Embracing economic change key to future Sino-Aust'n relations: report

Embracing economic change is the key contention of a comprehensive new Australian report detailing the future of the Sino-Australia relationship.

Delivered to both the Australian Prime Minister Malcolm Turnbull and Chinese Prime Minister Li Keqiang on Monday, the Australian National University's (ANU) Australia-China Joint Economic Report (ACJER) is the first major independent study of the burgeoning economic relationship between the two nations.

The report has said embracing China's transition to a services-based economy and fully realizing the potential of the China-Australia Free Trade Agreement (ChAFTA) is the key to a strong future ties.

Professor Peter Drysdale from the East Asian Bureau of Economic Research at the Australian National University (ANU), a co-autor of the report, said Australia's breakaway from its reliance on minerals and resources has opened the door for trade-based economic reform.

"Australia and China have a great opportunity to turbo-charge an already close relationship, to become stronger partners over the coming decades," Drysdale said.

"Australia has been a trusted partner in China's 'reform and opening' since the 1980s, and is seen in China as a valuable international testing ground and pilot zone for economic policy reform."

China is Australia's largest trading partner with trade between the nations worth around 115 billion U.S dollars in 2015.

But the report also highlighted the rising number of Chinese students choosing to study in Australia; currently China is the source of the most number of foreign students in Australia with 120,000, and Drysdale said Australia's willingness to embrace China's requirement for a more services-based economy, as well as opening up ways for premium Australian products to be sold in China, would benefit both nations in the future.

"Both Australia and China gain from growing and diversifying their economic relationship through new flows of tourists, students, investors and migrants," he said.

The report recommends the creation of a new Australia-China Commission to "promote academic, cultural, policy, government, business and community exchanges", high-level policy co-operation on trade routes - particularly those at seas, and the negotiation of a "negative-list Agreement on Investment within the ChAFTA framework to further liberalize investment flows" between the two nations.

The report said if both governments adopt these and other measures, it would maximize future economic growth for both Australia and China.

"If this reform agenda is prosecuted successfully, Australian exports to China will grow by 120 percent in real terms, and Chinese exports to Australia by 44 percent," the report reads.

"For China, this is conditional on the implementation of a reform agenda that embraces financial and factor reform, state-owned enterprise reform, increased openness to foreign investment, and capital account liberalization."

"For Australia, it means increased competition in sheltered industries, openness to foreign investment and skills, and facilitating investment in social and physical infrastructure." Endit