SENATOR THE HON PENNY WONG

LABOR SENATOR FOR SOUTH AUSTRALIA

SPEECH

19 June 2018

AUSTRALIA CHINA BUSINESS COUNCIL

PARLIAMENT HOUSE

CANBERRA

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May I begin by acknowledging that we are meeting today on the lands of the Ngunnawal and Ngambri peoples and paying our respects to their Elders past and present.

(Other acknowledgements omitted)

The Australia China Business Council has existed for almost as long as Australia has had diplomatic relations with China. Our oldest non-government institutional link with China, you play a key role in the bilateral relationship between our two countries. This role is perhaps even more important now, as the bilateral relationship between Australia and China weathers an unsettled period.

You would all be aware of reported tensions that have marked the Australia-China relationship over recent months. That tension has led, among other things, to Australian businesses shouldering the burden of slowdowns and administrative hold-ups, intimations from China’s representative here in Australia about implications for our economic ties, and some fairly direct recent remarks by China’s Foreign Minister Wang.

Instances of ill-advised and unnecessarily inflammatory statements from senior members of the government, such as ‘bridges to nowhere’ and the former Deputy Prime Minister’s ‘China is a greater threat than terrorism’ have been unhelpful.

Further, they have distracted from some of the more complex issues that arise in the China relationship: issues and challenges that need to be articulated clearly and purposefully — to the Australian people and to China — not dealt with glibly or thoughtlessly.

The China relationship is both a complex and crucial one. Politically and culturally, China and Australia are very different countries and in such complex relationships, differences of approach, objective and opinion will inevitably arise.

These differences have become more apparent as China has become more confident in asserting its interests under President Xi.

Australia is entitled to assert our national interests, just as China asserts what it sees as its interests. But it is possible for us to assert our interests and safeguard our sovereignty, without being offensive and inflammatory. A more sophisticated approach, based on both respect and a firm articulation of our convictions, will do more to ensure our national interests are maintained than will the disjointed megaphone diplomacy the Government seems to have preferred of late.

Similarly, it is also incumbent upon political, business and industry leaders to ensure they handle such debates with a degree of sensitivity and sophistication.

As I remarked in my first speech to the parliament, Australia’s diversity can be an aspect of our shared identity. Or it can be the fault line around which our community fractures. We must always guard against racial fault lines from our past being allowed to resonate today.

As others have noted, the Turnbull Government has fallen short in its management of this key bilateral relationship. A more considered, disciplined and consistent approach is required. It’s not in our longer-term interest for ties to be strained. Nor is it in China’s.

What the Australia China relationship needs is stability based on mutual understanding.

If Labor forms government following the next election, we understand that some of these pressures will persist. We understand that, at times, our interests will differ. We understand that challenges in the relationship may intensify. But what government can and should avoid is making things harder than they need to be.

So I’d briefly like to outline to you the key operating principles that a Shorten Labor Government would apply to our management of this critical relationship.

First, our starting point is a clear understanding and articulation of our national interests. It is better to start with a clear sense of purpose rather than a set of problems.

The national interests, as we identify them, are the security of the nation and its people, the prosperity of the nation and its people, the stability of our region and constructive internationalism. Constructive internationalism is fundamental to our intention to help build, strengthen and maintain a global rules-based system that guides behaviours and relationships.

Our national interests are firmly grounded by our values, which are given expression in the term ‘rule of law’. Underpinning this, of course, is the fact that all human beings have worth and dignity by virtue of their shared humanity.

Our second operating principle is that we accept that we live in a disrupted world. To construct the world we wish to live in, we begin with the world as it is, with its fracture lines, its pressures, the persistent challenge to democracy, and the resurgence of nationalism and populism.

Our third operating principle is that we accept China as it is, not as others might perceive China to be or as China itself might represent itself. It is a fact that China is Asia’s leading economic power. It is the engine room of the Asian economy, and Asia is collectively the world’s biggest economic region.

As I said earlier, Australia and China are very distinct kinds of countries. We are culturally, politically and socially quite different, with different histories, different origins and different values. Difference is a matter of fact, and differences need to be managed.

The important objective is to prevent differences from becoming disagreements, as far as possible. And when disagreements do occur, they must be managed with intelligence and tact.

Fourth, we need to acknowledge just how important and beneficial China’s emergence as a major economic power has been to both Australia and the world. At the same time, we need to accord to China the priority it deserves as our major economic partner.

Our economic partnership has grown enormously since we established diplomatic relations in 1972. China’s economic growth has lifted hundreds of millions of its people out of poverty, and the world is the better for that. China has also contributed to over a quarter of a century of economic growth in Australia, and that has been to the benefit of both Australia and China.

This mutual economic benefit is not just a feature of the past. It will proceed into the future as a consequence of China’s growth. In 2016, China’s GDP in PPP (Purchasing Power Parity) terms was $21.4 trillion; by 2030, it is projected to reach $42.4 trillion – roughly twice the size of the US and 25 times bigger than Australia’s.

