Australia-China Council

Keynote Address to the Australia in China’s Century Conference

The Hon Warwick Smith AM, Chair, Australia-China Council

Melbourne

30 May 2014

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Keynote Address to the Australia in China’s Century Conference [PDF 538 KB]

Introduction

Ladies and Gentlemen,

In the practice of international relations – be they political, business or cultural - the emphasis is often skewed towards the phrase – knowing your counterparts.

While it is undoubtedly important - a second focus - knowing your assets and skills, your strengths and weaknesses is just as significant, if not more, when we practice the 21st century relationship-building with the rising powers to our North, particularly China.

Consider this –

We are very well-versed in the economic dimension of Australia's relationship with China.

Our commercial achievements are nothing short of spectacular and a credit to many of you in this room.

But are many of us here aware of the following facts?

  • All major Australian cultural festivals and galleries in the past five years have established regular Chinese artistic programs.
  • Education is our third largest export earner after iron ore and coal.
  • And some 12 per cent of all Chinese university students abroad are being educated in Australia
  • China is Australia's third-largest joint scientific publications partner, and Australia is China's sixth-largest.
  • There are over 30 centres in Chinese metropolitan and regional universities teaching or researching Australian literature, history, politics or economy – and they have been studying Australia since the early eighties.
  • China is Australia's fastest growing and highest spending inbound tourism market, worth $4.7 billion (in the year ending September 2013).

These facts - to me - speak of the incredibly diverse avenues through which Australia and China connect with each other.

These avenues - which we can and should build further - as it is in our national interest to have a comprehensive and dynamic relationship with China.

Ladies and Gentlemen,

I would like to speak today about our soft power and multi-faceted diplomacy through which Australia engages with China.

I would also like to share my thoughts on the importance of institutions of influence and dialogue and a more important than ever need for partnerships between Corporate Australia, Government and Civil Society to develop our soft diplomacy outcomes.

Soft Power – Geometry of Engagement

Colleagues,

When we speak about Australia's relations with China, it is useful to use geometry - quite uncharacteristically for a lawyer, banker and former politician!

Australia and, indeed most countries of the world, are engaged, in what I would describe as a multidimensional diplomacy with China.

Vertically, over the course of forty years of our diplomatic history with China, we have created layers and layers of new structures for Australian and Chinese leaders, officials, business, cultural and education professionals and young people to talk to each other.

Horizontally, our engagement with China is conducted simultaneously across sectors and disciplines, regions and cities, by individuals and through institutions.

Economic, science, sport and cultural diplomacies now sit comfortably next to the centuries-old traditional statecraft.

Add to it is what I call the "Asia vertical" or regional and global dimensions of our bilateral ties.

Our trade flows have been shifting in the last three decades from Europe and North America to Asia and, more importantly, China.

The Asia vertical takes in many different countries, cultures and economies.

But what it represents is a giant economic neighbourhood, and one with Australia in it.

In the heart of this neighbourhood is China - Australia's largest trading partner and a rising power.

The complementary nature of Australia's economic partnership with China has been a major reason for the outstanding performance of the Australian economy during and after the global financial crisis and our enviable prosperity.

The rapidly growing economic and, increasingly, political and cultural stature of China in the region that Australia calls its own, presents a range of strategic challenges for Australia.

These challenges are often debated in the context of interests and values or against the backdrop of Australia's alliance with the United States.

However, this debate should not be the only dominant national conversation about China in Australia.

Australia's connections with China are much more extensive, multi-layered and diverse.

And it's Australia's ability to sustain and grow our engagement with China in business, education, science and arts, coupled with an effective and appropriately-resourced policy infrastructure that will be capable to develop further a strategic soft-power foundation necessary for driving our bilateral relations for the next 40 years.

''Soft Power' is described as a nation's capabilities to persuade other nations towards agreement through attraction and co-option rather than coercion, or through force or economic pressure.

I would argue that Australia's soft-power foundation in the context of our relationship with China is based on three strategic national 'assets' –

  1. Our position and history as a trading nation
  2. Our globally competitive and connected education system, and
  3. Our arts, creative industries and community links

Trade

Australia's economic essence as a global trading nation underpins our successful economic relationship with China.

