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Address to closing ceremony of Australia-New Zealand School of Government China Advanced Leadership Program, Canberra



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THE HON WAYNE SWAN MP Acting Prime Minister Treasurer

ADDRESS TO CLOSING CEREMONY OF AUSTRALIA-NEW ZEALAND SCHOOL OF GOVERNMENT CHINA ADVANCED LEADERSHIP PROGRAM

Canberra 4 November 2011

A PROSPEROUS RELATIONSHIP

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Thanks very much for having me here today. It’s an honour to be invited to address the Closing Ceremony of the China Advanced Leadership Program.

I would like to thank Professor Alan Fels for that warm introduction [Dean of the Australia and New Zealand School of Government, convener of the China Advanced Leadership Program]. Professor Fels has been the driving force behind turning the Australia and New Zealand School of Government (ANZSOG) into one of the very best schools of its type in the ten years since its inception. And through the creation of the China Advanced Leadership Program, Professor Fels has also played an important role in strengthening our countries’ bilateral relationship.

I would also like to acknowledge Vice Minister Yang and all of you from the delegation who have been with us in Australia participating in the program for the past three weeks. I hope you have had an enjoyable visit to New Zealand and Australia in this time and that you have been able to learn much while you are here. Because programs such as these are an important part of further strengthening the ties between our two nations.

The strong links between our countries rest on solid foundations and have a bright future because of the efforts of the likes of Professor Fels and you on this course. And I have no doubt these links will grow stronger from the experiences that you have gained here in Australia.

Today I would like to talk a little bit about my own experiences of China and its economy. And I’d also like to offer some reflections on how the dawn of the Asian Century is shaping our two great nations and the relationship between them.

A Personal Perspective

There has been a very big change in Australia’s understanding of China in my lifetime. When I grew up, life was more local. We focussed on the community and the country, rather than the region or the world.

Kids were more likely to learn French or Latin in school, rather than Mandarin or Cantonese. And if we were lucky, we had a local Chinese restaurant, but this was largely the extent of our appreciation of Chinese culture.

Today, things are very different. Australia and Australians are more aware than ever about China and the implications of its rise for us. No doubt this experience is mirrored in China, with an increasing appreciation for Australia.

From Australia’s side, it was the far-sighted leadership of some of the greats of my political party that initiated our awareness of China. It was 40 years ago that Gough Whitlam - the then leader of the Australian Labor Party - met Premier Zhou En-lai in the Great Hall of the People in Beijing to discuss the terms on which Australia and China would establish diplomatic relations. And next year we will celebrate the 40th anniversary of Australia-China diplomatic relations. There has not been a leader of my party since Whitlam who has not seen the great opportunities of closer economic ties between our two nations.

I was also fortunate to work with Mick Young, who was one of Australia’s first Labor Ministers to appreciate the potential for the relationship between Australia and China. And he helped instil this in me. As Treasurer and now as Deputy Prime Minister, I have visited China six times in less than four years, most recently just a few months ago. This is more than any Australian Treasurer that has come before me.

I have had the privilege to meet with a number of your current and future leaders in Beijing, Shanghai and Guangzhou, and I view many of them as friends. I’ve also sat at the G20 table with my Chinese colleagues and together we have helped forge the G20 as the premier global economic forum. A forum that itself represents the changing nature of the global economy and the growing influence of our region and our two countries. In this time we have worked more closely than any of our predecessors, and these ties run deep.

My own department, the Australian Treasury, has forged a strong bond with its counterpart, the National Development and Reform Commission, through the signing of a memorandum of understanding to improve information sharing. And most importantly, the greatest gains have come from the close working relationships that have been borne out of this agreement. But it is not just formal Government links that support our bilateral partnership. It is also the people to people links.

Australia has a large Chinese community which plays an invaluable part in Australia’s multicultural society, and Chinese New Year celebrations are now a firm fixture on our calendar. More Chinese than ever are being educated in Australia and taking back with them memories that will last a life time.

Growing Economic Links

As Treasurer, I also focus very keenly on the economic links. As your economy has grown, our economic and trade relationship has increased in significance. In the last twenty years, the total value of trade between our two countries has grown from around $2 billion to $106 billion.

Only a decade ago, Australia exported almost as much to China as it did to the UK, and more to the US than to China. In the years since, our goods and services exports to China have increased more than seven-fold. Our exports to your country are now around five times larger than those to the UK and more than four times larger than to the US.

The complementarity of our interests, particularly in resources, has long underpinned our economic links. But Australia is not just China’s quarry as some might assume. The relationship is much broader than this and is increasing in range and depth.

