The Department of Foreign Affairs and Trade, Australia
AUSTRALIA, NORTH EAST ASIA AND CHINA: OPPORTUNITIES IN A CHANGING WORLD
Address by the Hon Alexander Downer, MP, Minister for Foreign Affairs of
Australia, at a joint Asia House/Austcham luncheon, Hong Kong, 4 July 1996
I am delighted to address you today at this function jointly hosted by Austcham
and Asia House.
Both organisations exemplify some of the profound changes occurring in Asia.
Austcham with more than 1000 members and as the second-largest foreign chamber
in Hong Kong is evidence of the extent of Australia's economic engagement
Asia House reflects the trend toward greater co-operation between two of
the world's major regions, namely Asia and Europe.
For Australia, the importance of this process of engagement with this region
cannot be overstated as our highest foreign policy priority.
Within this overall commitment to the region, Australia has quite distinctive
interests in North East Asia. Naturally, many of those interests are important
here in Hong Kong and I will address them today, underlining in particular,
their importance to us over the long term, well beyond the historic transition
But, clearly, any discussion of Australian interests in Hong Kong and the
North East Asia region as a whole would be artificial if it were not also
to include discussion of the much broader subject of our interests in China,
the fundamental nature of its linkages with Hong Kong and an outline of
Australia's relationship with China.
Strategically, China, and our long-term relationship with it, is of vital
importance in Australia's foreign policy.
Over ten years ago, when I worked for then Australian Prime Minister, Malcolm
Fraser, his 1982 visit to China was marked by the overwhelming message that
Australia's relationship with China was one of engagement and partnership.
Now, in the midst of the vast changes occurring in North East Asia and here
in Hong Kong which has an integral role in these changes, I wish to reiterate
There is no question that the transformation occurring here provides opportunities
for Australia to develop an even more substantial and closer relationship
with China to the mutual benefit of both countries.
PART ONE: NORTH EAST ASIA
The first and most important feature of North East Asia is its economic
Indeed the expected continuation of economic growth in this part of Asia
will ensure that it remains the world's fastest growing region well into
the next century.
In 1994, the combined Gross Domestic Products of Japan, mainland China,
South Korea, Hong Kong and Taiwan accounted for a quarter of world GDP and
a fifth of world trade. A third of their trade is with each other.
Projections suggest that over the next four years the GDP growth rate in
those economies combined will be twice that of the average growth rate of
the world as a whole.
The second important feature of North East Asia is the fact that it is one
of the regions of the world where the interests of a number of major powers
intersect. These complex interrelationships between the major powers - the
United States, China, Japan, and Russia - give them a special capacity for
influence but which also imposes a particular responsibility on them.
Security in North East Asia is underpinned by stable, productive and mutually
beneficial relationships between the United States and Japan, between the
United States and China, as well as the relationship between China and Japan
themselves and those which Russia has with each of the others.
In other words, the commitment which the major powers make to strengthening
their bilateral relationships will be a key to North East Asian security.
A third feature of growing importance to the region is the trend to greater
cooperation embodied in regional structures and dialogue such as APEC and
the ASEAN Regional Forum (ARF).
Such cooperative regional arrangements are in large part the natural corollary
of the region's economic growth and the intersection of the security interests
of major powers. These mechanisms enable us to focus on and define our common
interests and to add to the web of linkages provided by strong and confident
APEC offers a unique way of sustaining regional growth through commitments
to greater trade liberalisation, but at the same time it also contributes
to the region's stability by providing the venue for informal personal dialogue
amongst the leaders of the principal economies of the Asia-Pacific region.
ARF for its part is helping to develop a sense of trust and shared responsibility
amongst the countries of the broader region, essential to shaping its long-term
security and prosperity.
Against the background of what may be described as these defining features
of the North East Asia region today, the new Australian Government is convinced
that more can and should be done to promote the spirit of cooperation abroad
and to make the most of the opportunities presented by the extraordinary
economic growth and changes taking place in the region.
