E&OE
26 March 2009
Interview - Australia Network, Beijing
Subjects: Opportunities in western China, global financial crisis, Chinese investment in Australian resources sector
JOURNALIST: Minister, thank you very much for joining us here in Beijing.
STEPHEN SMITH: Thanks Jim.
JOURNALIST: Australia’s no stranger to national disaster, but I doubt that even the recent bushfires could have matched what you’ve just witnessed in Sichuan.
SMITH: Well, you have to actually see it to believe it, I think is the best expression. I went to Chengdu in Sichuan Province and went to the earthquake centre itself and it’s beyond imagination, the scale of it. Which is why we saw, from Australians, such a rush of support, donations to the Red-Cross – and why the Australian Government continues to render assistance. When I was there, I announced a further contribution for the rebuilding of a local hospital. So, it’s one of those illustrations of a national disaster where it’s beyond the capacity of any one country to deal with, including a country of the size of China.
JOURNALIST: Back to Australia briefly and to the allegations that people within the Australian Defence Department have been spying on their own Minister, Joel Fitzgibbon. You work closely in the security area with Mr Fitzgibbon, this is just untenable isn’t it? Heads are going to have to roll.
SMITH: Well, my response is the same as the Prime Minister’s and the Defence Minister’s, which is - the Secretary of the Department of Defence and the Chief of the Armed Services have instituted an inquiry. I think we should just calmly wait until the results of that investigation or inquiry are known.
JOURNALIST: One of the things that you’re keen to do here in China is to see for yourself how the country is faring under the weight of the global economic crisis. You’ve just come from Chongqing, how do you think that China is doing? Is it doing better than the statistics suggest?
SMITH: Well, I started in the west deliberately, in Chengdu, in Sichuan Province, in Chongqing, and that’s to send a message that Australia understands that China is more than just Beijing, Shanghai, Guangzhou, it’s more than the eastern seaboard, and I have to say that when I arrived in Chongqing, I’ve not been as impressed with a city as I have been since the first occasion, a number of years ago, when I went to Shanghai. And we’re very much encouraging Australian industry to “look west”. I think the difference between where I’ve just come from, Chongqing and Chengdu, is that there a lot of the economic activity is domestically based, so they’re not suffering the same difficulties that those parts of China where their demand is driven externally. And so they’re doing much better, which is one good reason why Australian business should contemplate going there and going there soon.
JOURNALIST: So do you think that the efforts that the Chinese Government have been making in recent months to refocus on the domestic economy, providing it impetus there, is starting to show signs of bearing some fruit?
SMITH: Well certainly we strongly believe, and we have these discussions with the Chinese [inaudible] at the G20, that economic stimulus packages are absolutely essential. China has done one of enormous magnitude – AUD 885 billion. We’ve done two separate packages, just over AUD 50 billion. So it’s quite clear that with the downturn in global demand, countries whose economies are in part or in substantial portion driven by external demand, by trade, by exports, are suffering and the same is true of Australia. And that’s why the domestic consumption packages are very important, and that’s why we have been strongly urging that approach upon the international community through the G20.
JOURNALIST: You talk about the opportunities in China’s west, do you think that Australian companies and companies from other countries, currently doing business with China, have underdone their relationship with that part of the country?
SMITH: Well, there certainly is already an extensive Australian presence both in Chengdu and in Chongqing. And I had a meeting with Australian industry and business representatives. And they’re there in part as a result of earthquake reconstruction, but they’re also there because you’re dealing with cities which are substantially larger than Australian cities, and this is one of the great attractions to Australian exporters and Australian industry, so far as China is concerned – a large number of cities where the market is greater than the individual Australian markets or indeed the collective Australian market.
JOURNALIST: You’ll be meeting China’s Foreign Minister shortly. You’ll be able to give him some good news, given that the Australian competition watchdog has ruled that the bid by Chinalco to buy a big chunk of Rio Tinto won’t materially reduce global commodity prices. In other words, meeting one of the significant criteria that are required should this go ahead.
SMITH: Well, I’m meeting with my counterpart Foreign Minister Yang both in a bilateral sense but also for the second of our two Strategic Dialogues. I’m also meeting with senior Chinese leadership, Vice President Xi and Standing Committee Member Zhou. I’m sure that issues of investment and the Free Trade Agreement will come up. Whether the individual application for Chinalco comes up, time will tell. But the test in this matter is not the competitive test, which the ACCC has dealt with, but whether the investment is in Australia’s national interest. That’s a judgment that, in due course, my colleague the Treasurer Mr Swan will make. But in general terms of course, Australia very much encourages foreign investment. We’re a country that has been prosperous economically over a long period of time by being an attractive place for overseas capital investment and by being a great trading nation. So we encourage foreign investment, but under our foreign investment regime, there is obviously the national interest test. That’s a matter for the Treasurer.
JOURNALIST: But it is the case that China and Chinalco have said that the bid is not anti-competitive, it is one of the criteria the Foreign Investment Review Board has taken into account, and now the ACCC is saying it’s not anti-competitive. That has to a good first-step as far as this bid is concerned?
SMITH: Well, that is one of the requirements or one of the criteria. Mr Swan, of course, has published in an open and transparent way all of the principles that he looks at, one of which is whether the funds are coming from, effectively, a state-owned instrumentality, which of course everyone acknowledges Chinalco is. So, there’s more than one factor to look at. But there’s a well established process, well established legal requirements so far as Australia is concerned. Mr Swan is attending to these. Equally, I think, no one’s suggesting that it’s not a difficult or a complex matter to work our way through and that’s why he’s sensibly doing it deliberately and not rushing into it.
JOURNALIST: Minster, thanks for talking to us here in Beijing.
SMITH: Thanks Jim. Thanks very much.
[ENDS]
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