7 May, 2009
Address to the AustCham 15th Anniversary Dinner, Shanghai
China: The Place to Be
Introduction
I'm delighted to be back here at the Australian Chamber of Commerce in Shanghai for the 15th anniversary dinner in what is now my 5th visit to China as Trade Minister.
I'm told that back in 1994 when AustCham began as the China Australia Chamber of Commerce, it started out with just 12 members.
Today, the Chamber has more than 300 corporate members and 41 individual members, many of whom are Australia's biggest and most enterprising business brands.
It's an impressive achievement and reflects the tremendous business opportunities in this city. It is also a symbol of broader Australia-China business opportunities.
I have been in China for four days and I leave tomorrow. But I must say it has been a remarkable trip and I will leave feeling upbeat about the economic future of China. A country that is so important to Australia - just as Australia is important to China. In the midst of a global recession - with the International Monetary Fund forecasting the world economy will shrink by 1.3 per cent this year – China is thriving.
Yesterday Australia recorded its second largest ever trade surplus of $2.5 billion on the back of a new record in exports to China of $4.4 billion for the month of March.
Australian merchandise exports to China in the 12 months to March were 48 per cent higher than in the previous year.
I have seen for myself the great economy activity in China and the plans for the future.
I have seen the vast construction of new buildings, roads, airports and shopping centres in the inland cities of Kunming and Wuhan, and the activity here in Shanghai.
China will be the fastest growing country in the world this year.
I have no doubt it will be the fastest growing country in the world next year and probably the year after that as well.
This has huge implications for the Australian economy - especially as we deal with the fallout from the global recession.
My message tonight is this: China is the place we need to be.
We have strong links with China but we need to be expanding and diversifying that economic relationship.
Australia needs to be tapping into and taking advantage of Chinese economic growth.
But we are competing with other countries.
The economic strength of China is no secret and we need to be putting ourselves front and centre.
We need to get a bigger slice of the China action.
That is why this is my fifth visit in 18 months. That is why the Australian Pavilion at the Shanghai World Expo 2010 is so important to showcase Australian companies.
China Defying the Recession
No one doubts that China will grow strongly this year, but there are now strong signs of an economic recovery after a downturn in the second half of 2008.
The latest economic data shows Fixed Asset Investment (FAI) in China grew 29 per cent year-on-year in the first quarter of 2009 compared to the same period last year.
In addition, FAI investment in infrastructure grew at 100 per cent year-on-year for the quarter, reflecting the impact of the Chinese Government's $800 billion stimulus package.
At the consumer level, retail sales in China were up 16 per cent year-on-year in the first quarter and car sales grew 6 per cent year-on-year to a record of 1.1 million vehicle sales in March alone.
On the back of such data, Goldman Sachs has upgraded its GDP growth forecast for China from 6 per cent to 8.3 per cent for 2009 and to 10.9 per cent for 2010 (up from 9 per cent).
And our own Reserve Bank Governor Glenn Stevens has noted signs that the Chinese economy has picked up in recent months.
Here in Shanghai we are at the centre of economic growth and the challenge is to take advantage of that opportunity.
Implications for Australia
As the latest Australian trade balance shows, the weight of economic activity is shifting towards this region, with China at the centre.
The IMF has predicted that the Australian economy will contract by 1.4 per cent this year and we are expecting a tough Budget next week.
The Australian Government has always said we are not immune from global crisis, but that we have important cushions.
One of those cushions is our growing economic relationship with China. Growing trade and investment with China offers the best chance of a faster recovery for the Australian economy.
We are in the same time zone and there are great complementarities between our economies.
Australian exports of iron ore to China reached another record in April as the Chinese economy begins to expand again.
But on this visit we saw great opporunities for Australian businesses in other areas. Particularly in agribusiness and in green building with the urbanisation of China and the need for new housing.
Importantly, given our $6 billion-plus commitment to the Australian car industry there are exciting opportunities here in China in the automotive sector as well. The FTA and the two-track approach As you know, Australia is in the midst of negotiations of a Free Trade Agreement with China.
This will be crucial platform to advance the economic relationship between the two countries.
These negotiations have been slower than I would have liked in recent months but I am convinced there is the political will after my discussion with Minister Chen in April in Beijing and Prime Minister Kevin Rudd's talks with President Hu Jintao at the G20 in London.
I have often said we need the Chinese to show flexibility on market access for Australian agricultural goods and for Australian investment into China which must be part of the FTA. Investment is a two-way street. But we are not waiting for the Free Trade Agreement to be completed, we are also pursuing a second track of commercial links at the business-to-business and government–to business level.
In Yunnan province, where two-way trade is already $500 million a year, we agreed to a Memorandum of Understanding for cooperation in agribusiness between the Australian Government and the provincial Government. I think there can be a similar agreement for the resources sector and commercial services.
These are new frameworks to build off the already important platform that exists. In the Hubei province, where two-way trade is almost $1 billion, we achieved a breakthrough for Australian designers, builders and architects.
The mayor of Wuhan agreed to my proposal that we create a government-to-government framework to support expanded commercial cooperation in the urban development sector. Importantly the Hubei party secretary, the vice mayor of Wuhan, representatives of a large car company and urban planning officials will be part of the delegation.
Two-way trade between Australia and China is already almost $70 billion a year but it can - and must - keep growing.
Here in Shanghai, I will have the pleasure tomorrow of “topping out” the Australian pavilion the at Shanghai World Expo 2010. Shanghai World Expo 2010 The Shanghai Expo is set to be the largest in history with more than 180 countries participating.
There is expected to be more than 70 million visitors - most of whom are expected to be Chinese nationals.
With a total project value of $83 million, the Australian national pavilion represents the largest investment Australia has ever made in a world expo.
And I believe it is an investment commensurate with the importance of our trade with China. It is also a chance to showcase Australian companies to China and the world.
It is through building the economic relationship with China we can help sustain growth in our economy that underpins Australian jobs and better living standards.
Many of you here would recall the positive spin-offs that the World Expo had for the Australian city of Brisbane. It injected its own economic stimulus that is still benefiting that city and the state of Queensland.
What I think we'll see here in Shanghai is a similar effect but on a Chinese scale from which we can also benefit Australia's future.
Conclusion To close, I would like to say AustCham's growth has been impressive over the past 15 years.
This is a time to be confident and realise the opportunities with China are enormous.
Our future is dependent on our confidence in our own ability and a preparedness to embrace the new relationship with China.
To build it, strengthen it, deepen it and never fear it.
I have been giving Chinese leaders that I meet this week a boomerang as a gift and I joke with them how it comes back.
This is my fifth visit to China and like the boomerang I will keep coming back to China as there is such growth and potential here. It is essential we do.
[ENDS]
Media Inquiries: Departmental Media Liaison 02 6261 1555