To this end, the Australian Government is committed to what I like to characterise
as "practical bilateralism".
It is why the new Australian Government believes that foreign policy must
be based on identifying common interests and building on them fundamentally
at the bilateral level
Strong, confident bilateral relationships - and the shared understanding
that grows with them - in themselves, form a web of linkages that provides
the underpinning for regional cooperation and stability and effective multilateral
Australians are already actively involved in this way in North East Asia.
This is manifest in the fact that five of Australia's top ten trading partners
are in North East Asia.
And in 1995, close to half of Australia's total exports went to mainland
China, Hong Kong, Japan, Korea and Taiwan.
That is the spirit of the Australian Government's dialogue with all our
partners in the region - not least with China and Hong Kong, with which
our respective relationships have now expanded to include almost all possible
fields of human endeavour, well beyond the ambit of Governments.
PART TWO: AUSTRALIA, CHINA AND NORTH EAST ASIA
Seen in the context of these recent trends in North East Asia, China is
already of utmost importance for Australia as a key player in the security
and prosperity of our common region and as a significant and rapidly growing
This importance for our interests will increasingly grow and deepen, not
only in a bilateral sense, but by extension, regionally and multilaterally,
as China becomes even more engaged in the affairs of our region and in international
Last month, when I met Henry Kissinger in New York, he reminded me of his
earlier observation that whenever a country of China's potential emerges
into great power status, a period of adjustment follows - both on China's
part and on that of other countries, particularly those in the same region.
China already has a leading role to play in contributing to international
peace and security as a permanent member of the UN Security Council.
But in addition to this formal manifestation of its importance to regional
and global affairs, as China's economy modernises and expands to be one
of the world's three biggest economies early next century, its regional
and global influence will become even more apparent. Moreover, in this situation
it is natural that China will continue to be active in pursuing its own
For example, the way China approaches its reunification goals over the coming
years will be important to all regional countries, since it makes a significant
impact on major strategic relationships.
Australia's one-China policy is quite clear and the Australian Government
strongly supports both sides of the Taiwan Straits talking together and
resolving their difficulties peacefully. We look forward to an early resumption
of that dialogue.
Australia also welcomes China's announcement of a moratorium on nuclear
testing, so that it will be in a position to sign a Comprehensive Test Ban
Treaty by September 1996. That said, we are firmly opposed to any proposals
for further nuclear testing before then.
These points notwithstanding, I have no intention of engaging in megaphone
diplomacy either today or generally and certainly not before I have visited
China as Foreign Minister. Such differences that come up from time to time
in our relationship are most appropriately handled between us in the course
of our regular dialogue at all levels.
It is, of course, not surprising that such matters do exist as a reflection
of the fact that two countries such as Australia and China have different
backgrounds, political systems and priorities. Moreover, they may also derive
from the sorts of adjustments which Henry Kissinger referred to when speaking
of China's emergence as a major world power.
Of course, we do not and will not shirk from raising with China our concerns
on human rights and other issues at the appropriate time, but when we do
so it is always in the context of well-established global principles and
the enduring interests which we have identified in the relationship.
PART THREE: THE AUSTRALIA - CHINA RELATIONSHIP
Today, therefore I will focus my comments on how it is in both Australia's
and China's long-term interests that we expand the scope and our levels
of cooperation and joint endeavour and how Australia's enduring interests
in Hong Kong are an integral part of that enterprise.
Let me first touch on the international and regional dimensions and thereafter
speak in more detail about the Australia/China bilateral relationship and
then the Australia/Hong Kong relationship. Both these are relationships
which in their own way have been characterised by marked growth and expansion
over the past fifteen years - and have nourished each other.
As a large fast-growing economy, China is dependent on and will continue
to generate huge and increasing needs for resources, capital and technology.
Those needs can only be satisfied by a world trading system operating in
a liberal, rules-based environment.
