BOB CARR: Hello everyone. I am very happy to answer your questions, but a few opening remarks. In a year in which we're headed for the fortieth anniversary of diplomatic relations between Australia and China, I thought it was important to visit China, and of course to begin by visiting Shanghai. I spoke to Vice-Mayor Tu today, who is familiar with Australia, having worked with the Government of New South Wales on developing co-operation in financial services. And he spoke to me about the goal of seeing that Shanghai was an unmatched centre for trade and investment and shipping services and financial services, in the world, and my view is, in line with the thinking behind the Government's commitment to the White Paper 'Australia in the Asian Century', is that that is good for Australia. Again, it is confirmation of what is good for China, the rise of China, is good for Australia.

I spoke about how many of Australia's leading companies have established regional headquarters here in Shanghai, and that includes our four major banks. ANZ is Australia's largest investor in Shanghai and China. I spoke about the growing investment and trade relationship, and I spoke about some specific Shanghai companies that had invested in Australia, including Shanghai's Bright Food Group, which invested a 75 per cent stake in Australia's Manassen Foods, the China Oil and Food [Corporation], which holds a large stake in Tully Sugar, and the Yishi Law Firm, which has opened in Australia. But I just want to share with you the figures I've been quoting recently on Chinese investment in Australia. It just strikes me as interesting that, in the five years since 2007, we've seen a twenty-fold increase in Chinese investment in Australia. That is confirmation of the integration, the economic integration that is taking place between our two countries. Those investments are worth an estimated $13.3 billion. There are many outstanding examples, including the Channar Joint Venture Ore Project, which celebrated its 25 years, and which is going to extend production to enable extraction of another 50 million tonnes; MinMetals' investments across Queensland, Western Australia and Tasmania, with 7,000 employees in Australia; ChemChina, which has invested in chemical manufacturing; Chinalco, now one of the largest Chinese investors in Australia, through its stake in Rio Tinto and its share in Chinalco Yunnan Copper. We are beginning to see investment in agriculture. It confirms that Australia is a good site for Chinese direct investment, and I want to seize opportunities I've got here to remind the Government and Chinese business representatives of how sound a place we are in which to do business. To say on the way through that, of the 193 countries that make up the UN, it is important that China, that Chinese business recognises that Australia comes in thirteenth or fourteenth in terms of its economic strength. We are the thirteenth or fourteenth largest economy in the world, and of course the source of over 44 per cent of China's imports of iron ore, and 25 per cent of China's coal imports, and so on.

I'm very happy with that introduction to invite your questions.

JOURNALIST: Minister, you talk of wanting to broaden and deepen ties with China. What do you think is missing or lacking at the moment in the relationship? Which areas are you looking to particularly improve?

BOB CARR: We want more cooperation on financial services, for example. There are Australian banks, ANZ leads the group that is doing very well in China, expanding strongly. But there are limits on what they can do, and limits on what the providers of other services can do in China. We look to the negotiations on a Free Trade Agreement as being a useful vehicle to expand opportunities. We'd be very encouraged if the Chinese would lift the upper limit on Australian ownership of companies they've acquired in China. We think there are other opportunities too for Chinese investment in Australia. It's still a low level of overseas investment, even though it's grown 20-fold in the space of a few years. There's a long way to go in seeing China become a big outbound investor in the world at large, but in Australia in particular.

JOURNALIST: Well, Senator, in the talk you centred around investment and trade. But those seem to be areas where China and Australia are already close. Beyond that, are there other things that you're trying to achieve and improve through this visit and in the future?

BOB CARR: I think we've got a great deal to do when it comes to cooperation, both in this region and across the world. Naturally I'll be talking about the strategic agenda with my Chinese counterpart. We want to see China play a bigger, not a lesser, role in world affairs. We believe that the resurgence of China is good for the world as well as being good for China.

JOURNALIST: Will you be talking about greater military and strategic cooperation?

BOB CARR: My colleague, the Defence Minister, has signalled the opportunity for defence cooperation with China. We've had military exchanges with China – that is a significant part of the relationship. The more military-to-military cooperation there is, the better for understanding, for removing areas of misunderstanding.

