Asialink Business and Macquarie University Thought Leadership Dinner

Speech

Speaker: Secretary of the Department of Foreign Affairs and Trade, Frances Adamson

State Library of New South Wales

1 November 2017

Acknowledgements

Thank you Philomena [Leung, MC and Associate Dean, International and Corporate Engagement].

I would like to begin by also acknowledging the Gadigal of the Eora Nation, the Traditional Custodians of the land on which we meet.  I pay my respects to their Elders past and present and I extend that respect to any Aboriginal and Torres Strait Islander people present.

  • Professor S Bruce Dowton, Vice-Chancellor, Macquarie University and other distinguished guests from the University;
  • Mr Mukund Narayanamurti, Chief Executive Officer, Asialink Business;
  • Ms Rhonda Piggott, Director of DFAT’s New South Wales Office;
  • Ladies and gentlemen. 

Philomena, I’m aware of your work over the years building the international profile of Australian business and accounting, particularly in China.

This has been ground-breaking in many ways, anticipating Chinese and other international interest in Australia’s professional services at a time when we were still largely known overseas for our strength in commodities.

The international leadership shown by institutions such as Macquarie University and Asialink Business is a vitally important aspect of our national life.

It might have been tempting a while ago to stick with the notion that our education system was only about teaching Australians.

But institutions like Macquarie foresaw the substantial potential in internationalising our world-class tertiary education sector – and our country, and many of our partners around the region, are certainly the better for it.

Asialink Business, and the National Centre for Asia Capability, are going from strength to strength.

The Government will shortly release a new Foreign Policy White Paper, and I want you to know that the drafting team thoroughly appreciated the contributions Asialink and many others made during the consultation process.

The White Paper will examine the impact on Australia of shifts in economic and political power in Asia, including the implications of a strong and ambitious China.  This is a subject of interest and importance, especially in view of the 19th Congress of the Chinese Communist Party which concluded in Beijing last week. 

China’s direction:  more growth, but slower

President and General Secretary Xi Jinping’s lengthy Work Report to the Congress sums up China’s current situation.  It also provides an exposition of what the Party leadership sees as its future direction. 

This sets out a comprehensive and ambitious vision, which encompasses politics, ideology, social policy and foreign policy, as well as the economy. 

It is evident that the broad parameters of economic policy established in recent years are set to continue.  These include:  continued incremental reforms; openness to foreign investment; restructuring the state-owned sector to increase efficiency; moving to higher domestic consumption; and measures to address structural imbalances and financial risks. 

China’s leaders recognise the complexity of this task.  As in any major reform process, there are contradictions and vested interests which will require careful management. 

All this comes within the rubric of “socialism with Chinese characteristics”, a longstanding theme which is given prominence throughout the Work Report.  I mention this because – if nothing else – this Congress ought to remind us that ideology and political theory remain critically important for China’s leaders. 

It is worth remembering, too, that China’s objectives – for its economic structure, institutions and the operation of its economy – are not necessarily what we might expect them to be, given our own experiences and priorities. 

China is consciously marking out for itself a distinct path, which it considers best suits its circumstances. 

Even so, Australia is well positioned

What does this mean for Australia?  We have a strong interest in China succeeding with its economic transformation, though we accept this will mean lower nominal rates of growth. 

President Xi’s Report spoke of a transition from a “phase of rapid growth to a stage of high-quality development”, without specifying a numerical target.  This doubtless points to lower – but better quality – rates of growth in coming years. 

Lower and more sustainable growth rates are welcome from Australia’s perspective, given what they signify.  China’s economy is already very large, so that nominal increases of five or six per cent represent a larger increment than was the case some years ago when China’s smaller economy was growing at rates of 10 per cent or more.  

Even following the resources boom, with China’s economy well into its transition, long-term energy forecasts show that demand for Australia’s traditional exports of raw materials will continue.  This is due to the quality of our resource deposits, the reliability and efficiency of our suppliers, and our relative proximity which reduces the time and cost of transport. 

