Domestic dairy producers despair amid import surge

Related: Chinese industries influenced by Sino-Australia FTA

While China finalized negotiations with Australia on a landmark free trade agreement, after nearly a decade of talks, it is still in the process of striking similar deals with other countries.

The Sino-Australian FTA could show how similar agreements would bring long-lasting effects to participating countries. Let's take a look at which industries in China would be affected.

Dairy industry

According to the FTA, China will levy zero tariffs on dairy products from Australia in four years' time while the current rate is 10 to 15 percent.

Wang Dingmian, a dairy expert, told 21st Century Business Herald that the zero-tariff treatment will have "some" influence on China's domestic dairy industry, but it will not be "very large" because the volume China imports from Australia is small and the price of Australian dairy products does not have an advantage over those of New Zealand, which is the largest source of China's dairy imports.

According to statistics of the General Administration of Customs of China, the country imported 30,267.82 tons of milk power from Australia, accounting for just 3.72 percent of all imports.

However, discussion has already begun on whether zero-tariff treatment will usher in price cuts for imported dairy products or whether the move will disadvantage China's high-end dairy products makers. There are also voices that say the move will encourage Chinese companies to invest in the Australian dairy industry.

China's New Hope Group announced on Nov 18 that the company will invest A$500 million in Australia's agriculture and food industry, including the dairy industry.

Wine industry

China will lower its tariff on imported wine from Australia year by year and finally levy none in 2019, according to the FTA between China and Australia.

The country imported $182 million worth of wine from Australia in the first nine months of this year under the current tariff rate of 14 to 30 percent, making Australia China's second largest partner country, according to statistics of the General Administration of Customs of China.

For China's importers, the Sino-Australian FTA has brought "confidence", according to Guo Haibing, general manager of Shandong Smart International Consulting Company, which sells Australian wine.

This may later result in a change in market share of Australian wine in China, Guo added.

Tourism

According to the FTA, Australia will ease the visa application process for Chinese citizens. This will encourage more Chinese to choose Australia as their overseas travel destination and create more business opportunities for Chinese agencies organizing tours to Australia.

According to the Chinese luxury Consumer Survey released by Hurun in January, Australia was the most preferred overseas travel destination for wealthy Chinese last year.

Real Estate

China's domestic real estate market has been in decline this year and property developers are battling an "industry winter".

"Going global" has become a strategic move for major developers but where to go is a decision to be taken based on many factors. According to the Sino-Australia FTA, Australia will reduce inspection of private investment from China and this will add credit to Australia as aproperty investmentdestination.

Billionaire Harry Triguboff, the Australian property developer and Australia's fourth-richest man, is in talks with a Chinese company to sell Australia's biggest homebuilder, which he founded more than 50 years ago, Bloomberg reported last month.

Manufacturing

China has cut benchmark interest rates for the first time since July 2012 in an effort to prop up growth as the economy continues to slow.

Effective from Saturday, the one-year benchmark lending rate will be lowered by 40 basis points to 5.6 percent and the one-year benchmark deposit rate by 25 basis points to 2.75 percent, the People's Bank of China said on Friday.

The adjustment comes after figures showed that manufacturing activity in the country is nearing contraction.

According to the FTA, Australia will impose no tariff for all goods from China and this is definitely good news for China's manufacturing industry.