I'm delighted to have this opportunity to talk about the Australia-China relationship to the Australia-China Business Council and I'm pleased to be here again this year.
The relationship with China is exceedingly important; it is utterly vital to this country, it is comprehensive, it is constructive and it is a cooperative relationship.
At the Government level it has been elevated to a strategic partnership and everybody in this room knows that at an economic level it is a powerful relationship.
China is our largest two-way trading partner, our largest market for exports, our largest market for services, it is our largest source of overseas student enrolments and it's our most valuable tourism market. So overall it is an exceedingly important relationship.
There are about 120 countries around the world that claim that China is their largest trading partner but importantly Australia is China's seventh largest trading partner and I think that's a pretty impressive statistic given that we are the 12th largest economy in the world. To be China's seventh largest trading partner does reflect exceedingly well on Australian businesses and Australian exporters.
China's economic growth has been nothing short of remarkable. It has been an extraordinary 40 years of economic reform and the reforms will continue. We know that in the Third Plenum late last year a series of reforms were outlined by the President and if they are fully implemented then that will certainly underpin the China growth story for years to come and there will be great opportunities for Australia to take advantage of that growth.
If the 31 provinces in mainland China were independent national economies they would be among the fastest growing economies in the world. So China's rise is far from over, in many instances it is just beginning, as the smaller provinces become strong, economic powerhouses in their own right.
A prosperous China is not only good for China, it's good for the region and it's good for the globe. That's why we fully support China's economic reforms. We fully support China's engagement in the region and we fully support its full participation in the global, rules-based system.
At an economic level, much of the success of the relationship is due to people in this room, representatives of companies who are doing business with China and organisations like the Australia-China Business Council. I do want to acknowledge the leadership shown by this council – the National President Duncan Calder, the chair Ian McCubbin, the head of operations in China Paul Glasson, Martine Letts who has joined as CEO and I also want to acknowledge the extraordinary effort of Frank Tudor and Kevin Hobgood-Brown who over the last couple of years have been committed to ensuring that the relationship, not only remains strong, but endures.
I'm optimistic about China's future and I'm very optimistic about the Australia-China relationship.
At a Government level a number of Ministers have visited China and certainly visited in Opposition. Shortly, Prime Minister Abbott will make his first visit as Prime Minister to China. He'll be accompanied by Minister Andrew Robb and me.
I will be attending the Boao Forum. It will be my fourth attendance at that pre-eminent Chinese economic forum and I hope to continue to be a regular attendee at that forum.
The highlight of that visit will be Australia Week in China and I hope a number of you in this room have registered for that. It will be held in four cities, it will highlight Australian business, Australian industry, Australian services across a vast range of areas and it really will be an opportunity for us to demonstrate our attractiveness as a reliable trading partner and an attractive investment destination.
The government's foreign policy has been underpinned by what we call 'economic diplomacy'. It's a focus on promoting our national interest, protecting and projecting our reputation as an open, export orientated, market economy. Just as the aim of traditional diplomacy is peace, the aim of economic diplomacy is prosperity.
We have under this pillar of our foreign policy a very ambitious free trade agenda, and I know Minister Robb is speaking to you shortly and he can go into more detail. We're very excited by the prospect of a Free Trade Agreement with China. We have concluded one with South Korea, we are in negotiation with Japan but there has been much enthusiasm, particularly of late, from the Chinese side and most certainly on the Australian side, to conclude a Free Trade Agreement between our two countries and this will bring us even closer.
I know our friends in New Zealand concluded a Free Trade Agreement with China in 2008 and have seen, not only significant economic benefits, but a much closer and deeper engagement between an economy the size of New Zealand's and an economy the size of China's and I think there are lessons for Australia in that.
We commenced negotiations for a Free Trade Agreement way back in the Howard years in 2005 and I think it is an agreement whose time has well and truly come. So I'm looking forward to the conclusion of the Free Trade Agreement, hopefully this year.
In terms of investment, a number of reforms, announced in the Third Plenum, if fully implemented, will assist with further Chinese investment in Australia. Liberalising China's exchange and interest rates does provide potential for greater investment. Make no mistake, Australia needs foreign investment, our economy has been built on it, our economy relies upon it and we look forward to further opportunities for significant Chinese investment in Australia.
Already the increase in the level of investment has been profound, the Chinese stock of investment is 10 times what it was in 2005, and we have a robust framework in place for transparency and accountability but we also recognise that Chinese investment is crucial, essential for the continuing growth of the Australian economy.
Our relationship is much broader than just economic and much broader than just at the Government level. While we have access to the policymakers and decision makers in China on a regular basis, it's the people-to-people links that will give the ballast to this relationship and the Abbott Government recognised this very early on when we decided, in opposition, to implement a student exchange program that we've dubbed the New Colombo Plan.
