Why the China-Australia Free Trade Agreement is both good and bad for Aussies
After 10 years of negotiations, the China-Australia Free Trade Agreement (ChAFTA) was recently signed by each of the two parties. This shows how the connection between the two major world economies has become closer, while China’s influence in the Asia-Pacific region continues to increase.
China and Australia agreed to sign the declaration to effectively put an end to ChAFTA negotiations during Chinese President Xi Jinping’s visit to Australia last year. The negotiations began in 2005, and have now come to the conclusion that most Australian products exported to China will eventually have duty-free entry, while all of China’s exports to Australia will also be tariff-free.
The two sides reportedly promised to open up to each other in the service sector, and agreed to award each other most-favored-nation status and lower review thresholds for corporate investment. The free-trade agreement will establish a stronger and long-term alliance between China and Australia, as the two countries complement each other in resources and industries.
The two sides work so well together because China has labor-intensive manufacturing industries, while Australia has rich mineral resources with a small population. According to Australian Department of Foreign Affairs and Trade (DFAT), Australia’s top-five exports to China include iron ore and concentrates ($44.3 billion), coal ($9.3 billion), gold ($8.1 billion), education-related travel services ($4.1 billion) and copper ($2.1 billion).
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Meanwhile, China’s top-five exports to Australia are clothing ($5.1 billion), telecom equipment and parts ($4.9 billion), computers ($4.8 billion), furniture ($2.2 billion) as well as toys and games ($1.8 billion). Australia could benefit from the ChAFTA because of its trade surplus with China, while China will benefit in the investment category.
Trade numbers between Australia and Chine increased from $88.1 billion in 2010 to $136.9 billion in 2014, while numbers from Cina’s State Administration of Foreign Exchange revealed Australia had a $9.4 billion trade surplus with China in 2014.
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China was Australia’s top export market for goods and services over the last two years, making up about a third of its total exports and becoming an increasing source of foreign investment. The relationship of the two countries relies on an understanding as well as communication between the two sides, while the utilisation of ChAFTA leads to even more cooperation between the two.
With Australia being such an important economy in the Asia-Pacific region, ChAFTA strives to further improve China’s influence in regional economic cooperation. However, some industry leaders believe this could put Aussie jobs at risk, as it allows more Chinese workers to come to Australia on temporary skilled migration visas for up to four years with the possibility of staying even longer.
Under this agreement, up to 1,800 Chinese workers would be allowed to enter Australia as contractual service suppliers, while Chinese machinery installers and equipment servicers can work in Australia for up to three months.
So while the ChAFTA appears promising on the surface, it could cause problems for Aussies in the future.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.