China has the world's largest population and offers huge potential for Australian exporters.
China is Australia’s largest market for both goods and services exports, and over the five years to 2016-17, bilateral goods trade between Australia and China has grown by 33%. Yet in 2016, only 5.3% of Australia's total stock of foreign direct investment was from China, meaning there is still a significant opportunity to increase Chinese investment.
China is one of NSW's fastest growth markets. It has an export-oriented economy and requires resources from NSW to build infrastructure and supply energy for its manufacturing sector. China is restructuring its economy to focus on higher value manufacturing, services and environmental sustainability, providing new opportunities for NSW businesses to export their expertise. In 2016-17, NSW exported $7.2 billion worth of goods to China, ranking it the state’s second largest market for merchandise exports. China is the largest source of merchandise imports into NSW.
The NSW Government has prepared a strategy to increase engagement with China and build on NSW's existing trade and investment successes. The NSW Strategy for China targets new investment into the following sectors:
- education and training
- energy and resources
- information and communications technology and the digital economy
- professional services
Australia-China Free Trade Agreement
On 17 June 2015, the China-Australia Free Trade Agreement (ChAFTA) was signed by Australian Minister for Trade and Investment Andrew Robb AO MP, and the Chinese Commerce Minister, Mr Gao Hucheng. The ceremony in Canberra was witnessed by Australian Prime Minister.
The Agreement marks a historic foundation for the next phase of Australia's economic relationship with China and will unlock significant opportunities for Australia.
China is Australia's largest export market for both goods and services, accounting for nearly a third of Australia's total exports, and a growing source of foreign investment.
The ChAFTA is expected to provide new and expanded export opportunities for NSW businesses including:
- abolition of tariffs for dairy, lamb and beef and horticulture exports into China
- elimination, over the next four years, of tariffs on wine and seafood exports
- immediate elimination of a range of tariffs relating to resources and energy exports, including on coking coal, and phasing out of tariffs for thermal coal over two years
- removal of tariffs for pharmaceutical exports
- increased ease of doing business in China for companies in:
- legal services
- financial services
- construction and engineering
- health and aged care
- mining and extractive industries
- manufacturing services
- architecture and urban planning
- the tourism and travel sectors
There is also an in-built mechanism in the ChAFTA which will allow for further trade liberalisation and increased market access over time.
The NSW Government has developed its North Asia FTA Engagement Plan to describe how it will help NSW businesses take advantage of the opportunities from the China agreement, plus agreements with Japan and Korea.
Sydney became an operational RMB trading hub in November 2014 when the People’s Bank of China (PBOC) and the Reserve Bank of Australia (RBA) signed a Memorandum of Understanding (MoU) to establish official RMB clearing arrangements in Australia. This coincided with the signing by Australia and CHaFTA. Bank of China Sydney branch was announced as the nominated clearing bank for offshore RMB transactions in Australia.
NSW broke new ground when it released the first Dim Sum bond by an Australian state government in November 2014. Indicatively, RMB payments between Australia and China have risen from 3% in 2012 to 15% of trade in 2015, and 17% in 2016. Sydney is one of only 19 RMB hubs around the world and now ranks in the top 5 offshore RMB trading hubs.
NSW Trade & Investment offices in China
Watch the video Tony Zhang explaining his role as NSW Trade & Investment Commissioner for North and East China, and discusses the NSW-China bilateral business opportunities.