Speech to the Chinese Leadership Academy Pudong (CELAP)
Our changing relationship, our evolving region
2 April 2007, Shanghai
Salutation
Thank you Professor Xi.
It is a great pleasure to be back in Shanghai. And an honour to be invited to address the Chinese Leadership Academy Pudong.
Introduction
My visit to China this year marks the 35th anniversary of the establishment of Australia-China diplomatic relations. The world has changed a lot in those 35 years.
China has changed a lot too. The China of 35 years ago is nearly unrecognisable today. 35 years ago, the Pudong area here in Shanghai was rice paddies, not gleaming buildings. In those 35 years, Australia too has changed, and so has the Australia-China relationship. We are now engaged in every field and at every level.
We have a regular program of high-level visits in both directions. Just last month Vice Premier Zeng Peiyan visited Australia. Later this year we will welcome President Hu Jintao to Australia to attend the APEC leaders' meeting, which we are hosting in Sydney in September.
Australia and China are important economic partners. Two-way trade is worth 50 billion Australian dollars and is growing fast. Australia helps China to grow economically by providing raw materials and expertise. China's demand for resources has helped Australia's economic growth.
I think that we can do even more to integrate our two economies, including through the free trade agreement (FTA) we are currently negotiating - an FTA would deliver real economic benefits to both sides.
We recognise that the negotiations will be tough. But with mutual effort, we should be able to take our trade and investment relationship to a new level.
Australia and China gain a lot from understanding each other's views on bilateral, regional and global issues. We have dialogues on issues ranging from regional security, to minerals and energy.
And we have a dialogue on human rights, which remains an important issue for the Australian Government and people. We should be able to speak to each other frankly, even where we disagree.
But it is not just about dialogue; it is also about co-operation. I can announce today that I have approved one million dollars of funding for the China Council for International Cooperation on Environment and Development.
And I would like to announce that Mr Roger Beale, the former head of Australia's Department of the Environment, has been nominated as an international member of the Council.
I should also note that Australia looks forward to participating in the 2010 World Expo here in Shanghai.
Right across the relationship, there has been remarkable development over the past 35 years. The more we engage, the more our futures become linked. And the more our futures become linked, the closer we have to work together to face common challenges.
Today I'd like to talk about three of the common challenges we face in the areas of: environment and energy; security; and regional architecture.
Environment and energy
The spectacular night lights of Pudong viewed from the Bund are a symbol of China's economic development. They are also a symbol of China's growing demand for energy and the challenges we all face on environmental questions.
Australia is committed to finding real solutions to greenhouse gas emissions and global warming.
Along with China, Australia is a foundation member of the Asia-Pacific Partnership for Clean Development and Climate - the AP6.
By bringing Australia, China, India, Japan, Korea and the United States into one group, we have a real chance to reduce carbon dioxide emissions by finding technological solutions.
Partnership members have already developed a strong agenda. The Australian Government has committed 60 million dollars to 42 projects in the first round of action, including 34 million dollars for 21 projects with Chinese involvement. The projects include activities focused on high efficiency solar power stations, the capture and storage of carbon dioxide, and coal mine safety.
There is little doubt that coal will remain the dominant global source of energy into our immediate future. The International Energy Agency forecasts that coal will remain a fundamental driver of economic growth in China, accounting for almost two-thirds of China's primary energy supply in 2030. Australia has vast coal reserves and we are the world's largest coal exporter.
That's why developing clean coal technologies is in our mutual interest if we want to address climate change without sacrificing energy security or our natural economic advantages.
The decision by Premier Wen Jiabao and Prime Minister Howard to establish the Australia-China Joint Coordination Group on Clean Coal Technology is an important step forward in this regard.
Australia and China are also cooperating in water resource management. During Vice Premier Zeng Peiyan's visit to Australia, Australia and China agreed to work closely together on water scarcity - a key challenge for both our countries.
Australia is working hard on all fronts to meet the challenge of climate change. I announced last week that Australia had allocated 200 million dollars to establish the Global Initiative on Forests and Climate. I look forward to the contribution China can make to the initiative.
China is remarkable for having not only halted deforestation, but for its strong program of reforestation. In addition, China is already providing development support to countries in the Asia-Pacific and Africa, and many of those countries are looking to better manage and protect their forests. I will be discussing the initiative, and how China can help, in Beijing later this week.
As an energy exporter and an energy consumer, Australia is committed to addressing global warming in a way that delivers real results and pays due regard to economic impacts.
Australia and China's bilateral trade in energy was worth nearly 1.5 billion dollars last year and is growing as LNG shipments are now underway - and we both benefit from the trade.
Australia, like China, recognises that energy security is a key regional and global issue. Energy is a strategic commodity, but the best way to ensure stable supplies of energy is through transparent, well-regulated global markets.
The price of oil, LNG and other commodities might rise and fall. But price changes are important market signals that help companies plan for the future. We should not try to regulate global prices, nor should we seek to tie up energy reserves for our own purposes, because in the end it is less efficient than relying on markets.
We also need to consider the wider implications of our energy purchases.
There is a political cost and an increased risk in dealing with unstable or unsavoury regimes simply to get energy supplies. China has come under pressure in the international media for its dealings with Sudan on oil.
Chinese oil companies are free to make decisions about their international investments, but they should also be aware that their reputation - and China's - may suffer if the regimes they deal with face international criticism for human rights and other abuses.
Let me talk a little about Australia as an energy supplier.
Australia is a reliable energy supplier to China. Australia is politically stable. We are world leaders in mining and extraction technology and efficient transport - so we can deliver the resources to customers reliably and cheaply. Our energy relationship should continue to grow.
One area of potential growth is uranium. Our two governments have signed the required agreements, so Australian and Chinese companies can begin commercial negotiations.
