Plans for an Australia-China free trade agreement and greater banking deregulation in China will benefit all Australians, says Charles Sturt University (CSU) economist Professor John Hicks.

Professor Hicks noted that the growing Chinese middle class is rapidly changing the country's patterns of food consumption, with a rising demand for higher quality and more sophisticated food products.

"And this is one reason why the Chinese are so interested in acquiring farming resources in Australia," Professor Hicks said.

"Australian farmers must strive to meet this demand by adapting on-farm production processes to the needs of the Chinese market. If they do not do this, then the Chinese desire to acquire Australian farm land will continue to grow.

"Legislating to make such investment difficult is not in the best interests of Australia, or Australian farmers. We want our resources to be put to the best use possible.

"If Chinese corporations are prepared to buy Australian farms – and Australian famers are prepared to sell – then this shows that the Chinese place a greater value on the resource than do Australian farmers and are likely to make better use of it. That's an outcome that will benefit all Australians."

Professor Hicks noted that economic growth in China has already increased the growth of the Australian mining industry, which has flowed on to the Australian economy.

"Chinese demand for Australian resources is likely to last well into the middle of this century – particularly as the central and western regions of China strive to catch up to the rising living standards enjoyed in eastern China," he said.

"But the growth will not stop with mining. The services industry in China, which includes banking, is currently a much smaller proportion of its GDP than in Western economies such as Australia. As Chinese incomes continue to rise, we can expect this situation to change significantly."

Professor Hicks believes Chinese expenditure on consumer goods will start to grow rapidly from a low base, increasing demand for services such as banking.

"The Australia New Zealand (ANZ) Bank has already recognised the impact that this will have on banking and other financial services and is positioning itself to take advantage of the changing regulations in China that will permit foreign finance companies to enter the Chinese market."Importantly for Australian service industries, banking is only the beginning. All parts of the sector could benefit from exporting their expertise to the rapidly growing Chinese economy."