Chinese Assistant Minister of Commerce Wang Chao told the Second Biannual Australia-China Business Forum that this will see talks on a free-trade agreement (FTA) between the two countries enter a substantive stage.

"This year, high-level government officials from the two nations have met twice for FTA negotiations, and the seventh round of negotiation will start this December. China has a positive attitude towards this," said Wang.

But the two sides have yet to agree on issues related to the service and manufacturing sectors, which Ric Wells, head of Australia's China FTA Task Force, said would be the major challenge faced at this round of talks.

"We will have a long way to go," said Wells.

A Sino-Australian FTA first came onto the agenda during President Hu Jintao's trip down under in October 2003, when the two nations signed the China-Australia Trade and Economy Framework.

Since then, China and Australia have conducted a feasibility study on the establishment of an FTA between the two nations.

"The economy and trade of the two nations naturally fit each other. A Sino-Australian FTA could bring benefits to bilateral trade and maintain economic stability in the Asia-Pacific region," said Wang.

China and Australia already co-operate in sectors including energy, manufacturing, agriculture, services and education.

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