Trade Between China and Australia

MODELLING THE POTENTIAL BENEFITS OF AN AUSTRALIA-CHINA FREE TRADE AGREEMENT

Dr Yinhua MAI Centre of Policy Studies, Monash University Professor Philip ADAMS Centre of Policy Studies, Monash University Dr Mingtai FAN Chinese Academy of Social Sciences Professor Ronglin LI Nankai University Dr Zhaoyang ZHENG Nankai University

An Independent Report Prepared for: The Australia-China FTA Feasibility Study

2 March 2005

The Centre of Policy Studies
Centre of Policy Studies Building 11E Monash University Clayton, Victoria 3800 Australia Web address: http://www.monash.edu.au/policy/ ABN No 12 377 614 012

Contact persons at the Centre of Policy Studies:
Dr Yinhua MAI Senior Research Fellow Tel: [phone] Fax: [phone] [e-mail] Professor Philip ADAMS Director Tel: [phone] Fax: [phone] [e-mail]

Contacts in China
Dr Mingtai FAN Institute of Quan. & Tech. Economics Chinese Academy of Social Sciences 5 Jianguomennei Street Beijing 100732 China Tel: [phone] Fax: [phone] [e-mail] Professor Ronglin LI Institute of international Economics Nankai University 94 Weijin Road, Tianjin, 300071, China Tel: [phone] Fax: [phone] [e-mail]

Acronyms and Initials
CGE CoPS DFAT FTA GDP GNE GNP GTAP MMC MOFCOM nec ROW WTO Computable General Equilibrium Centre of Policy Studies Department of Foreign Affairs and Trade, Australia Free Trade Agreement Gross Domestic Product Gross National Expenditure Gross National Product Global Trade Analysis Project Monash Multi-Country Ministry of Commerce, People’s Republic of China not elsewhere classified Rest Of the World World Trade Organisation

Table of Contents
EXECUTIVE SUMMARY 1. INTRODUCTION 2. GROWING ECONOMIC PARTNERSHIP BETWEEN AUSTRALIA AND CHINA
2.1 China’s demand for Australian agricultural and mineral products 2.2 Two-way trade in manufacturing products 2.3 Cooperation in the services sector

References: Appendix A. The modelling framework – MMC This Appendix gives an overview of the Monash Multi-Country (MMC) model of Australia, China and the Rest of World (for full model documentation see Mai, 2004) 21 This mechanism is based on the one used in the GTAP model (see Hertel 1997). * The industry classification reported here is identical to the classification used for version 5 of the GTAP database (see Dimaranan and McDougall, 2002). The term “nec” means not elsewhere classified.