JOURNALIST: What's your view on the situation between the Philippines and the Chinese at the moment, is there an Australian position on that?

BOB CARR: We don't take a side on the various claims over the South China Sea. But we do, given our interest in the South China Sea, given the fact that a large proportion of our trade travels through it, we do call on governments to clarify and pursue those claims, and accompanying maritime rights, in accordance with international law, including the UN Law of the Sea Convention.

JOURNALIST: Do you think those disputes should be solved bilaterally or multilaterally?

BOB CARR: We believe they ought to be resolved in accordance with international law, and that means taking account of the United Nations Law of the Sea Convention.

JOURNALIST: How would you characterise the Chinese response to the decision to allow US troops to be based [inaudible] in Darwin?

BOB CARR: I think it was a relatively muted response. I think China, with its acute understanding of world strategic dynamics, recognises that deep in Australian thinking lies a support for a cornerstone security relationship with the United States. The Chinese would recognise that that is a major part of Australia thinking about its role in the world, and therefore I think they would view, not the stationing, but the rotating deployment of US Marines, a relatively modest number in Northern Australia, as being a natural outgrowth, a natural fleshing out of the ANZUS Treaty, and the defence cooperation that has long existed between Australia and the United States. You are aware of what our Defence Minister said about that, the opportunity for joint exercises with the Chinese. You're aware, as well, of the suggestion from the Indonesian President that their presence lends itself to cooperation involving other nations, Indonesians, the Chinese, on humanitarian relief exercises, especially given the proneness of the region to natural disasters. I'd be surprised if Chinese policy makers and strategic thinkers didn't recognise the rotating Marine presence in Northern Australia as a relatively modest development compared with more significant military presences and exercises across Asia.

JOURNALIST: Do you feel the Chinese currency is undervalued and will you mention this topic in your meetings with senior Chinese officials in Beijing?

BOB CARR: I won't be expressing views about the Chinese currency. I believe that international forums are the better place to have discussions about currency relationships, and the G20 would be the obvious forum for that. In the meantime, we've reached agreement in March, a bilateral agreement, affecting local currency swaps. The agreement allows for exchange of local currencies between the two central banks, Australia and China, of up to $30 billion dollars, and is for an initial period of three years.

JOURNALIST: Do you plan to raise the cases of Australians Matthew Ng and Charlotte Chou on this visit?

BOB CARR: It's a reasonable thing for a visiting Foreign Minister to raise cases of consular concern. I'm very familiar with those cases. The Australian Government has raised concerns with Chinese authorities about Australian business people imprisoned in China. Australian consular officials have delivered a high degree of support to these people and to their families. You can expect me to continue to raise these concerns and express the view that these cases should be handled transparently, expeditiously and in an open court. I think it's probably useful, though, if I didn't nominate the cases I'm going to raise, but to assure you that they are of concern to me, they continue to be of concern to Australia and we will continue the Australian practise of raising relevant consular cases.

JOURNALIST: Is there anything more you can do, though, than just raising the concerns? Are there other avenues?

BOB CARR: We've got to recognise the reality of China's judicial sovereignty, as with any other country. We're very mindful that these cases are being watched by the Australian business community. They do affect perceptions of the commercial environment in China held back in Australia, but we're obliged to acknowledge China's judicial sovereignty.

JOURNALIST: We signed a treaty last year on prisoner exchange programs, that hasn't been ratified or enforced yet, I don't think, I was just interested to know when we're going to start moving on that?

BOB CARR: Let me get advice on that.

JOURNALIST: About what we can do to get more access to Chinese markets. Can we sign agreements, or can we make agreements with the Chinese that aren't necessarily an FTA, given that the FTA has taken seven years so far and it doesn't really look like it's moving terribly quickly still. Are there ways of providing better access for financial and other services, I guess health services is another particularly big are where we are experienced and that the Chinese have a growing need for?

