Australia turning to Shanghai for free trade therapy

While bilateral trade between China and Australia stood at $122.3 billion in 2012, the stale taste of almost 10 years of free trade talks has stifled economic integration.

The Shanghai FTZ pilot project is now being considered by many of Thomas'clients as a "momentous step away from China's export-led growth model, to a more sustainable and liberalized consumer-led growth model."

In the next five years, the Shanghai FTZ is expected to contribute  between 0.1 percent to 0.75 percent to China's annual GDP and concurrently, provide a new model to attract foreign investment which can be applied to other cities and provinces.

Thomas said that as China had begun to foster domestic growth, it would be crucial for its services-based industries to both develop and mature to be able to compete on the world stage.

"Looking further forward, the Shanghai FTZ will also stimulate a fresh wave of investment and infrastructure spending, which will offer a wide range of opportunities for Australian businesses," he said.

Despite the cheerleading, Westpac is yet to set up shop in the FTZ, while its direct competitor in China of Australia's Big Four Banks, the Australia New Zealand Banking Group Ltd (ANZ) has already announced preparatory approval from the China Banking Regulatory Commission (CBRC).

From Whitford's view there is no rush.

Westpac, with strong footholds in Beijing, Shanghai and Hong Kong, has had a very good Christmas - reveling in record profits (A$6.8 billion up 14 percent from 2012) and basking in widely-held expectations that the Australian banking sector will deliver more earnings growth in 2014.

"From Westpac's perspective, I have a watching brief on the free trade zone,"  Whitford said.

"I am spending a lot of time on it...and from where I am sitting and everything I am hearing, to me it is going to be an opportunity that most banks who are actively participating in the Australia-China market will probably want to be involved in."