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HEIDI COUCH: Now to talk more about these mega mining deals, I'm joined by Australia's Trade Minister Simon Crean. Mr Crean, good morning. Certainly the deal with CNOOC breaks that previous record which was set by ExxonMobil's Gorgon contract last August. Is this now a trend? Are we going to be seeing more of these resources mega deals?

SIMON CREAN: I think it is. And I think it's significant for a number of reasons. First of all, it's the size of the contract which you've already mentioned. Secondly, it's another long-term commitment to enter into long-term purchases by China. This was started last year with Gorgon. So the fact that they're entering long-term contracts means the energy security issue and the cleaner fuel option - so in other words, the focus on cleaner energy sources positions Australia very well, because what this project does is to demonstrate that Australia's gas supplies aren't just in the north west shelf, as important as they are, but they also extend right across Australia and arc over into Queensland. So Australia is very much the Saudi Arabia of gas. It's a cleaner energy source. China is looking to cleaner fuel options, longer-term commitments to energy security. And it's a very good space for Australia to be in.

HEIDI COUCH: If we rewind the clock a couple of years ago, virtually no-one had heard of coal seam gas. And this was a by-product which was discarded. And now it's turning into a multi-billion dollar industry. How much growth is left in that sector?

SIMON CREAN: Well incredible growth I think Heidi. And the fact that you've got strong foreign investment in this sector - in this case it's the British company, but the Germans have also invested heavily into it - I think it's a demonstration not just of access to our resource, but for the technology that's associated with it. Technology that's taking us into the cleaner energy space. Ironically, this is a good example of clean coal technology, because it can leave the coal in the ground, and extract a cleaner energy source. So I think it pushes a lot of the buttons in the context of technology, technologically driven solutions to the question of cleaner energy sources.

SUSAN LI: Minister Crean, it's Susan here in Hong Kong. Now China buys a lot of Australia's natural resources commodities. So you have to pardon me if I want to get to the big topic taking place on a lot of people's minds in China, which is the case of the four Rio Tinto employees being tried in Shanghai at this point. We have a three day trial ending without a verdict. You know, from what you see and what's happened so far, what do you think. Are they getting a fair trial?

SIMON CREAN: Well part of the trial has been open, as you know. We've made representations that all of the trial should have been open. The question of state secrets was not open. I mean, the truth of it is that there are elements of our trials that involve commercial in confidence that can themselves become closed. But it's hard to judge when we haven't had access to that second component. There are reports, of course, that certain charges have been acknowledged, but I think the case has concluded - we have to await the outcome before we can comment realistically any further.

SUSAN LI: Yeah. And Minister Crean, let me just ask you, we had some recent developments yesterday in court with a Chinese billionaire supposedly bribing one of the employees with $9 million. Do you find it a little unfair and odd that the person giving the bribes is not being brought into courts, while the ones that are - that took the bribes are standing trial?

SIMON CREAN: Well I think that they're issues that only when we know what the full evidence presented is and the basis of the findings, I think they're the sorts of questions that need to be answered then. I don't think we can realistically comment on those dimensions until we know the outcome of this case. We certainly don't want to prejudice it. We don't want to prejudge it. We have to accept the circumstances in which people have been charged in China, and recognise the sovereignty of the Chinese legal system.

SUSAN LI: Okay. Now Minister Crean, let me just ask you about the time that has been, you know, put forward in terms of how much jail time is involved. They're five to 15 years. What sort of verdict are you expecting? What do you think is fair? And five to 15 years, is that a little too harsh or severe in your view?

SIMON CREAN: I've got no comment. That's a matter for the courts. We do not want to prejudge anything in these circumstances. We don't want to do anything that would impact upon the accused. I'm just not prepared to comment about that.

HEIDI COUCH: Mr Crean, the Prime Minister Kevin Rudd has warned all along that the world will be watching. Well, the world watched. What's the verdict from the outside looking in?

