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China takes its place at world’s investment table

IN the year or so since its entry in to the World Trade Organisation, China has been promoted as ‘the place to invest or export’ by both the Federal and Western Australian governments.

The significance to Australia of the potential offered by trade with the most populous nation in the world became clear in August last year when the North West Shelf venture signed a $25 billion deal to supply liquefied natural gas to China’s Guangdong province.

In May last year, on his third visit to China as Prime Minister, John Howard agreed to work on a new framework agreement to enhance the economic and trade relationship between the two countries. A celebration was held to celebrate the 30th anniversary of relations between Australia and China, the latter’s entry into the WTO in late 2001 and the announcement that China was hosting the 2008 Beijing Olympics.

Hamersley Iron, a subsidiary of Rio Tinto, also has concluded a 20-year joint venture agreement with the Shanghai Baosteel Group, worth more than $300 million a year.

Another one of Rio Tinto’s projects, the HiSmelt direct reduced iron smelter, planned for Kwinana, has received the backing of Chinese steel producer Shougang, which will take a 5 per cent share in the project.

Such deals are boosted by the gradual erosion of tariffs into China that has been taking place of late. In January 2001 China started a phase of market liberalisation, cutting tariffs for industrial products from 17 per cent to 9 per cent.

Tariffs on seafood and agricultural products also have been reduced, by almost 50 per cent, to an average of 15 per cent.

And China seems to be flavour of the month in WA, too. China became the first guest nation at last year’s Perth Royal Show. Then, in November 2002, Training Minister John Kobelke led a delegation to explore vocational education and training services. Currently, 30 per cent of Chinese overseas students go to the US, 20 per cent to Britain, and a total of 14 per cent to Australia and Canada.

In another win for WA, the manager of the Western Australian Technology Park in Bentley, Zernike Australia, secured a contract in the order of $1 million to assess Chinese technology parks over the first half of this year.

China has been operating the parks since 1988 and now has more than 50 in operation with a combined turnover of almost $240 billion.

But without doubt it is the $25 billion LNG deal that has put China in WA’s sights, according to WA Chinese Chamber of Commerce councillor Tan Songhuat. And he’s well qualified to speak on the matter. As vice-president of Australia LNG, Mr Songhuat played an instrumental part in stitching up the deal, alongside its president, Arthur Dixon.

“With the success of capturing the LNG contract, this really has opened up the opportunities with general trade,” Mr Songhuat said.

“WA has suddenly attracted a lot of attention.

“The different Chinese provinces are suddenly taking a keen interest in our State.

“As a result I expect a lot more visits from Chinese officials to WA.”

China is WA’s fourth largest trading partner and its third largest export market. In 2000-01, total trade had reached $3.1 billion, of which exports accounted for $2.7 billion. Imports from China totalled $381 million in 2000-01. Major imports included games and sporting goods, furniture, clothing, base metals and footwear.

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