Australia China Business Council networking day
Thank you very much John for that welcome. Ambassador Cheng thank you for your remarks before and your attendance and participation here today. Ambassador-designate Fletcher, welcome and congratulations on your appointment. Helen, distinguished guests, ladies and gentlemen. Good morning, welcome to Canberra for many of you. I begin by acknowledging and paying my respects on the continuing culture and contribution to this region of the Ngunnawal people and across Australia of all of Australia's Indigenous peoples and their Elders and all the nations of our Indigenous culture.
It's great to be here with you for the Australia China Business Council's annual networking day in Parliament House. For me, this is the first opportunity as the nation's Trade Minister to speak, at this important annual event. I trust, John that the traffic getting here in Canberra wasn't quite as challenging as it was in Shanghai when we caught up at Rio's headquarters in early November, as John referenced just before.
I do congratulate the Council for building this event over many years now, and for the impressive work of its members in ensuring year-round contribution to the building and enhancement of the Australia-China relationship.
The success of this networking day underscores the vital place that personal ties have in strengthening the connection between our two nations.
We are here today because we value the enduring partnership between Australia and China. It is a deep relationship with a long history. More than 1.2 million people of Chinese ancestry live here in Australia. Our students now travel to each other's countries not just for a great and rich educational experience but to gain a deeper and abiding understanding of the cultural nuances in each nation that, once understood, dispel misunderstandings and can draw us closer together. Our scientists work together to expand the boundaries of human knowledge. We visit each other's tourist attractions and enjoy each other's food and cuisine. We have more than 100 sister city and sister state relationships stretching back over more than 40 years.
We don't always agree, just as with any country. But it remains - as Ambassador Cheng just said - in the interests of both nations to embrace cooperation that is mutually beneficial. We work in our Comprehensive Strategic Partnership, formalised in 2014, to achieve these objectives.
The complementarities of our economies make us natural trading partners. China is Australia's largest two-way trading partner by a big margin and we expect it to remain so well into the foreseeable future. The China-Australia Free Trade Agreement has significantly increased and enhanced economic cooperation. Two-way goods and services trade has risen some 42 per cent since ChAFTA came into force at the end of 2015 to reach a record high of $215 billion in 2018.
This agreement has put Australia in an enviable position in terms of access to the Chinese market for goods and services. Both countries have implemented their tariff commitments on schedule. The vast majority of Australian products now enter China tariff-free, and all Chinese products come into Australia with zero tariffs. Australia is China's 7th largest source of imports. Many of these goods contribute to China's own manufacturing base and economic growth.
Some suggested at the time that China may not be able to conclude or deliver on a comprehensive FTA like ChAFTA. However, the success of ChAFTA is a further demonstration of the many benefits delivered to China, our region and the world from China's 40 years of opening and reform. Australia encourages the continued embrace of policies that are consistent with the principles of opening and reform, which have already delivered such great benefits to so many.
China's impressive economic development - the economic miracle of China, as outlined by Ambassador Cheng – and with that, the social miracles of enhanced health, education and equitable outcomes that have lifted hundreds of millions out of poverty and created new opportunities not just in China but across our region in particular. This economic development has only reinforced Australia's long-held understanding that our future lies in deep, close, and lasting engagement in Asia and across the Indo-Pacific. We are very focused on driving that engagement forward, as well as getting the terms of engagement right.
Just two months ago, Australia opened its 5th diplomatic post in mainland China. This consulate-general in the commercial hub of Shenyang [Shen‑young] is Australia's gateway to north-eastern China – a region that is home to more than 114 million people in itself.
As you have heard, last November I led a delegation to Shanghai for the first China International Import Expo, wherethousands of Chinese businesses met companies from all over the world in the enormous four-leaf clover that is the National Exhibition and Convention Centre. The hosting of an event to promote imports defied convention but was a powerful symbol of the global value chains that shape our increasing integration. A number of you were there. Some 200 Australian brands were represented, and we were in the top three countries for products exhibited. We had the largest food and agriculture products' presence. Brands such as Capilano Honey and Thomas Foods were there alongside Qantas, ANZ, Australia Post and many more. On that same visit, I witnessed the signing of a dozen memoranda of understanding worth $15 billion. I thank industry, business, leadership for their participation in CIIE as I do China for the initiative and the hosting of this important event.
While Australia's three largest goods exports to China are things we extract from the ground – iron ore, coal and liquefied natural gas – our trade is diversifying. In fact, growth in non-iron ore exports to China has outstripped that of iron ore exports for the past two years. Chinese appetites for Australia's agriculture, forestry and fisheries products are particularly strong, accounting for an estimated $15.5 billion in exports in 2018, more than double the figure of 2012.
