Address to Australia China Business Council

Good morning ladies and gentlemen. Welcome to Canberra, and I'm delighted to again address the Australia China Business Council Networking Day.

I have recently returned from Beijing, where I attended the third Foreign and Strategic Dialogue with my counterpart, Foreign Minister Wang Yi. This is part of the architecture supporting our comprehensive strategic partnership, and we discussed a wide range of bilateral, regional and global issues as one would expect at a Foreign and Strategic Dialogue. Whilst there was a focus on the issues in the South China Sea, issues on the Korean Peninsula, a considerable amount of our time was spent discussing the trade and investment and economic ties between Australia and China, as both our economies are in transition periods.

I also met with senior Chinese leaders including State Councillor Yung, and I had a wonderful opportunity to meet with Australian businesses who are operating in China and to gain from them their perspective of the challenges and the opportunities. There's nothing like hearing first hand from those on the ground as to what they're experiencing day by day, week by week.

I also visited our Embassy and we now have about 53 Australian-based staff in the Embassy from 12 Australian Government agencies, and of course there are many more locally engaged staff, but that just gives you an indication of the breadth and depth and the reach of our engagement with China.

At one point I was looking at some of the photographs on the walls at the Embassy - iconic images - Prime Minister Gough Whitlam's historic visit to China in 1973, Malcolm Fraser as Prime Minister standing on the Great Wall in 1976, Prime Minister John Howard in one of those colourful APEC shirts – you know the ones I mean – in 2001.

But one photograph that really captured my attention was Prime Minister Bob Hawke and Premier Hu Yaobang in the Pilbara in Western Australia in 1985, for this meeting set the stage for the 1987 Mount Channer iron ore deal between Sinosteel and Hammersley Iron that underpinned our economic relationship for at least the following 30 years. It was understandable at the time: China was at the dawn of its period of industrialisation, Australia had so much to offer in terms of our minerals endowment because China has a great need for minerals and energy, our geographic proximity, our stable political and financial environment.

Today of course, China's economy has grown enormously. It is now far more integrated into the global economy. We face many competitors – I think there are about 120 countries across the globe who count China as their number one trading partner, particularly merchandised goods – and China's economy has slowed a little but there's still growth estimated to be something like 6.9% this year, but nevertheless slowing. Our economy likewise, is now in a state of transition.

But what is exciting about this long economic partnership is that we can still complement China's needs. As China transitions from export orientation to domestic consumption and investment and services, Australia is able to provide high quality, timely delivery of services. I was just thinking about the area of health and aged care, the Chinese population faces a demographic challenge: their over 65s number about 120 million already and it's estimated that the old age group, that is the over 80s, is likely to quadruple in China over the next 40 years.

So there are enormous opportunities for us to diversify our trade and our engagement with China to complement what is happening in China. The Coalition Government has embraced deeper engagement with China and other countries through what we call "economic diplomacy." Those of you who were here last year will have heard me speak about our focus on economic diplomacy in terms of using our network of diplomatic and trade posts around the world to drive deeper trade and investment ties between the host country and Australia.

Our missions are charged with preparing the equivalent of a corporate business plan to set out how they would increase the trade, investment and economic ties between the country in which they are situated and Australia. Our diplomatic heads of mission have key performance indicators now that judge them on their ability to generate more trade and investment. So this is an integral part of our diplomatic toolkit, economic diplomacy is very much at the heart of it.

Of course this culminated in the signing of the Free Trade Agreement between China and Australia, the signing ceremony last year and then it came into force in December, and already we're seeing enormous opportunities arise between Australian businesses and Chinese businesses.

One of my favourites is the Geraldton Fishermen's Co-operative in my home state of Western Australia. They've set up a warehouse in China from which fresh Australian seafood, particularly our Western Australian rock lobsters, can be delivered into the Chinese market. From the time of leaving Geraldton to arrival in the warehouse and the markets in China is now down to 16 hours. It's one of the most efficient supply chains in the world, and this is what we're achieving under the Free Trade Agreement.

Obviously we've always had a focus on mining and energy, as I said, agriculture - a huge opportunity for us, but most certainly we're looking at services across the board. We're encouraging Chinese investment in Australia, particularly private Chinese investment , and our focus on opening up Northern Australia – the north of Western Australia, Northern Territory and Queensland – is an unparalleled opportunity for Chinese and other investment as we drive job opportunities and growth in the North. And it's not just in the traditional areas of mining, energy, agriculture but in health, in medicine and tourism and education. So it's a very exciting time for businesses who are thinking creatively about how to continue to take advantages of the opportunities that the growing Chinese economy presents.

We have a new Ambassador in Beijing, Jan Adams, who would be well-known to a number of you as our lead negotiator for the China Australia Free Trade Agreement. So she's exquisitely positioned with her background knowledge and experience to engage with the Chinese Government, Chinese business and industry, to promote our two-way trade.

The China Australia Free Trade Agreement is certainly historic, it's a massive opportunity, and we have engaged with business all the way through to get your feedback on the challenges, on the opportunities, on what we could achieve. It's a negotiation, neither side gets everything they want but in this case both sides stand to benefit enormously.

