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China and Australia signed a declaration of intent aimed at concluding bilateral negotiations on a free trade agreement (FTA) on Nov. 17, 2014, which means that the formal FTA will soon be signed. To date, of the 12 member countries of the Trans-Pacific Partnership Agreement (TPP), 8 have signed various forms of FTAs with China.

Ordinary people in China are more concerned whether Australian dairy and meat products will have easier acccess to the Chinese market, and whether prices will fall once they are exempt from duties.

The duty exemption is good news for price reductions, but as the distribution channels of many Australian products in China are exclusive, the dealers will be the first to benefit. Dealers will be reluctant to surrender their profits on their top-selling lines. So in the short term the public cannot expect to see substantial drops in price, but in the long run the duty exemption will bring benefit to everyday consumers.

Some people worry that domestic enterprises will be put under pressure as consumers favor imported goods. The duty exemption will exert pressure on domestic enterprises, but with a proper response, this pressure can be turned into a driving force. So in the long run the industries and enterprises affected will also be improved by the FTA.

Not only will the FTA benefit China’s economy, it also has great strategic importance. Australia is a member of both the TPPand APEC. The Asian-Pacific FTA advocated by China during the Beijing APEC meetings has great significance to China. As China and Australia will develop closer ties through this FTA, the two countries can speak with one voice in building this APEC FTA platform.

The TPP actively promoted by the US is more like a challenge to China and is interpreted as “marginalizing China”. The fact that 8 out of the 12 TPP countries have now signed various forms of FTA with China has served to neutralize part of the Challenge osed by TPP. Prior to the China-Australia FTA, successful talks on the China-ROK were also concluded, which will exert considerable pressure on the China-Japan-ROK FTA talks. With its sluggish economy, the situation is not favorable to Japan. Japan will have to pay a high price if it wants to isolate China.