There is a saying that good things come to those that wait. Yesterday’s signing of a free trade agreement with China, while 10 years in the making, was well worth the wait.
The agreement is transformational. It puts many of our most important sectors on a more competitive footing internationally and will provide Australian companies with the scope needed to boost trade. This will in turn increase growth and create jobs for Australians.
Many of us in Australian business have often looked longingly at the success of New Zealand’s FTA with China with more than a hint of envy. The impact on the New Zealand economy has been broader than the economic benefits it has delivered.
It has also changed the psyche of its people and its industries. They’re now a more confident nation open to foreign investment and its producers know they are the equal of anyone.
Of course the economic benefits of New Zealand’s FTA should not be overlooked. Estimates suggest its dairy industry has quadrupled as a result, with NZ rightfully recognised as a global leader.
Now it’s Australia’s turn.
Many sectors of our economy — resources, agriculture and services — will have access to new sources of foreign investment and the confidence to make longer-term investments given the enhanced export opportunities.
The growing Chinese middle class is the major driver behind the estimates in our Greener Pastures report that Australia could gain an additional $710 billion in agricultural exports by 2050 and our farmers are set to benefit in a similar way to how New Zealand farmers have already benefited.
While the agreement is one of the most expansive FTAs ever signed by China, there is a danger we won’t capitalise on the platform provided by Prime Minister Tony Abbott and President Xi Jinping. In essence, a lot of the hard work to bring this agreement to life starts now.
Yesterday I had the privilege of chairing the Australia-China CEO Roundtable in Canberra where the FTA was at the top of our agenda, and it was acknowledged the business community has a responsibility to build on the agreement and encourage deeper collaboration.
We indicated to Prime Minister Abbott and President Xi that business leaders recognise their role in bringing the free trade agreement to life by delivering the partnerships that will allow us to boost trade and create jobs.
We agreed with the leaders that where we identify challenges to its implementation from over-regulation or other barriers, we will openly discuss these with our respective governments.
Specifically, Australian business needs to play more of a leadership role. We need to think creatively on how we articulate the benefit that Chinese investment provides.
In turn, while we welcome China’s continuing economic reform, particularly liberalisation of the exchange rate and foreign investment regime, there are still considerable barriers to Australian investment set out in China’s Foreign Investment Catalogue. This needs to be addressed.
Given the renminbi is expected to dominate Asian trade and could become a rival to the US dollar as a global reserve currency, confirmation of China’s commitment to make Sydney an renminbi trading hub is a welcome step. It will further strengthen economic ties between Australia and China.
So, the message from business leaders was clear. We accept the mantle of implementation and will work to strengthen the relationships that will help to grow our economies and create jobs.
After all, trade builds trust, friendships and mutual prosperity.
Mike Smith is the chief executive of ANZ Bank.
This article was originally published in the Australian Business Review.