We are capitalising on the signing of the Free Trade Agreement, and its entry into force, with Australia Week in China, and I'm sure other speakers will go into more detail. That will be held next month, which will be a significant trade delegation across China and it is an event that is taken very seriously by our Chinese hosts. I think that the Department of Foreign Affairs and Trade and Austrade, Bruce Gosper can help me here, I think they've held about 250 events around the China Australia Free Trade Agreement: seminars, dinners and other events, so it really is the underpinning of our bilateral relationship for decades to come.

Of course we need the human capital in Australia to support the opportunities that the China Australia Free Trade Agreement presents and our deeper comprehensive strategic partnership. We have thousands of Chinese students studying in Australia and we deeply appreciate their presence, but the Australian Government knows that we need more Australians who are China-literate, who have an understanding of China's history, society, economy, what it's like to do business in China.

So we're investing in our young people through what we've termed the "New Colombo Plan". This is the reverse of the original Colombo Plan of the 1950s which saw 10,000s of young people from the region come and study in Australia, and gain Australian qualifications and go back and help re-build their countries after the Second World War.

What the New Colombo Plan does is send Australian undergraduates from our universities to live and study and work, undertake an internship or work experience, in countries in our region. We commenced the program at the beginning of 2014 with a pilot in just four locations, and in 2015 we rolled it out across 38 nations in the Indian Ocean, Asia Pacific. China has proven to be the most popular destination for our young undergraduates. Within two years, by the end of this year, 2,000 young Australians will have lived and studied and worked in China under the New Colombo Plan.

Overall by the end of 2016, 10,000 young Australians will have been in our region under the New Colombo Plan, and while I was in Beijing we held an event to encourage businesses to take up the third component of the plan – living, studying, working – and while we've had tremendous support from Australian businesses operating in China taking on our young students as part of the New Colombo Plan for an internship or a mentorship or work experience, what was so exciting was that Chinese businesses operating in China showed their deep interest and preparedness to take Australian students into their workplaces. I can't think of a more extraordinary opportunity for a young Australian student than to be living in China, studying in a Chinese university and having the opportunity to gain some work experience in a Chinese business operating in China. Now that would transform the way they see the world, they'll come back to Australia with these new perspectives and new insights, and an understanding that will be unparalleled. This is the kind of investment that we believe is necessary to ensure that the Australia-China relationship strategically, economically and at the people-to-people level endures.

There's another area where Australia and China are of a similar mindset and that is in the area of innovation, and I have no doubt that Prime Minister Turnbull spoke about his innovation agenda because the National Science and Innovation Strategy that he released in December is transformative.

It has the capacity to be a game changer in terms of Australia's economic growth and our prosperity. While we are focusing on innovation and putting innovation and creativity at the heart of our economic strategies, so is China. China has placed innovation at the centre of its G20 Presidency.

The G20 will be in China this year, and in so many ways I'm hearing and seeing similar approaches to embracing creative and innovative talent.

Australia has some of the most creative people on earth, and it's not just because we won six Oscars in technological and technical categories at the Academy Awards, although that does give me some indication, but we have also been judged as such by the University of Toronto. They hold a Creativity Index Survey each year and Australia came out on top as the most creative, innovative thinkers in the world. So we have so much to offer a country like China that is looking to place innovation at the heart of their economic growth, and already we're seeing some extraordinary signs.

I note that in terms of global R&D spend, in the period 1996-2011 the United States contribution to global R&D fell by about 8%, the EU's fell by about 5.2%, Japan's by about 5.7% but in that same period, China's contribution to global R&D grew by over 12%. Another statistic that I think tells the story is that the number of patents lodged with the Chinese Patents Office has reached almost a million a year; that is double the number of both the United States and Japan combined. So very exciting times for us to be using our creativity and innovative thinking to work closely with China.

China has an Innovation 2020 Agenda and they've listed as the areas where they'll be seeking to focus their R&D, in areas as diverse as nuclear fusion, nuclear waste management, stem cell research, IT, public health and the like. This also feeds into their 5 year plan from 2016-2020 where there is a focus on green development and social issues. As the Chinese population ages and urbanises, there's going to be much greater focus on food safety, food security and health. There will also be a greater focus on clean energy so opportunities for clean coal technology, nuclear opportunities certainly are there.

I was very interested in the Australia-China Centre for Tissue Engineering and Regenerative Medicine. This joint venture between Australian and China in this exciting area of growth really sums it up, that we're working together in areas where we both have an interest and expertise, and it will most certainly lead to greater collaboration in other areas of science and technology.

So ladies and gentlemen, it's a very exciting partnership, it has a great deal of potential, the opportunities for businesses who are prepared to take a risk, who are prepared to innovate, who are prepared to be creative in their approach are unlimited, I came away from my most recent visit to Beijing – and I've been visiting China for many years now – with a renewed sense of optimism that this relationship has even further to go in terms of enhancing our two-way trade and investment.

That's most certainly the view of the Australian Government and I'm here to encourage Australian businesses to do more to realise that potential. Thank you for having me here today.