AUSTRALIA AND CHINA
Thank you for your welcome.
I am delighted to be here in Beijing and to address this forum.
I am here as the leader of an economically vibrant nation whose current and future prosperity is bound up with China's.
China is one of Australia's most important relationships.
Tonight I want to underline my commitment to strengthening that relationship and to explain how I see it developing.
China's emergence as a leading nation of the 21st century is, of course, an extraordinary achievement.
Not only are hundreds of millions of Chinese being lifted out of poverty, but China's contribution to global growth is huge.
While China's transformation has been taking place in the years since 1978, Australia has become a confident middle power, actively engaged in our region and delivering long term economic growth for our people.
Australia's role as a stable, reliable and high quality supplier of energy and mineral resources to China is the bedrock of a comprehensive economic partnership.
Australia's resources support China's ongoing development.
China's growth contributes directly to Australia's prosperity.
As our economies have developed, so too have our bilateral ties and our shared interests.
And as our economies and our peoples become more interconnected, so the challenges we face grow more complex.
Those challenges include continuing with market-based reform that will make our businesses competitive and underpin future economic growth.
They also include institutional, social and environmental reforms to make growth sustainable by meeting social needs, protecting our environment and developing the skills and capabilities of our people, and they include cooperation to sustain the global recovery and maintain the stability and security that have allowed this region to prosper.
A prosperous China, fully engaged in the region, is good for Australia, the region and the world.
My argument today is that we can be positive about our relationship and that we should be ambitious for its future.
Australia's national interests demand this.
Of course, our two Governments will not agree on every issue.
One area of difference is human rights.
Where there are differences we will be clear and robust about them.
We do so in the context of what has become a comprehensive and constructive relationship between our two nations; a relationship grounded in a clear understanding of each other and our interests, and which is strengthened by hard work and deepened by mutual respect.
Approached this way, we can build on our remarkable progress to date. I am here to say that I am personally committed to doing just this.
A COMPREHENSIVE PARTNERSHIP
Australia's modern relationship with China, built on decades of hard work, began in the 1970s with the re-opening of diplomatic relations by my predecessor Gough Whitlam
This was a pioneering moment.
At that time, the value of our annual two-way trade was less than 100 million Australian dollars.
There were no students or tourists from the People's Republic of China in Australia.
Few saw clearly enough into the future to predict how dramatically China would change.
Together, we have both come a very long way since then.
Today, China is Australia's largest export market and import source.
Last year, total two-way trade exceeded A$100 billion for the first time - a sixfold increase in the past ten years.
One quarter of all Australian exports come to China - one quarter.
Australia, in turn, is China's seventh-largest trading partner.
Recent analysis by the Australia-China Business Council shows that Australian trade with China generated income equivalent to more than $10,000 per Australian household last year.
Energy and minerals trade continues to grow, increasingly with the involvement of Chinese companies.
Just last week, Origin Energy and Conoco Philips signed a 20-year LNG export agreement with Sinopec worth an estimated $90 billion.
In another recent example, Baosteel has been contracted to supply a 400 kilometre pipeline to the CNOOC/BG Group Coal Seam Gas plant in Queensland.
Of course, the economic relationship extends far beyond resources and minerals.
China has just become Australia's largest services export market, led by education and tourism.
2010 saw more than 167,000 enrolments by Chinese students in Australia. 12 years ago that number was just 9,000, and according to Tourism Australia there were nearly 450,000 arrivals from China in Australia last year.
Collaboration is now extending across science, finance, education, commerce and culture, between institutions in all sectors.
Australia-China bilateral engagement has grown to include every issue of mutual interest to our two countries.
Australia is committed to advancing the comprehensive, constructive and cooperative relationship between our countries, as set out in our 2009 Joint Statement.
In both countries, this is being led at the highest political levels. I was pleased to meet both Vice-President Xi on his recent visit to Australia and Executive Vice-Premier Li on their recent visits to Australia, and here in Beijing this week I have met with Premier Wen and renewed acquaintance with Vice Premier Li. We originally met on my first visit to China. I look forward to meeting President Hu again tomorrow.
A COMMITMENT TO ECONOMIC REFORM
Our economies may be becoming more complex and interconnected, but the reason for their growth is simple.
It flows from the economic reforms, sometimes difficult, that both our countries have undertaken.
China's decision to turn outwards and pursue market-based growth was a fundamental change in direction: an act of visionary leadership that has produced a transformative surge of national development.
