Australia and China - Partners for Progress

Speech by the Hon Alexander Downer MP, Minister for Foreign Affairs, at the 1999 China Oration of the Australia-China Business Council

Sydney, 25 November 1999

(Check Against Delivery)


It is a very great pleasure to be here today to present this year's China Oration. As you all know, China is one of our most important relationships. The Australia China Business Council has long played a valuable role in nurturing these links, and it is to be commended for hosting this annual speech.

I would like to use this address to do two things: to share with you a few of my thoughts about how I see China on the cusp of a new century; and to sum up the current state of our relationship with China.

Why China matters

A few months back the leading China-watcher, the late Gerald Segal, created something of a stir with a provocative article in Foreign Affairs entitled 'Does China matter?' I believe that it is important to ask such probing questions - they encourage us to re-examine our assumptions.

Segal argues that we shouldn't overestimate China's importance. He places China's economic weight in the international arena in a more realistic context. And he reminds us that China's military capacities are not those of a superpower.

However, from Australia's perspective it would simply not be sensible, indeed it would be contrary to our interests, to underestimate China's importance, not just to us, but also to the region.

Put aside for one moment China's very real economic and political presence in the world and simply consider the significance of what is unfolding in China. China matters in part because of the reform process, because one quarter of the human race is undergoing enormous change.

The success of economic reform in China over the last twenty years has been striking. We must remember that the process of transforming China's economic system is very complex, with a long time frame. There have been setbacks and there will be more. We are not dealing with straight lines and easy answers here. The challenge facing China now is to push ahead with economic reform in an environment of slowing growth, rising unemployment and mounting environmental problems.

China's economy has had a difficult year characterised by industrial overcapacity and subdued consumer spending. Cyclical problems - such as deflationary pressure - have been exacerbated by structural stresses, particularly in industry and the financial system.

But the Chinese Government is committed to reform and we shouldn't forget that the Chinese economy has weathered a tough period without hitting the wall. Even in these difficult times, it has maintained a reasonable rate of growth.

On the political front, change has been less marked. Village elections have been introduced but the deeper reforms have not been tackled and the edifice of political authoritarianism remains largely unchanged. Concerns about social instability are legitimate of course, but the need for basic political change will not vanish either. At the 99 Fortune Global Forum in Shanghai at the end of September, President Jiang Zemin declared that China in 2050 would be `a wealthy, strong, democratic and civilised modern socialist country'. To say the least, this is a very challenging set of objectives.

So, China matters because its relative and absolute global importance will increase. But, even more importantly, China matters to us here in Australia. The view from London or Washington looks different. China is a key player in our own region. And our relationship with China is undeniably important. It matters to us what happens in China because these events affect our security situation and considerable trade and investment interests.

A busy year in the relationship

I think it is a particularly opportune time to reflect about where we are in our relationship with China and where we are going after such a busy year. Even in the context of a highly active relationship, 1999 has been marked by a quite unprecedented level of contact.

Any bilateral relationship, especially one where we have substantial national interests at stake, needs not just constant attention but the occasional concerted burst of energy and activity which can push the relationship onto a new level.

The peak of this busy year was unquestionably President Jiang Zemin's state visit in September. It marked the first time a Chinese head of state had visited Australia. Given the historic nature of the visit, it is even more important then that it went well. I know that the Chinese Government believes it did.

The visit provided a focal point, concentrating the minds of people both here and in China, encouraging us to think through the state of the relationship. The visit had some very tangible outcomes: two energy and minerals cooperation MOUs, another MOU on joint efforts to combat crime, a consular agreement, a joint statement on electronic commerce and two more licences for Australian law firms. Both sides also agreed that there should be annual bilateral meetings of our Prime Minister and the Chinese President or Premier, as well as annual meetings between Foreign Ministers.

But President Jiang's visit does not stand alone. It was the highlight in a steady stream of high-level visitors going in both directions. Eight members of the Australian Cabinet have visited China this year - the Ministers for Trade, Defence, Justice, Education, Immigration and Social Security, the Attorney-General and of course myself in July. Numerous other high-level visits have helped further relations, including a visit by an Australian Parliamentary delegation.

