Sino-Australian ties on the upswing

But what of the future? Recently, Australia was surprised to see China, under pressure from domestic producers, increase the tariff on coal imported from Australia. While this won't derail the FTA, it has alarmed foreign observers, some of whom have urged the Australian government to leverage its support for the China-led Asian Infrastructure Investment Bank to get the tariff decision reversed. But it's likely the two issues will remain separate.

There are some more controversial measures such as allowing Chinese nationals to "purchase" permanent residence in Australia via real estate investment, which may provide incentive for some Chinese officials to invest (and thus entice corruption).

On the other hand, Australia has supported the strong anti-corruption campaign launched by the Chinese leadership and bolstered by the Fourth Plenary Session of the 18th Central Committee of the Communist Party of China. Canberra also has vowed to cooperate with Beijing on extradition of corrupt officials. These measures are directed at strengthening mutual trust because China knows now that to succeed in the 21st century, the country's progress is as much about corporate governance as it is about growth.

In conclusion, these are issues Australia and China both have dealt with since Whitlam landed in Beijing in 1971. Indeed, Whitlam was often criticized for his lack of interest in economics, compared with his interests in foreign policy, constitutional reform, urban issues, equal pay structure, the rights of Aboriginal Australians and support for Asian immigration.

But ironically his brave call to go to China in 1971 (just before former US secretary of state Henry Kissinger's visit) and subsequent recognition of China was perhaps the most important economic decision made in Australian history in the past half century. The fruits of that historic visit are benefiting both sides, and their relationship is bound to reach new heights in the future.

The author is the J.W. Nevile fellow at the University of New South Wales Business School, Australia, and has the book Trading Places - The Airport Economist's Guide to International Business to his credit.