Chapter 1 - Introduction and conduct of the inquiry
Referral of the inquiry
On 8 December
2004, the Senate referred the matter of Australia's
relations with China
to the committee for inquiry and report by 15 September 2005. On 13 September 2005, the Senate granted an extension
to the committee's reporting date to 10
November 2005. This
report is the first part of a two-part report. It concentrates on the trading,
commercial, social and cultural links with China.
The second report builds on the first part but is primarily concerned with the
political and strategic aspects of Australia's
relationship with China.
It will be tabled some time after this first report is presented.
Timing of the inquiry
This is the third inquiry conducted by a Senate
committee into Australia's
relationship with China.
In 1984, the former Senate Standing Committee
on Industry and Trade inquired into prospects for Australia–China trade. In
1996, the Senate Foreign Affairs, Defence and Trade References Committee
examined the wider bilateral relationship including the political relationship,
trade and investment links and social and cultural ties. Since then Australia's
relationship with China
has continued to develop and grow.
entry into the World Trade Organization (WTO) in 2001 and the opening up of its
domestic markets to international competition has transformed the country. Over
recent years, China
has experienced sustained rapid development and implemented wide–ranging
economic reforms, including the lowering of trade and investment barriers. In
opening up its markets, China
has become a dynamic, strong and expanding economy offering opportunities for
countries such as Australia
to strengthen and deepen links.
is Australia's second
largest merchandise trading partner and one of Australia's
most important trading allies. Its
size and growing political, cultural and strategic influence in the Asia
Pacific region, however, is also of great long–term significance to Australia.
The rate and nature of change in China,
its continuing economic development and its emerging influence in our near
region present both risks and opportunities for Australia.
The inquiry is being conducted at a significant
juncture in the Australia–China relationship. In 2002, Australia
and China celebrated
the 30th anniversary of the re-opening of diplomatic relations. Since then the relationship has grown
stronger. In August 2003, Australia
entered into an agreement, the Australia–China Trade and Economic Framework,
and in April 2005 both countries agreed to commence negotiations for a bilateral
free trade agreement.
The committee believes that at a time of such
rapid economic and political development in China
and the broader region, it is timely to review Australia's
relationship with China.
In particular to explore the ways in which Australia
can take advantage of the opportunities presented by the changes taking place
in China. The
following terms of reference allow the committee to do so.
Terms of reference
terms of reference for the committee's inquiry into Australia's relationship with China as set out below recognise that economic,
political and strategic factors are intertwined.
- Australia's economic relationship with China with particular reference to:
- economic developments in China over the last decade and their implications for Australia and the East Asian region;
- recent trends in trade between Australia and China;
- the Australia-China Trade and Economic Framework and possibility of a free trade agreement with China;
- ongoing barriers and impediments to trade with China for Australian businesses;
- existing strengths of Australian business in China and the scope for improvement through assistance via Commonwealth agencies and Australian Government programs;
- opportunities for strengthening and deepening commercial links with China in key export sectors;
- Australia’s political relationship with China with particular reference to:
- China’s emerging influence across East Asia and the South Pacific;
- opportunities for strengthening the deepening political, social and cultural links between Australia and China;
- political, social and cultural considerations that could impede the development of strong and mutually beneficial relationships between Australia and China; and
- Australian responses to China’s emergence as a regional power with particular reference to:
- China’s relationships in East Asia, including in particular the Korean Peninsula and Japan;
- the strategic consequences of a China-ASEAN free trade agreement;
- China’s expanded activities across the South West Pacific.
Conduct of the inquiry
The committee sought views from a range of people and
organisations including: sectors of the business community who have or would
like to establish commercial links with China; Chinese companies who have
business ties with Australia; mutual friendship associations both here and in
China; organisations and associations interested in fostering links between the
two countries; academics with expertise in East Asia and the South Pacific; and
people who are concerned about Australia's future relations with China.
advertised the terms of reference and called for submissions in The Australian on a number of occasions
leading up to the close of submissions on 24 March 2005.
received 81 public submissions which are listed at Appendix 1.
held nine public hearings. They were held in Canberra, Melbourne, Sydney and Perth. A list of the committee’s public hearings,
together with the names of witnesses who appeared, is at Appendix 2.