Our resources trade is a success story and a tribute to Australia's entrepreneurial culture, responsive economic and trade policy and favourable geographic location.

The new wave of China's economic and social reforms will bring new opportunities for Australia…

China's migration from the countryside to urban areas is arguably the biggest flow of human beings in history

  • with an estimated 300 million who will eventually make that shift

China sees urbanisation as one of the most vital ingredients of growth.

China has also become a major exporter of capital.

  • Chinese global outward investment reached $85 billion in 2013.

China dominates Australia's global trade statistics.

  • China was responsible for almost a third of Australia's total goods and services exports.
  • Australia's services exports to China were valued at 7 billion in 2013, mainly in tourism and education services, but this is where we will see niche opportunities emerge.

But in a highly-competitive and interconnected environment, Australia needs to continuously recalibrate its policy settings to maintain a competitive position and gain new ground in China.

Our natural competitive advantages will need to be underpinned by open markets, stronger China capabilities, innovative business models and the ability to capitalise on commercial opportunities in China's often unpredictable, fast-paced and increasingly global market.

Education and Science

Our ability to be innovative depends on how well we develop and utilise our second asset – our globally-connected education system.

International education is arguably one of the most powerful and sophisticated 'soft power' instruments to have emerged from globalisation.

And Australia is one of its pioneers.

Australia has greatly benefited from its reputation as a high- quality, English-speaking, higher education destination.

  • Australia is the third-largest overseas study destination for Chinese students (over 12 per cent of all Chinese students abroad), behind the United States (24.7 per cent) and Japan (13 per cent)
  • and China is Australia's largest source of international students – with over 150,000 student enrolments in 2012.

The vast and growing community of Chinese alumni of our institutions plays a central role in deepening the ties between our countries across community, business, government, civil society and education sectors.

  • Indeed, in 1986 – nearly 30 years ago – I visited China, hosted by today's Chinese Premier and today's Cultural Minister – contacts that have continued to this day.

The flow of students between our nations is uneven.

And for a long time Australia has been engaged in the debate about the importance of sending our students to Asia.

The New Colombo Plan has ultimately transformed this debate. Under the Plan, hundreds of Australian undergraduates will study in the Indo-Pacific region.

It is the first initiative of this scale - since the original Colombo Plan - that will make a practical, yet generational and long-lasting impact on the way Australian students view, learn about and engage with our region.

The New Colombo Plan, which is expected to commence in China in 2015, aligns with China's own goal of increasing the number of overseas students in China (from current levels of around 300,000) to 500,000 by 2020.

The interest in China among our students is already strong. Chinese statistics indicate that over 3,000 Australians studied at Chinese universities in 2012, in addition to many more who visit China on short-term mobility programs.

But the New Colombo Plan will provide a necessary push and encouragement to the new generation of Australians to make studying in Asia an indispensable part of their education experience.

  • I am pleased to be on the Steering Committee of the New Colombo Plan.
  • Which may in time be more appropriately named The Australian Scholarship Asia Program ('ASAP')

Colleagues, it is important that education and research engagement remain an utmost priority for Australia.

The impact of recent Budget changes needs to be considered carefully in this context, as science and innovation are vital for our national interest"

Arts and Culture

Arts and Culture receive the least attention, when we speak about our diplomacy, influence and persuasion.

At a first glance, our cultural links with Asia and particularly with China, have not kept pace with our economic integration.

The resources available to support cultural exchanges have not risen in line with Australia's growing economic interaction with China.

But under the surface and away from the domestic limelight, Australia – for its size and global 'cultural' weight - has demonstrated an exemplary leadership, capacity and knowledge base to be one of the hubs of the Asia-Pacific artistic and cultural engagement.

Communities of Australian and Chinese artists and art managers are increasingly interconnected, and our cultural exchanges have expanded dramatically in the past five years.

