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Speech to the ACBC (WA) Australia China Business and Trade Foundation: Kurrajong Auditorium - Confucius Institute University of Western Australia, Claremont Campus: 25 September 2006.

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ACBC (WA) Australia China Business and Trade Foundation Kurrajong Auditorium - Confucius Institute University of Western Australia, Claremont Campus

7:00 PM, Monday 25 September


z Dr Desmond Williams, President of the Australia China Business

Council (Western Australia) z Professor Alan Robson, Vice-Chancellor of UWA and Professor

George Stewart z Professor Jeanette Hacket, Vice-Chancellor of Curtin

z Jon Philp, Woodside

z Distinguished guests

z Ladies and gentlemen

Confucius once said - “If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people.”

That is how we should view our relationship with China - for the long term.

I am delighted to be at the Confucius Institute to talk about the education and science relationship between Australia and China and opportunities for the future.

This is one of the most exciting areas of my portfolio because of the tremendous opportunities this growing engagement presents for both Australia and China.

And like the Confucian saying - we need to think of our relationship,

not in terms of a year or 10 years. We need to be looking at the century ahead.

But, first, let me commend the work of the Australia China Business Council and its members in expanding the relationship between China and Australia through the development of business and investment opportunities.

I congratulate the Confucius Institute and its partners, the University of Western Australia, Zhejiang University, and the Chinese Ministry of Education’s National Office for Teaching Chinese as a Foreign Language, on the opening of this new Institute here in Claremont.

The Confucius Institute is a striking example of the increasing inter-connection between Australia and China at a variety of levels.

Not only is there a strong and growing business relationship between Australia and China but increasingly this is underpinned by our expanding academic, cultural and personal linkages.

The presentations by our colleagues this evening George Stewart from UWA and Jeanette Hacket from Curtin have touched on the complexities of the education and science relationship with China and have highlighted the need for a sophisticated and strategic approach to this relationship. The course Jeanette mentioned, The Executive Programme jointly presented by Curtin and UWA at The Australian Centre for Natural Gas Management specifically targeted to Chinese executives is a good example of this approach.

As you are aware, doing business in and with China presents its own particular set of challenges - some cultural and many regulatory. To improve the operating environment for Australian businesses and

create further business opportunities, Australia is committed to negotiating a high quality, comprehensive free trade agreement with China.

In April this year in Beijing I spoke at a conference on the Challenges and Opportunities of an FTA particularly in services trade. I suggested that a comprehensive FTA between China and Australia that encompassed services would not damage, but rather would, bring significant benefits to China in services.

As John noted, I also had the opportunity to open Woodside’s Beijing office whilst in China which highlighted the business and economic ties between our two countries.

The prospect of an Australia China FTA is of particular interest to Australian education and training institutions.

Let me put this in context.

In 2005 more than 81,000 enrolments of Chinese students were recorded with Australian education and training providers in Australia. China is by far the principal source market for overseas students in Australia.

These students make a significant academic, social and cultural


contribution to the communities in which they study and live, and also make a sizeable contribution to an export industry worth $7.5 billion to Australia in 2004. It is now our 4th largest export, after coal, iron and tourism and is an industry worth more than the exports of beef or wheat.

Alumni of Australian education represent a vast pool of talent for firms to access when doing business in China. They can help companies bridge the language and cultural divide, and open invaluable business networks. More importantly these students are building a human bridge between our nations. People-to-people links are priceless in Chinese culture - and we must recognise this significance.

Similarly the Confucius Institute is playing a crucial role in building mutual understanding between our nations through equipping Australians with the skills and knowledge relevant to engaging with our great northern neighbour.

I am pleased that Perth is the host for a Confucius Institute as I believe that Western Australia will be a key partner of China in the future.

While the achievements and figures I have mentioned are impressive, the future success of Australia and China’s education relationship rests on a more strategic and sophisticated approach, characterised by the following objectives:

z diversification in the fields of study and courses that Chinese

students undertake in Australia, including the attraction of more Chinese students to higher degree and research programmes;

z improved opportunities for the two-way movement of students,

academics and professionals between our countries; and

z deeper and longer term research cooperation and collaboration,

particularly in the sciences.

There are a number of initiatives underway to achieve these objectives.

Firstly, in April, together with my colleague Alexander Downer, Minister for Foreign Affairs, I announced the $1.4 billion Australian Scholarships initiative which greatly expanded the number of Endeavour Programme scholarships available to the Asia-Pacific region, including for postgraduate students.

