How dragon and kangaroo can fly together

The relationship between China and Australia has been strained because of a series of bilateral frictions such as the Rio Tinto business espionage case, the Dalai Lama issue and Australia's attitude toward Xinjiang separatist Rebiya Kadeer. This development has come as a surprise, especially because Sino-Australian ties had been progressing smoothly on the political, economic, cultural and educational fronts after the end of the Cold War.

Experts agree that Australia has benefited greatly from bilateral trade. Australia's official statistics show that during 2008-09, bilateral trade touched 83 billion A$ (about $76.1 billion). Australia's exports to China rose from 2008 to 2009, that is, during the height of the global financial crisis. To a large extent, the increase in exports to China has helped Australia weather the global financial storm and fueled its economic growth. And China has become Australia's largest trade partner and the largest export target.

China and Australia are important investment partners, too. Till 2008, Australians had invested $5.82 billion in 8,954 projects in China, and China's non-financial direct investment in Australia was about $3 billion.