China is steadily becoming a major global cultural centre as a result of growing economic prosperity and a diverse and burgeoning arts scene. This presents enormous opportunities for Australian arts and creative industries. However, they operate in competition with some of the world's leading cultural icons vying for attention of Chinese audiences.

Colleagues,

To use our nation's economic, education and cultural assets to advance our diverse interests with China and broader region, we need a sophisticated 'toolbox'.

We need a range of podiums through which we can speak, learn and work with China, and build that mutual understanding that we so often refer to in official statements.

Institutions of Influence and Dialogue

On 11 May 1976, in Beijing, Australia's first Ambassador to China, and a fellow Tasmanian, Stephen Fitzgerald, wrote a letter to the then Foreign Affairs Minister, Andrew Peacock.

He said:

China is not a habit of mind for Australians.

The spread of Chinese influence is a process we do not understand.

There is, of course, intrinsic worth in the understanding of Chinese culture for its own value.

But the purpose of this dispatch is to suggest that there is a very specific Australian interest in the promotion of what is broadly described in China as cultural exchange.

Without this, our relations with China will never be more than superficial, and we will be damagingly ill-equipped to adjust to a China dominant in our region.

This letter led to the establishment of the Australia-China Council, which I chair almost 40 years after Ambassador Fitzgerald sent his dispatch.

The Council – a product of genuinely bipartisan agreement and support – has survived almost 40 budgets, 13 elections, bilateral highs and lows – to be one of the most respected and long-standing institutions in the Australia-China relationship.

It's a uniquely Australian model which combines external cross-sectoral expertise of the independent board with the support from the Department of Foreign Affairs and Trade.

With a broad brief of advancing relations between our peoples – a mission largely unchanged over the last 36 years - the Council helped to kick-start hundreds of collaborations between Australia and China in arts, education, science and business.

Let me give you a few examples:

In 2012, the Council with the generous support of over 1m and vision of BHP Billiton facilitated the establishment of Australia's first high-profile privately professorial position in China – BHP Billiton Chair of Australian Studies at China's elite Peking University

BHP Billiton Chair is an Ambassador for Australian higher education and research, while providing academic leadership to over 30 Australian Studies Centres in China's metropolitan and regional universities.

The Chair initiative is an example of essentiality of soft diplomacy:

  • It is an example of a partnership between government and business in pursuit of a common national goal – the goal of a strong, smart and diverse bilateral relationship between Australia and China.

And the Australia-China Council has shown how to design and execute such alliances.

We have created the Foundation for Australian Studies in China – a unique national partnership between business, government and education sectors created to support the BHP Chair and address the shortages of funding for the Australia-China Council.

I strongly believe that BHP Billiton Chair is the new model of how public and private investments and interests will converge to advance our broad national interests, in the environment of fiscal resilience.

Let me give you another example:

Four years ago, the Council and the Australian National University provided some modest funding to a relatively unknown grass-root student organisation – Australia-China Youth Association to establish Australia-China Youth Dialogue.

  • Today, the Association has over 5000 members.
  • Now in its fifth year, Australia-China Youth Dialogue has become a premier event on the bilateral calendar.

In the economic diplomacy space – which is the Government's priority - just last month, during the first Australia Week in China, the Trade and Investment Minister launched "Demystifying China"

 Our new initiative developed in partnership with KPMG and the University of Sydney's Business School

Demystifying China is Australia's first public visual database of Chinese investment in Australia – a topic of considerable interest and debate in Australia.

All these and hundreds of other programs were made possible with a budget of less than a million dollars, which has not increased in real terms for over a decade, at a time when the bilateral engagement has expanded manyfold.

This is a shameful situation.

And one that needs to be urgently addressed by new partnerships which bring corporate, government and non-government actors together - as envisioned by the New Colombo Plan and pioneered by the Australia China Council (through the BHP Billiton Chair)

In the last two years, we have completed the most significant renewal of the Council, the Board and programs in the history of ACC to position it strategically for the next decade.