Last week I attended the Cheung Kong/Australia Endeavour Awards reception at UWA which brought home to me how important these exchange programmes are and the opportunities they provide for the students. One Chinese student informed me that the exchange had been a life-changing experience for her.

The Endeavour Programme includes Endeavour Executive Awards, which support two-way professional development opportunities for high achievers in business, industry, education or government from

participating countries, including China.

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The Executive Awards may be of interest to some members of the audience here this evening!

Secondly, in Brisbane in April at the International Education Forum I hosted a meeting of 27 Asia-Pacific education Ministers or department heads to discuss education issues in the region.

Recognising the importance of student mobility and exchange to fostering understanding and mutual respect in the region, Ministers issued the Brisbane Communiqué which articulated a common goal of increasing student mobility and the transferability of qualifications in the region.

The Australian Government is currently progressing the work of the Communiqué in conjunction with participating countries, including China. A well-credentialed, mobile workforce with internationally recognised qualifications supports the capacity of Australian firms to do business globally.

Thirdly, and of great strategic importance, the Australian Government is engaged in a number of initiatives to deepen and enrich the growing collaborative relationship between the Australian and Chinese science communities.

It is this strategic science relationship that I would particularly like to focus on tonight.

Australia regards China as a key priority partner for Australian science. Not in the same way as we regard the essential need to collaborate with the world’s most prolific science-producing nation -

the United States a - but because of what China represents - which is unprecedented potential.

We all know that China has in recent decades leap-frogged the traditional economic development paradigm by investing in its skilled workforce and its innovation system.

While this is a phenomenon that has drawn some focussed attention, and led for example to statements such as the USA announcement in February 2006 of the ‘American Competitiveness Initiative’, I am inclined to see more of the opportunity than the threat.

China is striving hard to create a knowledge based economy and has thus placed science, technology and education high on its list of national priorities.

In late 2005, the Chinese Government released its National Medium and Long-Term Science and Technology Development Plan.

This forms the basis of China’s science and technology development planning for the next fifteen years - to 2020.

The plan is comprehensive, covering a wide range of sectors, from public health and national security, through to manufacturing and the transport sector.

But it also covers - and this is of key interest to Australia - the

sectors of:

z energy;

z water and mineral resources;

z environment; and

z agriculture

The opportunities for Australia are clear.

These are four sectors in which Australia faces significant scientific challenges in coming decades.

If we can collaborate with some of China’s best minds, which are also focussed on finding clever scientific solutions to these challenges then we are both better off, as nations and as members of the global community.

Let me dwell for a moment on the phenomenal resources that China is bringing to bear on its science and technology development. The long term plan aims to bring the amount of research and development funding in China to around $160 billion AUD by the year 2020.

In absolute terms this is clearly a lot of money, but that’s not the only remarkable feature of China’s investment in science and technology. Since 2000 China’s national expenditure on research and development has grown from just under $14.5 billion (Australian) to over $38 billion, a growth of over 150%.

The Australian government has heard from leaders in the business and education sectors of the need for a more systematic and strategic approach to engaging with China.

We have also heard their concerns that other countries are also positioning to take advantage of the rise of China.

In particular, the Prime Minister’s Science, Engineering and Innovation Council is currently considering the report of a working group which investigated the challenges, opportunities and threats to Australia from the economic emergence of China (and India).

The working group stressed the need to capture the significant opportunities for the Australian economy offered by China’s rapid growth; to strengthen linkages at the government-to-government, education, research and industry levels; and to target and focus our resources so as to strengthen the foundations for Australia’s future competitiveness.

Sound advice no doubt, and I can assure you the Government will be giving serious consideration to the recommendations of this study. But let me discuss with you some of what the government is currently doing to strengthen our science and technology links with China.

I have met recently on two separate occasions with Professor Xu Guanhua, China’s Minister for Science and Technology and, I understand a very influential figure in Chinese policy development.

In Beijing Professor Xu and I discussed the close economic ties, and

more particularly the close scientific ties, enjoyed by our two countries, and we both agreed there was potential for even greater collaboration in science and technology.

In fact, he was very impressed by our Nobel Laureates for Barry Marshall had just visited China, and I was walking in his wake. I can confirm Barry was treated as a celebrity in China. We have a long way to go in appreciating and valuing our great scientists and researchers!

Professor Xu identified a key number of areas where China would welcome increased collaboration with Australia, and I guess you will not be surprised at what these are, as they are not only key scientific challenges for China, but also for Australia.

