China and Australia fosters economic ties

Today, China and Australia have signed a mutual trade agreement with the outlook to reinforce economic ties.

This pact implies that Australia will alleviate its dependency on exports to China which accounts to 5.3% of its Gross Domestic Product.

Australian Prime Minister Tony Abbott and Chinese President Xi Jinping who launched the discussions affirmed that both countries trade ministers will start the legal procedures later today.

The long collaboration between the two countries can be summarised as being a win-win situation, with Australia buying Chinese manufactured products at a cheaper cost while China rely a lot on energy supply.

Richard Grace who is also the head of international economics at the Commonwealth Bank, suggests that Australia will likely benefit more from this partnership given the size of the economy. Nevertheless the added-value that both countries will receive cannot be omitted.

As per the discussions, Australia will see a tax cut over its coal exports, as well as on its cooking coal and thermal coal.

Today, Australia has singed its third Free Trade Agreement with Asian countries, the first two being South Korea and Japan.

The previous Australian Government did not conclude the negotiations launched since 2005 and with Prime Minister Abbott’s intervention, partnerships with Asiatic countries have been elaborated within a time-frame of one year.

Source: Bloomberg

Priscilla Camryn By: Priscilla Camryn
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