President Jiang was accompanied by a number of key Chinese figures, including Vice-Premier and former Foreign Minister Qian Qichen and the Chairman of the State Development Planning Commission, Zeng Peiyan. The SDPC is one of China's pivotal super ministries and has the task of approving major national projects, including (crucially from our point of view) LNG terminals.

Since the President's visit, we have seen a number of senior Chinese visitors over the last two months - including Beijing Party Secretary and Politburo member Jia Qingling, and the Ministers for Civil Aviation, Rail and Health. And all of these central government visits have been underpinned by a rolling program of provincial and local visitors.

Of course, visits purely for the sake of having another visit are of limited use. The important thing about these visits is that they underline two crucial matters: the significant depth and breadth of our relationship with China, and its dynamic nature. As I have said on a number of occasions, Australia-China relations are now as good as they have been at any time since the establishment of diplomatic relations in 1972.

A balanced and sensible relationship

At various points in the past, Australia's relations with China have assumed an overly emotional character, with a tendency to succumb to excesses of opprobrium or enthusiasm. Of course, we are not the only country with such pendulum swings of opinion - they have, for example, been far greater and more frequent in the United States. At times, the direction of the relationship has not always been under our control - events have knocked relations off course. But there is no doubt that emotionalism has mitigated against a more level-headed and durable policy.

So, how can we steer a more steady course? I think a good first principle is to have a clear view of where our medium to long-term national interests lie and how these interact with China's interests. This is a question of balance.

As the Prime Minister said during President Jiang's visit, we should not succumb to any false notions that we have some kind of "special" relationship with China. Our Government's ground-breaking Foreign and Trade Policy White Paper quite rightly stated that China was one of our four key relationships alongside those with Indonesia, Japan and the United States. But this sensible evaluation of the relative importance of different nations in our view of the world does not imply that we have a "special" relationship.

In fact, affirming that we have a special relationship with China does not improve our policy choices, it constrains them. It sets up unreal expectations both here and in China which cannot always be met. In the end, it only sets us up for a fall. Some media articles have recently claimed that the fact that it took some years to secure the release from prison and deportation of James Peng demonstrates that the Australian relationship with China is weak. This kind of comment, I would argue, is itself evidence of people in Australia setting unrealistic expectations for our relationship with China.

Instead of some mythical "special" relationship, what we actually have is a mature and broadly-based relationship with China, a relationship based on mutual respect and mutual advantage. And part of that mature relationship should always be a hard-headed appreciation that China and Australia have both commonalities and differences and that working with the various levels of China's system of government is complex.

At times, our differences will be quite strong, requiring deft handling. It is important that both sides in a relationship can speak frankly about them. Where necessary, we shouldn't step back from saying no, from sticking to a position which we believe is right. We should say so plainly, and not in a hectoring or blundering fashion. This is absolutely vital for maintaining our credibility. We must always think of what will be effective, and what truly serves our long-term interests.

Taiwan will remain a sensitive issue in the relationship. Our commitment to a One China Policy is unquestionable, but we will continue to promote our commercial relations with Taiwan vigorously. In regard to cross-straits relations, we urge both sides to settle these differences peacefully to the benefit not only of themselves but the whole region.

We always need to try and comprehend how China sees the world. That doesn't mean we have to accept Chinese perspectives uncritically - far from it. But our policy is better informed and more effective if it is founded on some understanding of the Chinese world view.

But it would be a grave mistake to see differences of national experience, economic structure, political system and cultural outlook as immutable and unchanging. It would be equally wrong to cast such differences in purely negative terms - after all, diversity can be a very positive and dynamic factor in a relationship.

On the political front, we have developed a good working relationship with the Chinese leadership. Both President Jiang and Premier Zhu Rongji have experienced Australia at first hand - indeed, all seven members of the Standing Committee of China's Politburo and all Vice Premiers have now been to Australia. During my visit to Beijing in July, Chinese Foreign Minister Tang Jiaxuan declared that the our relationship had entered a new phase of comprehensive development. Healthy political relations are a vital precondition for good commercial relations.