BOB CARR: I think it's appropriate for us to make representations about access, about rules, separate from the FTA. I spoke to my colleague, Craig Emerson, this week, and he was upbeat about China's motivation as it approaches the opportunities afforded in the FTA. So while that process seems to be gathering pace, it's to be expected that we will be focussing on the opportunities it provides. If we're disappointed, of course, we'll look at raising them on an individual basis. But it would be nice to wrap up investment concerns as part of that FTA.

JOURNALIST: If China, South Korea and Japan get their FTA together before we get an FTA with China, are we likely to miss out on some opportunities?

BOB CARR: I'm not sure. That's better addressed to Craig Emerson, but I'm convinced of the advantage of the FTA, and I'm encouraged that following my briefing with Craig Emerson, that the Chinese are too, that they see it as advantageous to them.

JOURNALIST: When you say it's gathering pace, how can we put a bit more colour around that?

BOB CARR: I think you can say that the view of the Australian Government is that Chinese interest in, and commitment to, the FTA process has quickened somewhat.

JOURNALIST: Any reasons why, in particular?

BOB CARR: Better addressed to Craig Emerson, but his briefing of me was upbeat. I was encouraged by it.

JOURNALIST: Question about China – US relationship [inaudible]. Do you think China and the US can continue to be good friends?

BOB CARR: It's a good question. I do, and in fact, in Washington a few weeks ago, I was taken aside by one very senior American policy maker who said to me, 'You've got to understand, we've got a good relationship with China. We settle a lot of things.' And that's certainly my impression. That's certainly my impression. I mean these great countries are now interdependent economically. That's why the notion of containment is so irrelevant to China. As China does well, so will the United States, and China's got an interest in America resolving its great challenge of budgetary management.

I think the relationship over 40 years has confirmed resilience. Whenever there's been a misstep on one side or the other, it seems to have been quickly repaired. I'm reading a book on this at the moment by President Obama's former China advisor, Bader, and it reminds me of how many times, in the '80s and '90s, the relationship between America and China got into a bit of trouble and how often it was picked up. I was also reminded that the election of Barack Obama in 2008, was a Presidential campaign in which the winning candidate had not felt obliged to make adverse comments about China, and its economic or trade practices, or human rights record, as part of the campaign. So there was no time lost on repairing the relationship in view of critical campaign commentary, and I thought that was an interesting point. I'm also struck by statements that President Obama has said about wanting to see China play a role in world leadership, political leadership, commensurate with its economic strength.

JOURNALIST: But it doesn't look like this year that we're going to see the same sort of Presidential campaign. We've already had the Republican nominee, [inaudible] Romney, make some pretty adverse comments about China. Do you think that that will raise its head as an election issue in the US this year?

BOB CARR: I think there's more maturity in America now given the obvious economic interdependence between China and the United States. And I think America has many other priorities: Iran, for example, North Korea, and priorities where a co-operative relationship with China is likely to be helpful. If that were not to be the case, and there was a change of government, a change of administration in the US – and I'm now being very speculative, this is hypothetical – I think the Chinese would probably think our relationship with America has sustained election campaigns in the past where there've been very critical comments of China – 1980, 1992 – and we can sustain this. The point about the relationship is that it's resilient, and that of course is in Australia's interest. We want to see that mature, co-operative relationship between China and the United States. It's hard to think of a country that would benefit more from that relationship being on good track.

JOURNALIST: Do you think Australia has struck the right balance between the US and China?

BOB CARR: Well, think of our importance to China. Think of it from a Chinese perspective. China gets 44 per cent of its iron ore; it's got long-term contracts, advantageously priced, with Australia, for gas; it gets about a quarter of its coal from Australia, and Australia is a reliable supplier. Australia is a country where the rule of law applies, where contracts are respected and it's got political stability, it's got policy continuity. I think that relationship means a great deal to China. Australia's a supplier of commodities about whom China does not have to be anxious. Moreover, Australia is approving Chinese investment in Australia. Some 300 proposals that have been approved, no argument --- they've been ticked off. Some of the great examples I could point to, if you think of that 25 year relationship between Rio Tinto and Sino Steel, and being renewed to extend production by a further 50 million tonnes. I think it's hugely important from a Chinese perspective to have that relationship. There are large areas of agreement on strategic issues between Australia and China. As I said earlier, I think China understands that Australia has, and very likely always will have, a treaty relationship with the United States. It was signed in the wake of the Second World War when Australia felt it came close to being invaded by the Japanese, and I think the Australian people would be very reluctant ever to relinquish that treaty. I think Chinese strategic thinkers are astute enough to understand that.