We continue to centre our efforts on supporting our national assets - education, economic diplomacy and arts - but with a sharpened focus on:

  • Professional mobility between our nations
  • Capabilities of our institutions to work with China
  • And an active search for new areas of engagement

Today we're launching our new corporate profile which you can find in the foyer. We encourage you to connect with us, share your ideas or learn more about our programs.

The Australia-China Council is one of a very few of, what I call, institutions of influence and dialogue that Australia needs to build and support to enable our relationship with China and the region to grow deeper and broader.

Another such institution, but a very different one is the Asia Society.

Founded in 1956 by John D. Rockefeller the 3rd to promote greater knowledge of Asia in the US, the Society today is a global web of 11 centres across Asia, US and Australia and programs in 50 countries which focus on building networks with and within Asia, and advancing a comprehensive understanding of Asia.

Asia Society (Australia), established in 1997 is a not-for-profit, non-governmental platform with an extensive business, education and cultural membership base.

It is a platform which connects Australian and Asian business and political leaders, generates dialogue and builds long-lasting relationships, which are so valued and so essential in Asia.

Prime Minister Abbott chose the Asia Society (Australia) to deliver his speech which set the scene for his landmark North-Asia tour last month.

Ladies and Gentlemen,

I would argue that for a country that is so actively engaged economically, strategically and culturally with our region, and so dependent on the global and regional prosperity, peace and knowledge of our neighbours, we have nowhere near enough institutions of influence and dialogue – such as the Asia Society, Asialink, Australia-China Council, Australia China Business Council.

And the Corporate Australia does not do nearly enough to assist these vital national needs, or centres of Chinese studies.

And we do not support sufficiently those that we do have.

But it is these institutions that:

  • Generate and test new ideas and concepts about our most important and complex relationship - ideas that we desperately need to evolve beyond the current dichotomy debate

It is these institutions that:

  • Sit outside or alongside governments that can facilitate conversations beyond the official domain
  • Connect sectors, people and communities of interest in the shared pursuit of expanding our connectivity with China

The responsibility for supporting these institutions does not solely lie with governments.

It is our shared duty, as all of us - be it in business, government, education or artistic communities - will benefit from having strong, diverse and innovative centres and hubs for engagement with China and the region, and having our own uniquely Australian voices and perspectives heard there.

The recent surge of philanthropic and government investments in Australia's soft power capabilities –

  • The New Colombo Plan
  • Westpac's Bicentennial Foundation and scholarships
  • Andrew Forrest's investment in Western Australian higher education and links with Asia
  • BHP Billiton's landmark investment in BHP Billiton Chair of Australian Studies at Peking University
  • Donation by Mr Huang Xiangmo [pronounced whoo-ang siang mo], Founder and Chairman of the Yuhu Group to establish the Australia-China Relations Institute at the University of Technology Sydney

These are just some of the examples of a long-term vision and commitment to building our skills and strategic assets for engagement with the Indo-Pacific region and China.

Conclusion

Ladies and Gentlemen,

It is widely acknowledged that international relations have ceased to become an exclusive domain of governments and its foreign ministries.

Geometry of our engagement with China is multidimensional and has many actors.

I believe that Australia has all the right settings to succeed in strengthening foundations and developing new frontiers of Australia-China partnership.

But, to grow our relationship with China, you need to focus on three Ps:

  • Passion - learning and understanding all new ideas, perspectives and practices that China brings to the world
  • Persistence - thinking long-term, building partnerships and overcoming barriers; and
  • Proactivity - making the first steps and driving the agenda

At a time, when Australia finds itself working hard to make the most of economic opportunities presented by China's renaissance, while trying to minimize strategic risks this revival may pose, we need to build and strengthen our soft power assets and institutions which connect peoples and cultures, so political and economic engagement can succeed.

It is a very competitive global race to position strongly with North Asia, and China particularly.

Australia is not as comprehensive or as focused as others.

We need to address this urgently through real partnerships between business, government, civil society and our education and cultural institutions.

And we need to do it on a "whole of Australia" scale.

It is also important we do so with, as I say,

  • Passion
  • Persistence and
  • Proactivity

NOW

Thank you