A CHINESE PERSPECTIVE ON THE CHINA-AUSTRALIA FREE TRADE AGREEMENT AND POLICY SUGGESTIONS

This article provides an analysis of the potential economic effects of the China-Australia free trade agreement, and provides a set of policy recommendations regarding such an agreement. The article begins with a review of China-Australia trade relations, showing the widening gap in the importance of one country relative to the other. Next, the article examines the competitive advantages of China and Australia in trade by way of local revealed comparative advantage (RCA) and finds that trade between China and Australia is predicated on differences in their factor endowments. The study then investigates the main problems in the negotiations for the China-Australia Free Trade Agreement and concludes with a set of policy suggestions.