From agriculture to clean energy, Australia-China trade and investment offer much growth potential for cooperation and collaboration in traditional and new sectors, showing bright spots amid global challenges to economic development, according to a leading Australian scholar.

The relationship between Australia and China is "quite particular" because there has been a very large area of resources cooperation — most notably in Australian iron ore exports — and strengths in other specialized markets, such as the agricultural, education, and tourism sectors, Professor Hans Hendrischke from the University of Sydney's Business School told China Daily in an exclusive interview.

Areas presenting significant opportunities for Chinese investment in Australia can now be seen at different levels, including the traditionally strong iron ore mining shifting to new minerals like lithium and other materials related more to the green sector's battery supply chain, he said.

Hendrischke leads the school's Australia China Business Network and chairs the business and economics cluster of the university's China Studies Centre. He is a member of the Net Zero Institute, which helps with decarbonization solutions for the world to meet its climate change goal of net zero carbon emissions by 2050, by involving more than 150 university researchers with industry collaborators across a range of disciplines.

Hendrischke also heads a strategic research cooperation project publishing annual reports on Chinese outbound direct investment in Australia and thought leadership reports on Australia-China business relations, and co-authors major Australia-China trade reports for the Australia China Business Council.

"The bilateral relationship is very strong in terms of trade volume," he said. "On the other side, if you look at the way in which the economies interact at a deeper level, that is, in terms of cooperation, collaboration, in terms of mutual investment … the cooperation is much weaker than you would expect with the big trade volume that we have."

China is Australia's largest two-way trading partner, accounting for 26 percent of Australia's global goods and services trade in 2023-24, according to official figures.

Two-way trade with China increased 2.6 percent in 2023-24, totaling A$325 billion ($205 billion), with Australia's goods and services exports to China totaling A$212.7 billion in 2023-24.

"Services exports were up 42.3 percent in the same period with increased personal travel and students returning to Australia. Increased engagement between Australia and China has led to positive developments in the trade relationship, including the removal of China's trade impediments that affected Australian exports since 2020," according to Australia's Department of Foreign Affairs and Trade.

"China is the fifth-largest foreign direct investor in Australia (investment stock worth A$47 billion in 2023), accounting for 4 percent of total foreign direct investment. In recent years, Chinese investment has broadened from mainly mining to other sectors including infrastructure and healthcare," the department stated on its website. Australian FDI in China totaled A$2.2 billion in 2023, it noted.

Hendrischke emphasized that the Australia-China relationship is "very much influenced by international events and by the geostrategic, geopolitical situation", extending into economic cooperation and development.

He said that, amid these challenges, agriculture remains an area where there is much potential.

"We know that there is demand in the Chinese market, there's interest in the Chinese market but there is very little uptake of opportunities in the Australian market, we've observed that over the years now," Hendrischke said.

"In a sense, we are surprised every year when we do our statistics that, in spite of all the interest that we've noticed there, the growth and the uptake is rather limited. That could be linked to the general geopolitical atmosphere, the confidence that people have in cooperation."

The energy sector is another field where investment could come into Australia in terms of cooperation, Hendrischke said.

"The Southeast Asian countries is where investment now goes that used to go to Australia … That is starting to put competitive pressure on Australia and these are areas where Australia actually could again work with China if we didn't have the broader geopolitical issues."

Europe, for example, attracts Chinese investment linked to technology and innovation based on a strong manufacturing sector, he said. "We don't really see it in Australia, there is very little investment coming in for manufacturing. That is an area in which there is potential but it would require that political differences and geopolitical differences are somehow settled", he added.

"The interesting part is more on new technologies that are developing where in fact China might be interested to cooperate with an overseas partner. In clean technology, in the transfer of energy, and so on," he said.

"These are areas which are developing at the moment," Hendrischke noted, adding that Australia, with its size and industry requirements, offers advantages "that you won't find in a more densely populated country like in Europe".

"What has to be resolved of course is the whole security issue. Businesses have to be confident that they won't be stopped by influences that say, well, this is not secure, or this is a security risk. And these could be strategic risks, which are not defined by business but are defined by governments and politics," he said.

"It could also be technological, technical risks in terms of data protection, so there's a process that will have to unfold to put this type of cooperation on a stable basis," Hendrischke said.

In terms of providing confidence to the business community amid global economic uncertainty and challenges, Hendrischke highlighted the Government Work Report delivered by Chinese Premier Li Qiang at the opening meeting of the third session of the 14th National People's Congress, the nation's top legislature, on March 5.

"The fact that China, in a situation which is very unpredictable and complicated and possibly full of surprises, the policy that is announced is saying that 'we want to increase incentives for foreign investment', is again a signal that business is normal," Hendrischke said.

"It's saying, 'We don't want to, or we don't expect any bad disruptions, we do the things that we have done before'. And China has done that before, whenever there was a decline in foreign investment, China started to put up new incentives, and the new incentives are not radical, they are quite conservative and quite low key, because … there's no indication that China expects anything unfavorable or anything surprising to happen," he said.

Similarly, he said the announced Chinese government target of GDP growth of around 5 percent this year reflected the sign of "giving confidence, to both the domestic audience and to the international audience.

That China wants to pursue a stable course, it does not expect any disruptions by saying that, and the point of the exercise is to give confidence, that the situation can be kept stable in a global situation which is very insecure with all kinds of unpredictability, Hendrischke said.

"With the economic tools that were announced, again, the main thrust of the message is that China can continue with business as usual ... the point being that the government policy is meant to be stable," he said.

Contact the writers at alexishooi@chinadaily.com.cn