Australian PM off to China for trade talks

BEIJING - Prime Minister John Howard heads to Asia today on a visit that could lead to a significant economic boost for Australia.

Mr Howard has meetings with Chinese Premier Wen Jiabao and President Hu Jintao tonight, after which they are expected to announce the two countries will start on a free trade agreement (FTA).

A report that both countries have been working on the deal is expected to show Australia will benefit by more than A$20 billion over a 10-year period from the two nations opening their markets.

It would join a series of other free trade talks -- including with the United Arab Emirates, Malaysia and Asean -- that Australia has embarked upon in the past six months.

Mr Howard will also touch on the sensitive issue of Chinese relations with Taiwan and the United States, with tensions ramped up after China's recent decision to pass controversial anti-secession laws.

The visit also coincides with tensions between China and Japan over a Japanese textbook, which China alleges glosses over wartime atrocities.

Japanese foreign ministry officials are in Beijing trying to head off the crisis, which resulted in around 10,000 people taking to the streets of Shenzen.

Mr Howard will break his time to China with two-day visit to Japan, where trade will again dominate discussions.

Australia and Japan are hoping they will be able to move forward with a feasibility study for a free trade agreement.

However, it is now emerging that Japan - Australia's single largest trade partner - will baulk at such a move.

- AAP