China economy

Australia's deals with China create a model for bilateral ties

PUBLISHED : Monday, 15 April, 2013, 12:00am
UPDATED : Monday, 15 April, 2013, 2:31am

Asian nations worried about China's rise would do well to take note of the deals struck by Australia last week. The agreements, signed by Prime Minister Julia Gillard in Beijing, initiated direct trading of currencies, put in place an annual leaders' summit and promised joint exercises with the People's Liberation Army. As a whole, no other country can claim such bilateral ties. They amount to a strong foundation on which to build the sturdiest of friendly relations.

Like Australia, the majority of Asian countries do not have historic baggage with China. Their trade links are similarly strong and one day, with effort, economic ties will be maximised through free-trade agreements. For a handful, there are territorial disputes and, as with Canberra, alliances with the US. Understanding and resolve by both sides are needed in such circumstances. The similarities are such that governments would benefit by looking at the details of what Gillard has achieved and consider them as goals.

Australia is only China's seventh-biggest trading partner, yet the agreements lift relations to the highest level. Just Germany and Russia can presently boast of annual meetings of their heads of government with China's. The US dollar and Japanese yen are the only other foreign currencies directly trading with the yuan. Regular military exercises with the PLA have until now been the sole domain of Pakistan.

China being the biggest buyer of Australian natural resources like iron ore has played a big role in striking the currency pact. A tough upcoming election has also been on Gillard's mind in making the deals. The military exercises will add a considerable strategic dimension to relations. Together, they put ties on a solid footing for the challenge of reinvigorating talks on a long-stalled free-trade pact.

Putting the deals together was a two-year process. Now that they are in place, China and Australia have moved to a new level of partnership. A model has been created other nations, especially Asian ones, would do well to consider emulating.