Australian small caps and start-ups are delivering increasingly valuable services into China in everything from agtech to fintech to medtech. Austofix, one of Australia's leading designers and manufacturers of orthopaedic medical devices, has increased its sales in the stainless steel nails surgeons use to treat bone fractures. Just last week, nine leading Australian health service providers visited Chengdu, Beijing and Guangzhou to meet key decision makers. The scale of collaboration with China in this sector is staggering – in Beijing alone, there are more than 600 hospitals. China is naturally, as a growing and more prosperous nation, looking to partner with the world's best providers to meet the needs of its citizens and for reasons of safety, excellence and reliability Australian healthcare companies are amongst China's trusted partners.
Trade in services – in health, education and more – is growing, fostering closer connections between people. In 2018 there were more Chinese students in Australian educational institutions than ever before, at just over 200,000, up 11 per cent on the previous year.
Less well-known though is that, in expenditure terms, China is the 2nd most popular destination for Australians who choose to study abroad. It is also right up there as a favourite destination for New Colombo Plan students; young Australians who are investing some of the best years of their lives to get to know China better. This two-way exchange of our youngest and brightest can only bode well for the future ties and relations between our two countries.
Australia's stunning landscapes, clean environment and unparalleled dining scene are big drawcards for Chinese tourists, our biggest market, who made up 1.3 million short-term visits in the year to March. But again, it is a case of mutual attraction – over the same period, more than half a million Australians returned from visits to China - short-term visits, having marvelled at the Great Wall, savoured roast duck and hand-made noodles, and discovered the new worlds and the virtual reality arcades of Shanghai. Indeed, on a per capita basis, Australians travelling to China far outweighs the rate of Chinese tourism to Australia.
Foreign Direct Investment from China is very strong. A recent survey of Chinese investors in Australia by KPMG and the University of Sydney found that Australia remains our preferred investment destination relative to other countries. That is reflected in the latest data, which has China as Australia's 5th largest source of FDI last year, at $40 billion.
The Significant Investor Visa has already given a $10 billion boost to the Australian economy while diversifying Chinese interests, according to a new report by Deloitte that you'll hear more about shortly when it is formally launched by Deloitte Private managing partner Andrew Culley.
Meanwhile, Australian businesses are increasingly investing in China, with the stock of Australian direct investment into China exceeding $13 billion in 2018. Australian expertise in banking and wealth management services has seen financial institutions become some of the largest Australian investors in China. In Westpac's recent Australia-China Business Sentiment Survey, the majority of businesses said they were optimistic about their prospects over the next five years.
As I have said before, we are concerned that trade tensions between the US and China will affect global economic growth. It's true our economy has weathered global storms before, as our nearly 28 years of uninterrupted economic growth attests to. Sound macroeconomic policies helped us through the Asian currency crisis of 1997 and the global financial crisis a decade later. I pay tribute to the visionary reforms dating back to the Hawke Labor Government in the 1980s, supported by the Liberal-National Opposition of the time, for opening our economy and making us more resilient to external shocks in the future. Trade with China and Asia more broadly has supported our export growth in commodities and services and greater economic integration has meant that we are working, studying and holidaying in each other's countries more and more – and underpinning therefore each other's growth and prosperity. But any global slowdown will affect Australia as it will all nations.
A protracted trade dispute between the US and China is not in our or anyone's interests. We, and other countries, want an outcome which promotes openness and fair, transparent market-based competition, rather than one which undermines it. We want an outcome in favour of non-discrimination, and consistent with World Trade Organization rules.
Australia cannot resolve the dispute between these two great powers but we can and do urge them to address the underlying issues without the escalation of trade-distorting measures that ultimately hurt all nations. We will continue to pursue our important partnerships with both countries, while at the same time encouraging efforts to resolve differences and ease trade tensions.
The rules-based international trading system that supports growth and prosperity has served Australia and China well, and we both want to see a functioning and effective WTO. While we have different points of view on some issues, we are working together with other nations to update the WTO rulebook to better reflect how modern business is done. For example, we are collaborating to develop new international rules on digital trade that will make it easier for businesses to operate across borders; and new rules to tackle behind the border barriers to assist our services exporters.
We are also working together in the Regional Comprehensive Economic Partnership, or "RCEP", negotiations to further liberalise and facilitate trade and investment in our shared region. RCEP countries account for more than 60 percent of Australia's two-way trade and almost half the world's population, so this agreement can give Australian businesses more seamless access to our region and further enhance the economic integration of business and nations across our region. Leaders last year committed to concluding negotiations this year and we are working hard to deliver on that commitment, to realise the largest trading area in the world - and I look forward indeed to the next stages of those negotiations.
