Stakes high in Australia-China trading game
4 September 2013
This election campaign has been remarkable for the almost total absence of discussion of China. This is odd. Decisions about how to run relations with our main trading and regional partner will be among the most important that leaders in Australia will make in the coming decade.
Whoever wins on September 7 will be dealing with falling growth rates in the near future and an era of greater austerity on the horizon due to the ending of the resources boom. They are going to have to find a way to get more growth from our economic relations with China, rather than just relying on selling resources to them, at a time when their appetite for this is declining.
Against this backdrop they are going to have to decide quickly what they will do about finally signing a free-trade agreement and liberalising inward investment rules to allow Chinese investment here to increase substantially, against the trend of recent rhetoric.
The Australian government itself issued its China Country Strategy paper on August 29. That spelt out the immense importance of the relationship, and the challenges it brings. But the paper got little mainstream coverage. That is a pity.
The paper shows why strategic decisions involving China are going to be tough but momentous ones. They could be truly transformative for Australia. It also shows why smart engagement will give Australia a voice in the immense internal changes China is likely to see in the coming decade.
In the next 10 years China will become a middle-income country, a predominantly urban country, and a service-sector oriented economy. This is truly a crossroads moment, both for China and for us. Real choices that require political risk are involved. Perhaps that is why the politicians have wanted to keep quiet about it.
Much of the 32 pages of the China Country Strategy is concerned with education. Education lies at the heart of our relations with China. We already have 120,000 students from China here, and their involvement in our education system, along with their role in the changes coming in China in the future will be immeasurable. This is acknowledged in the strategy. But it is only half the issue.
The far greater challenge is to teach Australians, from business to government, about how to understand and engage better with their greatest regional partner. The Country Strategy calls this the need to be ''literate'' about Asia, and in particular China. Greater knowledge about our main trading partner will give us a competitive advantage.
Universities are going to be among the most important partners in this challenge to create a new generation of people who make China a focus of their careers and professional lives. It is no longer an exotic choice for a minority. Knowledge of a culture as different and as complex as China's is critical for Australia's future. We cannot neglect it if we want to maintain the levels of wealth and success that we have experienced over the past two decades.
The China Country Strategy is a worthy and important document and should be at the centre of a well-informed public debate. The easy platitudes of a China threat that we hear sometimes are becoming increasingly outdated. In several policy areas, from sustainability to innovation to global governance reform and international finance, we share common concerns and a common environment.
But rhetoric is one thing. When we say we want to be partners in innovation or research, then we have to think long and hard about where and how we do this. Are we looking at medical research partnership to face common health challenges (China will be facing a demographic time bomb in the next decade as its population ages), or energy innovation to do something about our shared addiction to fossil fuels? Is water conservation our priority with a China starved of decent resources, or are we keen to see a free-trade agreement that finally opens up the vast untapped consumer market in China for our companies?
What price are we willing to pay to get this market openness? Heavy Chinese investment in our agribusiness (China bought most of Australia's exported beef last year)? Or even final allowance for Huawei to be involved in our telecommunications infrastructure?
The Australian and Chinese governments have the foundation now to talk more through the strategic high-level dialogue established in April. But this dialogue is of little use if it can't help us work out the answers to the questions above.
There should have been more discussion of Australia-China relations during this election. But there won't be any chance to ignore this issue once September 7 is over. In October or November the new Chinese leadership at their first important annual meeting will outline their key priorities for the next year. They will be seeking growth, like Australia, and they will be seeking innovation partnership and increasing their already impressive research and development commitment. We need to be close to these debates, and show we are relevant to them.
We are in a great place to do this. And our leaders here need to be aware of the warning of Confucius in his Analects: ''A leader who does not prepare their people for challenges is guilty of dereliction.''
The Australian government should back up its acknowledgement of the need to train a new generation to be China literate with substantial support. It will be one of the wisest investments this country ever makes.
Dr Michael Spence is Vice-Chancellor of the University of Sydney. Professor Kerry Brown is executive director of its China Studies Centre.