JOURNALIST: Being reasonably new to the Government, Senator, do you agree with the comments that were made in the 2009 White Paper about China posing a potential military threat to Australia?

BOB CARR: White Papers have traditionally dealt with possibilities, without being focussed on motivation, even on likelihood. So the White Paper surveyed the horizon and dealt with possibilities. As you know, there's another White Paper in preparation.

JOURNALIST: It's not going to cross that territory?

BOB CARR: I can't predict what's going to be in it, or what territory it's going to traverse.

JOURNALIST: There doesn't seem to be much money in the Budget for anything extra in terms of implementing anything the White Paper is going to say.

BOB CARR: I think we've got to wait to see what is in the Ken Henry White Paper, we've got to wait till we see what's in that, but, I spoke to Ken Henry a couple of days ago, and I referred to things I'd seen in South East Asia, and I'll talk to him after this visit to talk about things I've observed in China. But it was interesting in Singapore, one Australian business person said to me, Australians see Singapore economically as an extension of Australia, and Singaporeans see Australia as an extension of Singapore economically. And I think that's going to be the approach we take increasingly – we're not locked in competition with Singapore or Shanghai, but if an Australian-owned company is doing well in Singapore or Shanghai, that is sustaining jobs and generating revenue back in Australia. You see the seamless integration of our economies that we're now looking at. So few people would be aware of those investment figures I quoted earlier, or that there have been some 380 proposals for Chinese investment in Australia since 2007 all been approved, no argument, all of them ticked off. And you had a 20-fold growth in the last five years, lifting to $13.3 billion, the Chinese investment in Australia. This is a dramatic story of economic integration year and we've got the 40th anniversary of diplomatic relationship at the end of the year. It's an important opportunity to renew and refresh the relationship and study some of the quiet successes that have been locked into place.

JOURNALIST: You've made some comments in the past about the Dalai Lama. What's your message going to be in Beijing about the events in the last few weeks with Mr Chen on human rights, and how long the rest of the world can put up with the Chinese conducting a whole bunch of extra-legal activities in the face of them wanting to step up and have a more important place in world forums?

BOB CARR: We Australians will always raise human rights issues. We'll do that in our bilateral meetings, we'll do it in the context of the Human Rights Dialogue, which is very important because it enables specific cases to be reviewed, and it enables Members of Parliament to be in attendance, people from the Opposition to be in attendance. It won't be the biggest part of our relationship or of our discussions, it won't dominate the agenda, but it will always be there. I think we can probably be most effective in taking up cases without signalling them in advance. But you mentioned the case of Mr Chen; his and his family's position have been on our cases of concern list handed to China at the last Human Rights Dialogue in 2010, and further information was sought by the Australian representatives in April and September 2011. So it will always be there for us, not only in the Human Rights Dialogue, but in our bilateral discussions. But the relationship with China is strong enough, and diverse enough, for these issues to be on the agenda, with their presence of the agenda respected by both sides.

JOURNALIST: The Ambassador [inaudible] travelling to Tibet. Do you know what is happening with that request?

BOB CARR: A request to go to Tibet from our Ambassador was made on March 19. The Embassy's lodged a formal request to visit the Tibet Autonomous Region, and Australian Embassy officials are also seeking to visit Tibetan regions of neighbouring Sichuan Province. We will continue to make representations to enable us to become better acquainted with the situation there, including through meetings with local leaders and officials.

JOURNALIST: Have the Chinese responded in any way at all?

BOB CARR: They haven't. In the past, there's been a long lead time.

JOURNALIST: Are we talking three months, six months or a year?