SIMON CREAN: Well I think the world is still watching. It wants to know the outcome. It wants to know the basis on which that outcome was arrived at. Until we see the record of the court, it's too early to judge. But yes, the world is watching. It has been watching it for some time. Has it impacted on the broader economic relationship? No. I think that the evidence of the big deal that you've already talked about being signed yesterday demonstrates that the trade is very strong. Throughout the course of last year, China became Australia's largest trading partner, some $83 billion. It has displaced Japan as the major trading partner. We've had a successful round, fourteenth round in the FTA, the Free Trade Agreement negotiations and we continue to engage with China, not just through the medium of the free trade talks but also through the second track approach, commercial to commercial operations, region by region.

So I think that the strength of the economic relationship will continue to grow. China of course has big demands in terms of infrastructure and growth, not the least of which is the huge growth in urbanisation that's going to occur over the next 20 years. I mean China is going to have to house something like 300 million people over the course of the next 20 years. This is the biggest urban development in the history of the world. I would like to see Australia better placed in terms of assisting in that urbanisation in terms of smart building, building products, energy efficient housing, all of those challenges that come but it's not just the housing itself. You can't build cities of that size unless you have retailing and logistics services, unless you also are encouraging financial services so these are all the spaces that Australia wants to try and be in.

HEIDI COUCH: Well Mr Crean it sounds like the future for Australia-China relations don't just depend on resources out of the ground, you're saying there are wider opportunities for trade with Australia?

SIMON CREAN: Absolutely. I think that even in the resources sector Heidi, it is the services dimension of the resources sector, the extractive dimension of them. As it is in agriculture better productivity in terms of the land but take it to the services sector more broadly and those areas such as logistics and retailing and urban design, urban construction, the physical side of it, physical infrastructure, these are - and financial services, there are incredible opportunities going forward. But I must say it's not only in China that this opportunity exists. It exists in the whole of Asia, it exists in India and this is something that Australia recognised over 20 years ago. We have increasingly positioned our presence in the broad Asian region and that's where opportunity rests for us.

SUSAN LI: Minister Crean, yeah looks like there's a lot of opportunity across the Asia back and even this budding relationship between China and Australia. Let me just ask you about the big topic though in trade relations with the world's fastest growing major economy and that's the currency. We have huge debates coming from US law makers say it is undervalued by as much as 25 to 40 per cent. What's your view here?

SIMON CREAN: Well this is a matter for the Chinese Government but the message that I've continued to convey not just to China but to all in Asia is that why - what are some of the reasons Australia has been able to weather the global financial crisis better than any other developed country in the world? It's because we took decisions 20 years ago to become a more competitive nation and engage with the rest of the world. One of the most significant factors that led to that strength and competitiveness was floating the dollar, letting the market determine the appropriate rate. Now I'm firmly convinced that that was not just an important message for Australia it's also an important message for other countries to take on board. Whatever they do in the short term they've got to think about the medium and longer term opportunities. If they want to become developed nations faster, if they want to move to a faster trajectory, they've got to be more engaging with the rest of the world, not just in product markets but in services and in allowing investments into those countries so it's the structural adjustment challenges, not just the opening of markets that I think is the important message that these countries need to have conveyed.

SUSAN LI: Yeah, let me just pick up on what you just said because you talked about China's currency policy as being a China matter, so what do you think about US law makers trying to lecture and push China to do something about the Yuan, about its own currency regime?

SIMON CREAN: Well I think we're seeing a lot of that in the current circumstances of the bilateral relationship between those two economic super powers and it is all about the rebalancing argument. I'm sure that you will continue to see those debates go on. Is it going to result in anything in the short term? Who knows, because ultimately that's a decision for China but what I'm trying to say is that beyond the bilateral relationship and the pressures that go there, I think the future for any economy is built around two fundamental principles and that is engagement with the rest of the world, so opening markets, but secondly being competitive enough to take advantage of those market openings. Now…

SUSAN LI: Minister Crean, I'm sorry…unfortunately we are out of time, Minister Crean, I'm so sorry we have to get a commercial break but thank you so much for your time.

SIMON CREAN: Okay.

END

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