Transcript - E&OE
14 July 2009
Joint Doorstop Interview with Senator Carr
Wuhan, China
Subjects: Automotive Industry; Chinese economy; detention of Mr Stern Hu.
MR CREAN: Well we arrived in Wuhan, which is my second visit in the space of a couple of months. This is the second major region that we have visited after Shanghai, and between Anhui Province and Hubei Province in China, is a population of 125 million people. It reinforces the second track approach we are taking to develop commercial relationships with China. The first track of course is to conclude the FTA. But the second track is to engage at the political and government levels in the regions to identify areas of opportunity for Australian and Chinese businesses to joint venture and joint invest in, to look for ways in which we can strengthen the cooperation and the two-way flow of goods, services and investment flows.
Last night we had a very successful discussion with the top leadership of the Anhui Province. We had the Party Secretary, we had the Governor, we had the Mayor, we had the political leadership through the system and we also had strong representation from the steel making industry present. At our suggestion they have responded positively to developing a framework agreement to shape the focus for taking the relationship forward, and it was interesting that the Party Secretary said he didn't want it to just be a piece of paper, he wanted it to have focus, he wanted it to be strategic, he wanted it to have depth and breadth. Now of course, that was a terrific response to what we are trying to achieve.
We come here to the Hubei Province and its capital again, as I say, for the second time to follow up on a visit in which we got a similar commitment to a framework approach. We'll have more to say about that over the next 24 hours when we have further discussions. But I think that what this approach highlights is a different attack, a different approach, a different way of continuing to deepen and strengthen the relationship with China. Specifically, and Kim Carr will have more to say about this, we have also focused on the auto sector. So we are targeting regions, we are targeting sectors. The auto sector is a crucial one for us to maintain our focus on because China is now the largest auto market in the world and the largest auto producer in the world. You would be crazy not to be seeking closer engagement with China, as the automotive sector undergoes fundamental global restructuring. And of course our Government is committed to Australia continuing to play the great strength of its role in that reshape.
What has been agreed in the Anhui Province, at both the Chery and the JAC company levels, is the agreement to set up working parties to progress the strategic direction and areas for cooperation within the auto sector. So that is, if you like, the business to business exchange, we have developed a framework for a government to government exchange, the challenge ongoing is to keep joining the dots. We will do it and develop it in the auto sector and I am delighted that Kim has come on this visit because of the significance of that sector, I think it highlights the importance, not just of one Minister coming to China, but of coming in force to demonstrate our commitment to developing further relations with region. I will invite Kim to speak further on the automotive sector.
SENATOR CARR: Look, in five days we have visited five cities. We have met with industrial and political leaders. We have learnt more about the industrial needs of the Chinese people, and I trust they want to convey more about the opportunities that exist for cooperation with Australian business. This is about building jobs, not just here, but in Australia, and for the automotive sector which employs some 200,000 Australians both directly and indirectly. This trip has highlighted the opportunities that exist for further expansion of Australian manufacturing, further expansion of opportunities for our research, our scientific community, and further opportunities across a range of other sectors which will stand us in good stead as we move forward and build on the capabilities, the world-wide, global capabilities that we have in Australia, and which are needed here in this country.
JOURNALIST: When you look out the train window does it look like in mainland China the economy is booming?
MR CREAN: I have got no question in my mind that the economy is booming and you see it most noticeably in the regions. I think that Anhui Province talked about them growing at something between 14 and 16 percent last year, next year. Here in Hubei, I think from memory last time they too were growing in double digits. I think you only have to look at the extent of the infrastructure that is being invested in, and take the Wuhan region which is the, if you like, the hub for seven regions of China - a transport hub in terms of water, the river, rail, air and road. Massive investment in infrastructure, as there was in Anhui Province - both Wuhu and of course its capital yesterday. Of course, all of this investment is terribly good news for our resource suppliers and that is why we are visiting a steel mill here.