Those of you who were here last year will recall that I talked about this vision we had of a student program that would enable young Australian undergraduates to take the opportunity to travel into our region, study at a university and undertake an internship or work experience, a mentorship, with a business operating in one of the host countries. Well that's now becoming a reality. Last December, we officially launched the New Colombo Plan, the Governor-General is the patron of it, it received bipartisan support, so my dream of it lasting for generations may well be proven correct!
We have commenced this year with a pilot program in 2014 to make sure we iron out all of the bumps. We have four locations - Singapore, Indonesia, Hong Kong and Japan and the first 300 students will be heading off next month. They have internships, they have places at universities in our region, in those four locations, and the next 300 students will leave in the middle of the year and those undertaking 12-month scholarships will commence in September.
The program is well and truly underway so that means for 2015 we will open it up to the rest of the region. China has expressed great interest in being one of the founding partners from 2015 in the New Colombo Plan and I know that the demand for places in Chinese universities from Australian students will be strong. They were all asking about it this year and I said 'just wait until 2015' and because we have so many Chinese students coming to Australia it truly will become a two-way exchange as we build up the numbers of Australian undergraduates studying at universities in China.
I can't think of a better way to deepen a relationship with a country than have a whole generation of young Australians who have studied, lived, worked, learnt the language, got to know the people, hung out with friends and come back to Australia with new perspectives, new ideas, new insights and not only adding to our productivity and prosperity but building connections and networks and links that will last a lifetime.
The original Colombo Plan from the 1950s through to the 1980s saw about 40,000 young people from the region come to Australia to study here over a 30 year period. And I'm still struck at the number of times someone will come up to me – a vice president, a cabinet minister, a community leader, a business leader in the region and say 'I know Australia well because I was a Colombo Plan scholar'. Well that's what we want to have happen in reverse and that is well and truly underway so I hope next year I'll be able to report on how the Australia-China New Colombo Plan relationship is faring.
We're also collaborating with China in other ways. China's aid budget now is about the size of Australia's aid budget, about $5 billion a year, and we have different strengths, different capabilities, different expertise and we are beginning to collaborate particularly in our region.
Australia will focus its aid budget under the Abbott Government on the Indian Ocean Asia-Pacific, particularly the Pacific, where we have specific responsibilities. China has begun to invest in programs for development assistance in the region and I believe that there are huge opportunities for us to collaborate in some of these aid projects.
Another aspect of the Australian Government's aid program is to leverage the private sector. Our economic diplomacy initiative extends to aid - we want to alleviate poverty, lift standards of living by growing the economies of the recipient countries, empowering the women to take part in the formal labour markets and ensure that the private sector, aid for trade initiatives, are at the core of our aid program. That's a view that China shares so we have started collaborating. Our first initiative is an Australia-China-PNG trilateral collaboration where we will be bringing our expertise, China will bring its expertise, Australia as a reliable and trusted donor of aid to PNG, China as a new economy and new to this area. We are tackling malaria in PNG which is not only a health issue, it's an economic and social issue of mammoth proportions in PNG. This trilateral collaboration, I believe, is the start of many other aid collaborations between Australia and China and the region and I have some great plans on what we can do together and China has been very receptive to those thoughts.
Our diplomatic relations are strong. Australia's first diplomat to Chongqing was in 1941 under the Menzies Government when it was decided that Australia needed representation outside London. We sent ambassadors for the first time to Washington, to China and Japan and then diplomatic relations ceased and commenced again in the 1970s, but the history of our diplomacy goes back decades and I find that that has been a very important aspect to the discussions I have with the Chinese leadership and the counterparts that I meet.
Like all relationships we don't agree on everything. What's in Australia's national interest is not always in China's national interest, what's in China's national interest is not always in our national interest, but the important thing is we can talk about it. Our relationship is too important for us to not talk about it. So there have been some exchanges in recent times where Australia has set out its view and China has set out its view and we don't always agree but we recognise the importance of the relationship and the fact that we can talk about it indicates the strength and the resilience of our relationship.
In recent times, we've been working closely with China as a temporary member of the UN Security Council and I was delighted that China backed a resolution put forward by Australia on humanitarian assistance into the conflict in Syria. It was a great outcome, not only for the people of Syria, but for the Security Council and for Australia-China relations as we worked so closely with China on that issue.
So ladies and gentleman, I believe this is a great relationship, it is one that will endure. There will be bumps along the way, but overall the Australia-China relationship could not be stronger, although I still believe that the very best days of our relationship lie ahead.
Later this year we'll be welcoming President Xi Jinping to Brisbane for the G20 after Prime Minister Abbott has attended the APEC meeting in Beijing. There will be many opportunities for us to develop even closer personal relationships between the leadership team of both our countries and that will be a positive outcome for Australian businesses working in China and Chinese businesses working in Australia.
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