Now, it will always be the case that Australia will rarely dominate China's foreign policy considerations. The United States and Japan - and to a lesser extent the Korean Peninsula, Russia and South Asia - are at the forefront of Chinese thinking.

But this does have advantages for us. We do not come to the Chinese with the complicated political baggage that others have. We do not challenge Beijing in the same way.

We are also not directly embroiled in regional issues like the South China Sea, where Beijing believes it has core national interests at stake. We can talk to China about such matters without having our own vested interest called into challenge and, as a result, are now seen as valuable interlocutors on a whole series of regional issues. Again, we will not always agree, but it is important that we can work together in bodies such as the ASEAN Regional Forum and also APEC, where we helped move forward issues like East Timor.

A growing dialogue

Our bilateral dialogue on security and foreign policy issues is maintained by several sets of annual meetings: the senior officials talks, which will be held again in Canberra early next year; the security and disarmament talks which will be held in Beijing in a week or so; and annual talks between defence personnel. These talks are crucial because they allow us to build up the ingredients that are vital in any healthy and productive bilateral relationship: trust, good lines of communication, and a willingness to discuss often sensitive issues in a more open fashion.

I believe that this has been crucial in what has been an often testing year. US-China relations have been strained for much of 1999, especially following Premier Zhu Rongji's visit to Washington in April and the NATO bombing of the Belgrade Embassy in May.

This has had no resonance in Australia's relationship with China - and nor should it. But in years gone by, many assumed because of our alliance with the U.S. that poor Sino-U.S. relations would affect Australia's relations with China.

China's accession to the World Trade Organisation has been one of the big questions of 1999. It has been a bumpy road, but the end is now in sight. Australia reached an in-principle agreement with China on the terms of our own bilateral market access negotiations back in May. The MOFTEC Minister, Shi Guangsheng, and I were able to publicly announce this deal during my visit to Beijing in July. Since then, we have been pushing hard for Chinese WTO membership as soon as possible on appropriate terms.

It was particularly encouraging then that the US and China sealed a WTO agreement after some tough talks in Beijing earlier this month. This deal is important not least because it underscores a continuing Chinese commitment to reform and openness. A stable, prosperous and open China is a vital component of both international security and regional economic health.

This point brings me to another expanding part of our bilateral relationship with China: military links. If we want to discuss security and foreign policy issues with China in a constructive and informed way, we need a channel into the PLA. Of course, there are definite limits to how far this cooperation can and should go, but the development of our links with the Chinese military over the last few years has been quite notable.

High-level visits have underpinned this dialogue. Several senior Chinese officers, including the PLA Chief of General Staff, have visited Australia this year. In May, John Moore became the first ever Australian defence minister to visit China, and in October, the Vice Chief of the Australian Defence Force led the Australian side in the third round of our military talks with China.

We have backed up these high-level contacts with some grassroots initiatives. For the first time an Australian officer has attended a course at China's elite National Defence University. This two-month long course brought together 17 officers from China, Japan, Singapore, New Zealand, Thailand and Australia. Again, there is absolutely no substitute to regular face-to-face contact in gaining a better understanding of how another country sees the world.

Our political relationship with China has been buttressed in recent years by another crucial process: the human rights dialogue. In 1997, we reached the conclusion that the established policy of supporting the annual China resolution at the UN Commission for Human Rights in Geneva was going nowhere. It locked us into an ultimately futile annual exercise - every year China mustered the numbers to quash the motion in a process that undermined the relevance of the Commission itself.

Shouting at the Chinese about human rights in public forums is counter-productive. We decided that our human rights objectives in relation to China could be much more effectively promoted by a policy of dialogue and constructive engagement than by a stance of confrontation. The latter might have allowed some breast-beaters to feel good about themselves for a short period of time but it didn't get us any closer to achieving better standards of human rights in China.
The third annual round of the Australia China Human Rights Dialogue was held in Beijing in August. The Government is committed to active and long-term engagement with China on human rights. Part of our commitment is a willingness to state very clearly Australian concerns about reports of human rights abuses.