So yes, the Chinese economy continues to grow very strongly. I have never doubted their determination to continue to achieve that 8 percent that everyone doubted they would - no, not everyone - but some did doubt that they would achieve in this, the year they took the huge brunt of the global financial meltdown. The real question is how long forward is it going to sustain. Well, that is a question that I can't answer but I do know that China is the fastest growing economy in the world this year, and next year, probably the year after. Australia is the only developed country in the world to have avoided the technical recession. It is still in positive growth, there is great opportunity for us to take market share, and there is also a resilient domestic economy because as a government we are making key decisions to invest in our economy, in ours skills development, in our innovation. These are the drivers of economic growth, so they are not only factors in the fiscal stimulus package to create jobs in the immediate sense, they are investments in the nation's future. They are the sorts of investments that structural reform will make us more competitive, more productive. So, on the trade front, I've always argued to the twin pillars approach to trade policy. We have got to open the markets. That's what this exercise is about. But we've got to be competitive to take advantage of those markets. Australia is well placed on both fronts, but we are not going to let up. We've got to persist with the strategy here to keep opening the market opportunities and find new commercial opportunities.
JOURNALISTS: Did the Stern Hu issue come up with the officials you mentioned earlier?
MR CREAN: The only time the Stern Hu issue has come up with officials on this visit with me is when I raised it. And I raised it because I'm not going to shirk from the issue. This is something that has to be faced in a mature relationship but it's completely separate from the development, the ongoing development, the deepening of our economic relationship with China. We're going to continue to call for the expeditious processing, if charges are to be laid, against Mr Stern Hu. We continue to pursue and obtain consular access not just through the Embassy but for his family. We continue to make the call for legal representation and most importantly we urge the Chinese authorities to actually put out more and better details of this case. It's quite frustrating trying to deal with these questions when what we're dealing with is speculation and not fact. Well I'm not going to deal with speculation. I am prepared to deal with facts. But that's what we're trying to elicit - better and further details.
JOURNALIST: So when was the last time you had had some contact with any Chinese officials on this issue and what was their response?
MR CREAN: When I raised it in Shanghai.
JOURNALIST: [Inaudible]
MR CREAN: Well, that's not the purpose of this visit for me. The question of the ongoing access on a consular basis is a matter for the Foreign Minister. And he is pursuing it as you know through the Embassy - we are pursuing it through our Embassy in Beijing. We continue to make the strongest representations around those fundamental points - due process, expeditious process, further and better particulars.
JOURNALIST: You're calling on WISCO Iron and Steel this afternoon - will you be bringing the Stern Hu issue up with that major, major importer of Australian iron ore?
MR CREAN: I will not be bringing it up because it is speculation as to what the circumstances surrounding Mr Stern Hu's arrest are. Now, there's all sorts of theories - one of which is that it's linked to iron ore and steel negotiations. But can you tell me that that's a fact? I mean, you write about it, but I'm not going to respond simply on the basis of what you write. That's why we need the facts. No, we will be talking to the iron and steel industry here because this is an industry that has gone through fundamental structural reform. It's got rid of a lot of inefficient plants in Wuhan. It's invested in, as we understand it, state of the art steelworks - we want to see those for ourselves. With huge capacity, this is going to be increasing demand for our iron ore. What we also would like of course to interest them in is our gas. Now, these are opportunities that present themselves in terms of an economy that is making huge investment not just in physical and transportation infrastructure but of industrial capacity. This is the place Australia has to be. And it has to understand what's happening, it has to see for itself first hand what's happening on the ground. It has to build the relationships and it has to keep coming back. This is an economy more than any other that understands and appreciates the importance of personal contact and follow up. We intend not only to establish it but to build upon it.
JOURNALIST: Rio's probably one of the longest standing relationships in this country, and they have been caught up in the biggest diplomatic incident certainly in your administration, probably in the past three or four administrations. What sort of message does that send out to businesses that you want to establish these long personal relationships when they can be just capriciously thrown into jail?
