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The Right Side of History by John Brumby
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THE HON. JOHN BRUMBY is a former Treasurer and Premier of Victoria. He is currently a Vice Chancellor’s Professorial Fellow at The University of
Melbourne and Monash University, and an Independent Director of Huawei Technologies (Australia).
The Asialink Essays 2012 Vol. 4 No. 4 Published by Asialink, Sidney Myer Asia Centre www.asialink.unimelb.edu.auAugust 2012 The University of Melbourne Parkville 3010 Australia essays@asialink.unimelb.edu.au
In a recent speech Wayne Swan asked whether Australia would be on the right side of history in this, the Asian Century. This is indeed the right question for Australia today. A child born in the first year of this century will come of age in an Australia that is profoundly shaped by our relationships in Asia. It will either be an Australia that is closely engaged, contributing to and benefiting from the energy, growth and innovation of the most dynamic region in the world; or an Australia playing catch up in a changed global economy it has failed to fully embrace and understand.
The Right Side of History John Brumby
Talking to China
The first imperative is to increase our
governmental and diplomatic presence in
China. Talking to China is crucial. In my
opinion, Australia’s Free Trade Agreement
with the US would never have occurred
were it not for our strong diplomatic
relationship, forged through almost 70
years of dialogue, discussion, negotiation
and friendship. With China, we don’t have
that kind of time.
A deepening of our relationship with
China will not come about by Australian
leaders visiting and lecturing their hosts
about governance, investment, or any other
matter. Rather, it will come about via a solid
diplomatic presence, mutually respectful
dialogue, and a sharing, in friendship, of
our respective cultures, values, and ideas.
In this regard, the Prime Minister’s recent
announcement of a new consulate in
Chengdu, the capital of China’s Sichuan
Province, is welcome news. But as former
ambassador Geoff Raby has pointed out,
until the Prime Minister announced the
new consulate, our diplomatic footprint in
China hadn’t changed in seventeen years.
The new consulate joins just four others. By
way of comparison, we have four diplomatic
offices in Italy alone. Our two way trade
with Italy last year was just under $7.5
billion per annum. With China, it was over
$113 billion.
In some ways the states have been more
nimble than successive federal governments
in responding to China. When our
government came to office in 1999, Victoria
had no representation in mainland China –
just an office in Hong Kong. We opened new
Government Business Offices in Shanghai
and Nanjing – and the current government
proposes a further office in Beijing. Also
NSW, Queensland and WA each have
representation in two Chinese cities.
Trade and investment
The second priority is to deepen, diversify,
and mature our trade and investment
relationship. Some might be tempted to
look at the figures and say the job’s done:
After all, last year Australia’s two-way trade
with China was worth $13,470 to each
Australian household alone – an increase
since 2007 of 93 per cent.
But to rest easy at this point would be
to misunderstand the nature of China
today. China is no longer just a demand
sink for resources, nor the world’s cheap
manufacturing hub. When I joined the
Australian board of Huawei last year, it
was because I wanted to be involved with
a company that symbolised the future of
China, not the past. Huawei is China’s
largest privately owned company, with
an annual turnover of more than $US33
billion, and a presence in over a hundred
countries worldwide.
According to the World Intellectual
Property Organisation, Huawei last
year filed the third largest number of
international patent applications of any
company in the world. In fact, the total
number of applications from China rose by
more than 33 per cent on the previous year
– which is by far the largest increase of any
country. In a world continually transformed
by technological advance, it makes sense to
engage with the region that will more and
more be driving that advance.
Likewise, when we consider trade heading
in the other direction, we need to look past
the obvious needs of a rapidly developing
country for nickel, zinc and iron ore. There
are new export opportunities to consider
today. For example, as the Chinese people
become more affluent they also become
more susceptible to the kinds of lifestyle
diseases we are all too familiar with in the
West. 80 per cent of deaths and disability
in China are now caused by chronic disease,
which is why it’s important to remember
page 2 / 4the asialink essays vol.4 no.4 — 2012 The right side of history john brumby
China is no
longer just a
demand sink for
resources, nor
the world’s cheap
manufacturing
hub.
that here in Australia we don’t just have an
abundance of natural resources, but also
a wealth of experience in tackling these
problems. We need to recognise strengths
like these in the Asian Century – and see
how they fit with the challenges faced by a
rapidly rising Asia.
We also need to recognise our limitations
– which brings me to the thorny question
of Foreign Direct Investment. Australia
has almost always been a net importer of
capital. We built the strong economy we
enjoy today in significant part by leveraging
foreign savings. KPMG predicts that
between US$1 trillion and US$2 trillion
of Chinese investment will head overseas
between now and 2020. By 2011, China had
invested only $13.4 billion in Australia.
For comparison, the United States direct
investment total by 2011 was $122 billion.
We need to make sure that all of the barriers
that might stand between Australia and
new trade and investment opportunities
are removed. Barriers both visible and
invisible. Barriers arising from historical
bias, or outdated perceptions. Engagement
in the Asian Century requires the free flow
of ideas, knowledge, technology, goods,
services, and capital.
Partnerships in innovation
But true engagement requires more than
just exchange between two countries. It
requires partnership. And in many ways the
most important partnerships for Australia
in the Asian Century will be those in
Science, Technology, and Innovation.
