Interview - Chinese website Tencent from Davos, Switzerland.
Main Topics: Australian economy, trade tensions with China, protectionism, Australia's trade relationship with China in 2010.
Transcript - E&OE
29 January 2010
JOURNALIST: Hello Simon. So, what do you take away from the World Economic Forum discussions here?
SIMON CREAN: I think the message that I am taking away from here is greater hope in terms of the global recovery than was certainly the case 12 months ago. There is clearly a lot of interest in why Australia as a developed economy is the only one to have avoided the recession. There is the sense that it is only because of China, and whilst China has been an important factor, it is not just that. Australia moved decisively and quickly on its fiscal stimulus, but Australia a couple of decades ago understood the importance of opening up its economy and making it more competitive. So it wasn’t just about arguing trade liberalisation, open markets and lower tariffs. It was also about floating the exchange rate, investing in skills, investing in infrastructure, investing in the productive capacity of the nation, to not just open markets but to make us more competitive. We also took the conscious decision to engage much more with Asia, Asia as a whole. China has been a critical component of that, but it is also other aspects of Asia that we have very strong trading and investment relationships with.
JOURNALIST: I know that the Australian economy has experienced a very good year in 2009. It was actually the first developed country to pull out of the recession. In 2010, the IMF is very positive about the Australian economy. They predict that Australian GDP will go up to 2.5% in 2010. Are you also so confident on the Australian economy?
SIMON CREAN: We do because we didn’t take a big hit on unemployment. Unemployment is only 5.5% which is quite an achievement compared to the rest of the developed world. But I am confident that we can pull out of it because a lot of our stimulus package, two thirds of it in fact, has been investment in the drivers of a more productive economy. Investment in infrastructure, physical infrastructure, human capital, in skiils, in innovation. And if we can get that model right, I think we can lift productivity to a higher level. We have an ageing population. We have big demands in terms of people’s aspirations. The best way for us to manage, and embrace, that is to become more productive as well.
JOURNALIST: Some people argued in 2009 that the global economic recession would result in the increase of protectionism. Actually, China and Australia has some conflict on the trade issue. So what is your comment on this?
SIMON CREAN: Well, we had a little bit of conflict, and I think that’s been the case over the years, but everyone was predicting that there would be a reversion to wholesale protectionism when the global financial crisis hit. That people would look inward. That didn’t happen. There were some instances and we have to be mindful of that, but in the main, we did not experience people’s worst fears in terms of protectionism. Now, that’s not to say it won’t happen, but the truth is it didn’t happen in the worst of the global financial crisis and we have got to make sure it doesn’t happen as part of the global recovery. And our message is that it is really important as part of the global recovery to conclude the Doha Round because trade is an economic stimulus, and it is an economic stimulus that doesn’t hit the budget, doesn’t hit the fiscal aspects within an economy. So, we want to try and get the Doha Round concluded. Not only because it is a stimulus, but because it is more insurance against a reversion to protectionism. One of the reasons we have been able to avoid countries reverting to protectionist measures is they can’t in a number of cases because it is inconsistent with the WTO rules. We have got to continue to strengthen those rules as further insurance against a reversion to protectionism.
JOURNALIST: China is now the largest trade partner for Australia. So are you still very positive on Australia and China’s trade relations in 2010.
SIMON CREAN: Absolutely. I think both countries understand the fundamental importance of each other to their respective economic growth. China needs Australia. Australia needs China. Not exclusively, but importantly. I think the other thing that is important is the nature of the relationship also will increasingly diversify. It won’t be just about trade in goods. Increasingly, it will become trade in services and greater facilitation of investment flows between the two countries. This is the reason we are trying to put a new framework into place to restate the modern dimension of the relationship. So we are hoping to conclude the Free Trade Agreement with China and to give a much better framework to that broader and diversified trade base.
JOURNALIST: And the Chinese New Year is coming soon very quickly. So what would you like to comment on the China economy in 2010.
SIMON CREAN: I’d like to wish them every success in 2010. Not only is it important for China as a nation, but it is important for the world as a whole. I wish them a very healthy and prosperous New Year.
JOURNALIST: Thank you so much for your time. I hope you have a good time here.
SIMON CREAN: Thank you.
ENDS
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