A golden opportunity for a reset on China amid escalating global tensions

A golden opportunity for a reset on China amid escalating global tensions

Thu, 20/09/2018 - 10:06
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New PM Scott Morrison (right) and his deputy, Josh Frydenberg have been urged to repair Australia's relationship with China. Photo: Reuters

There’s no doubt we’ve endured an ugly period in Australian politics.  Turmoil of the kind we’ve seen in Canberra is not only bad for business, it’s bad for Australia’s reputation in the region and the world. 

But it’s also important to look for opportunities as they arise—and the recent change of leadership in Canberra offers one golden opportunity that Prime Minister Scott Morrison should seize without delay. 

For some time now, the Australia China Business Council has been calling for ‘reset and repair’ when it comes to Australia’s relationship with China. 

Over-blown rhetoric, political pointscoring and an unhelpful conflating of issues has led to an atmosphere of mistrust and misunderstanding between the two countries. 

ACBC members—who are closely engaged on the ground in China and therefore more attuned than most to the nuances of the relationship—report that the breakdown of relations has a real effect in terms of processing delays, breaks in communication and a lessening of enthusiasm for Australian products and services. 

Former Prime Minister Malcolm Turnbull recently made some welcome moves towards restoring the relationship; it’s time for the new leadership to move further in that direction. 

It’s important to get some facts on the table.  In 2017, China was Australia’s largest trading partner, with $183.4 billion of two way trade.  The next largest was Japan, at $71.9 billion.  The US came in third at $68.5 billion. 

That means Australia does $40 billion more trade with China than with our next two largest partners combined.  To put it another way, while the US accounts for less than 10 per cent of Australia’s total trade, China accounts for almost a quarter. 

The point of the story is that purely on an economic level, the relationship matters.  It generates jobs, creates cross border friendships  and drives business opportunities.  Australia is now entering its 28th year of unbroken economic growth. 

Anyone born after I went into public life 35 years ago does not know what a recession is like—and this economic good fortune owes much to our relationship with China. 

But the Australia-China relationship is more than simply economic.  This year we celebrate 200 years of Chinese settlement in Australia.  1.2 million Australians today are of Chinese descent.  Australia was one of the first countries to open diplomatic relations with China in 1972.  And every year we see an increasing awareness of the contribution of the Chinese community to Australia. 

To take just one example, it’s now commonplace to see the Lunar New Year celebrated right across the nation, from local councils, to schools, to businesses large and small. 

Another reason the Australia-China relationship is important is because of China’s emerging role as a world leader in technological innovation and R&D.  The OECD predicts that 2018 will be the last year in which China is outspent by the US on R&D. 

President Xi Jinping has signalled that he wants China to be ‘a nation of innovators’, which means Australia must prepare for a time when the most technologically advanced nation in the world is in our region, and not on the other side of the world. 

As an Independent Director of the Australia board of the Chinese telecommunications company Huawei, I was deeply disappointed that the Government chose to exclude Chinese companies  from participating in the rollout of 5G in Australia. 

But there will come a time when the best technology is routinely Chinese, and I believe that a more positive and constructive Australia-China relationship will help us avoid a future in which Australians have to settle for second best technology. 

For all of these reasons, Prime Minister Morrison should immediately move to initiate a fresh start between Australia and China.  One way to do this is to engage more closely with China’s two current signature platforms: the China International Import and Export Expo (CIIE) and the Belt and Road Initiative (BRI). 

The CIIE will be held in Shanghai in November, and President Xi Jinping will attend.  More than 150 Australian exporters have already registered.  Not only should the incoming Trade Minister, Simon Birmingham, make CIIE a priority, but Prime Minister Scott Morrison should too. 

And I think it would send a powerful message if Opposition Leader Bill Shorten was also able to attend....to re-affirm bi partisan support for the Australia China relationship. 

BRI is China’s massive effort to improve and increase trade and economic activity along six land corridors and a maritime route through Asia and Europe.  It’s an infrastructure-building initiative of unprecedented size and scale, crossing three continents, and directly involving 68 countries containing more than 60 per cent of the world’s population. 

There are four reasons why the Australian Government should consider a formal relationship with BRI.  First, it would demonstrate that we welcome China’s efforts to connect economies at a time when some developed nations, like the US, are heading in a protectionist direction. 

Second, better infrastructure connecting Asia and Europe will benefit Australia.  As China and other Asian countries continue to grow, new untapped markets will open up for Australian products and services—if we can get them there. 

Third, Australia needs foreign investment.  As the world’s largest economy and a nation of savers with $US3 trillion in foreign reserves, China is an important source of FDI, and the BRI label on a project is a powerful way to attract it. 

And fourth, and perhaps most importantly, BRI projects through their direct and indirect economic impact will help lift literally hundreds of millions of desperately poor people in our region out of poverty. 

Aside from these initiatives, the Australian Parliament  should declare a halt to MPs using the China relationship for domestic political purposes.  It’s too important for that.  This does not mean that China must never be criticised. 

Nor does it mean Australia must compromise our values.  Rather, Australia must recognise that our national interest includes a positive and mature relationship with China. 

After the turmoil of recent weeks, it's time for Canberra to turn its gaze  outward and towards the future of the nation—and that means a strong, confident and positive engagement with China. 

The Hon. John Brumby AO is a  former Premier and Treasurer of Victoria.   He is National President of the Australia China Business Council and an Independent Director of Huawei Australia.