That growth is now extending to the central and western provinces of China, including huge investment in infrastructure, services and economic development.
China's export industries have fuelled its growth, and many of those industries are also moving rapidly up the value chain into innovative, high-value products and services.
This transition is driven in part by the Chinese Government's investment in research and development.
Australia, too, has walked the reform road, albeit from a very different starting point.
Successive governments have deregulated the Australian economy, cut tariffs, floated the Australian dollar, privatised government-owned enterprises and opened our doors to foreign investment.
Reform can be difficult and unpopular, but in our country these changes have paved the way for two decades of economic growth.
ACHIEVING SUSTAINABLE GROWTH
Now both our countries face the challenges of future growth with confidence.
Australia stands in a position of economic strength.
As we look forward, we continue to walk the reform road.
Like China, we emerged from the Global Financial Crisis without dropping into recession.
This performance is explained by several factors. China's continued demand for our exports is one. Another is our effective use of economic stimulus. A third is our history of reform, which has created strong institutional foundations in our banking, financial and regulatory systems.
As a result, we have low public debt, a substantial investment pipeline, strong job creation and GDP growth prospects, stable prices and a rewarding environment for investors.
But we know that further reform is required to achieve truly sustainable growth that benefits all of our people.
Of course, the same is true of China.
Rapid growth is a great achievement, but it brings with it new challenges.
As it goes through this great transition, China needs new infrastructure and new services to meet the needs of a changing population.
It must continue strengthening key institutions to maintain and underpin commerce, civil society and effective public administration.
Improving health, retirement, education and other services present a major challenge for both our nations, even though even though the scale and nature of the challenge is very different.
Our growth strategies should also be squarely focused on creating jobs and improving living standards.
In Australia we are pursuing reforms designed to boost productivity, lift the skills of Australians, raise workforce participation, and develop infrastructure, including a National Broadband Network that will underpin the innovation economy.
We are also tackling climate change by introducing a carbon price and moving towards emissions trading.
Finally, we are undertaking fundamental reforms of education to lift the quality of education at all levels from early childhood to postgraduate education. Education is a driver of economic performance and the agent of opportunity. It is central to our economic future.
China and Australia come from different points, but our shared interest in this agenda for sustainable growth is increasingly obvious.
In this context we welcome China's ambitious economic strategy, as proposed in the 12th Five-Year Plan, for balanced and sustainable growth.
We support practical steps identified in the plan to rebalance the Chinese economy towards becoming more reliant on domestic sources of growth.
It also emphasises the quality of growth, as Premier Wen said to the National People's Congress in March this year, by focusing on an economy increasingly geared to the production of energy-efficient, high technology products, by focusing on social welfare, environmentally sustainable growth and reducing income inequality, and by increasing education spending and government supported research and development funding.
This is an ambitious plan and, of course, it will require sustained effort to implement.
REFORM PRIORITIES
Against this backdrop I want outline three particular priorities for our economic relationship: investment, trade and clean energy.
First, investment.
Chinese investment is welcome in Australia, as is shown by the steady stream of proposals approved by our Foreign Investment Review Board.
As with investment from other countries, inward investment proposals are subject to consistent rules which serve our national interest.
Australia has 72 major resource projects at an advanced stage of development, worth around $130 billion. Many involve Chinese companies, and Australia seeks more investment opportunities offshore, including in China.
A more open investment environment should be supported by streamlined and consistent administrative processes. A clear, reliable legal and regulatory regime would be a major benefit that would provide a further boost to our economic partnership.
HIGH QUALITY TRADE AGREEMENT
Second, we should continue to pursue two-way trade.
Free trade means jobs and growth.
Concluding a high quality Free Trade Agreement would deepen our relationship further and create long term benefit.
Progress in five years of our negotiations so far has been slow.
We need to do better.
An FTA would complement our work for regional trade liberalisation in the multilateral system.
I also encourage China to continue playing a constructive role in efforts to conclude the Doha Round.
Multilateral trade liberalisation is one of the most important opportunities we have for shared global growth.
Even where they are significant, we should not allow individual differences between nations to obstruct the potential for shared progress.
If we cannot achieve full success in the round then we need to maximise what we can, particularly for the poorest countries. In this circumstance we must all take care to safeguard the world trading system.
CLEAN ENERGY FUTURE
Third, we have a shared interest in a clean energy future.
Climate change is a persistent and long-term challenge to the world.
It is imperative that we decouple economic growth from emissions growth.
