China

Australia's bilateral relationship with China is one of our most important. China's importance to Australia has grown with China's increasing economic, political and strategic weight in the Asia-Pacific region and the global economy. Two-way trade has increased significantly over the past decade and China is now Australia's second-largest trading partner.

With average annual economic growth of 9.5 per cent over the past two decades, China has been the single largest contributor to global growth over the past five years. Whilst many economic and human development indicators are improving, China also faces ongoing and emerging development challenges related to its continued rapid growth.

Country overview

China's terrain is divided into three large areas. Central China is made up of high plateaus that are snow covered in winter. North China has vast plains with large wheat, barley, sorghum, soybean and cotton plantations. South China is a hilly area with a hot, humid monsoon climate and contains most of the country's rice plantations.

China has greatly improved the quality of life of its people over the past two decades with some 200 million people lifted out of poverty. China's economic reform program since 1978 has been the main vehicle for this progress. It has involved the ongoing transition to a market economy, encompassing reforms in the financial system, state-owned enterprises and the government structure, as well as key resource sectors.

Despite these achievements, major challenges remain. Over 100 million people live in absolute poverty in China. Although China's overall human development indicators have improved, significant and growing inequalities have developed between rural and urban people, coastal and inland provinces, and men and women. For example, urban people earn at least twice as much as rural people. Given that approximately 70% of the population still lives in rural areas, this is a significant issue. In short, poverty remains a major challenge for the Chinese Government with poverty alleviation one of its highest priorities.

Development challenges

China's population lies at the heart of its development challenges. It is the most populated country in the world, currently at 1.23 billion. The large number of people who need to be reached by education and health services makes improvements difficult. Population pressure is at the heart of China's environmental degradation, its polluted rivers and vast deforested areas. It is the size of the population to be fed, housed and clothed that has shaped the Chinese Government's policies and priorities in many areas.

The Chinese government has recognised that a singular focus on economic growth poses serious risk to longer-term growth and political stability. It has adopted a long term development objective to establish all-round, balanced and sustainable development of the economy and society. This aims to advance reforms in a manner that balances urban and rural development, development amongst regions, economic and social development, development of man and nature, and domestic development and opening up to the outside world. This balanced development policy is reflected in China's 11th Five Year Plan that commenced in 2006

Australia's aid program

Country program estimate 2008-09: $25.0 million
TotalODA: $34.8 million

Australia attaches a high priority to its relationship with China. It is in Australia's interests to see that China continues to grow in ways that are environmentally sustainable and which promote equity, to see reform within a framework of stability, and to increase economic and commercial engagement between China and Australia and the wider international community.

Australia currently assists China with on-going improvement in governance and policy reforms, including capacity building to enhance regional trade and investment. Health, environmental management and assistance for regional security and stability are also priorities in the program.

Australia works with key ministries to undertake trade and fiscal reform, improve technical and vocational education systems, and strengthen health systems in selected western provinces to reduce the spread of communicable diseases, particularly HIV/AIDS. Australia also supports the Human Rights Technical Cooperation Program, which underpins dialogue between the two countries on practical approaches to improvements in human rights.

On 23 November 2005, the Australian and Chinese Governments formally endorsed a new China-Australia Country Program Strategy 2006-2010. The goal of the strategy is to further mutual national interest by supporting China's balanced development policies and working together in the region. The strategy has three strategic objectives:

Building capacity in selected sectors in China through targeted technical assistance in areas where Australia has relevant and valued expertise. Priority sectors include governance (focusing on economic reform), environment (focusing on water resource management), and health (focusing on HIV/AIDS and other communicable diseases)
Extending the Australia-China relationship by building durable links between government agencies and institutions, in targeted areas
Working collaboratively to strengthen the region, by engaging with China to address significant regional issues, such as communicable diseases and water management.

See also:

AusAID China newsletter

Useful websites

May 2008