13 August 2015

Opening remarks: China-Australia Strategic Economic Dialogue, Canberra


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It is my great pleasure to welcome you and your colleagues to the first Strategic Economic Dialogue to be held in Australia.

Since our successful meeting in Beijing last year, Australia and China have signed a landmark Free Trade Agreement which secures improved market access for businesses on both sides while promoting increased two-way investment.

In addition, Australia signed the Asian Infrastructure Investment Bank (AIIB) Articles of Agreement, in Beijing in June this year. And today I introduced legislation into the House to give effect to our membership of the AIIB.

From our discussions today, we will have an opportunity to build on this momentum and advance our mutual economic interests.

China is of fundamental importance to the Australian economy.

China is Australia's largest trading partner with two-way goods and services trade worth more than A$150 billion annually. When diplomatic relations were established in 1972, China accounted for 1 per cent of Australia's goods trade. Today, China's share is around 30 times larger.

For China, Australia is an important supplier of key commodities such as iron ore and coal. Each year Australia sends enough iron ore to China to build the Sydney Harbour Bridge from Sydney to Perth, and then back to Sydney again. Meanwhile China is the dominant supplier of manufactured goods to Australia, in line with China's increasing importance within global supply chains.

But our economic relationship is not all about iron ore, coal and manufactured goods. China's growing middle class and evolving economy will underpin a diversification of our trade relationship.

For example, Australian exports of services reached A$8.2 billion in 2014, up from A$2.7 billion ten years earlier.

China is Australia's largest source of overseas students and our second largest source of overseas visitors. Equally, an increasing number of Australians are travelling to China, with just under 400,000 Australian residents visiting mainland China in 2014.

Services trade in areas such as tourism and education create opportunities for closer people-to-people ties between our two countries.

Increasing two-way investment is also an increasingly important feature of our economic relationship.

The overall stock of two-way investment between Australia and China is now around thirty times the level in 2005. China is now Australia's largest source of ‘approved proposed foreign investment'. Australia supports China's efforts to open its capital markets and to pursue a greater international role for the RMB. A more open capital account will also provide opportunities for Australia to extend our exports of financial services to China.

The financial services sector represents around 10 per cent of the Australian economy, greater than the mining industry and is Australia's largest industrial segment. Australia has particular expertise in funds management, insurance and pension services.

Through our work on the Investment Cooperation Framework, we are able to share information and identify impediments and barriers to cross border investment, including in areas such as financial services.

Building on the Free Trade Agreement, initiatives such as the Investment Cooperation Framework will provide long lasting benefits to both countries and diversify our commercial relationship.

On today's agenda we will also consider two-way investment and enhancing bilateral cooperation, both of which are important priorities for our countries.

Areas I would like to explore include how the AIIB could complement the efforts of China's One Belt One Road initiative.

Joining the AIIB presents Australia with great opportunities to work with China to drive economic growth and jobs in the Asian region.

Additionally I would like to discuss how to build Northern Australia through the Northern Australia Infrastructure Facility, which will open the North to trade opportunities with partners such as China.

Australia also welcomes the support China has shown for initiatives such as the Global Infrastructure Hub, an outcome from Australia's G20 host year.

Chairman, welcome again and I look forward to continuing our productive discussions as part of the Strategic Economic Dialogue.