement, concluded this week, Robb told his counterparts to view Australia as a test case to trial the opening up of Chinese services to outside competition.
“I said think of us as ‘a special economic zone,’ which has been a very effective tool of public policy in China,” Robb told executives and economists at a Bloomberg function in Sydney today.
“I don’t know whether that was conclusive, but in the last two months the services door just opened.”
Robb said while agriculture and resources were important, Australia’s export future will rely on providing services to Asia, where the middle class of 600 million people is forecast to expand to 3 billion.
“There are literally hundreds of services across the economy that are in demand in China and so many other parts of the region,” he said.
Australia is the most China-dependent developed economy in the world, with exports to the nation accounting for 5.3 percent of gross domestic product according to Commonwealth Bank of Australia.
While resources have dominated exports, Australia will need to adjust as the government in Beijing engineers a transition to consumption-led growth from fixed investment.
“There was nervousness through much of the negotiations, or for the first six months, when I’d be saying we’ve got to open up services,” Robb said. “And they kept saying ‘but we would have to give this to much bigger countries’,” if they’re given to Australia, he said.
Parts That Work
Robb said that by using the notion of a “special economic zone”, China could take the parts of the agreement with Australia that worked and include them in negotiations with larger countries.
It could also exclude the parts that didn’t work and say those were an experiment. His focus stems from a structural imbalance whereby services account for about 80 percent of Australia’s economy and just 15 percent of its exports. He argues that a knowledge-based economy like Australia must harness its expertise in the field.
“Twenty percent of the world’s population is in China, seven percent of the world’s water, and most of it’s polluted,” Robb said as an example.
“We’ve got an enormous opportunity, because of our skill set, to contribute to fixing that problem over the next few decades with the Chinese. Contributing to their growth. And they see it.”
bloomberg.com
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