Oct. 30 (Bloomberg) -- Chinese Vice Premier Li Keqiang said China is committed to a free trade agreement with Australia and developing a broader relationship, as he began a three-day visit aimed at cementing ties strained in the past year.
The two nations should view their relationship “from a strategic height,” Li said at a lunch organized by the Australia China Business Council in Sydney today, adding he aims to “enhance mutual trust” during the trip.
Relations between the two countries have been frayed in recent months over a failed investment deal with Rio Tinto Group and the detention of Rio employee Stern Hu by China.
Foreign Minister Stephen Smith said this week Australia’s relationship with China is one of its most important and that the two governments must work through any difficulties in a “calm and measured way.”
Two-way trade between the two nations was worth A$74 billion ($68 billion) in 2008, compared with A$8 billion in 1995. Australia is pushing for a comprehensive free trade agreement with China and wants resource producers to enter into long-term supply contracts with Chinese companies.
The FTA should be approached “step by step” and in a “down to earth” manner, said Li, who’s scheduled to hold talks today with Prime Minister Kevin Rudd in Canberra. The growth in trade has been a highlight in relations between the two countries, he added.
The negotiations are a “strategic choice for both of us,” Li said through an interpreter. “Our political will of advancing these negotiations remains unchanged and our confidence of concluding negotiations and reaching agreement remains unchanged.”
Li, who arrived late yesterday, will also visit Brisbane, where he will meet with Queensland state leaders, China’s official Xinhua News Agency reported.
Agreements covering forestry, cultural heritage, illegal logging and education and training were signed earlier today, Deputy Prime Minister Julia Gillard’s office said. China is Australia’s largest source of overseas student enrolments, with more than 125,000 last year.
Li and Gillard will discuss global challenges such as recovery from the financial crisis and addressing climate change, her office said.
Li’s visit is an “obvious gesture to say that the relationship is now returning to the status quo, which was a developing relationship,” Michael McKinley, senior lecturer in international relations and strategy at the Australian National University, said in a telephone interview today.
“There have been some distractions in the relationship,” McKinley said. “But economic interests are what count.”
Li, who has a doctorate in economics from Peking University, is seen as a possible successor to Premier Wen Jiabao in 2013.
Tensions between the two governments rose after Rio Tinto rebuffed a $19.5 billion investment from state-owned Aluminum Corp. of China in June. The detention of Hu, an Australian citizen, and three Chinese Rio executives in July further stained ties.
Hu has been formally arrested on suspicion of violating commercial secrets and taking bribes, the Department of Foreign Affairs and Trade in Canberra said Oct. 23.
Uighur leader Rebiya Kadeer’s visit to Australia in August escalated the spat. The government in Beijing accuses Kadeer of orchestrating clashes in July between Muslim Uighurs and ethnic Han Chinese that left more than 190 people dead in Xinjiang province. Kadeer denies the allegation.
Former Prime Minister Bob Hawke, who attended today’s lunch, told reporters the visit is a “very firm indication that those difficulties, major difficulties, are behind us and we can go forward now on what is going to be a very prosperous win-win for both countries.”
Australian regulators have approved more than 100 investment proposals from China to acquire Australian businesses since November 2007, Smith said this week.
Felix Resources Ltd. became the latest high-profile Chinese investment in Australia when the government agreed to allow Yanzhou Coal Mining Co.’s A$3.5 billion takeover offer on Oct. 23.
Li, accompanied by a 50-strong delegation, will visit New Zealand from Nov. 1-3 for talks with Prime Minister John Key and Deputy Prime Minister Bill English, the government in Wellington said in a statement today.
Administrative arrangements on educational cooperation, dairy products, temporary workers and meat products will be signed during the visit, according to the statement.