In Australia we see great opportunities in a clean, innovative, low pollution economy.
To drive change, the Government is determined to put a price on carbon from July 1 next year.
The 12th Five-Year Plan demonstrates China's commitment to energy efficiency, environmental conservation and tackling carbon emissions.
It sets targets to reduce the emissions intensity of GDP growth and reduce water, soil and air pollutants. The Plan also refers specifically to carbon trading in China.
These are welcome developments, even though they will be challenging to implement and represent only part of the change that will be needed to significantly reduce China's impact on climate change over the coming decades.
Our bilateral cooperation on climate change and clean energy is progressing well.
We recently welcomed Vice-Chairman Xie of the National Development and Reform Commission to our Ministerial Climate Change Dialogue in Australia. The successful dialogue identified new areas for potential collaboration such as power transmission and renewable energy.
Scientific collaboration between Australia and China has already generated advances in areas ranging from medical research, disaster management, biodiversity, water conservation, to food security, wireless communications and new alloys for manufacturing.
In recognition of the depth, breadth and value of this relationship, today Premier Wen and I witnessed an agreement through which the Australian and Chinese Governments will each contribute $9 million over three years to an Australia-China Science and Research Fund.
SHARED GLOBAL AND REGIONAL CHALLENGES
I have spoken to you of common challenges and shared interests.
Those interests are at stake in cooperation to sustain the global economic recovery and in efforts to maintain the peace and stability that have allowed this region to prosper.
China, now more than ever, is an active participant in global and regional architecture, helping shape it and in turn being influenced by it.
As China's role in the world grows, so its role in supporting the international system will grow.
We should expect no less.
Australia welcomes and strongly encourages China's positive international engagement.
There is no better example of how Australia and China are working together on shared interests than in our cooperation in the G20 for strong, balanced and sustainable global economic recovery.
Establishment of the G20 as the premier global economic forum itself reflects the growing weight of China in the world, along with other emerging economies such as India and Brazil.
Australia strongly supported the G20 replacing the G8 as the global driver for resolution of the Global Financial Crisis, just as we played a leading role in reforming the IMF to give countries like China a larger say in our global financial architecture.
The G20 acted resolutely to arrest the crisis and trigger recovery, through $5 trillion worth of coordinated fiscal stimulus and historic reform to strengthen the international financial sector.
Australia is now working closely with China in the G20 to ensure global economic recovery and strong job growth into the future.
China's economic rebalancing outlined in its 12th 5 Year Plan is precisely the sort of action G20 economies have committed to, for strong and balanced global growth. As are Australia's economic reforms.
This is a central part of the G20's agenda this year, to ensure that the world's major economies are pursuing economic policies that together lift, not just shift global growth.
That means more jobs, more opportunities: better lives.
Among other things, we are also working closely with China on continued reforms to strengthen the global financial system, to address energy and food price volatility and on a development agenda to ensure the G20 helps our most in need.
I look forward to working closely with China in the G20.
Just as we are engaged globally, Australia and China are increasingly working together in our region.
We both have strong and enduring interests in a stable, secure and prosperous region.
Ours is the fastest growing region in the world. It is also home to some of the world's most dangerous flashpoints.
I have just come from the Republic of Korea.
I took the opportunity to visit the Demilitarised Zone and was forcefully reminded of the security challenges in our region. To stand nose-to-nose with a North Korean border guard, with only a pane of glass in between, is a sobering experience.
So too is the idea of a conference table that literally straddles a demarcation line - one half in North Korea, one half in South Korea.
North Korea's strengthening nuclear program and developing long-range missile systems are a threat to regional stability and security. So are the unprovoked recent attacks on the Republic of Korea.
As the host of the six-party talks to address the problems of North Korea's nuclear program, China is an essential part of the solution we need.
We share an interest with all our partners in making sure that North Korea does not destabilise the security and prosperity of our wider region.
I would like to work more closely with China on common challenges like this one, and I encourage China to bring its influence to bear on North Korea.
Security on the peninsula can only come through dialogue, and for dialogue to be meaningful we all know that North Korea must create the right conditions: commit to de-nuclearise.
This is in the interests of all countries in the region, and globally.
Friends, pursuit of shared interests is often done through a framework to make sure that this is done in the best way possible.
That is why Australia is committed to building stronger institutions in our region for mutual benefit.
We are all familiar with our successful regional cooperation on trade liberalisation and economic integration through APEC.