Visit to China
In August 2005, four Australian senators made a private
and unofficial visit to Beijing, Shanghai
and Xi'an at the invitation of the Foreign
Affairs Committee of the National People's
Congress of China. The travelling party included the Chair of the Senate
Foreign Affairs, Defence and Trade Committee,
Senator Steve Hutchins, Senator David Johnston, who is now Deputy Chair of the
committee, the Deputy President of the Senate and committee member Senator John
Hogg, and participating member Senator Brett Mason. Senators Hutchins
and Johnston were accompanied by their partners. At the
request of the senators, Dr Richard
Grant, from the secretariat accompanied the delegation.
Members of the delegation and the secretariat express
their gratitude to the National People's Congress for their hospitality and
generosity, and to Ms Ou
Boqian and Mr Wang
Xingguang from the Chinese Embassy in Canberra
for their assistance with organising visas and the itinerary.
The purpose of the visit was to enable the senators to develop
greater understanding of China's
economy, culture and society, following the committee's hearings in Australia.
This was the first visit to mainland China
for all four senators. In Shanghai,
the senators met with the Pudong District People's Congress and Mr
Vice–Chairman of the Standing Committee of the
Shanghai Municipal People's Congress.
The delegation then visited Beijing where they had
discussions with the Hon. Jiang Enzhu,
Chairman of the Foreign Affairs Committee of
the NPC, Mr Yi
Xiaozhun, the Assistant Minister of the
Ministry of Commerce, the Hon. Yang Jiechi, Vice Minister of the Ministry of
Foreign Affairs, Mr Ye Kedong, Assistant Minister of the Taiwan Affairs Office,
and Mr Xu Jialu, Vice Chairman of the Standing Committee
of the NPC.
The senators also met with Mr
the Deputy Director of the 2008 Beijing Olympic Games Organising Committee. In Xi'an,
the senators had discussions with various members of the Shaanxi Provincial
People's Congress, including the Chairman, Mr
and the Vice Chairman, Mr Gao
Yixin. The committee thanks all these officials
for their willingness to talk openly on a wide range of issues.
On 25 August 2005, the Australian delegation met with
the Hon. Xu Jialu (front row, fourth from left), Vice Chairman of the National
People's Congress at the Great Hall of the People in Beijing. Also present was Mr Graham Fletcher (front row,
second from right) the acting Australian Ambassador to China.
In Shanghai, the
Australian delegation travelled on the Meglev train, which runs from Pudong
International airport to the city. It is one of the fastest trains in
commercial use, reaching a maximum speed of 435 kilometres per hour.
The senators met Australian officials based in China,
including Mr Sam
Gerovich and Mr
from the Australian Consulate General in Shanghai,
and Mr Graham
Kym Hewett, Mr
and Mr Trevor
Holloway from the Australian Embassy in Beijing.
In addition to these officials, the committee thanks Ms
Second Secretary of the Political Section at the Australian Embassy, who
accompanied the senators throughout their visit.
Structure of the report
As noted earlier, the committee agreed to produce and
table two separate reports. This first report is divided into four parts and covers
the following main topics:
Part 1—Background to the
relationship between Australia
Chapter 1 Introduction
and conduct of inquiry
Chapter 2 Economic
developments in China
Part 2—Trade between Australia
and obstacles to trade
Chapter 3 Trading
links between Australia and China
Chapter 4 Barriers
to trade—tariffs and non tariff barriers
Chapter 5 Trade
Chapter 6 Trade
in manufactured goods
Chapter 7 Trade
in minerals and energy
Chapter 8 Trade
Chapter 9 Investment
Part 3—Formal trade agreements
as a means to strengthen the trading relationship
Chapter 10 The
connection between the multilateral trade agreement, regional arrangements and
Chapter 11 The
proposed Australia-China Free Trade Agreement (FTA)
Chapter 12 For
and against the proposed FTA
Chapter 13 Building
a better trading relationship and strengthening ties with China
Chapter 14 Human
rights and labour standards in China
Part 4—Developing broader
political, cultural and social links
Chapter 15 Promoting
Chapter 16 Public
diplomacy, culture and sport, and the Chinese–Australian community
Chapter 17 Science
Chapter 18 'Political'
The committee thanks
all those who contributed to the inquiry by making submissions, providing
additional information or appearing before it to give evidence.
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