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Media Release: ACBC National Chairman John Brumby addresses crucial issues flowing from the Strategic Economic Dialogue

18 September 2017

Getting the Terms of Engagement Right with China
By John Brumby AO, National President Australia China Business Council


There’s much at stake for the Australian economy and Australian business in the crucially important Strategic Economic Dialogue that took place this weekend in Hangzhou.

The Dialogue saw Treasurer, Scott Morrison, and Trade Minister, Steve Ciobo meet their counterparts, Director of the National Development & Reform Commission, He Lifeng and Minister of Commerce, Zhong Shan. These meetings provided an important opportunity to set directions and nudge initiatives forward in Australia’s biggest trade relationship. They are the economic engine room that helps drive leadership in the relationship between the two countries.

The Australia China Business Council hosted the visit of Chinese Premier Li Keqiang in March this year, which saw Australia and China identify significant new areas of common interest in international diplomacy against the drift towards protectionism and sign a raft of bilateral cooperation agreements. But among the things left pending from that visit was the signing of a memorandum of understanding on China’s Belt and Road Initiative (BRI), the large scale initiative in China’s economic diplomacy that will help to shape the way in which China invests its considerable savings in our region and around the world in infrastructure and other development projects.

BRI has huge interest because of the potential of Chinese investment to relate to large scale projects in Australia as well as the opportunities for participation by Australian business in projects in third countries. The MOU would have been simply a mechanism for both countries to talk about the nature and the terms of Australian engagement in this initiative. 

Though the Chinese side had been encouraged to think that Australia would want to engage on BRI — across the Tasman the New Zealand government signed a similar MOU — at the last moment the Australian government backed away. The puzzlement at Australia’s last minute shyness was not confined to Chinese officials putting Mr Li’s agenda together. Australian business and other stakeholders were also left wondering why on earth the Australia government would not wish to talk it through with China.

Hopefully Hangzhou will see progress on doing just that.

Since Premier Li’s visit, the Australian Government sent Trade Minister Ciobo to participate in the Belt and Road Forum hosted by President Xi Jinping. There it was possible to gauge a sounder view of the nature of the initiative and its openness to international participation in defining the terms of engagement — by major European powers and the whole range of international institutions such as the World Bank, the IMF and the WTO. As with China’s Asian Infrastructure Investment Bank Initiative, it’s clear that Australia’s participation is most welcome and, more importantly, that Australia would not want to rule itself out of at least a modest role in helping to shape the game.

Since March, there’s been other work towards common goals on BRI to move discussion forward in the framework of the overall relationship between both countries.  There are still many things to talk about.

BRI obviously sits in the context of the China-Australia Free Trade Agreement (ChAFTA) framework and its vision for the Australia-China relationship. The investment chapter of ChAFTA is a declared priority for development and upgrading and the issues that have arisen around infrastructure investment are central to mobilising Chinese capital for Australian development in sensible ways. 
 
Australia should also strongly welcome bilateral cooperation and commercial opportunities in third countries, especially those that also enhance development outcomes.
 
Some of the questions on which a high-level study might focus include the following. What is the best way for Australia to mobilise Chinese capital and development capacities? What principles can be agreed to help realise the potential benefits of such cooperation? When should multi-national partnerships or consortia be encouraged? What are the main infrastructure gaps in Southeast Asia and across the region?
 
These were ideas canvassed at a top level bi-national forum hosted by the Chinese Center for International Economic Exchanges (CCIEE) and the Australian National University’s East Asian Bureau of Economic Research (EABER) that included think tanks and official observers in Beijing last month, including ACBC. They are the right questions for the Strategic Economic Dialogue to put on the table.

CCIEE and EABER last year completed the Australia-China Joint Economic Report, a comprehensive review of the relationship and its prospects.

Over the past year, the bilateral trade and investment relationship continued to grow very strongly, despite continuing weakness in the global economy and increased policy uncertainties surrounding developments in some major industrial countries. And its health and vigour defies one or two dead cats that have distracted thinking away from the main game in our partnership with China: our future economic and political security.
 
Let’s hope the Strategic Economic Dialogue sees leadership in both countries get on with the main game.


The Hon. John Brumby AO
National President, Australia China Business Council

 

For media inquiries contact:
Helen Sawczak
National CEO, ACBC
61 3 9027 5605