MR CREAN: It's true they've been caught up in the incident, and we are working closely with them to resolve that incident. But I don't hear Rio saying 'stop your talks in terms of the interests of our business, don't go and talk to the steel mills'. Rio are not saying that to us. They are seeking our assistance in terms of the issue of Mr Stern Hu, and we are, but they are also saying it is in our interests to continue to develop the relationship with China, and we will.
JOURNALIST: You talk about the dearth of information coming from the Chinese Government, what's Rio telling you about Stern Hu?
MR CREAN: I have not been in touch with Rio about Stern Hu, Mr Hu.
JOURNALIST: [inaudible]
MR CREAN: Look, understand this - this is the issue for the Foreign Minister. But I couldn't come here on an issue to do with trade, and not also raise with the most senior officials that we could get, the issue.
JOURNALIST: Were you disappointed with the level of those officials?
MR CREAN: I was not. And I notice that it keeps getting referred to as the sixteenth in the order, well we reject that. The person in question is number three in the Government in terms of those authorised to talk with foreigners. Now, you may not like that in the system and you may want to go through a grading system in terms of political structures on other counts. Bear in mind too that I had no intention of catching up with the Party Secretary of Shanghai because I'd met him six weeks previously. As I had the previous time I visited. I've had no problem getting access to the Party Secretary - the problem was he wasn't in town. Neither was the Mayor. So what we got was the Assistant Secretary-General of the Government. Now, you can say that that's low level, but the fact is I sought it. And the important thing is having made the very strongest representations about our concern and the seriousness with which we treat this case, all I was seeking to do was ensure that they conveyed it to Beijing. They undertook to do it and they have done it. They've told us they have done it.
JOURNALIST: Given the level of access you were able to get through the Government, wouldn't it make sense then to raise it with the steel mills today?
MR CREAN: Why? These are commercial activities. I don't know what we're dealing with in terms of the charges, if they are laid, against Mr Stern Hu. Let's wait til we've got the facts. Now I'm frustrated that we don't have the facts. I'm frustrated that the process is taking the time that it is taking. But that is the facts, they're the circumstances that we do have to deal with.
JOURNALIST: Will this make the approval of Chinese investments, under the auspices of state owned enterprises, more difficult for the politicians to be able to address given the perception in the Australian public that China may well be still a centrally planned economy?
MR CREAN: This issue won't, as far as the FIRB processes are concerned, because the whole purpose of looking at decisions for foreign investment purposes is to assess the national interest test. So the question of the state-owned enterprises is taken account of in that assessment.
JOURNALIST: Do you discount the possibility that Stern Hu may have actually done something wrong and deserves to be locked up in jail as he is now?
MR CREAN: I am not going to speculate on the circumstances surrounding Mr Stern Hu. We seek further details. We seek and pursue that as strongly as I've indicated. But we have to await the detail.
JOURNALIST: Do you expect any top Chinese leaders to visit Australia this year?
MR CREAN: I have got no idea as to what their intention and their program is. We, of course, have a number of invitations, some long standing, In fact, the Party Secretary here was due to come last month, but wasn't able, so we look forward to catching up again with him here.
JOURNALIST: You talk about how important the steel industry is to Australia, that the government here is trying to force consolidation in the industry, and force private enterprise out of the industry to bring together a bunch of large steel mills, all of which are government owned, does that suit the way that Australia wants to do business?
MR CREAN: Well I am not too sure that is the correct description of what they are seeking to do. There is no question about the fact that consolidation is being encouraged in this country, not the least of which in the automotive sector.
SENATOR CARR: In the auto industry, they have moved down to ten companies. They have got one hundred and thirty companies; they are moving down to ten companies which will have 90 percent of the market share. One of the points I think you are missing here is that there is a huge opportunity opening up for Australia. What we are doing is talking about opening up new channels, new business opportunities, in areas which have not yet had the capacity to actually deal directly with us. We are dealing with companies with a growth rate of 40 percent a year. And have had so for seventeen years, yet they have not had the direct involvement with the Australian automotive industry to the extent that we think appropriate. These are companies which will have a 40 percent growth rate this year, in the middle of the worst recession in 90 years; this is the sort of opportunity that we want to see open up for our country and our industry. And consolidation is part of the way the Chinese Government is looking at it - these are opportunities for us and not great threats.
