Address to Australia China Business Council Networking Day
I acknowledge my dear friend, and the Parliamentary Secretary to the Treasurer Kelly O'Dwyer, Warrick Smith – good to see you Warwick, ladies and gentlemen.
It is a pleasure to be here again for the ACBC annual Networking Day. It is an event on my calendar that I look forward to each year.
The ACBC has played an important role in supporting our bilateral relationship with China, indeed both at the business level, and certainly your dedication to promoting business and trade is very clear to both Australia and to China, but just as importantly promoting the people-to-people links which enhance the friendship and understanding between our two nations.
The achievements – both politically and economically – in the bilateral relationship last year were indeed remarkable. We had unparalleled contact at leaders-level.
Prime Minister Abbott visited China on two occasions for the 'Australia Week in China' promotion in April which was an outstanding success, accompanied by a very impressive delegation of Australian businesses and we were very pleased by the focus that that received in China. And the Prime Minister was also there for China's hosting of APEC in November.
And the visit of President Xi Jinping in November for the G20 Summit and an extensive bilateral program certainly raise the bilateral relationship to a new level. I'm sure the Tasmanians are still talking about his visit to our island state! And that means that President Xi Jinping has now visited every Australian state and territory. I'm not sure that many world leaders can claim that result.
Now the most significant outcomes from President Xi's visit included our agreement to upgrade the bilateral relationship to a "comprehensive" strategic partnership, the establishment of the Bank of China's RMB clearing bank in Sydney, which was launched last month; and the conclusion of negotiations for the China-Australia Free Trade Agreement.
I don't think I need to tell this audience that the Australia-China Free Trade Agreement is indeed a landmark agreement that will benefit both countries enormously.
For Australia, it will unlock substantial benefits not just in the immediate future, but for years to come, not only through improvements in access for a wide variety of goods, services, investment, but Australian businesses will also be able to source more competitively priced inputs from China and this is important for us.
For the future, the Free Trade Agreement contains a "most favoured nation" provision for investment and certain key areas of services, now that means that Australia will benefit from any improvements in access that China might grant to other countries that might strike deals with China in the future and I think that is a great outcome. This lays the foundations for the next phase of Australia's economic relationship with China and you are all at the forefront of that.
One of the greatest signs of China's confidence in Australia is the strong growth in investment. Between 2008 and 2013, the stock of Chinese direct investment in Australia increased six-fold to almost $21 billion. Now there is nearly as much Chinese investment in Australia as there is in the United States and that is quite an extraordinary outcome.
We are also seeing investment increase the other way with Australia's direct investment stocks in China totalling $6.4 billion in 2013 and looking ahead, the prospects for the bilateral trade and investment relationship are overwhelmingly positive.
But we can't pretend there aren't challenges. In 2014, China's economy experienced its slowest growth since 1990, reflecting what Chinese leaders are calling the 'new normal'.
As recently announced by Premier Li, China's target for GDP growth in 2015 is 7 per cent, that is no mean figure but it is less than in the past. Industrial overcapacity, a slowdown in the property market, and increasing risks in China's banking system, remain barriers to growth in the medium-term.
Another high point in the Australia-China relationship is a particular passion of mine and that is the New Colombo Plan. This year China has come on board as a partner in the New Colombo Plan which was in its pilot phase in 2014. This year about 600 Australian students under the New Colombo Plan will be studying and undertaking work placements in China - that's about 20 per cent of the entire cohort of Australian undergraduates taking part in our New Colombo Plan initiative. I think that is a really strong sign that our young people see a future that is strongly linked to China.
I have to pay tribute to the business community - for our business community both here in Australia and in the host countries overseas has been utterly instrumental in the success of the New Colombo Plan. Businesses like VM Ware Shanghai, Telstra, NAB, BHP Billiton/Rio Tinto and organisations like AustCham Beijing are already supporting New Colombo Plan students to gain experience in the region.
This is going to assist in establishing life-long connections as the original Colombo Plan did back in the 1950s, the 1960s and 70s. It will establish networks and friendships and the ongoing support of the business community is crucial to the program's ongoing success and the realisation of its potential as a genuinely transformational foreign policy initiative.
Today's New Colombo Plan students are the leaders of the next generation across business, politics, NGOs, banking, law – this program will ensure that Australia's young people will have the skills and knowledge they need to ensure that Australia flourishes in the future.
I want our students to be more Asia-literate, to come back home after their experience of living and studying and working in the region with new perspectives, new insights, new ideas, add to the productivity and prosperity of our nation, but particularly have a greater understanding of the importance of those links into our region and as you have heard, they are particularly focussed on China.
With that in mind, I certainly encourage all of you here today to think about becoming involved in the New Colombo Plan by providing internships or mentorships for our students who are overseas because the practical side of the New Colombo Plan – learning how to live and work and form connections in a country in our region is every bit as important as the academic experience that they will gain and that's what makes it so unique and quite wonderful.
The New Colombo Plan is just one way in which business is helping forge Australia's contemporary relationship with China. As that relationship grows in complexity and diversity organisations like the ACBC play a really vital role in contributing to the communities understanding of the bilateral relationship.
That's why I'm so pleased today to be able to officially launch the ACBC's 2014 Australia-China Trade Report.
This is a timely document. It is an important document. For the first time it calculates the impact of direct trade with China on our GDP and this is an impressive sum - 5.5 per cent in 2011, double the contribution of domestic agriculture, fisheries and forestry combined it underlines that trade and investment with China creates Australian jobs and economic growth.
I sincerely thank NAB and the Australia China Business Council for their sponsorship of the report because it does provide new insights into the diversification that is taking place in our trade and investment relationship with China. Importantly it draws upon a survey of 200 Australian firms who are members of the ACBC and it contains some really valuable case studies, identifies emerging trends, and analyses the impact of trade across industry sectors so it is a very valuable document as we work towards maximising every opportunity, the potential that arises under the new Free Trade Agreement.
I am pleased to note that it shows Australian business is positive, very positive, about the opportunities offered by the new Free Trade Agreement and I think you certainly should be, but you are also clear eyed about the challenges.
There are a few highlights - as China's economy continues to shift away from investment-led growth towards private consumption we can expect increased Chinese demand for premium and high quality Australian food products including beef and meats. And I think this is important, made in Australia, produced in Australia equates to high quality and that is a message we will continue to get out to our region.
Chinese direct investment in Australia is creating employment, jobs for Australians, it is expanding opportunities for cooperation in sectors such as agriculture and real estate and new opportunities are emerging to maximise Australia's comparative advantages in high-end manufacturing and services. Services contribute to at least 75 per cent of the Australian economy yet only 16 per cent of our exports, so there is enormous potential for us to increase our services exports.
Australian businesses have responded with "a complex and sophisticated view of Chinese markets", according to the report, integrated in Chinese value chains and through China in global value chains.
The Australia-China Trade Report is valuable, it is accessible, it is an important contribution to inform the public debate and understanding of the Australia-China business relationship overall as well as assisting business to make informed judgments about the opportunities and challenges of becoming integrated into Chinese consumer markets and value chains.
So John, congratulations on publishing such an important resource. The past year has clearly created very positive momentum in the Australia-China relationship and I think this report will only add to that and help business to maintain it through 2015 and beyond.
It is so important that we use these opportunities to continue to work towards building closer economic and political ties with China.I am confident that the very best days of the Australia-China relationship lie ahead of us. It is a relationship that will endure and the Australian Government is absolutely committed to its success.
Thank you for the opportunity to launch this important trade report today.
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