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Upgrade The Australia-China FTA And Share The Prosperity of The Chinese FinTech Industry

11 Dec 2019
By Jeanne Huang
Tony Abbott and Xi Jinping sign the Aus-China FTA. Photo by DFAT. DFAT Website: Photo source:

With China’s booming financial technology industry looking to continue expanding, Australia should revise and “upgrade” its free trade agreement with China so that Australia can have a share in its prosperity.

Internet finance is a type of emerging finance that includes fund management, payments, information, and other related businesses by such internet tools as cloud computing, big data, third-party payment, and social network. It relies on the development and application of FinTech, which ranges from financial data analysis to financial programming, digitised processes, and payment platforms.

The Chinese FinTech industry is booming. For example, on 11 November 2019,, which is owned by the Alibaba Group, conducted a “Singles’ Day Sale.” On this day, China UnionPay (operating bank cards) and China NetsUnion Clearing Corporation (operating non-bank related internet and mobile payment services)  processed a total of 1.8 billion payment transactions worth  RMB 1.5 trillion billion. Among them, the number of transactions processed by NetsUnion was roughly six times that of China Unionpay’s at a value three times that of China Unionpay’s. As a commentator described  “[i]f you want to see the future of FinTech, just go to China.”

Can the Australia-China Free Trade Agreement (hereinafter “ChAFTA”), effective since 2015, facilitate Australian businesses and share the prosperity of Chinese FinTech industry? Answering this question requires looking into ChAFTA chapters of investment, trade in services (especially financial service) and e-commerce.


In Chapter 9 of ChAFTA, Australia offers “pre-establishment national treatment” to Chinese investors but China only reciprocates after-establishment national treatment (as per articles 9.3.1. and 9.3.2 of ChAFTA). Pre-establishment national treatment means that Australia will treat Chinese investors no less favourably than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, and expansion of investment in Australia. China does not offer pre-establishment national treatment to Australia, probably because when ChAFTA was concluded, Chinese domestic law did not offer pre-establishment national treatment to any foreign investors. Moreover, China had expected to conclude a bilateral investment treaty (hereinafter “BIT”) with the US, which might set a standard on national treatment for future Chinese BIT and FTA investment chapters. Therefore, China decided to wait for the result of the US-China BIT negotiation.

However, US President Donald Trump put the US-China BIT negotiation into uncertainty. With the pressure of the US-China trade war, China quickly passed the Chinese Foreign Investment Law in March 2019, which offers pre-establishment national treatment to all foreign investment and investors (Article 4 of the Chinese Foreign Investment Law). Namely, the treatment given to foreign investors and their investment at the market access stage shall be no less favourable than that given to Chinese domestic investors and their investment. This is significantly better than what China offered to Australia in ChAFTA.

Trade in Service: Financial Service

Whether foreign businesses can enter the financial services market in a state depends on the market access offered by the state. In ChAFTA, Australia adopts a negative list for financial market access while China applies a positive list (i.e. the “Trade in Services Specific Commitment”). A negative list means the industrial sectors found in the list are forbidden or restricted for foreign investment and all the sectors not listed are presumably open to foreign investment. In contrast, the positive list means foreign investment is allowed in the listed sectors only. Therefore, under ChAFTA, Australian businesses can only access sectors listed in China’s “Trade in Services Specific Commitment.”

Today, China has abolished the positive list and established a negative list to market access for foreign investment. Chinese Foreign Investment Law provides that China grants national treatment to foreign investment beyond the negative list. In June and July 2019, China enacted the “National Special Management Measures for Foreign Investment Market Access” (hereinafter “2019 national negative list”) and “Foreign Direct Investment Encouragement List.”

The following table compares China 2019 national negative list with the “Trade in Services Specific Commitment” in ChAFTA. In the first three categories of Internet Finance (credit investigation, banking, information/data processing), the market access offered by Chinese domestic law is equal to ChAFTA. However, in all the other categories except “basic telecommunication service,” Chinese domestic law has offered more favourable treatment to Australian businesses compared with ChAFTA.

Categories of Internet Finance Market Access in ChAFTAMarket Access in 2019 China national negative list
Credit investigation

(info related to deposit, loan, financial leasing, payment, credit card/check, guarantee/undertaking, foreign exchange service, auto consumer credit)

No restrictionNo restriction
Banking (including payment)No restrictionNo restriction
Information/data processing (Financial data processing software)No restrictionNo restriction
Value-added Telecommunication service (email, voice mail, online data search, digital data exchange, value-added fax service, coding, online data processing (including transaction processing))≤50% foreign shareholding -China nationwide


≤55% in Shanghai FTZ

≤50% foreign shareholding


No restriction for e-commerce

Basic telecommunication service (telephone)


≤50%≤49% foreign shareholding
InsuranceLife insurance ≤50% foreign shareholding

Auto insurance-no statutory insurance

Other insurance-no restriction

Life insurance ≤ 51% foreign shareholding


No restriction on auto insurance and other insurance

Futures≤49% foreign shareholding≤51% foreign shareholding
Securities (including fund management)≤49% foreign shareholding≤51% foreign shareholding


The heathy development of FinTech requires protecting personal data. However, the China-Australia FTA only provides a soft best-effort clause for protecting personal data and privacy (outlined in Article 12.8 of ChAFTA). Recently, the Australian government has introduced the Consumer Data Right (hereinafter “CDR”) which gives “consumers the right to safely access certain data about them held by businesses” in the banking industry. Meanwhile, Chinese legislators are working on including personal data protection into the forthcoming Civil Code. Chinese Civil Code has gone through three drafts and it is widely considered that the third draft will be highly similar to the final draft. Although both CDR and the third draft of Chinese Civil Code require personal data can only be transferred at the consent of consumers, there are at least three important differences between them. First, under CDR, no “implied” consent is allowed for data transfers. In contrast, the third draft of the Chinese Civil Code does not specify whether the consent for transfers should be explicit or implied. Second, CDR imposes mandatory accreditation of data recipients but China has no equivalent accreditation. Third, CDR extends Privacy Act 1988 protections to bind all accredited data recipients, while the third draft of Chinese Civil Code regulates privacy protection and personal data protection differently. The provisions for privacy protection is not necessarily to be applicable to personal data protection.


On 24 March 2017, Australia and China made the Declaration of Intent regarding Review of Elements of the China-Australia Free Trade Agreement. About three years have passed. It is unclear to what stage both governments have finished the review. What is clear is that upgrading ChAFTA is desirable for Australian businesses to participate in the booming Chinese FinTech industry. First, regarding investment and financial service, the ChAFTA does not provide more favourable treatment to Australian businesses compared with Chinese domestic law. If an FTA does not offer better treatment, it is of minimum value. Second, in terms of e-commerce, because of the differences in domestic law, it would require careful negotiation so both governments can create affirmative obligations on personal data protection.

Jie (Jeanne) Huang is an Associate Professor at University of Sydney Law School.  Associate Professor Huang’s teaching and research interests are in digital trade law, Chinese law, and private international law.

This article is published under a Creative Commons Licence and may be republished with attribution.