The reason for this is simple: China has
no intention of falling into the so called
‘middle-income trap’. This occurs when
developing countries – relying on low
cost labour and the take-up of existing
technologies – hit a wall in terms of
productivity growth. There’s only one way
out of the trap, and that’s innovation.
China’s determination to become an
innovation powerhouse is resulting in what
the Australia China Business Council has
called ‘the largest investment in Research
and Development in human history.’ China’s
12th Five Year Plan aims to increase total
R&D spending to 2.2 per cent of GDP by
2015. In 2010, they were at 1.75 per cent –
$105 billion – which means that in the next
18 months, China’s R&D spend will increase
by more than the total amount Australia
spends each year.
Australia can and must leverage some of
that unprecedented Chinese R&D spend by
forging new partnerships in innovation.
After all, General Electric’s 2011 Global
Innovation Barometer suggests that 40 per
cent of innovation in the next decade will
happen in collaboration across borders. We
need to extend the hand of partnership into
China, and give China a reason to extend
their reach to our shores.
The CSIRO is calling for a big increase in
what they call ‘science diplomacy’ – and
the inclusion of scientific collaboration
objectives in bilateral economic dialogue
and agreements. I would argue for an
annual, ministerial level Australia-China
forum, which sets ambitious targets and
reports back publicly on new scientific
collaborations.
Governments must also continue to create
an environment of innovation here in
Australia. In the year 2000, our Government
in Victoria set a goal to become one of the
top five biotechnology hubs in the world by
the end of the decade. We wanted to give the
world’s best scientists a reason to be here –
and on a number of measures, we achieved
that goal.
We also passed the nation’s most ambitious
climate change legislation – again in the
hope of stimulating innovation and creating
an environment in which new technologies
and solutions could emerge.
page 3 / 4
In many ways
the most important
partnerships for
Australia in the
Asian Century will
be those in Science,
Technology, and
Innovation.
the asialink essays vol.4 no.4 — 2012 The right side of history john brumby
I fully endorse these aims. Here in Victoria
we know how valuable – and mutually
enriching – the sharing of cultures can
be. After all, we are the most diverse state
in Australia. 43 per cent of us were either
born overseas, or have a parent who was
born overseas. We also have a Chinese
community that is almost as old as the
colony itself. All of this is an advantage in
the Asian Century.
Conclusion
While I have focused on China, much of
what I have had to say applies to the other
rising Asian nations in turn. The World
Bank estimates that the global middle class
will expand from 1.8 billion people in 2009,
to 5 billion by 2030 – two-thirds of whom
will be in Asia.
India, for example, is already Australia’s
second largest source of foreign students.
Indonesia has long been the recipient of
Australia’s largest bilateral aid program,
but now there are opportunities beyond
aid. Their economy is growing impressively
at around six per cent each year, but with a
per capita income around one tenth that of
Australia’s, there is enormous potential for
future growth.
So it should be clear that the term ‘Asian
Century’ is not just a catchy name. It
reflects a coming reality that will shape our
future and determine the opportunities
that our children and grandchildren will
enjoy. It should be viewed not as a threat,
but an opportunity: To play a greater
diplomatic role in the region; to reap the
benefits of increased trade and investment;
to join forces with the emerging centre
of world innovation; and to enrich our
cultural lives and relationships within our
region.
We can, if we choose to, shift our
relationships in Asia to the next level. But
we need to act now if we are to be true
partners in this Asian Century.
—
While the Western world argues about
climate change, China knows from
experience that it simply must grow
greener and cleaner: Over the last ten years,
environmental degradation and depletion
cost China ten per cent of their GDP.
It’s no wonder they have doubled their
wind power capacity every year since 2005,
or that they are now the world’s largest
manufacturer of solar panels. I believe
the Gillard Government’s decision to put
a price on carbon will drive investment
in cleaner technologies, which in turn
will open up new opportunities for
partnerships and collaborations with the
world’s largest emitter of greenhouse gases.
A fuller engagement
Finally, it is very important that we
recognise the full human potential of
engagement in the Asian Century. China’s
story is one of an ancient culture now re-
engaging with the world; and given the
centrality of art and culture in all Asian
societies, our engagement with China must
be about more than trade and investment.
In 2010 the National Art Museum of China
showed a series of work by indigenous
Australian artists from our National
Museum of Australia, and late last year the
Australian museum reciprocated with an
exhibition of contemporary Chinese art
called A New Horizon. The name is apt. As
we shift our gaze from West to East, a ‘new
horizon’ is exactly what we see. It’s one we
have barely begun to explore.
As so often, Asialink has been a strong voice
for greater cultural engagement. They
advocate the training up of an ‘Asia capable’
cultural workforce here in Australia; a
strong Asian focus in the new cultural
policy to be launched by the Gillard
Government later this year; and a deeper
sharing of Australian culture with Asia –
one that transcends the kind of shallow
‘nation marketing’ we’ve sometimes seen
in the past.
page 4 / 4the asialink essays vol.4 no.4 — 2012 The right side of history john brumby
While the
Western world
argues about
climate change,
China knows
from experience
that it simply
must grow greener
and cleaner.
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