As ambassador to China, I often said that Australia had stood shoulder to shoulder with China for decades in our willingness to supply the resources China needed for its economic modernisation.  We still do – as I am sure Ambassador Jan Adams says regularly too.

This resources relationship remains very important to both our countries, and has been the strategic underpinning of our mutually beneficial partnership.

As China’s economy undergoes transition, including further urbanisation, Australia is well positioned also to help meet the demands of the growing middle class for higher-quality food, including wine and seafood, as well as other consumer items such as vitamins and skin care products.  The middle class also has a desire for overseas education, improved aged and health care, and travel experiences in unique environments such as those found in Australia. 

Well positioned due to the ChAFTA framework

The China-Australia Free Trade Agreement provides a strong framework for continued two-way growth in our trade and investment. 

When ChAFTA is fully implemented, tariffs for the overwhelming majority of our goods exports and imports with China will be reduced to zero.  In this respect, Australia’s competitive position in the Chinese market is guaranteed. 

I recognise of course that there are other considerations involved with trade in goods, particularly agricultural products, given the importance of quarantine and food safety to both Chinese and Australians. 

Our agricultural and quarantine authorities are giving these matters priority attention.  We look forward to addressing them progressively, to allow more trade to take advantage of the tariff preferences that are contained in the FTA.   

As well as the outcomes on goods, ChAFTA sets out the broader framework for our cross-border services trade with China, and the rules underpinning bilateral investment. 

China is Australia’s largest services export market, worth $11.3 billion in 2016.   Services exports have increased strongly since ChAFTA entered into force in late 2015, up 16 per cent year-on-year – tourism and education make up the lion’s share.  ChAFTA is enabling Australian firms to meet Chinese demand for high-quality services in health and aged care, architecture, construction, telecommunications, finance, law and mining.   As the Government’s key export support provider, Austrade can assist Australian companies take advantage of these burgeoning opportunities in the Chinese market.

The Agreement has also supported greater investment flows in both directions, providing increased certainty for Australian and Chinese businesses.

Australia very much sees FTAs as living documents, to be updated and improved to address any difficulties that may arise, reflect domestic reforms, and respond to changing economic circumstances.  This is recognised in ChAFTA mechanisms for review. 

During Premier Li Keqiang’s visit to Australia in March, Australia and China agreed to commence reviews in 2017 of the ChAFTA services and investment commitments.  The first review meetings took place last month.   The process offers an opportunity to take stock, further eliminate barriers to trade in services, agree on additional protections for investors, and open up new trade and investment pathways. 

We welcome President Xi’s statement at the 19th Party Congress that China will open up further to the world, including by introducing a negative list for investment nationwide, and relaxing controls over foreigners operating in the services sector.  ChAFTA will enable Australia to take advantage of these developments, as we look to supply goods and services to the next generation of Chinese consumers.

The services sector offers immediate opportunities for growth and for building stronger bilateral connections. 

For example:  tourism is a growth area

2017 is the China-Australia Year of Tourism.  Tourism is emblematic of the closer partnership which is being developed between our two countries. 

China is already Australia’s largest tourism market.  Last financial year, 1.3 million Chinese visitors spent $9.8 billion here. 

This has not happened by accident.  Prior to 1997, Chinese tour groups were limited to visiting four of China’s Asian neighbours.  But in 1997, Australia received Approved Destination Status for organised Chinese tours.  Since then, tourism operators, Tourism Australia and Australian governments have taken practical steps to turn opportunity into reality.  Our visa systems have evolved to handle many tens of thousands of applicants efficiently, especially around peak travel periods such as Chinese New Year. 

In 2016-17, airline seat capacity between Australia and China increased by 23 per cent compared to the previous financial year, on 136 flights per week.

In addition, we had 100 flights per week with Hong Kong, a total of 236.

By comparison, there were 110 flights per week between Australia and the United States. 

We are further improving the competitiveness of our visa system by trialling a premium 10‑year multiple entry visitor visa, and enabling online applications in simplified Chinese.