I know this is of importance to you here in Hong Kong, as the main entrepot
for trade and investment with China. It is also why Australia strongly supports
China's early accession to, and full participation in, the World Trade Organisation
(WTO), in accordance with the rules-based system which serves all trading
nations so well.
Consistent with this, the Australian Government also supports efforts broadly,
including in China, to improve protection of intellectual property.
Australia welcomes the steps China is taking to reform its trade regime
to satisfy the requirements for WTO accession. We also welcome the recent
assurances it has provided to implement stricter protection of intellectual
Australia and all other countries of the region share an interest in China's
active participation in and strong contribution to the region's emerging
We welcome China's commitment to participate actively in these regional
bodies, in particular strengthening its cooperation with its regional neighbours
through APEC and through its involvement in the ASEAN Regional Forum and
other regional security processes.
Let me now turn to Australia's economic relations with China.
China is now Australia's sixth largest trading partner and two-way trade
is likely to approach A$8 billion this year.
After July 1997, the combined markets of Hong Kong and China will constitute
Australia's second-largest trading partner, although of course Hong Kong
will maintain its economic autonomy.
The growth figures continue to be very strong. Trade with China has more
than doubled over the last five years. But in just three years, contracted
Australian investment in China has expanded almost sixfold, from A$800 million
to over A$4.5 billion. Just as significant, Australia is second only to
Hong Kong as China's preferred investment destination.
That trade and investment record has been driven by natural complementarities.
China needs Australian raw materials for its industrial and infrastructure
expansion. So three-quarters of Australia's exports are commodities like
iron ore, alumina, wool, wheat and sugar.
But that picture is changing rapidly. Australian exporters are creating
new, high-technology complementarities in services, telecommunications and
transport equipment. For example, many of you have probably seen one of
the many Australian-built high-speed ferries that are now operating in China
- on the Pearl River, between Hong Kong and neighbouring centres, and around
Shanghai and Dalian.
The services sector is growing steadily as the Chinese economy becomes more
complex and Australians are moving to meet new demands. Many of you have
been doing that here in Hong Kong.
Financial institutions like the ANZ and Commonwealth Banks, and insurance
companies like National Mutual and Colonial Mutual, already highly successful
in the Hong Kong market, are building on that strong foundation of experience
and establishing themselves in China to tap the growing potential in the
In fact, if you choose almost any commercial activity known in Australia,
you'll find an Australian pursuing it in China. Lawyers, architects, accountants,
education consultants and teachers are all active.
Australian firms, many of the companies represented in the audience here
today, both large and small, are establishing a solid presence on the ground.
The bigger players are household names: AWA, BHP, Boral, CRA, CSR, Fosters,
Pacific Dunlop, Pioneer and TNT. They cover the spectrum of Australian industry
sectors, and many have offices in China's major cities.
On the proven principle that investment often breeds export success, the
Australian Government will be encouraging joint ventures as a means of facilitating
exports. It sees significant opportunities in food processing and raw materials
The new Government intends to encourage training and educational links,
especially in those areas connected with direct economic needs. Take for
instance the example of the Royal Melbourne Institute of Technology's full
time one year course on international trade and business in Wuhan in which
80 managers from China and Australia are studying together.
These are the sorts of creative projects that build the networks so important
to long term business success and there are nearly 3,000 students from China
taking full-time courses in Australia.
As with Austcham in Hong Kong, thriving Australian business chambers are
now a feature of the business scene in Beijing, Shanghai and Guangzhou.
I am struck by the way in which our relationship has changed from one that
was largely between governments, to one where much of the dynamism comes
from the private sector. Indeed there is probably no better example
of the involvement of private business than Phillip Brass, the recently
retired Managing Director of Pacific Dunlop, who is the current Chairman
of the elite group of international business advisors to the Mayor of Shanghai.
The new Australian Government is fully committed to adding to our Ministerial
contacts with China as an essential tool for negotiating mutually beneficial
results in all areas of the relationship.
