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While cheap energy underpinned major increases in living standards across the developed world last century, the federal government aims to make energy more expensive.

Discussing his Australia-China 2.0 strategy in Perth, Rudd said one of the reasons for the carbon price was to help renewable energy become more cost competitive to develop it here.

“That’s the discipline that underpins carbon pricing around the world,” he said.

“That’s why in Europe and Germany and elsewhere you see this rapid expansion in the renewable energy sectors because carbon prices have been around for awhile.

“That’s why it represents an opportunity here in Australia and not a threat.”

As ongoing industrialisation continues to reshape and urbanise China, Rudd spoke of a looming services sector explosion in the country.

Outside of demand for renewable energy and environmental services, Rudd said there was growing Chinese demand for services in its mining, financial, logistics, high technology, professional, retail, tourism and health sectors.

Rudd noted the terrific performance of Australia’s mining and energy industries to supply China, but also said there was much money to be made from services within China’s economy.

“We are blind to reality if we don’t realise China is changing its growth model,” he said.

“So we can pretend that it’s not going to change or we can accept the fact that they are changing and we are now dealing with these two ongoing realities.”

He revealed that Trade Minister Dr Craig Emerson was engaged in fundamental investigations with Australia’s “Chinese friends” for a free trade agreement, to help overcome restrictions facing Australian businesses in the country.

Austrade is organising an August trade mission to five emerging “second-tier” cities considered well poised for services growth.