In July, at a meeting in China with Australia’s state and territory tourism ministers, the Minister for Trade, Tourism and Investment Steve Ciobo emphasised the importance of tourism as a growth industry, the role it has played over the past few years in the rebalancing of our economy, and the need to work collaboratively on the Australian side to facilitate and promote further growth.

The forecasts are promising.  Tourism Research Australia estimates that by 2027, 3.9 million Chinese will visit Australia annually, spending around $34 billion each year.

To ensure that these numbers continue to rise, Australia needs new investment – including from China – in facilities and logistics.

Per capita, vastly more Australians travel to China: 455,000 in 2016.  [if per capita we had as many Chinese travel here; that would be upwards of 30 million!]

Tourism builds familiarity and friendships between our countries.  The connections that begin on holidays and business trips can flow through to growth in commerce and investment.

Like international education, tourism is a mutually reinforcing channel for exchange and understanding, and friendship between Australia and China.

As the Prime Minister said when Premier Li Keqiang visited in March this year, “all of this adds significant new ballast to what is already a key bilateral relationship for both of our countries”.

Belt and Road

Australia wants also to be well positioned to work with China internationally. 

This can take many forms, including in the economic sphere, where China’s 13th Five-Year plan sets out an agenda for China focused on more disciplined outbound investment, and sustained government support for advanced manufacturing and innovation. 

Both the plan and the recent Party Congress also emphasise the Belt and Road Initiative, a major undertaking with broad potential application across the globe. 

Australia welcomes initiatives that promote much-needed infrastructure development.  There is a global hunger for infrastructure investment, whether it originates from multilateral development banks or bilateral sources of capital. 

Belt and Road is an ambitious undertaking and its full dimensions have yet to take shape. 

The Australian Government is mindful that major economic initiatives can have profound geopolitical effects. 

This is all the more reason for the Australian Government to think constructively yet clearly about the principles, rules and institutions that underpin an initiative such as Belt and Road given its scale, ambition and complexity. 

We do not so far see a single window for Belt and Road-labelled opportunities, or competitive tendering for projects but the Australian Government has been engaging China on the prospects for Australian business involvement, as we would on any major initiative from an important partner.  We know that Australian companies possess relevant expertise in project design and management, construction and ancillary services. 

We acknowledge the efforts the business community is making as well, particularly the delegations that Jean Dong has organised with former Trade Minister Andrew Robb under the auspices of the group called Australia-China Belt and Road Initiative. 

In our discussions with China, we have emphasised the importance of projects embracing international standards, accountability and best practice, including social and environmental impact.  This is because our own experience has shown that investments are most likely to be successful when these principles are respected. 

In May this year, Minister Ciobo participated in China’s big international conference, the Belt and Road Forum for International Cooperation, in Beijing. 
He delivered a presentation on “energising two-way investment” during a panel session on trade connectivity.  Australia also supported the “Initiative on Promoting Unimpeded Trade Cooperation along the Belt and Road” statement issued at conclusion of the trade session.

In September, at our bilateral Strategic Economic Dialogue with China, Mr Ciobo discussed closer engagement on trade and infrastructure investment opportunities with the Chairman of the National Development and Reform Commission, He Lifeng. 

Together they signed a memorandum of understanding on cooperation in investment and infrastructure in third countries, which can include Belt and Road projects. 

During the talks, Mr Ciobo also proposed the establishment of a bilateral Trade Infrastructure Working Group, which would provide a mechanism to exchange information about opportunities for collaboration on Belt and Road projects.  We are pursuing this proposal with Chinese officials.

We want to ensure that Australian companies are given the opportunity and are in a position to make informed decisions about participation in Belt and Road projects.  

Mr Ciobo confirmed to his Chinese counterparts that Australia would participate in the Belt and Road-focused China International Import Conference to be held in November next year. 

Well positioned – politically

For Australia to remain competitive and relevant for the China market, we can never ignore the political dimension. 