We export significant amounts of agricultural products including meat, wool, aquatic products and wine to China. China is already our largest source of foreign students, making up nearly 30 per cent of all international enrolments. And tourism from China has also grown significantly.

This is only the beginning of the opportunities of what we call the Asian Century - and China is very much at the heart of this.

China, Australia and the Asian Century

I don’t intend to lecture you about the future economic prospects of your country, of which I’m sure you’re all well aware. I do however want to touch on this through the lens of Australia and China’s bright futures together, so I hope you will bear with me for my final remarks.

As you know, China’s recent economic transformation has been one of the greatest achievements of the late 20th century. And your future is even brighter.

Since 1978, your economy has increased forty fold. And over the five years to 2016, China is expected to be responsible for around one-third of global growth and could surpass the US to become the world’s largest economy. In fact, by 2020, you are projected to account for about one fifth of global GDP. And by 2030, almost one quarter. This is part of the broader rise of Asia as experience a shift in economic weight, from West to East.

Consider these facts. In 1990, just under one-quarter of world economic activity fell within 10,000 kilometres of Australia. By last year, it had risen to more than one-third. And by mid-century nearly two thirds of global production and consumption will be

taking place within 10,000 kilometres of Australia. And while China is playing a central role in the Asian Century, it is also a story about India, Indonesia, Vietnam and others.

By the middle of this decade, India’s contribution to global growth is expected to almost double from its contribution in the 1990s. And developing Asia more broadly is expected to account for about half of global growth in the next five years, from a little over a third in the eight years preceding the global financial crisis. But it is not just overall growth under way in these economies that is changing the region and the world.

By the end of this decade China is expected to surpass the US as the world's single largest middle class market. And with it Asia is expected to have more middle class consumers than the rest of the world combined.

As I have been explaining for some time now, our region is transforming from the world’s largest producer to the world’s largest consumer. And at the same time the goods that our region is demanding are changing. This is great news for people in China, who can now afford goods and services that could not have been dreamed about a generation ago. You and I know this is bringing with it perhaps the greatest rise in living standards for any single nation that the world has seen. But in its own way, it will also bring about a fundamental change in Australia’s economy - the beginnings of which we have already seen.

Just as the nature of our trade relationship with the region has grown, it is also changing in nature. This rising middle class is already demanding more than just new roads and buildings, which Australia’s commodity rich economy has played a key role in building. It is increasingly demanding higher quality goods and services, further influencing the shape of the Australian economy.

Already we see Australia’s services exports to China and the Asian region growing and evolving. In architecture alone, Australian architects, including from my home town in Brisbane, are designing new and exciting buildings for the Chinese skyline like the Water Cube in Beijing.

As I’ve discussed at great length in recent years, this is just the tip of the iceberg of what is possible. But as policy makers, here’s the important thing for us to note: Australia’s success is not preordained, nor is China’s or any other country in our region. While our joint economic destiny looks favourable from here, we need to work hard to ensure we can enjoy a prosperous future together.

Obviously, Australia has a comparative advantage as a supplier of resources to the global economy.

And this will be the case for many years to come. But if we are to take full advantage of the opportunities the Asian Century presents this nation, we can’t simply rely on a resource endowment, or similar enduring advantage.

As an advanced economy with a diversified business sector and a highly educated workforce, we start with an advantage. But we need to adapt and build on these resources. That is why the policies of my government have been to provide Australians with the best opportunity to prosper in the Asian Century. Whether it be through the education and training that was at the heart of this year’s budget. Or whether it be the Minerals Resource Rent Tax introduced into Parliament this week, which will help spread the opportunities to those business not directly benefiting.

We know this is an ongoing process and that we must evolve if we want to seize the great opportunities before us. That is why Prime Minister Gillard has announced a White Paper - a very detailed and formal Government study - looking at Australia’s engagement with Asia.

The opportunities arising from the Asian Century depend critically on the decisions and investments we make today as policy makers.

Conclusion

That is why this course is so valuable and is so strongly supported by my Prime Minister and our Government.

You and I know that Australia and China have different histories and political systems. We know we have different sized economies and are at different stages of development. But with the right policies and close ties we can position ourselves to best take advantage of our relationship in the Asian Century.

We have much to learn from one another and initiatives like the ANZSOG China Advanced Leadership Program are an invaluable asset for both our countries. I look forward to welcoming many more of your colleagues in the future. And to seeing you next time I visit your great nation.

Thank you.