Risk vs reward: is China worth the effort?

Business Asia, Nov, 2003 by Randolp Ramsay

The announcement by President Hu and Prime Minister Howard is great economic news for Australia. It shows China values its relationship with Australia and sees our bond with the USA as a bonus.

With China looking set to overtake Japan as Australia's number one export destination by 2012, the size of the opportunity this agreement presents for Australian companies should not be underestimated.

The agreement will make it easier in terms of foreign investment. It will streamline regulations, give Australian investors greater scope in their Chinese operations and help local companies to form joint ventures. It will raise Australia's profile as a reliable and preferred foreign partner and help Australian engineering and construction companies when bidding for large capital projects,

China accounted for 40 per cent of the increase in world output over the past year, which is a contribution equivalent to four times its weight in the global economy and seven times its share of world trade. In 1995, China took 4.4 per cent of Australia's total merchandise exports. In 2002 its share was worth $8 billion, or 7 per cent. China has an insatiable appetite for resource inputs and raw materials. Wool and iron ore are currently our biggest exports to China, but elaborately transformed manufactures (ETMs) and service exports such as education and tourism are beginning to take off."