Australia and China have signed a pact to begin negotiations on a free trade agreement (FTA), with Australian Prime Minister John Howard saying Canberra recognizes China as a "market economy". A memorandum of understanding between China and Australia was signed in Beijing on Monday night by Howard and Chinese Premier Wen Jiabao. Howard said concluding the FTA would be a challenging and complicated task. "But we approach it with a great deal of optimism and enthusiasm and I believe China will do likewise, and if that attitude continues there is no reason why after a difficult negotiation, success cannot be achieved," he said. China is Australia's third largest trading partner, with two-way trade between the countries valued at more than Aust. $30 billion ($23 billion) in 2004.