PART FOUR: HONG KONG AND CHINA: A SHARED FUTURE
Let me conclude by speaking of Hong Kong. Nowhere is the change that is
occurring in the region, and the evolving role of China, more evident than
in Hong Kong, marked most particularly by the fact that on 1 July 1997,
China and Hong Kong will enter an even more directly-shared future.
When I visit China - which will be soon - I will be underlining Australia's
substantial interests in Hong Kong and in the achievement of a successful
transition in 1997.
My starting point will be that for Australia, Hong Kong is a major economic
partner, and that we are committed to Hong Kong over the long haul.
It is our eighth largest export market, with two-way trade worth almost
A$4 billion last year and growing fast. It is our fourth-largest source
of, and sixth-largest destination for, foreign investment. Hong Kong, too,
is a major base for Australians doing business in the wider China market.
The more than 350 Australian companies with operations here are testament
Thousands of Hong Kong people have chosen to make Australia their home,
and over 30,000 Australians live and work here. A quarter of a million Australians
now visit Hong Kong each year.
These flows of people are fundamental to the strength and vitality of the
relationship and its value to each side and I have every reason to expect
them to broaden and deepen.
Naturally then, the Australian Government is taking steps to clarify post-1997
issues of importance to Australians in Hong Kong, including specific issues
such as nationality and right of abode questions.
At this point in the transition - with just 362 days to go -Britain and
China deserve, in my view, considerable credit for what they have achieved.
What has been promised under the Joint Declaration and the Basic Law lays
a solid foundation for a continuation of Hong Kong's prosperity and way
China's commitment to the one country two systems formula for Hong Kong
is an undertaking of great significance.
That formula, promising that Hong Kong's way of life shall remain unchanged
for 50 years, allows Hong Kong and the international business community
to plan for the future with confidence.
This is critical because it is Hong Kong's way of life that has formed the
basis of its spectacular economic success. The Joint Declaration and the
Basic Law unequivocally recognise that.
They offer a basis for confidence in Hong Kong's future stability and prosperity,
built on the continuation of the key elements that made that success possible.
And fundamentally there are two commitments which have the greatest importance.
First, there is the guarantee of a "high degree of autonomy".
Second, the recognition that Hong Kong's free and open economic and social
system should be preserved.
It is that system which has been central to Hong Kong creating the prosperity
we see today and which will ensure its success into the future. It is that
system which has made possible Hong Kong's enormous contribution to the
economic progress of China as a whole and, indeed, the wider region.
Hong Kong's trademark entrepreneurial drive, its adaptability and its capacity
to innovate in the business sector owe much to the free flow of information
and ideas, secured by freedom of speech and the press. Business has flourished
because of the level playing field underpinned by the rule of law and accountable
The Joint Declaration and the Basic Law both provide for the continuation
of all the rights which Hong Kong people currently enjoy including democratic
political institutions. For they are vital for the confidence of those members
of the international community with an important stake in, and goodwill
towards Hong Kong's future - the many thousands of companies which do business
here, and the millions of people who make their living in, or in partnership
with, Hong Kong.
Hong Kong is, and will remain, an important element of Australia's comprehensive
engagement with North East Asia and I expect that this will even increase
in importance in the coming years.
And, from my discussions over the past two days, I think there is reason
for measured optimism about Hong Kong's future.
Certainly I now understand why people have often said to me that nobody
ever got rich betting against Hong Kong!
So, while Governments must see the strategic directions for our key relationships
it is really in the hands of our companies and our businesspeople to bring
them to economic life.
In this regard, let me recognise here the drive and commitment of those
Australian companies and the Hong Kong companies who are in economic partnership
Governments can do a lot. But in the end they do not do the trading, make
the investments and create the wealth on which we all depend to raise living
standards and secure our future.
Let me conclude by wishing you well and assuring you that we will be working
hard and with a clear sense of purpose to ensure that business can make
the most of these great opportunities in this exciting part of the world.