Australia is also working with China in the East Asia Summit, a leader-level process that involves all the major powers of the region and which has a mandate to pursue the broad spectrum of our growing interests: political, economic and security.
As of this year, the East Asia Summit includes the United States and Russia as members. This is an historic development.
We now have a regional institution comprising all the key players of the region.
Now we need to work together to strengthen the East Asia Summit's agenda.
We need to continue to build habits of cooperation across our region, where differences can be sensibly managed on the basis of mutual trust.
The East Asia Summit has already developed an agenda from economic and education cooperation, to security and environmental cooperation - including on climate change.
This can be strengthened for our common good.
For example, last week I visited an area devastated by the destruction of the earthquake and tsunami in Japan.
It was a merciless and savage natural disaster.
Countries around the world did not wait to be asked. They reached out to help Japan. Australia did. I know China did too.
In Minami-Sanriku, I stood on the broken ground of a lost town.
I met families still living in evacuation centres, their entire world defined by strips of cardboard marking their allotted space.
I felt the same for them as I did for those suffering great loss and grief from Australia's own summer of lethal natural disasters.
And I felt a responsibility to make sure we are ready with the best responses possible to major natural disasters in our region.
This is something we can do in the East Asia Summit.
An example of where together we become much more than the sum of our parts.
And the East Asia Summit can play a practical role in addressing other regional challenges, such as maritime security.
BUILDING LINKS BETWEEN OUR PEOPLE
At the heart of our relationship, are people.
The friendships and bonds between our peoples will ultimately define what we become; what we mean to each other.
And there are no stronger ties than those provided by education.
China is our largest source of overseas students.
More and more Australians are also studying in, or about China, including through the 11 Confucius institutes now across our country.
These exchanges bring perspective, understanding and friendship, for Australians to appreciate China's ancient and remarkable civilisation, and its extraordinary achievements in recent years, and for people from China to appreciate modern Australia's dynamism and multicultural outlook - including the fact that after English, Chinese is the most-spoken language.
Education is a shaper of character and a driver of opportunity in the modern world. I am passionate about strengthening my country's commitment to educational excellence.
Partnership with China in that endeavour is a precious part of our relationship.
Tomorrow at a meeting of Australia-China alumni, I will preside over the establishment of a Chair of Australian Studies in China at the University of Peking - a first for this world-class university, supported by BHP Billiton, one of our great Australian companies.
I am also pleased to announce that Monash University, in collaboration with Southeast University, is establishing a joint research institute in the Suzhou Industrial Park. This exciting collaboration will enhance the research performance of both universities, building academic talent and engaging with industry.
And in another significant development, the University of Sydney is establishing a China Studies Centre, bringing together the wide array of research disciplines at the University with extensive engagement with China.
Tourism also reinforces our people-to-people links with China, now our fastest growing market.
There were more than 470,000 Chinese arrivals last year - more than from the United Kingdom.
To reinforce this positive trend, we have taken a further step towards broadening the range of tourism options available for Chinese people to travel to Australia.
Through our people, so too our cultures will thrive, not just in our understanding of one another but in our influences on one another.
That is why Australia has been so proud this year to showcase our culture across China through the year long Year of Australian Culture in China, ‘Imagine Australia', and why we eagerly anticipate handing over the baton for the Year of Chinese Culture in Australia, which begins soon.
CONCLUSION: A POSITIVE SUM GAME
Friends, last month I spoke to the United States Congress about shared interests and common challenges.
I argued my guiding principle: that prosperity can be shared.
The global economy is not a zero-sum game.
There is no reason for Chinese prosperity to detract from prosperity in Australia, the United States or anywhere in the world.
There is no doubt that we are all living through a period of profound change.
The Global Financial Crisis showed how close we can come to collective disaster.
There is no major challenge that can be solved by one country alone. The North Korean situation is a clear demonstration of this reality.
As our partnership with China grows, so does our interdependence.
That is the nature of the world today and it brings great benefits as well as new challenges, and as we undertake that work, we build relationships which reinforce the potential for our economic life to be a positive sum game, for nations and their citizens.
What I mean by that is shared prosperity creates benefit for all of us. But more than just generating choice and opportunity through wealth, by working together successfully on clearly defined challenges we can also generate trust and mutual understanding.
These are precious goods in today's global environment. They are crucial to successful economic exchange, to social development and to international relations.
I look forward to working with you and many others to realise the potential we see before us.
Thank you very much.