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March 24, 2017

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China to expand trade with Australia

PREMIER Li Keqiang yesterday warned against protectionism, saying China planned to close its US$50 billion a year deficit with Australia by expanding their trading relationship rather than retreating from it.

In a speech in Australia’s Parliament House, he said globalization had created “some problems,” but that free trade was not to blame.

China “cannot close our doors” to solve its trade imbalance with Australia, which last year left it with the US$50 billion deficit largely through industrial demand for iron ore and coal, he said.

“We believe that to resolve trade imbalance, we need to continue to expand trade,” Li said.

China will open up wider to the outside world and work with Australia for greater development of bilateral economic and trade relations, Li said. It will send a positive signal to the world that both sides will back trade and investment liberalization and maintain the current global trading system, he said in talks with his Australian counterpart Malcolm Turnbull.

Today, Li and Turnbull will detail an expansion of their two-year-old bilateral free trade pact in the areas of investment and services.

Donald Trump’s election as US president is changing the dynamics of global trade. Australia was an enthusiastic advocate of the proposed Trans-Pacific Partnership, a trading bloc of Pacific Rim countries the Obama administration had committed the United States to joining. China never intended to join.

As well as pulling the US out of that pact, Trump — who campaigned on an “America First” platform — has said he will renegotiate the North American Free Trade Agreement with Mexico and Canada. Australia’s 12-year-old free trade deal with the US could also be reviewed.

Li’s five-day visit to Australia and New Zealand, which began on Wednesday, is the first by a Chinese premier in 11 years. He is also the most senior Chinese official to visit Australia since 2014, when President Xi Jinping finalized the free trade deal.

Turnbull suggested that as well as trade, the two leaders will discuss tensions in the South China Sea over territorial claims.

“Premier Li and I will discuss, as we have before, the importance of upholding and maintaining stability in our region,” Turnbull said. “We believe China has much to contribute to global peace and prosperity in this time of rapid change.”

China will “never seek hegemony and dominance,” he said, adding that China needed a stable world environment to grow its economy.

Australia is seeking to take advantage of China’s decision earlier this week to suspend meat imports from Brazil due to a scandal over sales of rotten and salmonella-tainted meats.

However, it may have little scope to increase exports as its cattle herd is near a two-decade low. Cattle were culled in record numbers following a drought between 2014 and 2016.

Australia’s agriculture exports to China were worth more than A$8 billion (US$6.14 billion) last year. “China must feed their nation but has 7 percent of arable land. Australia is seizing the opportunity to provide high-quality, safe food,” Turnbull said.

Li is to meet Australian business leaders and attend an Australian Rules football match before heading to New Zealand.




 

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