"Access to capital from China will enhance Australia's chance of positioning herself as a major financial centre, said the UNSW Business School's Professor Fariborz Moshirian. "It has been overshadowed by attention focused on agriculture, but the amount of capital inflow into Australia will have a significant impact on our economy."
This afternoon Prime Minister Tony Abbott and Chinese President Xi Jinping are expected to sign a Free Trade Agreement (FTA) after Mr Xi addresses the federal parliament. China is Australia's number one trading partner, with the flow of services and goods between the two countries valued at over $150 billion last year.
"Australia has a comparative advantage in financial services and IT, as well as in the more high profile areas of tourism and agricultural products," Professor Moshirian said. "Superannuation funds and other fund managers could expand their business to China, given massive size of funds that Australia is managing."
The FTA would boost the financial sector, as well as the export of agricultural products, which he said would counter the downturn in mining commodities.
Professor Fariborz Moshirian, Director of the Institute of Global Finance, said "Australia needs to diversify away from the mining sector and not be too concerned about ownership of some of the mining resources. Instead, it should focus on financial services could deliver more income in the medium to long term to Australia. This has worked well for countries like Singapore and the UK. Indeed Britain has the highest ratio of services exports to GDP in the G20, at 13%, and if Australia could just get a slice of that action it would be very welcome."
Under the FTA deal, 85 per cent of all Australian exports will enter China tariff-free. The government estimates this would be worth at least $18 billion.
Professor Moshirian adds "the Agriculture sector will expand and create more jobs in Australia once we increase free trade in agriculture products with China. Also the Education sector in Australia could greatly benefit from this new FTA, as it would enhance both research and teaching collaboration between the two countries."
"The FTA with China should also accelerate the process of free trade within APEC and so Australia should also become more proactive in promoting greater regional free trade within APEC, ASEAN plus 6."
For further comment call Fariborz Moshirian on 02 9385 5859 , or Email firstname.lastname@example.org
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Julian Lorkin: 02 9385 9887
AGSM Scholar, Professor, Director of the Institute of Global Finance
School of Banking & Finance