Dialogue does not mean we can't put our views forcefully - we do. This year we have been able to express our concerns about the maltreatment of leaders of the China Democracy Party and supporters of the Falungong movement. While we take no position on Falungong's beliefs and practices, the continuing crackdown on the group is a breach of fundamental rights to assembly and free expression. In fact, the only differences between our current and earlier approaches is that we don't pursue what had become an unproductive annual exchange in Geneva, and that we (and our Chinese counterparts) spend much more time on productive exchanges that have real human rights benefits for China.

The odd angry press statement serves no purpose. Our dialogue ensures that our views are heard by senior figures within the Chinese hierarchy, and that they have the ability to influence policy change in China.

Of course, we need results. We have to be able to demonstrate that the dialogue is moving in the right direction. On this count, the human rights technical assistance program plays an important role by offering the Chinese practical help in the longer term process of building up accountable, transparent institutions that are responsive to people's needs. The program's activities cover a broad spectrum - training for judges, study tours by the Supreme People's Court and the Justice Ministry, rebuilding primary schools to enhance social and economic rights, and projects relating to sensitive areas such as civil society, ethnic and religious minorities and women's rights.

In all this, we need to remember an important point. Improving the human rights situation in China is a long process - we cannot expect big changes overnight.
Our human rights dialogue is interlinked with another facet of the relationship which has expanded appreciably over the last year - legal and judicial engagement.

This year, the Attorney-General, the Justice Minister and the Chief Justice of the High Court have all been to China. They have engaged senior Chinese interlocutors on a whole series of legal issues, encouraging the Chinese to introduce a legal system which is based firmly on the rule of law.

There have been some important outcomes from this growing legal engagement. Six Australian law firms now have licences in China. We have an Australian Federal Police officer in place in Beijing to act as a liaison point with Chinese law enforcement authorities, a step that has improved communication considerably. During President Jiang's visit, the Attorney General and the Chinese Ambassador signed an MOU on cooperation on combating crime. This document encourages the two countries to cooperate in a more consistent manner on all types of crimes, from drug running through to money laundering.

This spirit of cooperation has been vital in combating illegal immigration. It has been very heartening that the Chinese authorities have been cooperative in the speedy return of illegals.

Legal cooperation also has important commercial implications. The non-enforcement of court decisions and arbitral awards in the commercial sphere in China is a significant problem, as some of you will know. We have pressed the Chinese to ensure that decisions and awards are fully carried out, pointing out that non-enforcement hits foreign investor confidence hard.

Flourishing commercial ties

That brings me naturally to the commercial relationship - the area where the ACBC has made such a substantial contribution.

Trade and investment links form the bedrock of the relationship. In decade from 1988-1998 two-way trade grew, on average, at 18% per annum. Our strong economic complementarities saw this two-way trade top the $10 billion mark last year. And the statistics for this year indicate that Australian exports are growing again after last year's fall.

We have injected a much-needed strategic element into our economic relations this year: we upgraded and expanded the Joint Ministerial Economic Commission which last met in Beijing in May; we held the Trade and Investment Summit in Melbourne during the President's visit - many of you were no doubt there; we signed four business-related MOUs, three in the energy and minerals field and another in electronic commerce; and we have started work on a new energy and mineral resources joint working group.

While some of the traditional areas of trade like wool and iron ore will continue to be mainstays of the relationship, our economic links will expand into new areas such as LNG, hot briquetted iron and financial services.

The future for Australia-China trade look bright. Further progress in improving resource allocation and unlocking the dynamism of China's private sector will create new opportunities in areas such as banking, insurance, telecommunications and housing.


All in all, we can look back with some satisfaction on 1999 as a significant year in the Australia-China relationship.

We have moved ahead on a broad front, deepening our relations. Maintaining and extending the gains we have made in this vital relationship will require a mixture of hard work, imagination and level-headedness. But I'm sure that the ACBC and its members will continue to play a strong part in that work. And for my part, I can assure you that our Government is committed to helping Australian businesses take full advantage of all the new opportunities that the rapidly developing Australia-China relationship will offer.


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