Published: 02:14, June 14, 2024 | Updated: 09:30, June 14, 2024
Li’s southbound diplomatic trip heralds stronger partnerships
By Philip Wong

Amid a shifting global diplomatic landscape, Chinese Premier Li Qiang on Thursday embarked on a southbound diplomatic trip, with stops planned for New Zealand, Australia and Malaysia.

It is widely expected that his visit to Australia will help significantly strengthen bilateral economic ties. The China-Australia relationship is likely to enter a new stage, featuring renewed and mutually beneficial collaboration.

Li’s trip underscores China’s intent to strengthen diplomatic and economic ties with countries in the Asia-Pacific region. His scheduled engagements in major Australian cities, including Adelaide, Canberra and Perth, indicate a broad scope of collaboration between the two countries.

Li’s visit marks the continuation of high-level bilateral interaction, following a visit by Australian Prime Minister Anthony Albanese to Beijing last November, when leaders of the two sides agreed to resume key bilateral dialogue and further cooperation in several areas.

Since the Australian Labor Party’s electoral victory in May 2022, there has been a discernible improvement in China-Australia ties. A pivotal moment was the lifting of Chinese trade restrictions on key Australian exports, including wine, barley, beef and timber, which has stabilized prices and enhanced the diversity of products available in the Chinese market, creating a win-win situation for both nations.

Further discussions on bilateral issues, including restrictions on Australian lobsters, are likely to be held during Li’s trip. These discussions will test the resilience and commitment of both countries to resolve disputes amicably and advance bilateral ties and economic partnership. Successful discussion on these issues is crucial, not just for bilateral relations but also for broader regional economic integration.

Both China and Australia are key members of the Regional Comprehensive Economic Partnership (RCEP) trade pact.

Set against this context, the outcome of discussions during Li’s trip could have huge effects in terms of facilitating trade and economic cooperation in the Asia-Pacific region, as well as ripple effects on the Hong Kong Special Administrative Region through the Hong Kong, China-Australia Free Trade Agreement (HKC/AU FTA), which has been in effect since January 2020.

RCEP and the HKC/AU FTA are not just economic tools that solidify economic ties by emphasizing transparent and fair-trade practices under international standards but also strategic instruments that can foster greater political and economic stability in the region. By promoting economic interdependence, these pacts help in mitigating political tensions and building mutual trust among signatory members.

Furthermore, these agreements contribute to setting a foundation for a more integrated, prosperous and resilient Asia-Pacific economic architecture. They encourage members to adhere to internationally agreed rules and standards, thereby promoting a level playing field and predictable business environment. RCEP and the HKC/AU FTA are also set to significantly facilitate foreign direct investment (FDI) flows in the Asia-Pacific by creating a more conducive environment for cross-border investments by harmonizing investment rules, improving market access, and providing investor protection. The streamlining of regulations reduces uncertainty and transaction costs, encouraging businesses to expand their operations across members. Moreover, RCEP and the HKC/AU FTA open up previously restricted sectors to foreign investment, creating new opportunities for companies looking to establish a presence in the region.

Investor confidence will be bolstered by the inclusion of provisions on fair treatment, compensation for expropriation, and dispute settlement mechanisms. These safeguards help mitigate perceived risks and attract more FDI. Additionally, the reduction of trade barriers and harmonization of rules under RCEP facilitate the development of regional supply chains, incentivizing companies to set up production facilities in member countries to capitalize on the agreement’s benefits.

As RCEP and the HKC/AU FTA stimulate economic growth and trade in the region, they generate positive spillover effects that enhance the region’s attractiveness to foreign investors. The expansion of consumer markets, infrastructure development, and overall economic dynamism can further draw in FDI. However, the actual impact on FDI will depend on factors such as the specific provisions of the agreements, the implementation process, and the domestic policies of members.

Members that are better prepared to leverage these agreements, with supportive domestic reforms and strong institutional frameworks, are likely to gain greater benefits in terms of FDI inflows. As these agreements take effect and evolve, they have the potential to reshape the investment landscape and contribute to the Asia-Pacific’s long-term economic prospects.

Renewed efforts to strengthen relations between China and Australia extend beyond trade. Collaborative ventures in areas such as renewable energy, scientific research and education could lay the groundwork for sustained partnerships. These initiatives align with global development goals and position both nations as leaders in addressing global challenges such as climate change, health security, and technological innovation.

Climate change and environmental management: Both countries face significant environmental challenges, including climate change effects and biodiversity conservation. Collaborative research in these areas can lead to better management strategies, shared technological solutions, and joint contributions to global environmental goals.

Health and medical research: The COVID-19 pandemic highlighted the importance of international cooperation in health and medical research. Joint initiatives could focus on pandemic preparedness, public health, and the development of new medical technologies and pharmaceuticals.

Agricultural innovations: Agriculture is a critical sector for both nations. Collaborative research in agricultural technologies and practices can improve crop yields, enhance drought resistance, and reduce the environmental impact of farming. This cooperation could be particularly impactful in the face of changing global climate patterns affecting agriculture.

Space and astrophysics: China’s advancements in space exploration and Australia’s strategic geographic location for space monitoring and research create an opportunity for collaboration in space science. Joint missions, research projects, and data sharing agreements could enhance capabilities and scientific understanding for both countries.

Expanding cooperation in these fields not only strengthens bilateral relations but also positions China and Australia as leaders in addressing some of the most pressing global challenges of our time. By focusing on areas that impact global sustainability, health, and technology, both nations can contribute to a more stable and prosperous global community.

Premier Li’s diplomatic trip is significant, particularly his visit to Australia and will mark a pivotal moment for Sino-Australian relations.

This high-level engagement is expected to pave the way for a robust partnership, setting a positive tone for the future of the Asia-Pacific. Maintaining open dialogue, mutual respect and shared goals will be essential for realizing more fruitful cooperation.

The author is deputy director of Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.

The views do not necessarily reflect those of China Daily.