AUSTRALIA'S ambassador to China says the future challenge faced by the nation is the ability to judge accurately the direction of our key trading partner’s growth.
Geoff Raby believes the relationship between China and Australia is becoming increasingly diverse and complicated, with many layers presenting Australia with opportunities and challenges.
“Here we have our single largest economic partner, the one that will be the last economic partner for as far as anyone can see and yet, we have very different systems of social and political organisation and very different values,” he says.
“We don’t have an option other than to engage with China, which means to fully understand and help China understand us. This engagement needs to be at all levels and particularly on a cultural level.
“We can’t take China for granted, the world has beaten a path to China’s door and we can’t assume that because we already have a relationship, that everything will develop smoothly.
“Given the tremendous advantages we have, we don’t want to waste them and fail to realise the full dimension and potential of the relationship.”
Raby says it’s important for Australia to think about what China will look like in 15 years.
“In three years time, China will be a one billion tonne per annum steel manufacturer. The world has never seen anything of this scale, so today is the time we need to think about that and we need to be educated about it,” he says.
"Trading, resources and commodities have underpinned these leads and China’s rapid economic growth and urbanisation will continue to drive integration between our two economies.
“The bilateral relationship is no longer defined simply by the cycle of supply and demand or exports in one direction. Australia’s links with China are becoming increasingly comprehensive based on expanding bi-lateral trade flows, investment and importantly, people-to-people engagement.
“As China regains its normal historic place in the world as a major economic power, the opportunities for Australia also grow and not just in traditional sectors, but in many new ones as well.”
Raby says no other country can replace China as Australia’s largest export market while it continues to grow.
“Arguably, no other country has benefited more from China’s rise than Australia and no country wants to see China’s economic growth sustained more than Australia does,” he says.
“In the past 10 years, two-way traffic has increased more than six fold to around $100 billion last year and our exports to China counted last year for 25 per cent of Australia’s total exports.
“This is a proportion that hasn’t been seen since Japan in the early 90s and one important conclusion from this is that Australia is arguably more competitive on the China market than any other country on earth and this will continue to grow.”
China’s household consumption as a share of GDP is around 40 per cent.
“This figure reveals what we all know about China’s average consumer – they have low wages, spend little and save a lot, so there is a long way for China’s household consumption to expand,” says Raby.
“The planned transition to a domestic, consumer-driven economy requires China to do a number of things, all of which will be difficult and challenging.
“These include increasing the number and changing the type of new jobs created, creating more opportunities in the services sector, appreciating the currency and putting in place efficient social welfare and public education systems.”
Raby believes that while commodities will underpin growth in China, enormous opportunities exist for Australia to expand into a wider range of other profitable areas.
“The Chinese and Australian economies enjoy strong synergies, which mean that a comprehensive and mutually beneficial free trade agreement is in the long term interest of both countries,” he says.
“Importantly, a free-trade agreement will also provide the foundation for the establishment of a long-term, mutually beneficial investment relationship. Australia is also one of the top destinations for Chinese outbound investment.
“In the past three years, over 230 Chinese applications have been approved, with only six requiring amendments. The total value of this investment is over $60 billion.”
Raby says China’s development path over the next 10 years will offer many more opportunities to deepen our engagement and it’s up to businesses and governments in both countries to realise the opportunities at an early stage.
“China in the next five years will increasingly export high-quality, value-added products and will also look to import more sophisticated goods and service sector products, something for which Australia is well known and respected for,” he says.
In 2009-2010, China became Australia’s largest services export market worth a total of $5.8 billion. In 2010, there were more than 150,000 enrolments by Chinese students in Australia and China is also our No.1 source of income.
“China’s incredible infrastructure expansion is already multiplying the avenues by which Australia can pursue eager economic co-operation,” says Raby.
As China’s energy consumption and carbon emissions grow, Raby says Australia is building collaboration on technology to optimise our primary source of energy and minimise its impact on our communities and the global environment.
“As new projects, including Queensland’s flourishing coal seam gas sector come online, Australia is well placed to supply China’s expanding energy market,” he says.
“Over the past two years, China’s top three gas companies have struck record breaking, long-term contracts with gas projects, providing jobs for thousands of Queenslanders and certainty for the state’s economic development.”
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