China-Australia Economic Cooperation and the Belt and Road Initiative (BRI)

China’s Belt and Road Initiative (BRI) relates to the overarching agenda for cooperation between Australia and China based on their shared interest in an open global economic system, and reforms that promote the effectiveness of participation in the international market. These interests should guide the approach to regional and global cooperation. The BRI offers a framework for deepening cooperation through a process of open regionalism that promotes policy cooperation on economic issues of importance to both countries; the exploration of priorities for investment to enhance connectivity; trade and direct investment; the deepening of financial links; and the expansion of person-to-person exchanges. Both governments should invest in the deepening of the relationship within the framework of their Comprehensive Strategic Partnership by establishing an Australia-China (Ao-Zhong) Commission to promote high level policy research and scientific and cultural exchanges between the two countries. Additionally, they need to follow through on an ACJER recommendation that the Chinese and Australian governments upgrade cooperation on the BRI by establishing a dedicated high-level joint working group under the Comprehensive Strategic Partnership. To promote trade and investment connectivity, the landmark ChAFTA agreement should be implemented, and its investment chapter should be used to put into place a new bilateral investment agreement to benefit both countries. Deepening financial integration will benefit from dialogues and work between the two governments to understand the challenges China faces in opening its capital account to make its economy more flexible and its resource allocation more efficient while managing associated financial risks to its domestic economy. It is important to invest in person-to-person bonds and the social capital needed to support the development and management of a higher level relationship through the Australia-China Commission proposal. Deep mutual understanding and working closely together on policy developments through such exchanges will help manage risks and achieve the full potential of the relationship.