We will find out the future of the Chinese economy in the next five years, former Australian Ambassador to China, Dr Geoff Raby has told the Perth launch of CEDA's research Global networks: transforming how Australia does business.
"In the next five years the great question of our age will be answered and that is whether China will be able to make the transition to a developed middle level income country," he said.
"In a two decade span, China has gone through an entire transformation of its economy through manufacturing and now entering a service-based economy."
Dr Raby said for the first time this year, services will account for more than half of China's gross domestic product (GDP).
"As incomes have risen over the past decade the share of services and GDP is now rising very quickly," he said.
We need to start thinking of China as the world's services centre not the workshop of the world, he said.
Dr Raby said for China to make the transition, the Chinese Government must continue to focus on financial sector reform, full internationalisation of the Renminbi and opening capital accounts.
Also speaking at the event Federal Department of Foreign Affairs WA State Office Director, Andrea Gleason said the China Australia Free Trade Agreement (ChAFTA) is going to deliver significant opportunities for Australia.
"China being the world's second largest economy we'll get to enjoy competitive advantages in China that only a few economies enjoy," she said.
"Over 85 per cent of our goods will enter duty free and when ChAFTA is fully instituted that will rise to 96 per cent."
Speaking on free trade agreements (FTAs) more broadly, Ms Gleason said they help reduce barriers to investment that Australian industries face.
"The FTA agenda is a really important element of the Federal Government's plan for growth and new jobs beyond the mining investment boom," she said.
On the Trans Pacific Partnership (TPP), Ms Gleason said member countries are Australia's important trade and investment partners accounting for one third of total exports, 45 per cent of overseas Australian investment and 40 per cent of inward investment.
"The TPP is going to eliminate at least 98 per cent of the tariffs among the 12 member countries," she said.
"It's going to provide a set of commonly agreed rules and promote transparency of laws and regulation across the 12 economies making it much easier and simpler for business to trade and invest in the region."
Ms Gleason said Australia is committed to expanding membership to the TPP over time, eventually hoping that it will cover the Asia Pacific region.
The Airport Economist and UNSW JW Nevile Fellow in Economics, Tim Harcourt said FTAs will help international engagement.
However he said FTAs are the not the "be and all of everything."
"I think the thing about FTAs is they are necessary but not sufficient," he said.
On the topic of WA's economy and the Australian economy, Mr Harcourt said growth is still strong.
"WA is still our nation's leading exporting state, net exporting too," he said.
Mr Harcourt said challenges ahead in the global economy include climate change and demography changes including an ageing population.
The real advantage in Australia is immigration, he said.
"One in four Australians are born overseas, two in three of our entrepreneurs, one in two of our exporters are born overseas...look all around you, you can see the impact of immigration in such a positive way on our economy," he said.