Australian Prime Minister Tony Abbott has hailed as "history-making" a free trade deal between Australia and China signed in Canberra on Wednesday.

When fully enacted, it will remove red tape for Chinese businesses investing in Australia and abolish 95 percent of tariffs for Australian exports to China.

"This agreement will give our nations unprecedented access to each other's markets," proclaimed Abbott, adding that it would also be positive for the wider Asia-Pacific region.

Boon for Australian economy

China is already Australia's biggest trading partner. The two-way flow currently exceeds 109 billion euros ($123 billion).

The deal comes at a crucial time for the Australian economy, which has been hurting from a Chinese slowdown and a fall in demand for natural resources from down under.

Currently, charges of up to 40 percent are levied on goods from Australia but these will be abolished under the pact, meaning energy products and virtually all resources can now flow freely.

Australian agricultural products, ranging from wine to dairy products, will have duties lifted too.

More Chinese investment

Chinese companies will benefit from concessions on foreign investment, allowing the smooth backing of Australian start-ups.

A 5-percent tariff on Chinese electronics and white goods will also be cut.

But unions warn the deal will allow Chinese companies to import cheaper workers from China to work in Australia.

"Any claimed benefits from this FTA will pale into insignificance compared to the lost opportunities for working Australians and the impact that will have on our society," Allen Hicks from the Electrical Trades Union told the AFP news agency.

Canberra has already signed similar deals with Japan and South Korea in recent years, and China plans a regional free trade area of the Asia-Pacific in the near future.

mm/ng (dpa, AFP)