Chinese President Hu Jintao meets with Australian Prime Minister John Winston Howard in Beijing April 18, 2005. Howard is paying a working visit to China from April 18 to 19. (Xinhua Photo)

Chinese Premier Wen Jiabao meets with Australian Prime Minister John Winston Howard in Beijing April 18, 2005. (Xinhua Photo)

China and Australia agreed to start talks on establishing a free trade area following Australia's recognition of China's full market economy status, according to a Memorandum of Understanding signed in Beijing Monday. 

The two sides signed the MOU following Chinese Premier Wen Jiabao's talks with his Australian counterpart John Winston Howard at the Great Hall of the People in Beijing.

Trade between the two countries has grown fast over the past years. China is now Australia's third largest trade partner, second largest export market and second largest origin of imports.     

During the talks, Wen spoke highly of bilateral relations, citing their substantial development in recent years through constant contacts between leaders of the two countries and the encouraging results of bilateral exchanges and cooperation in such fields as economics, trade, education, culture, science and technology.

Wen said the Chinese government attaches importance to its relations with Australia and takes Australia as an important cooperative partner in the South Pacific region.

"China and Australia are important countries in the Asia-Pacific region and share wide-ranging common interests in safeguarding regional peace and promoting common prosperity," Wen said.

"In the current volatile international environment, to further bilateral overall cooperation is in the fundamental interests of the two countries and the two peoples, and is conducive to peace and development in the Asian-Pacific region," he said.

The Chinese side appreciates the Australian government's adherence to the one-China policy and opposition to Taiwanese independence, said the premier.

Wen said the Sino-Australian relationship faces new opportunities and that China will make a concerted effort along with the Australia side to push for continuous and steady growth of bilateral relations and overall cooperation.

Wen made a four-point proposal on the future development of bilateral relations.

The first is to enhance mutual political trust. China will enhance political relations with Australia on the basis of mutual respect, equality and reciprocity, and strengthen communication on major issues of common concern so as to promote and consolidate the political basis for bilateral relations.

The second is to actively and properly push forward bilateral free trade. China agreed to begin bilateral negotiations on a free trade agreement and will realize a free trade arrangement between the two countries on the principle of mutual benefits.

The third is to make efforts to further bilateral reciprocal cooperation. The two countries should actively explore new means and spheres of cooperation while looking for long-term cooperation. The Chinese government encourages and supports mutual investment and emphasizes bilateral cooperation in agriculture, energy and resources development.

The fourth is to strengthen security consultations. The Chinese side will continue to strengthen consultations and coordination with Australia on major international and regional issues and jointly promote peace and stability in the Asia-Pacific. China welcomes Australia's positive role in east Asian regional cooperation.

Howard said Australia-China relations have witnessed comprehensive development in recent years with smooth cooperation in various fields, particularly mentioning the fruitful energy cooperation which has become an important component of bilateral economic and trade cooperation.

He said such momentum can be realized in more fields.

Therefore, Howard said, Australia has decided to recognize China's full market economy status and will initiate negotiations on a free trade agreement so as to further bilateral economic and trade cooperation.

The Australian side will, with a positive and pragmatic attitude and in the reciprocal and win-win principle, push forward the further development of bilateral economic and trade relations. The Australian side is optimistic about the prospects for bilateral cooperation, he said.

He said the Australian government's adherence to the one-China policy will remain unchanged.

Howard arrived here Monday afternoon for a working visit to China.

Editor: Olivia