I’m speaking of energy sustainability and agriculture. China is keen to cooperate scientifically with Australia in all areas of sustainable energy research including:

z renewable energy

z clean coal technology

z hydrogen energy production and storage

z fuel cells

z and improved coal mining technologies.

Professor Xu also indicated that China is keen to cooperate in agricultural research, and in particular, water resources management - also a key issue for Australia.

The Australian government is already actively supporting collaboration and senior government-level dialogue in both these areas. For example, my colleague Ian Campbell, Minister for Environment, is leading a business mission to China in mid October in the field of Renewable Energy.

I refer also to the work occurring through the Australia-China Climate Change Partnership, established in 2003, and the Australian sponsored coal summit with China in 2005.

The Australia-China Climate Change Partnership will continue to promote cooperation on a broad range of climate change issues, including measures to reduce greenhouse gas emissions through the cleaner use of fossil fuels.

The Government is also working with China, multilaterally, on the topic of climate change through

z the APEC Energy Working Group

z the Carbon Sequestration Leadership Group

z the Methane to Markets Partnership and more recently

z the Asia-Pacific Partnership on Clean Development and Climate.

In my portfolio there are 3 key strategic scientific engagements I would like to mention;

First, there is the Australia-China Special Fund for Scientific and Technological Cooperation. This fund, which is designed to specifically support research activities between Australian and Chinese scientists,

was established in 2000.

From its modest beginning, of $250,000 per country for each annual cycle of the fund, it has now grown to a substantial bilateral fund of $4 million per annum with each side contributing half the funds, in other words, supporting the participation of its own nationals. It has been a spectacularly successful fund, as the strong demand upon it in recent years from the Australian scientific community has shown. It was this demand for funding for high quality projects that led me to increase the Australian contribution earlier this year to $2 million - unequivocally supported by China.

The fund supports leading edge research collaboration in advanced materials, agriculture, biotechnology, the environment, mining and energy and information and communications technology.

Let me give you a few examples of what we’re funding -

One recent project seeks to understand the behaviour of ‘quantum dots’. The creation and observation of these nanostructures, which are often described as ‘artificial atoms’, will increase scientists’ understanding of their properties for a wide variety of future applications, including new types of lasers and optical communication systems.

Another project, in the area of neuroscience, will use magnetic resonance imaging (MRI) techniques to investigate the patterns of activity in several areas of the brain in patients with initial and later stages of visual impairment. This research will lead to a better understanding of the changes to brain activity in some conditions which result in blindness.

This is valuable scientific research which will benefit both our societies in the future.

My support for mutually beneficial collaboration is however not all researcher-initiated. I am currently targeting funding towards an annual scientific symposium between the Chinese Academy of Science, and Australian Academies of Science, and Technological Sciences and Engineering.

The third such Academies Symposium will take place in Sydney this November and will bring together eminent scientists from Australian and Chinese research communities, to discuss energy, including clean coal, nuclear power, transportation fuels and renewables.

Also, on the topic of targeted support for strategic research cooperation, earlier this year I announced Australian Government funding support for the Australia-China Centre on Water Resources Research, located at the University of Melbourne.

The centre will further increase research networks between Australian and Chinese scientists and promote multi-disciplinary research collaboration into water resources in both countries. Looking at the Big Picture - we all know that international collaboration with the global science and technology community is vital for Australia in order to meet the economic, social and

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environmental challenges of our future.

It is also clear to us that China is rapidly emerging onto the world stage in terms of its investment and its capability in science and technology.

It is also clear that Australia and China have common interests and face common challenges that only science and technology can solve, and that we must therefore cooperate closely.

There is great opportunity for further science and technology engagement between our two countries.

As we see other countries doing, particularly North America and Europe, which are seriously building profile and links into the research organisations in China, Australia must also continue to build institutional, business and individual links into the research and higher degree institutions in China.

For Australia, these connections will not only bring tangible links into the research and development communities in China, they may well also generate significant numbers of higher degree research students to come to Australia and fill some of our own gaps in key research areas.

Not only then would our key industry and scientific bodies benefit from the size and growth of the research sector in China, but at the same time, the growth in higher degree students would help to sustain Australia’s largest education market.

Government, business, educational institutions, research bodies and individuals all have a role to play to ensure that both Australia and China benefit from their expanding relationship.

There are many exciting science and education opportunities to be realised and immense potential for growth.

The business world, academics and scientists are building a common future for Australia and China.

This future can only be brighter when it is enriched with the wisdom and insight of our social and cultural traditions.

And thus it is fitting that we meet here in Perth at the Confucius Institute.

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