Economic Policy

PM to China: Play fair on trade

November 6, 2023

06 November 2023
Phillip Coorey
The Australian Financial Review

Anthony Albanese said China has a duty to itself and the region to practise free and fair trade, and expressed confidence Beijing's remaining sanctions on Australian exports will be lifted as a result of the historic visit.

Addressing China's largest trade fair, Mr Albanese noted, pointedly, that despite Beijing imposing $20 billion in coercive trade sanctions over the past three years, Australia's trade in goods and services reached a record level in 2022-23.

But Australia and everyone else in the region would benefit more if all players agreed to uphold a rules-based trade system, the prime minister said at the China International Import Expo in Shanghai.

"It's why we continue to highly value the World Trade Organisation, whose role as an independent and respected umpire benefits us all," he said.

"The framework of trade rules provides certainty and opportunity for redress if problems arise. The success of economies cannot be guaranteed, but we know that international trade benefits the lifting of global living standards."

Opening the expo, Chinese Premier Li Qiang claimed China adhered to such principles as he reaffirmed Beijing would pursue ascension to the 12-member, regional free trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Great Britain recently became the 12th member of the pact and six other nations have applied to join. The original pact, the Trans-Pacific Partnership, became the CPTPP after the US withdrew under the isolationist approach of Donald Trump.

Premier Li said China "will always stand on the right side of history" and would "resolutely oppose" unilateralism and protectionism.

Beijing would "firmly uphold" the authority and effectiveness of the multilateral trading system.

But the other members of the CPTPP, including Australia and Japan, oppose China's entry until it actually does abide by the rules-based order for trade.

Mr Albanese said Mr Li's comments were "very positive", but entry to the CPTPP was conditional on China walking the walk in terms of its trade behaviour.

He did not rule out a nuanced shift, such as offering to facilitate China's entry should it lift its standards.

"Any country must demonstrate that it can meet the high standards of the agreement," he said.

Mr Albanese is expected to convey this to Chinese President Xi Jinping in talks in Beijing today, and in formal talks with Mr Li tomorrow.

"Along with the other economies in our region, Australia and China have prospered thanks to the certainty and stability that is made possible by rules based trade," he said.

"Every country has a role to play in advancing trade that is both sustainable and inclusive. We do that by eliminating unnecessary barriers to trade and investment by fostering a level playing field and by working towards inclusive economic growth."

Mr Albanese's trip, the first to China by an Australian prime minister since 2016, is the culmination of 18 months of efforts to stabilise the relationship following the standoffs between the Coalition government and Beijing which led to the trade bans.

All those bans, except for $2.5 billion in restrictions on wine, beef and lobster, have been lifted and wine will be lifted in about five months.

Trade Minister Don Farrell, who was with the prime minister in Shanghai, and who met his Chinese counterpart on Saturday night, was confident China would remove all remaining bans following the visit.

"I raised those issues directly with my counterpart last night and I expect that as part of the stabilisation process that's going on with China, and as part of our ambition to remove all of the impediments, I would expect that in a very short space of time," he said.

"When that will be I can't tell you exactly, but from all of the indications last night... it's going to be a very positive outcome.

HSBC chief executive Anthony Shaw regarded the occasion as so important he flew to China overnight to spend just a day in Shanghai as part of the Business Council delegation.

"We very much welcome both governments doubling down on dialogue, creating predictability for Australian businesses in China and for Chinese businesses on Australia," he told The Australian Financial Review.

HSBC has deep links in both countries and had clients affected by the export trade bans.

"We've had to help customers as they navigated the trade environment over the past few years," he said.

Mr Shaw said the "reopening of a strategic and respectful dialogue provides guardrails for business to operate in a more predictable environment and allows business to do what it does best and just get on with it".

Incoming Business Council of Australia president Geoff Culbert, who hosted a business summit to coincide with Mr Albanese's visit, said the restoration of stability opened further opportunities for cooperation.

He listed decarbonisation and the net zero commitment and the increasing digitisation of our economies.

Treasurer Jim Chalmers said a stabilisation of the relationship was in the interest of both countries, but there were underlying realities.

"We are clear-eyed about the complexities and the challenges of managing this relationship, but we give ourselves the best chance of prospering together if we engage with one another," he said.

"And we've already seen some of the fruits of that effort. Something like 95 per cent of the trade

restrictions by dollar value have been lifted."

Opposition home affairs spokesman James Paterson concurred.

"Let's not pretend that this stabilisation that we've seen in the relationship, which we have provided bipartisan support for, and which we welcome, has fundamentally changed anything underneath the surface," he said.

"Certainly, it appears very different on the surface, but beneath the surface, China is still the number one source of espionage risk for Australia.

"They're the number one source of foreign interference in our democracy.

They are the number one source of state-backed cyberattacks on Australia.

"What has changed is China's tactical approach to Australia, not its strategic approach to the region or the world."

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