Transcript E&OE
26 October 2009
Question and answer session following a speech given at the Australian National University.
Subjects: Asia Pacific community; East Asia community; EAS; APEC; ASEAN; Australia-China relations.
QUESTION: Professor Bill Tow from the Department of International Relations. Thank you Minister very much. Excellent speech and I felt very well reasoned.
Asia Pacific community. And I'm wondering what your perceptions are in terms of what progress, if any, the Chinese and the Australians have in reaching some type of modus vivendi or concord in terms of organising multi-lateral security dialogues, under that particular framework or related frameworks.
Thank you.
STEPHEN SMITH: Thanks very much Bill. It's a good question the day after the most recent meeting of the East Asia Summit, and the leaders there had a good conversation about regional architecture, including not just the Prime Minister's Asia Pacific community initiative, but also the suggestion from new Japanese Prime Minister Hatoyama for an East Asia community.
And we welcome this very much.
The Asia Pacific community initiative, which the Prime Minister launched in April of last year, essentially set or struck the following scene: this is the century of the Asia Pacific: economic, political, and strategic significance is moving to our part of the world. What's the reason for that?
It's not just the rise of China, it's the rise of China, the rise of India, the rise of the ASEAN economies combined, and the ongoing presence and power of the United States, both economic and strategic.
So the world's moving our way.
If the world's moving our way, is the regional architecture right to enable a world which has moved our way to have a sensible conversation in our region? Both about peace and security matters, but also about trade, investment, and prosperity matters.
And if you look at the mainstays of our regional architecture in the Asia Pacific, on the one hand, we have APEC, which deals with prosperity, trade, and investment matters. It doesn't or can't deal with security matters because you have non state actors. But there's a gap in that configuration.
India is not there. And we strongly support India's presence and membership of APEC when the moratorium finishes. On the other hand, you have the ASEAN and ASEAN-related regional architecture.
This has grown, qualitatively, over the years.
I don't think, when a half a dozen nations sat down in the mid to late 1960s, in 1966 and 1967, and formed ASEAN that they envisaged that we would see now ASEAN, the ASEAN Ministerial Dialogue with dialogue partners like Australia, the East Asia Summit, and the ASEAN Regional Forum now of some 26 countries, plus the European Union.
But if we look, for example, at the East Asia Summit, there we find the presence of the 10 plus the six, but there's no United States.
So there's no one piece of regional architecture where we can get together, where all of the key players are in the room at the same time, and have a conversation both about peace and security and prosperity and trade and investment. That's the gap. And we need to make sure that the regional architecture is right for this in future years. Which is why we've set, if you like, a sort of putative timetable of where will the architecture be in 2020.
It may well be there's a creation of a new piece of architecture. I've always thought, instinctively, much more likely that there will be an evolution of some of the existing pieces of the architecture. And the contribution that we've seen to the conversation, not just from China, but also more recently from Japan and from the ASEAN countries themselves, has been very positive and very productive.
We're hosting a one and half track dialogue forum in Sydney in early December, where we've invited academics and representatives and officials from all around the Asia Pacific.
And we think this will be, again, a very positive step forward, a positive contribution to the debate.
We've welcomed very much that it's not just the Prime Minister's APc initiative.
But also, other suggestions within our region which is now causing, not just Australia, not just China but our region generally, to start to focus on the architecture, its viability and utility for the future as we inexorably move to an Asia Pacific century where the region's economic, security, strategic, political influence is much more prominent in this century than it has been in the past.
CONVENER: Thank you.
Before I ask for any more questions, I actually want to ask one myself, so I take this opportunity to do so because it flows on somewhat from what you've just said.
It's axiomatic that it's the US China relationship that sets the broad parameters for Australia's strategic environment. I don't think anybody would deny that. Some observers think that sooner or later, Australia is going to be put in the position where it has to choose between the two.
It's a possibility. But I don't think it's an inevitability, personally. And I think actually Australia's been quite good at walking both sides of that particular street.
What I would add to that, though, is it seems to me that at least potentially, a better developed, even richer, stronger Australia China relationship, rather than detracting from our relationship with the United States, can actually also serve to make that stronger as well. And I'd just be interested in - is that me just being naïve, or what do you think about it?
STEPHEN SMITH: Well Richard, I know you well enough to know that you would never be naïve, and I also know you well enough to know that any question you ask would not be a naïve question. It might set a trap for a naïve player.
And I like very much that you jealously guard, to the China Institute, the first right of questions, and jealously guard that even more exclusively to yourself.
I very much admire this. But your starting point is correct, that in very many respects, the United States - China bilateral relationship will be the most significant bilateral relationship in the course of the first half of this century. But, I also think your optimism at the end of your question is also right.
My analysis is this: that the most significant bilateral relationship for the first part of this century will be the United States - China bilateral relationship. And it's absolutely essential, not just to China and the United States, but to our region and to the international community, that that's a positive, constructive and harmonious relationship. That won't however, be the only relationship which is of significance or importance.
Everyone sees the rise of China, not enough people see the rise of India. So my own view is that you can, I think, hazard a guess, that, in the course of the first half of this century, that a significantly important, emerging bilateral relationship will be the China - India bilateral relationship, but also the United States - India bilateral relationship.