During the 45 years since Australia and the People’s Republic of China established diplomatic relations, each Australian Prime Minister has given attention and priority to this relationship.  This bipartisan commitment to growing our relationship has provided important continuity throughout political shifts and changes in both countries. 

China has also given priority to our relationship.  Its senior leaders have visited Australia regularly.  Each of the seven members of the new Standing Committee of the CCP Political Bureau has visited Australia, some several times.  [Xi Jinping, Li Keqiang, Han Zheng]

In 2014, Australia and China agreed to describe the relationship as a “Comprehensive Strategic Partnership”, reflecting the range of areas in which we cooperate, and our shared commitment to strengthening and deepening the relationship.

The political relationship is not always plain sailing.  Australia and China have different perspectives on some important issues.  We have quite different political systems, as well as differences in political values. 

We each have our own interests to pursue, and these don’t necessarily align.  We are clear-eyed about all features of the relationship, including those things which are easily managed and those that are more complex. 

I mentioned some of the latter in a recent speech in Adelaide.

We do not ignore the difficulties, nor do we dwell on them to the exclusion of broader opportunities. 

It is not of course only relations with China that are complex. 

We live in a dynamic and fast-changing world, and the Government has to navigate complexity and uncertainty across the international agenda.

Australia and China have established a robust framework to acknowledge our differences, discuss one another’s concerns, and pursue our mutual interests.  We are straightforward in safeguarding our interests, and fully committed to deeper cooperation in the many areas where we have shared objectives. 

Well-positioned:  community links

I am aware that many in this room are also deeply committed to building ties of understanding and discovery between our peoples.

Education is central to this endeavour.

Governments, education institutions and indeed the whole Australian community share responsibility for providing Chinese and other international students with a safe and supportive environment.

We must not allow the worst of our society to make the strongest impression on our guests and friends from overseas.

On the contrary, we all can play a part in encouraging acts of welcome and friendship – so much more in line with the spirit of our universities, schools and other public spaces.

Chinese students often learn to love Australia, understanding and valuing this country and their own all the more by virtue of knowing both well.

And often, very significant social, business and research collaborations follow.

The Minister for Foreign Affairs Julie Bishop is very focused on the benefits Australia and our partner countries all derive from Australia’s “global alumni” – that is, all graduates from Australian institutions who live and work overseas.

She is also very committed, as are we all, to the New Colombo Plan.

The New Colombo Plan commenced in 2014, and by the end of 2018 more than 4,700 undergraduate Australians will have been supported to study and work in China, in fields such as law, business, health, language, education and science.  I’ve had the privilege of meeting many of them – in China and Hong Kong.

Macquarie University student Jennifer Tridgell, a New Colombo Plan Scholar who studied and interned in Hong Kong in 2016, spoke for many when she said:

I am constantly amazed by how Asia is a door to endless opportunities. For me, the New Colombo Plan has provided the key … [I]t is exhilarating to step over that threshold into our region and embrace the boundless opportunities that it holds.”

Increasingly, the Australia-China relationship is a story of connections and networks, as students and businesspeople spend time deeply immersed in one country, then bring back lessons, contacts and opportunities to the other.

I applaud Macquarie University’s leadership in developing a model of international education that is about partnerships for long-term mutual benefit, both to participating institutions and their nations.

Connections such as those between Macquarie, the University of Hamburg and Fudan University reflect the fact that our deepening relations with China are also portals into a new network of global connections.

Conclusion

Australia and China are well placed to continue this trajectory of relations benefitting both countries over the long term.

Strong drivers have brought us together – our complementary economic development, and growing links between our communities.

I firmly believe these will continue and develop, because governments on both sides recognise that closer relations are in our long-term interests, even while we seek to manage our differences.

On Australia’s side, the vigour and vision of private-sector pioneers and educators in engaging China has been a great boon, and continues to be a source of valuable thought leadership as we position ourselves to stay competitive and relevant to the China market.

So, thank you!

Last Updated: 2 November 2017