JOURNALIST: I just want to talk a bit more about the Stern Hu case [inaudible] you're talking about autos and I'm talking about the iron and steel industry [inaudible]…
SENATOR CARR: You are making assumptions about the circumstances concerning this case. We're not in the business of pre-judging those circumstances. We are not in the business of in any way endangering the circumstances in which an Australian citizen is actually being held in detention. Our job as politicians on behalf of citizens right around the world is to do our best to provide assistance when they get into trouble. It is not our job to pre-judge the case or make assertions based on idle speculation as to what is actually going on. We will wait for the facts to come to us. And we will endeavour to ensure that all our support is provided to citizens wherever they are in the world, when they're in trouble.
MR CREAN: Well just on the question of steel, the consolidation of the iron and steel industry has been going on for years and even before the Hu Stern case, when I was here last time I was told in great detail about the consolidation and rationalisation that was being undertaken in the steel sector, not only here but in Guangzhou. And why? Because the previous steel industries were outdated and inefficient, poor carbon foot print and so on. Now there are a lot of pressures that are driving the consolidation within the steel sector, one is climate change and the need to produce more carbon friendly production process, the other is scale. And of course the big growth particularly in the auto sector has happened in the last couple of years, just as it has in so many other competing demands for steel products, whether it's construction, manufacturing, white goods, all of the things that come with a really strongly growing and maturing economy. That's why there is consolidation in the steel industry, don't try and read conspiracies into what is going to be the automatic development…
JOURNALIST: [Inaudible]
MR CREAN: Look, why wouldn't it be government policy to consolidate and rationalise. It is our government policy to rationalise the auto industry, we did it twenty years ago under the Button Plan. And that is why we are a world competitive industry. Of course it's government policy but it has got to be commercially realistic.
JOURNALIST: So you agree to the centrally planning thing that China is doing?
MR CREAN: We have to deal with the decisions that governments make in countries in which we operate. If we are going to develop trade relations, industry collaboration, we have to understand their policy. What these exercises are about is better understanding that policy but also understand that it doesn't just happen in Beijing. It happens because of strategic decisions taken in Beijing, and of course the government is crucial to that and also are commercial interests - our task is to build better relations government to government, understand what is happening at the commercial level, and, as I said before, to join the dots. And we are about joining the dots.
JOURNALIST: On the auto industry, is this going to allow you to give the Australian car industry a softer landing, or do you actually expect it is going to expand the Australian car industry?
SENATOR CARR: I think it will expand opportunities. It offers opportunities up for new investments in the components sector, in terms of foreign investment. It opens up new business opportunities for our specialist producers. It therefore provides, I think, new employment opportunities for Australians who are currently working in these particular companies. So I see this as all positive.
JOURNALIST: But will it expand [inaudible] current levels?
SENATOR CARR: If we take for instance the case of General Motors' plant in Fisherman's Bend which has drawn some attention in recent times - we are looking at an expansion of five to six thousand engines a year up to twenty thousand engines a year. And staying about twenty thousand engines a year. That is a huge expansion. There has to be a significant employment implication for Australian auto workers. It has significant implications for the auto supply chain that actually goes into making that engine. Now that sort of experience, I think, can be replicated a number of times over in different companies operating in different fields of the automotive industry. It is not just the direct manufacturers, it is our design and engineering people, it is our universities, it is the CSIRO. There are just so many chances here. There is a wave of opportunity flowing through the Australian industry if we get this right. If we can build the connections, if we can develop the political relationships, and the industrial relationships, in terms of company to company talks, there will be huge numbers of jobs to flow from it.
MR CREAN: Ok, thank you.
[ENDS]
Media Enquiries: Departmental Media Liaison 02 6261 1555