Signing the Australia-Hong Kong Free Trade Agreement and associated Investment Agreement in March this year marked another significant milestone.Hong Kong is Australia's leading business base in Asia, reflecting the unique advantages of the 'One Country, Two Systems' framework. It is Australia's 5th largest source of inwards investment and a platform to showcase Australia's premium goods and services to Asia and the world.
Australia welcomes China's contribution and the contribution that the Belt and Road Initiative can make to trade and infrastructure connectivity in the region. Australia supports regional investment initiatives that are transparent, uphold international standards, meet genuine need and avoid unsustainable debt burdens for recipient countries. We are recognised as a global leader in developing high-quality infrastructure, engineering and design, project management, financing and professional services. We look forward to more opportunities for Australian firms to work on commercial projects that meet world's best practice. Our Government's expansion of Efic's mandate, in the additional capital we have provided, will help Efic to support high-quality infrastructure across our region too. Where possible, and in keeping with our principles and agreements - such as the Australia-China agreement on third country cooperation - investment can occur in partnership with others, to enhance the potential of third countries while also creating greater opportunities for Australian firms and others in our region.
On top of this, there is still greater scope for cooperation on other shared areas of interest.
The National Foundation for Australia-China Relations, which Foreign Minister Payne announced in March, demonstrates our commitment to building and ensuring a constructive and enduring partnership. This innovative platform will build on the Australia-China Council's pioneering work over the past 40 years fostering connections in education, culture and the arts. Led by Warwick Smith – the chair of the current Council – the Foundation will engage across the full spectrum of the bilateral relationship, backed by $44 million to support its expanded mandate. This includes promoting Australian excellence in areas such as agriculture, infrastructure, health and ageing, the environment and energy. The Foundation will harness the private sector, peak bodies, NGOs, cultural organisations, state and federal agencies and the Chinese-Australian community to promote greater understanding of China amongst Australians. It will provide practical support and expertise to Australians developing links with Chinese counterparts.
The activities of the National Foundation will complement the many exchanges already taking place across education, sport and the arts.
Forty years ago, cultural exchanges between Australia and China were the province of small groups of elites on both sides. No longer.
Last month our 'Festival of Australia' was held across 10 Chinese cities and reached an audience of 90 million thanks to an integrated online marketing and communications campaign that included use of WeChat and Weibo. It culminated in an AFL game in Shanghai, as you know, between Port Adelaide and St Kilda. The Festival was a true partnership between all levels of government and industry and sporting bodies to showcase more than 400 Australian brands to a massive audience, reaching beyond the well-trodden urban pathways.
Of course, as any marketer worth their salt knows, it's no use reaching millions unless you have your messaging right. Today I am pleased to launch the 2019 Australian Brands in China Index Report, by Digital Crew and Monash University. The report is full of valuable and timely insights about perceptions of Australian brands in China, and the impact that social media and technology such as Alipay have on their performance.
For me, the report powerfully highlights the rapid pace of change in China and the opportunities for Australian businesses. Beer, wine and spirit brands dominated this year's top 10 brands, while fast-moving consumer goods dropped out of the top 10 altogether. What are Lindeman's Wines, Bundaberg Rum, Hardys Wines and Burch Family Wines doing right in China at the moment? How has Lucas Papaw become the most trusted Australian cosmetic label? Why are Chinese tourists increasingly opting for the great outdoors over our big cities? Instinctively, we all know the answer to that. I commend the report to you as a valuable market insight.
Tim Beresford from Austrade will launch a further initiative this afternoon that will see the Australia China Business Council, Austrade and the Business Council of Australia lead a pilot program to send Australian chief executives and board directors on study tours of China, developing greater, more nuanced understanding which can only benefit, again, both of our nations.
I return to my earlier point about the immeasurable value that relationships have as we work together as nations. Sharing experiences of our past to help forge new opportunities together into the future.
If you visit the National Museum of Australia on Lake Burley Griffin today, you will see some of that shared story depicted in the hand-painted 'Harvest of Endurance' scroll. This marvellous piece is an artistic representation of two centuries of Chinese contact with, and migration to, Australia. We all have brushstrokes to add to that story.
Old Masters: Australia's Great Bark Artists is currently touring China from the National Museum of Australia giving Chinese audiences an artistic appreciation of the ancient Arnhem Land and Australia's most ancient cultures.
Ours is a vibrant and fast-growing connection between countries which both have rich histories to share; between countries whose businesses, institutions, artists and our people have great connections to enrich and enliven further. It goes back a long way, and its evolution will continue for many years to come. You are all part of that journey– of helping to grow ties and expand mutual understanding through our businesses and your personal connections. And by being here today and sharing your experiences and insight in connecting with China, you are broadening a path on which others can join, for the benefit of both our nations.
Thank you for your participation and time today.
 $214.6 billion
 20 May to 2 June
- Minister's office: (02) 6277 7420
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