The Australia-China FTA (ChAFTA) was signed today, with prime minister Tony Abbott calling it “a momentous, historic day” .
The ANZ Bank’s international & institutional banking CEO Andrew Geczy wrote as a forward to the Bank’s publication accompanying the signing that:
China remains one of the fastest growing countries in the world and it will continue to shift towards a consumption-driven and increasingly service sector-led growth model. This will provide many Australian businesses with the chance to evolve and diversify.
Crucially he added that “time for businesses to make these growth opportunities a reality.”
But where are the opportunities?
When most people think of an FTA, its about cheaper goods and access to physical goods markets.
But one of the specific and special benefits of ChAFTA is the access ustralia’s service businesses now have to the Chinese marketplace.
The ANZ says that “Australian firms in a range of services industries will gain almost unheralded access to China’s markets.”
They added that:
While all FTAs are broadly similar in their aims, the agreement with China potentially provides greater upside for Australia due to the strong underlying growth, increasingly for food and services, as living standards in China improve further over time.
According to the Australian Government, under the ChAFTA China commits to provide almost unmatched access for Australian services providers (only Hong Kong and Macau, special administrative regions of China, will have better access). Access will be improved in around 40 areas to levels either equivalent or better than those enjoyed by other nations. Tourism, aged care, health, finance, engineering, construction and legal firms are among the potential beneficiaries. China is seeking to develop its services sector so that it accounts for a larger share of output and growth and this transition is already happening (Figure 5). Services account for more than 70% of Australia’s economy so we are well placed to help achieve that. But there will be strong competition from other countries.
Here is the ANZ’s summary of how, and by how much, the various service sectors will benefit.