Security
Australia and China are both strong trading nations. Exports of goods and services are worth over 20 per cent of Australia's GDP and nearly 40 per cent of China's GDP.
And for Australia's trade, no region is more important than North East Asia. Our top four trading partners are: Japan, China, the United States, and the Republic of Korea - those four together make up over 40 per cent of our international trade.
A stable region - a stable world - makes this trade possible.
Over the past 50 years of peace in North East Asia, Japan, the Republic of Korea and China have all emerged as economic powerhouses. The peace and stability that has allowed Asia to prosper and grow has been underwritten by the United States' strategic commitment to the region. Australia thinks that continued US engagement with East Asia is central to a stable future.
Because of our close and growing ties with Japan and our deep engagement with the region, Australia and Japan have recently signed a Joint Declaration on Security Cooperation.
This Joint Declaration is not an alliance and it is not aimed at any third country.
It will contribute to regional stability by allowing Australia and Japan to continue to work closely together on law enforcement, counter-terrorism, regional disaster response and other issues - just as we did in response to the 2004 tsunami disaster.
Australia and China also work together. We share the goal of maintaining peace and stability in the Asia-Pacific Region and more widely. Australia and China share the view, for instance, that North Korea's development of nuclear weapons is a serious threat.
I welcome China's leadership on the North Korean nuclear issue. China is best placed to convince North Korea that it can choose a better path than confrontation.
I also welcome North Korea's agreement at the February round of the Six-Party Talks to take preliminary steps towards giving up its nuclear weapons.
But, given that country's past record, all eyes will be on North Korea to see it keeps its commitments. China's role in holding North Korea to its commitments will be crucial.
Australia too is playing its part. Australia has given 57 million dollars in humanitarian aid to North Korea through international organisations since 1995.
Most recently, in March, I sent a high-level delegation to Pyongyang. Senior North Korean officials assured our delegation that North Korea was committed to implementing the 13 February statement.
North Korea has asked for a reciprocal senior delegation to visit Australia later this month, but any visit will depend on the progress North Korea makes in implementing its commitments.
I was disappointed to see that North Korea's delegation refused to participate in the last meeting of the Six-Party Talks in Beijing two weeks ago. The six parties should meet again as soon as possible to discuss progress in implementing all aspects of the February agreement.
Of course, if we are discussing stability in North East Asia I have to comment on the Taiwan issue.
Australia has a "one-China" policy.
In 1972 when we established diplomatic relations, Australia "recognised the Government of the People's Republic of China as the sole legal government of China and acknowledged the position of the Chinese Government that Taiwan is a province of the People's Republic of China". Australia does not recognise Taiwan.
But Australia does not want to see conflict between the mainland and Taiwan - military conflict across the Taiwan Strait would be catastrophic.
Australia's position is clear: no matter what differences of opinion there are across the Taiwan Strait - and I recognise that the next 12 months could be difficult - those differences must be solved peacefully.
I often see the differences between the mainland and Taiwan played out when I travel to the South Pacific.
For Australia, stability in the South Pacific is of vital importance. Australia wants to see a stable, prosperous South Pacific. To achieve this, we need good governance in the Pacific Island countries.
The Pacific Islands may not be close to China but, as a major power, China should give due regard to the region's stability and sustainable development. Viewing the Pacific Islands only through the lens of the Taiwan issue would be a mistake.
Australia has a long history of engagement with the Pacific Island countries, including in providing aid. China is relatively new to this challenge.
We welcome constructive Chinese aid that is transparent and accountable and that supports the development plans coming from the Pacific Island countries. We all need to make sure that our aid meets the "do no harm" standard.
Regional Architecture
As we address challenges like the environment, energy and security, we have to consider what regional institutions and frameworks we can we use to address these challenges.
I believe Australia and China should work more together to develop strong, credible regional institutions.
For Australia the key goal is peace, stability and prosperity for the region.
The regional institutions we develop have to be outward looking. They should link our region to the wider world, not cut us off.
Australia sees APEC as a pre-eminent regional body. APEC involves all of the major players in the region.
Its agenda focuses on promoting economic growth through free and open trade and investment, but it covers other issues including health, emergency preparedness and counter-terrorism. I think it could do even more by examining some security issues.
The newest regional institution is the East Asia Summit (EAS). Australia was very pleased to participate in the inaugural meeting in December 2005 as a founding member of the EAS.
The EAS is making an important contribution to regional relations and can contribute usefully to regional community building. It is an important venue for leaders to discuss and address strategic issues that affect our region.
Of course ASEAN is one of the region's most enduring institutions. But ASEAN has to demonstrate that it can address difficult issues that affect regional stability and development.
As China's role and influence in the region grows, so too do its responsibilities. China's positive contribution to addressing challenges in the region is crucial. We all, for instance, share concerns about the situation in Myanmar.
Australia puts a lot of effort into the development of regional organisations - they are a top priority for our foreign policy. And they complement our strong bilateral relationships with countries in the region like China.
I hope that Australia and China can work together in building the institutions we need to deliver prosperity to our two countries and the Asia-Pacific region.
Conclusion
The message I want to leave you with today is that Australia and China have many shared interests.
As key players in an evolving region, we have an opportunity to shape our future.
We can work closely together on security, environment and energy issues and developing regional institutions.
We need to make sure that we are aware of each other's thinking on key issues. We need to maintain and increase our government-to-government dialogues. And we need to make sure that scholars, journalists and other opinion makers have the opportunity to exchange visits and ideas.
China has enormous influence in the Asia-Pacific region and beyond, and with the influence comes responsibility.
Australia and China working together is, of course, good for Australia and China. But importantly, it will also benefit our entire region.
Thank you.