BOB CARR: Our last request for a visit was made, as I said, on 19 March, that's the most recent request.

JOURNALIST: But how long have you had to wait in the past?

BOB CARR: I'd need to check that with the Embassy.

JOURNALIST: When was the last time you visited China, and in what capacity, and how do you think the Australia-China relationship has changed since the last time you were here?

BOB CARR: I would have been here travelling in a private capacity, and I was here in a commercial capacity, giving a presentation in Beijing at a Mallesons' Conference on opportunities for Chinese economic cooperation with Australia a couple of years ago. The development of China is on a most impressive trajectory. Australia's benefiting enormously from it. I think a few years ago there was speculation about whether China could maintain its growth or run into barriers. I think, as Bob Hawke keeps saying, you can only look at the record. China has kept clocking up respectable economic growth.

JOURNALIST: Do you have a view on where the economy is at the minute, and where it's going to go [inaudible] probably more concerns now than there have been for some time?

BOB CARR: Yes, I discussed this in detail with Vice Mayor Tu today. His view was that the description 'soft landing' seems to be appropriate, but he expected stronger growth in the next two quarters. You've still got a very strong trajectory here, and I think that's how Australian-based businesses would be viewing opportunities in China. That's no bad thing that China seems to have curbed expectations of an inflationary take-off. As I said, a 'soft-landing' seems to have been the best description.

JOURNALIST: Are Australian businesses taking enough advantage of the opportunities here in China? If not, what can the Government do if anything [inaudible]?

BOB CARR: I think it is very hard to generalise. You've got Australian companies that have probed for opportunities, invested here. Others that have entered China, not expanded as optimistically as they would have hoped, but the scale of economic cooperation is pretty significant. By any test, I think a further Chinese economic liberalisation would be very useful. Again, we'll be looking to Ken Henry's Paper as a guide to what Australia might do for its own sake to further liberate Australian business to have successful experiences in China.

JOURNALIST: In terms of further economic liberalisation, what do you think the next important two or three important steps would be?

BOB CARR: I think freeing up financial services in China, lifting upper limits on ownership – that is, liberalising the foreign investment climate in China – and looking at other services as well – advisory services, legal services. And then there's the agenda that's represented by the FTA talks, but Craig Emerson would be better placed to brief you on those than I.

JOURNALIST: You talked about China's investment in Australia, I guess hinted that there was going to be more investment coming down the path in agriculture-type areas [inaudible]. What sort of areas in agriculture would you expect the Chinese to be targeting?

BOB CARR: I haven't got intelligence on that. There's been investment in Tully Sugar, Bright Foods' investment in Manassen Foods in New South Wales. I mean, if anything the interest has been understated given China's quest for food security and given Australia's great agricultural opportunities.

JOURNALIST: What is the most important thing you'd like to achieve during this visit from the point of view of calling it a success?

BOB CARR: I think stressing the continuity of the issues in our relationship leading through to the fortieth anniversary of diplomatic relations between Australia and China. Seeing that we explore some ways of designing more regular consultation would be useful as well.

JOURNALIST: Do you have any specific plans [inaudible]?

BOB CARR: No. I think both sides can begin to think about that.

JOURNALIST: Do you have any thoughts about what level of regular dialogue you will have?

BOB CARR: I think we will open about that. Seek views from the Chinese side, and test them on ourselves, without being dogmatic at this stage.

JOURNALIST: Are there things you will be raising with Mr Yang and Mr Li?

BOB CARR: Yes.

JOURNALIST: Are you excited about meeting Mr Li?

BOB CARR: Very much so. I wasn't in Government when he came to Australia in, I think, 2008, 2009, but I followed his visit carefully. I think for their part, the men slated to move into China's leadership positions will be stressing, as they appear to so far, policy continuity. And that's what you get when you have a mature relationship as you have with the relationship between Australia and China.

JOURNALIST: Does the Australian Government have a view on the recent purge of Bo Xilai from the Politburo and what that says about how stable the leadership of the Communist Party is here?

BOB CARR: No.

[ENDS]

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