So, this is not going to be a world of just one or two countries. India is also a country of a billion people on the rise. So, it's absolutely essential, in my view, in the course of this century, that the United States - China bilateral relationship is strong and productive; that the China - India bilateral relationship is stung and productive; and that the India - United States bilateral relationship is strong and productive. That's very important for the region and the international community.
Australia has strong, positive and productive relationships with all of those countries. We have our Alliance with the United States. We have our comprehensive economic relationship and our growing relationship with China, which I've detailed in my paper. And with India, we are seeking to take India to the front rank of our bilateral relationships. So they're important relations for Australia as well.
I've never seen Australia as wanting to, or needing to, play the role of a bridge between great nation states, or great powers like the United States, China or India. The United States and China will form their own bilateral relationship without the need for any assistance from us.
But the fact that we have positive and productive relationships with both those countries is, in my view, a very good thing. It adds to the quality of the relationship that we have to both those countries, and we hope it also adds to the productive nature of the relationship that they have one to the other.
But, my starting point is the same as yours; that that's the most important bilateral relationship in the first half of this century. But my sentiment is also the same as yours, which is one of optimism that that can prove to be very constructive for the region and the international community.
CONVENER: We have time for one more question. Yes?
QUESTION: Duncan Forbes, the Australian China Business Association. Thank you for your speech, I think will come to the question.
As you noted, China is in 2008 ranked fifteenth in terms of overseas investment into Australia and the likes of Switzerland and New Zealand. Yet, Australia and its media continue to feed on this perception that Chinese investment is, in fact, much greater than this reality.
Based on our surveys, Australians consistently over-estimate how much China has in fact invested in Australia. Why is this and how would you counsel the contrary to better inform the public?
STEPHEN SMITH: Well, I think the way to better inform a public debate in any area is to speak calmly and dispassionately but confidently about what the facts are. And the facts are, as I've indicated in my speech, that, yes, China is growing as a significant investor in Australia. It currently comes in at the fifteenth largest investor, a way behind our largest, single investor, the United Kingdom. Although, of course, if you accumulate the European Union, that is far and away our largest, single entity as a foreign investor.
But speaking calmly about the facts, I think, is important. Also speaking calmly in the context of history is also important. We saw a similar increase in direct foreign investment, in particular in our minerals and petroleum resources industry, in earlier years from Japan, and subsequently Korea. And at both those times of our history, we've seen, or saw, similar commentary in the public domain. But, we have calmly worked through that public commentary to now see a position where Japan and Korea, together with China, form a very important North Asia trading destination, and a very important North Asian investment source, so far as Australia is concerned.
We, as a country, have become a prosperous, well-developed country because we've been two things: a great trading nation; and an attractive place for overseas capital investment. Our capacity as a great trading nation started with minerals and petroleum resources, historically with gold, then with iron ore and then with petroleum resources, in particular liquefied natural gas. Which some people, who don't live in Western Australia, are only now just starting to recognise. Some of us have been on that commodity for a substantial period of time.
But now, it's not just that which forms part of our attributes as a great trading nation. It's also what we do in services, and what we do in terms of our intellect and our ingenuity. If you're a country of 22 million people, in the modern world, the only way in the end you'll survive, is on your intellect, your investment in education, research, development; your capacity to be ingenious. And even in our minerals resources exports, for example, iron ore, the reason our iron ore exports are competitive is not because of the way we dig up the iron-ore but because of the most sophisticated computerised railway line we have which brings ore from the inland deposits to the coast and makes it, therefore, a competitive export industry.
Historically, we've needed overseas direct capital investment to promote those export industries. More recently, of course, because of the accumulation of superannuation funds, there is some potential for us to do that domestically. And that's a good thing.
But the global economy being what it is, our competitiveness as a destination for overseas capital investment will continue to be absolutely essential and central to our ongoing prosperity. And so, we hold ourselves up as a destination for overseas capital investment, whether that's from China or anywhere else. We have a well known regime, both legislative and regulatory which governs the national interest implications of that investment.
And on a very small number of occasions, from time to time, the Treasurer of the day will give consideration as to whether an investment is not in our national interest. That is a very small number of occasions over a span of years.
In very many difficult areas of policy, or of public commentary, I think the way to make progress is to, very calmly articulate what the facts are, and to very calmly articulate what the benefit is that comes from having a very close, ongoing and expanding economic relationship with China.
CONVENER: Thank you, Minister. I know that there are some more questions, but we're now over time. So, I'll ask people's forgiveness. Of course, if it's China there are going to be more questions.
Minister reminded me with his reference to Western Australia why I'm no longer in DFAT. After, I think, four Ambassadors to China from Western Australia in a row, I decided that was no place for a boy from Melbourne. I don't get things right, because the current Ambassador is a boy from Melbourne, but there you go.
Minister, the point of this whole function was indeed to help contribute a better informed debate about China. The debate about China is, of course, hugely important for Australia, because it's one of the major factors deciding our history well into the next century and perhaps beyond that. What we need though, is to have a better informed one, and you have made a significant contribution to just that, so, thank you very much indeed.
[ENDS]
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