Australian Embassy

Speech -ECNU



“Australia and China – Our long-term common interests”
(Thursday 10 December)

***This speech is the first in a series of lectures to be given by Dr Raby at Australian Studies Centres around China***

Professor Yu Lizhong, President of East China Normal University (ECNU), Dr Chen Hong, Director of the ECNU Australian Studies Centre. May I begin by saying it is a pleasure to deliver the inaugural lecture in this series of talks at the Australian Studies Centre at ECNU. Since it opened in 1985, the Centre has done an excellent job in assisting us to promote knowledge within China about Australian society and culture.

Today I would like to speak about Australia and China’s bilateral relationship. This is a subject that has attracted lots of attention in the past year – perhaps more than we would wish it to have had at times. Nonetheless, it is useful for us today to again review where things now stand.

The title of today’s speech is “Australia and China: our common long-term interests” a title chosen to reflect Australia and China’s many shared interests and the fact that these interests, be they economic, strategic or cultural, are only going to increase in the years ahead.

The process of diplomatic engagement between our two countries began over thirty five years ago, and in that relatively short period of time engagement has increased dramatically.

Our relationship with China is now one of Australia’s most important, as well as one of our most high profile. In any given month there are a range of senior-level visits between our two countries. Recently, Vice Premier Li Keqiang and PLA Chief of General Staff General Chen Bingde both paid visits to Australia. There have been many visits to China by Australian Cabinet ministers in recent times, and of course by Australia’s best known Chinese speaker, our Prime Minister, Lu Kewen.

Total two way trade is now worth $83 billion, there were more than 150,000 enrolments by Chinese students at Australian educational institutions this year - making us one of the most desirable destinations for Chinese students wanting to study overseas - and we have more than 75 sister city/sister state relationships.

The Australia China relationship is indeed broad and our engagement, as you can see, very extensive. This is something we welcome and will continue to strengthen, though recent difficulties have highlighted some of the complexities of having such a close relationship.

I will discuss some of these complexities later, but first let me highlight some of our countries’ many common interests and correct what I believe are some misconceptions in the media and public domain in both Australia and China.

Australia and China’s Common Interests
Australia and China share strong and growing economic complementarities. China is currently Australia's largest two-way trading partner, with total trade increasing in the last financial year by 30 percent.
China is now Australia’s largest export market, receiving more than 20 percent of our total merchandise exports.

Naturally, resources and energy account for the majority of these exports, and Australia is committed to remaining a stable-long term supplier of these vital commodities that China needs for its economic development and growth.

Bilateral services trade is also growing strongly, particularly in the area of education as I mentioned before; where China provides almost one-quarter of all Australia’s international student enrolments.

The Australian Government values highly Australia’s deserved reputation as a reliable provider of high quality education and training services to overseas students, and Australia has in place a world class consumer protection framework to protect these students’ interests.

Everywhere I travel in China I encounter examples that demonstrate this country’s growing links with Australia. For example, more than 600 carriages for Sydney’s upgraded CityRail network are currently being built in Jilin Province by Changchun Railways Company. China’s world-famous Tsingtao beer uses barley imported exclusively from Australia in the brewing process for its export product.

The 2008 Beijing Olympics were also an advertisement for the growing links between our two nations. Australian architects designed some of the landmark Olympic venues including the “Water Cube”, the Olympic Green Tennis and Hockey Centres, and the Olympic Sailing Course in Qingdao.

In a bid to expand and diversify further our economic ties with China, a number of Australian Government ministers have in the past year travelled to significant regional centres including Chongqing, Chengdu, Wuhan, Harbin and Kunming. Many ministers of course also come to Shanghai. But it is my firm belief as Ambassador that to really understand what is happening in China today, it is necessary to see first-hand the rapid development taking place in China’s so-called second and third tier cities.

Given this increasing integration of our two economies, it is natural that Australia welcomes China's return to its historical status as a major power. Australians are comfortable with this reality, understanding that as China grows, so we grow.

Chinese Investment in Australia
Because of this, the Australian Government welcomes China’s increased investment in Australia. We welcome all foreign investment but, like all other countries, including China, foreign investment must be consistent with the advancement of our national interest.

