Speech to the Victorian Branch of the Australia-China Business Council
(Check Against Delivery)

Introduction

Thank you Bill O’Shea; distinguished guests, ladies and gentlemen. It is a great pleasure to be able to speak to you this evening. All of us here tonight would agree that China is one of Australia’s most important trading partners.

I want to acknowledge the fine work done by the Australia China Business Council in advancing this relationship, a role that will no doubt continue as the relationship develops and prospers into the new century.

Excellent state of the bilateral economic relationship

One of my first major duties upon becoming Trade Minister just over a year ago was to deliver the opening address at the Australia China Trade and Investment Summit here in Melbourne. Coinciding with President Jiang Zemin’s historic visit to Australia, the Summit was an important milestone in our bilateral economic relationship. Never before had so many business and government leaders from Australia and China come together to discuss our commercial future. A more significant symbol of growth and maturity in the trading relationship would be hard to find.

In the year since that important occasion, trade and investment links between Australia and China have forged ahead. In the last financial year, two-way trade grew by 24 per cent to $A12.5 billion. China is now our third largest trading partner and third largest export destination. That our commercial ties are flourishing is due largely to the efforts of businesspeople like you.

In 1999-2000, Australian exports to China increased by 26 per cent to almost $A5 billion. Primary products continue to lie at the core of our exports, accounting for around 60 per cent of the total. China is Australia’s largest market for wool and an important destination for Australian wheat and other food exports. Resources and energy products, such as iron ore, crude petroleum, alumina and coal, are also important pillars of the trading relationship. We remain optimistic that liquefied natural gas will join this list before too much longer. In recent years, manufactured exports have also increased from a low base.

Australian services exports have expanded rapidly in recent years, growing at an average annual rate of over 10 per cent for the past decade. The granting of Approved Destination Status for Australia last year has seen large numbers of Chinese tourists flock to our shores, while Australian banks, accounting firms, insurance companies and legal practices are now firmly established in China.

Visit to China

On my visit to China in May, I was accompanied by a delegation of 76 businessmen and women, one of the largest trade missions to leave Australia for some years. Members of the delegation were involved in all aspects of the visit, including my meetings with senior Chinese political figures in Beijing, Guangzhou and Kunming.

The depth and breadth of our bilateral relationship was reflected in the composition of the business mission. Sectors represented ranged from traditional areas like mining and energy, through to new and dynamic areas of the economic relationship — agribusiness, construction services, insurance and high technology. The size of the delegation, and its diverse composition, were clear evidence of Australia’s determination to succeed in China’s highly competitive markets.

In my meetings with Chinese ministers and provincial governors, I stressed the long-term and strategic nature of our trade and investment links with China. I assured them that Australia was not a fair-weather acquaintance, but a regional trading partner committed to enduring economic engagement.

As well as focusing on the needs of Australian companies in China, I promoted some key Australian projects such as the bids for the first LNG contract, a new air traffic control system and a second insurance licence. I also tackled the Chinese over improving the business environment for Australian investors, and reforming the tariff quota system which remains cumbersome and non-transparent. Australia applauds China’s efforts to improve its business environment, but we also believe that more needs to be done.

WTO

The highlight of my visit was the signing of the bilateral market access agreement relating to China’s entry into the WTO. As I speak, the working party finalising China’s accession is preparing to meet in Geneva. I hope that agreement on the finer details of China’s membership can be reached over the coming weeks, allowing China’s accession at the end of 2000 or early next year.

With entry into the WTO, China stands at the brink of a defining moment in the development of its economy. WTO membership will mark the end of the "long march" from economic isolation to global economic competitor. It will be a very significant step towards China taking its place in the international trading system, and one Australia has long supported.

WTO membership will have a far-reaching impact on China and its trading partners. Tariffs and other structural barriers that currently frustrate Australian exporters will gradually reduce. Australian firms will be able to compete more effectively with other suppliers for market access. Austrade has been conducting a series of seminars around Australia highlighting these benefits and the new opportunities to be found in China’s WTO accession. Opportunities for growth are there for those who are prepared to look for them.

Clearly, the Chinese Government will face great difficulty in implementing all of its WTO commitments. We are determined to assist. We are already training Chinese officials in Australia and we propose to run sector-based seminars in China next year to help China comply with its WTO commitments.

But we would be foolish to believe that the road ahead will be easy. Sections of the economy will resist change, and the risk of social dislocation will weigh heavily on the minds of the Chinese leadership. China has indicated its desire to stay the course of reform and this process will be monitored closely by ourselves and others.

APEC

Of course, China’s interest in multilateral trading forums is broader than its desire for WTO membership. In 2001, China will chair APEC for the first time. Its themes for APEC are regional links and globalisation; promoting investment and trade; and the future development of the world economy.

As chair, China is in a position to play an influential role in maintaining political support for APEC’s long-term trade and investment goals, and for a new WTO round. If liberalisation were to fall off the agenda under China’s APEC chairmanship, it could seriously harm the prospects for future global economic growth.

One of the exciting parts of China’s APEC year is already taking shape with our support. In response to an Australian suggestion, China will host a Symposium on Paperless Trading in Beijing in February. There is a certain irony in the civilisation that invented paper now joining us in the push to paperless trading. The Australian Government, and our business community, look forward to progress on this new area of cooperation.

Regional opportunities

With a continued commitment to economic reform in China, further opportunities will open up for Australian exporters and investors. Over the past two decades, Australian investors have been very active in seizing the many opportunities that have arisen in China’s coastal regions. Cities such as Shanghai and Guangzhou have been transformed into major international trading hubs, marking a return to the heady days of early this century.

For the Chinese government, the development of China’s less prosperous interior provinces is now a key goal. If this development strategy bears fruit, it should lead to excellent opportunities for Australian exporters and investors.

With this in mind, I ventured to Kunming, the capital of Yunnan, on my recent trip to China. I found that a number of Australian firms are already forging successful partnerships out west. Technico, an advanced agri-biotechnology company, has already invested A$15 million in a successful seed potato production facility outside Kunming. And recently, another member of my business delegation, Portman Limited, signed a A$1.5 million contract with Kunming Steel Mill to provide trial shipments of iron ore. This contract could grow to over A$10 million per annum if the trial shipments are successful.

These opportunities and the promise of further successes have led Austrade to open a new office in Kunming later this year. This office, plus a further one planned for Chengdu, will greatly enhance Austrade’s ability to identify opportunities for Australian business as these western regions begin to develop.

Conclusion

I do not underestimate the challenges faced by Australian businesses looking to make a go of it in the Chinese market. To succeed, the businessmen and women of Australia need all the support they can muster.

Tomorrow morning I will sit down for breakfast with the Chinese Trade Minister, Shi Guangsheng, at the World Economic Forum. That meeting, as with any similar meeting or negotiation, provides an ideal opportunity to push the interests of Australian business.

Business organisations like the Australia China Business Council play a critical role in focusing the minds of governments on the bottom-line. I applaud the contribution the ACBC has made. Our Government is committed to working with you to make the Australia-China relationship even more dynamic and mutually beneficial in the future.