A child born in the first year of this century will come of age in an Australia that is profoundly shaped by our relationships in Asia. It will either be an Australia that is closely engaged, contributing to and benefiting from the energy, growth and innovation of the most dynamic region in the world; or an Australia playing catch up in a changed global economy it has failed to fully embrace and understand.

 

The first imperative is to increase our governmental and diplomatic presence in China. Talking to China is crucial. In my opinion, Australia’s Free Trade Agreement with the US would never have occurred were it not for our strong diplomatic relationship, forged through almost 70 years of dialogue, discussion, negotiation and friendship. With China, we don’t have that kind of time.

 

A deepening of our relationship with China will not come about by Australian leaders visiting and lecturing their hosts about governance, investment, or any other matter. Rather, it will come about via a solid diplomatic presence, mutually respectful dialogue, and a sharing, in friendship, of our respective cultures, values, and ideas.

 

The second priority is to deepen, diversify, and mature our trade and investment relationship. Some might be tempted to look at the figures and say the job’s done: After all, last year Australia’s two-way trade with China was worth $13,470 to each Australian household alone – an increase since 2007 of 93 percent.

 

But to rest easy at this point would be to misunderstand the nature of China today. China is no longer just a demand sink for resources, nor the world’s cheap manufacturing hub. When I joined the Australian board of Huawei last year, it was because I wanted to be involved with a company that symbolised the future of China, not the past. Huawei is China’s largest privately owned company, with an annual turnover of more than US$33 billion, and a presence in over a hundred countries worldwide.

 

Australia needs to recognise its strengths in the Asian Century – and see how they fit with the challenges faced by a rapidly rising Asia. We also need to recognise our limitations – which brings me to the thorny question of Foreign Direct Investment.  Australia has almost always been a net importer of capital. We built the strong economy we enjoy today in significant part by leveraging foreign savings. KPMG predicts that between US$1 trillion and US$2 trillion of Chinese investment will head overseas between now and 2020. By 2011, China had invested only $13.4 billion in Australia. For comparison, the United States direct investment total by 2011 was $122 billion.

 

We need to make sure that all of the barriers that might stand between Australia and new trade and investment opportunities are removed. Barriers both visible and invisible. Barriers arising from historical bias, or outdated perceptions. Engagement in the Asian Century requires the free flow of ideas, knowledge, technology, goods, services, and capital.

 

But true engagement requires more than just exchange between two countries. It requires partnership. And in many ways the most important partnerships for Australia in the Asian Century will be those in Science, Technology, and Innovation.

 

China’s determination to become an innovation powerhouse is resulting in what the Australia China Business Council has called ‘the largest investment in Research and Development in human history.’ China’s 12th Five Year Plan aims to increase total R&D spending to 2.2 percent of GDP by 2015. In 2010, they were at 1.75 percent – $105 billion – which means that in the next 18 months, China’s R&D spend will increase by more than the total amount Australia spends each year.

 

Finally, it is very important that we recognise the full human potential of engagement in the Asian Century. Asialink has been a strong voice for greater cultural engagement. They advocate the training up of an ‘Asia capable’ cultural workforce here in Australia; a strong Asian focus in the new cultural policy to be launched by the Gillard Government later this year; and a deeper sharing of Australian culture with Asia – one that transcends the kind of shallow ‘nation marketing’ we’ve sometimes seen in the past.

 

I fully endorse these aims. Here in Victoria we know how valuable – and mutually enriching – the sharing of cultures can be. After all, we are the most diverse state in Australia. 43 percent of us were either born overseas, or have a parent who was born overseas. We also have a Chinese community that is almost as old as the colony itself.  All of this is an advantage in the Asian Century. ■

 

*The Hon. John Brumby is a former Treasurer and Premier of Victoria. He is currently a Vice Chancellor’s Professorial Fellow at the University of Melbourne and Monash University, and an Independent Director of Huawei Technologies (Australia).

 

**This article is an extract from a recent Asialink Essay. View the full series at www.asialink.unimelb.edu.au/essays