In Australia, we are fortunate to have a comprehensive annual survey of Australian people’s attitudes to foreign policy and foreign investment which is conducted by the renowned Lowy Institute, a non-government think-tank based in Sydney. This year, for the first time, the Lowy Institute also conducted a survey in China, on Chinese perceptions of Australia.

Both of these surveys included a range of findings, many of which were very positive. But interestingly, foreign investment was an issue that the Lowy polls in both Australia and China showed was of some concern in our two countries. This is perhaps not surprising given the prominence of this issue in Australian and Chinese media throughout the year

The 2009 Lowy Poll in Australia showed that only 42 per cent of those surveyed believed the amount of Chinese investment being approved by the Australian Government was appropriate. So the general sense in the Australian community was that too much Chinese investment was coming into Australia. Similarly, the 2009 Lowy Poll in China showed that only 41 percent of Chinese surveyed were comfortable with the notion of an Australian company buying a controlling stake in a major Chinese company.

Clearly, governments on both sides need to do more work to explain to our communities the many benefits that foreign investment brings to both our economies.

On the issue of Chinese foreign investment in Australia – notwithstanding what you might read in the media, or on Chinese blogs – the facts speak for themselves. Over the last two years alone, Australia has approved more than A$39 billion of Chinese investment, a staggering increase when compared to the fact that a total of A$14.5 billion was approved in the decade between 1997-2007.

Of the 110 Chinese investment applications that have been submitted since late 2007, not one has been rejected by the Australian Government – not one. And only five have been subject to undertakings, amendments or conditions designed to protect the national interest. This shows very clearly that the Australian Government has a very open and welcoming attitude to Chinese investment in Australia.

Just last month, Australia approved Yanzhou Coal’s $3.5 billion bid for full ownership of Felix Resources, and approved Shanghai-based Baosteel to take up to 19.9 percent equity in another major Australian resources company.

Quite simply, these are not the actions of a government that is unwelcoming of Chinese investment. Indeed it is quite to the contrary, and therefore important for me to correct the record, and challenge some of the misconceptions that have developed around this issue.

In the Joint Statement agreed during Vice Premier Li Keqiang’s recent visit, we noted Australia sees China's increased investment interest as a positive, mutually beneficial development. Such investment helps grow Australia’s productive capacity, creating wealth and jobs, and helps meet the growing needs of the Chinese economy for our resources, which will only continue to increase into the future.

The Joint Statement also noted that China “sees great scope for increased Australian investment in China”. As our Trade Minister constantly says, investment must be a two-way street. Australian investment in China is currently limited to only about A$7 billion, in part because of extensive restrictions applied by the Chinese Government on foreign investment.

We would like, over time, to see a corresponding expansion of Australian investment in China, allowing Chinese partners to benefit from the experience and expertise of Australian investors in fields ranging from mining and agriculture to modern service industries.

We encourage potential Chinese investors in Australia to come to us directly and talk about their investment proposals, rather than relying on intermediaries.

One area where we can make significant progress on investment is through our bilateral FTA negotiations, which foresees an investment framework. These negotiations have been going on for some time, and Australia hopes we can conclude an FTA in the near future.

Other common interests (G20, Climate Change, Non-proliferation)
I would now like to talk about some other areas where Australia and China have been cooperating to address the challenges faced by our two countries, and will continue to do so in the future.

Australia and China are both members of the G20, and we enjoy close collaboration within the G20 process. Australia believes the G20 has clearly proven itself to be the best forum for global leadership on the financial and economic crisis. Importantly, it provides an equal seat at the table for developed and emerging economies, from all regions of the world.

To this end, we were very pleased with Leaders’ endorsement at Pittsburgh of the G20 as the world’s premier international economic forum, and their agreement to schedule a further three G20 Leaders Summits in 2010 and 2011.

Australia has been among the strongest advocates within the G20 on the need to reform the IMF to allow China to make a greater contribution to global financial governance. It was pleasing that G20 Leaders agreed at Pittsburgh on specific targets for transferring IMF and World Bank voting rights to emerging and developing countries, particularly China.

It is now important that we work together to ensure these commitments are implemented, and develop an ambitious agenda for next year’s Leaders Summits in Canada and South Korea. We will be working closely with our Chinese counterparts in the lead up to these Summits.

Climate Change
Climate change is a particularly topical issue at the moment, with world leaders about to gather in Copenhagen. Australia and China have a lot of common interests in how we combat climate change. Both countries have a very real stake in the development of climate friendly technology that will enable our economies to continue to benefit from coal.

It may not be fully appreciated, but when it comes to coal our two countries are in the same boat. Australia is the world’s biggest coal exporter and China is the world’s biggest coal producer and consumer. Coal’s share of energy consumption in our two countries is also roughly the same, between 70-80 percent. It therefore makes sense that we have an active program of cooperation on clean coal technology and carbon capture and storage.

Last year, Australian and Chinese experts completed a carbon capture demonstration project at Huaneng Gaobeidian power plant on the outskirts of Beijing. Australia and China also cooperate bilaterally through our climate change partnership, which covers areas such as renewable energy technology, energy efficiency, agriculture and forestry.

We have also elevated our climate change dialogue to ministerial-level. Our Minister for Climate Change and Water, Penny Wong – who incidentally is the first ethnic Chinese person to sit in an Australian Cabinet - was in Beijing recently for discussions on strengthening bilateral cooperation on this issue.

Australia has announced its commitment to reduce its carbon pollution to 25 per cent below 2000 levels by 2020, if the world agrees to an ambitious global deal to stabilise levels of greenhouse gases in the atmosphere at or below 450 parts per million.

It is in both Australia’s and China’s national interest to see an ambitious global agreement on climate change at the Copenhagen UNFCCC conference taking place as we speak.

Security Cooperation
Australia and China also share a common desire to promote peace, security and the development of the Asia-Pacific region. In May this year we worked together to ensure a very successful regional meeting in Beijing of the International Commission on Non-proliferation and Nuclear Disarmament (ICNND) – a joint Australian and Japanese initiative to promote discussion on non-proliferation and disarmament issues in advance of the Nuclear Non-Proliferation Treaty Review Conference scheduled for May next year. The meeting in Beijing drew together key security experts from the region including from China, Japan and Korea to discuss the challenges of non-proliferation and disarmament and ways to address them.

We were grateful for the support of China’s Ministry of Foreign Affairs and Tsinghua University (which hosted the meeting) in ensuring the meeting was a success and we look forward to the launch of the ICNND report later this month. I will be presenting a final copy of the report to MFA next week, and believe it will make an important contribution to the review conference.

Cooperation in Regional and International Frameworks
In regional and international fora such as APEC and the East Asia Summit and also in the United Nations, Australia and China share many common interests. We welcome China’s clearly stated support for the positive role Australia can play in regional and international affairs.

Something particularly important to Australia given our long and proud history of support for the United Nations, is our candidacy for a non-permanent seat on the United National Security Council for 2013- 2014.

Australia is strongly committed to the work of the United Nations. In addition to being a founding member, Australia has a distinguished record of contribution to the organization. This includes support for and participation in many peacekeeping operations, and major financial contributions. We are the 13th largest contributor to the UN budget and the 12th largest contributor to the peacekeeping budget, a substantial contribution relative to our share of global GDP. Australia also provides significant amounts of overseas development aid, and has developed initiatives such as the ICNND mentioned above, to reinvigorate work on nuclear non-proliferation and disarmament, another major contribution to the UN.

At the regional level, we also welcome China’s support for Australia’s Asia Pacific community initiative. Senior Chinese officials and experts last week attended the Asia Pacific community conference held in Sydney to discuss options for a future regional framework to address the economic, strategic and security challenges that face our region. We welcome the contribution that Chinese officials and scholars made to discussion on the issue.

We also welcome our joint commitment to enhance dialogue and coordination on matters concerning Pacific Island Countries and the key role of the Pacific Island Forum, and look forward to coordinating more closely with China on matters concerning the Asia-Pacific.

As I said at the start of my speech, the intensity and complexity of our bilateral engagement will lead to differences and friction from time to time. This is only natural given the different historical, cultural and political factors that continue to shape our two countries.

Decisions by our Government not to prevent certain figures from visiting our country do not imply endorsement by the Government or people of Australia for their political views. Rather, they reflect the strongly-held liberal democratic values of the Australian community to allow people to express their political views freely, regardless of what we ourselves or others may think of these views.

Problems such as these visits or sensitive consular cases will continue to arise from time to time. They cannot be denied or wished away and are part of a broadening and maturing bilateral relationship. The real challenge for us is to deal with these difficulties in a manner appropriate to both our countries.

Australia has a very firm, clear and consistent ‘one-China’ policy. We recognise and respect China’s territorial integrity. We also recognise the significant economic and social progress that has been made in China on many fronts, and look forward to its continuation. At the same time, we are alert to the challenges that lie ahead for China’s development, including environmental and population pressures, and other areas of concern to communities in other countries, including in Australia, such as human rights.

We therefore welcome the increased high-level engagement and cooperation that is taking place at a political and strategic level, as well as the growing interdependence of our two economies. We look forward with confidence to China’s further development and full participation in the global community.

Further strengthening our bilateral engagement
Let me now touch on some future directions in our relationship. As I mentioned before, one of the best things Australia and China could do to raise the bilateral relationship to a higher level would be to conclude a Free Trade Agreement.

Unfortunately, negotiations remained stalled for much of this year. But I am hopeful that following Vice Premier Li Keqiang’s recent visit to Australia, there will be new momentum in the negotiations. During this visit, both sides re stated their “determination to conclude negotiations as rapidly as possible”.

I won’t dwell here on the specifics of the negotiations. But clearly an FTA is a way for us to deepen the integration of our two economies and societies. Although there are sensitive issues on both sides, I am confident that these can be overcome through negotiation. Neither Australia nor China should push for a sub-standard FTA. We want an FTA that can be held up to the region as a model, and demonstrate that we are both open to trade and investment liberalization, and opposed to protectionism.

Of course, at the same time as intensifying our bilateral FTA negotiations, Australia and China should both remain fully committed to supporting an ambitious and balanced conclusion to the WTO Doha Round in 2010, as agreed by our Leaders at last month’s APEC Leaders Summit. Both China and Australia have much to gain from successful conclusion of the Doha Round.

Another area to develop is our official-level contacts in order to establish a greater degree of familiarity and pave the way for even better cooperation, and to also create a framework for the many economic, security, and strategic dialogues we currently enjoy.
Specifically, we welcome the upgrading of our Defence Dialogue to the level of the Secretary of Defence and Chief of the Defence Force, and hope there will be further visits in each direction by military leaders in the year ahead. I mentioned previously the very successful recent visit to Australia by PLA Chief of General Staff General Chen Bingde. Australia is committed to increasing its defence engagement with China, through training exchanges, joint exercises and senior level dialogue.

Finally, as the bedrock of our bilateral relations, we need to further enhance people-to-people contacts and cultural exchange. Australia and China have already developed a wide variety of links, but we can engage more effectively. We need to take full advantage of all the opportunities we can to promote a deeper understanding and appreciation of each other. This is why the Australian people have welcomed the arrival of China’s newest ambassadors to Australia – the two pandas who are now making their home in Adelaide Zoo.

It is also why Australia has made one of the most substantial international commitments to participating in next year’s World Expo to be held here in Shanghai. It is why next year the Australia International Cultural Council plans to sponsor a major “Year of Australia” cultural promotion in China. It is why our Government continues to support the activities of the Australia-China Council, which for over 30 years has been promoting people-to-people links between our two countries, including promotion of Australian Studies in China. It is also why Mandarin is one of the four priority languages in the Government’s new languages program which began operation in July this year. It might be of interest to you that grouped together, Chinese dialects are now the second most widely spoken language in Australia.

A productive relationship between Australia and China, based on mutual interest and mutual respect, is clearly in both our countries’ long-term interests. Both sides have much to gain from this growing relationship.

Australia will continue to give priority to developing two-way trade and investment in ways which benefit both countries, both peoples and both economies. We will work hard to give greater depth to the important cultural and education links that will promote greater understanding and good will. We will continue to pursue constructive engagement with China on significant regional and global issues. And above all, our engagement with China will continue to be constructive, patient and forward-looking, informed by both our countries’ long-term economic and strategic interests and a growing sense of confidence and optimism about our ever strengthening bilateral relationship.

Thank You