To the extent possible, Labor will work towards ensuring that our political relationship works on the same basis as our economic relationship – respect and trust based on dialogue and understanding. Respect and trust don’t just happen. They have to be built and maintained, and that’s what we intend to do.

Our fifth operating principle is that we intend to pursue a coordinated and integrated approach to the many strands of our relationship with China. I am concerned, for instance, that we appear to have a number of silos that do not communicate nearly well enough. And I am also concerned that coordination across government is not sufficiently fit for purpose.

DFAT should be at the centre of this coordination – the lead department for managing the relationship and for managing a whole-of-government China strategy.

It was promising to hear in Senate Estimates a couple of weeks ago that DFAT is expanding and strengthening its China team. This, of course, goes beyond increasing personnel numbers or strengthening our language skills and our understanding of China’s political, social and cultural dynamics.

DFAT will need to draw on the analytical strengths of ONA and other agencies if we are to acquire a greater understanding of China’s economic dynamics and its strategic aspirations and the way these link together to expand its geo-economic power.

DFAT should also play an important role in ensuring all parts of government have the same understandings and are working towards the same goals. The work done by all departments needs to be integrated and mutually reinforcing. It cannot be at cross-purposes.

In the public discussion, too, key stakeholders appear to be talking past each other. Government and business need to engage frequently, to understand the full spectrum of Australian interests when it comes to China.

And our sixth operating principle is to work constructively with China and others in a regional framework. In a speech at Singapore’s Lee Kuan Yew School of Public Policy in January, I spoke of the important place that ASEAN occupies as a central regional institution. ASEAN’s institutions, and the way it manages its institutions, offer other countries, such as China and Australia, an important mechanism for enhancing regional stability and prosperity. We can work with ASEAN countries to help build and maintain the kind of region we want.

And what kind of region do we want? We want a region where the system of rules and institutions are the basis for collective action. We want a region where those seeking to shape and make the rules do so through negotiation not through imposing their will on others. We want a region where differences and disputes are resolved through internationally-agreed frameworks. We want a region where economic prosperity is based on a free and open trading system and investment transparency. We want a region where outcomes are not determined only by power. And, as President Macron put succinctly during his recent visit, none of us want a region that is characterised by hegemony.

Given the historical significance of the events that occurred in Singapore last week, it is important that we recognise that our region needs the ongoing commitment of the US. As the world’s only global power, the US has a stabilising role to play in Asia. The Secretary of DFAT drew our attention to this in Senate Estimates a fortnight ago when she said that our interest is served by a multipolar region – a region where the United States remains deeply and constructively engaged.

It is also in the context of the region that we consider China’s Belt and Road Initiative. China already operates a broad network of bilateral relationships in Asia. But the strategic significance of the BRI extends well beyond bilateral interests as it builds a chain of economic and political linkages throughout the region.

There is no doubt there’s a massive infrastructure deficit in the region: the ADB estimates some US$26 trillion in infrastructure investment is needed between 2016 and 2030. BRI can contribute substantially to addressing this need. But to maximise the benefit and ensure the sustainability of these investments, projects should be transparent, conform to environmental and social safeguards, and not place unsustainable debt burdens on regional countries.

It is against this background that Labor has indicated its willingness to examine BRI projects on a case-by-case basis. Some projects will play to our strengths; others won’t. Some will align with our interests; others won’t. Some projects will fit with our economic or development assistance plans; others won’t.

But those that do should be seen as opportunities for the kinds of collaborative partnerships that will be needed if the region is to deliver on its economic potential. There will also be opportunities to assist and work with regional countries in their management and implementation of BRI projects.

This is where an association such as the Australia China Business Council can play an important role.

I also want to make a point about foreign investment. It is entirely legitimate for Australia to set the parameters for foreign investment consistent with our national interests. It is for this reason that Labor supported the Security of Critical Infrastructure legislation that addresses national security risks.

It is also for this reason that Labor continues to give bipartisan support to Australia’s current Foreign Investment Review Board processes. Of course it is not sensible to reflexively oppose all foreign investment. Australia has always built its economy with investment funded by both domestic and overseas capital. We are a capital hungry economy that has relied on foreign investment to create Australian jobs and local business opportunities, and to boost growth.

In government, Labor fully intends to extend and strengthen the ‘one and a half track’ dialogue between China and Australia. In our view, the broader and deeper the contacts between Australian and Chinese enterprises and people are, the more robust the bilateral relationship becomes and the more consolidated the outcomes will be.

So what do I think the relationship with China needs? It needs consistency. It needs clarity about where our interests converge and where they differ. It needs a sophisticated approach to managing difference. And it needs us to work together where we can. Where our interests do not align we should be firm in expressing that, preferably not through the media but through direct and honest discussion between our two governments.

And as I have emphasised, we should approach China with respect, not fear.

It is for governments to set the pace here: it’s just not good enough to sit around waiting for things to improve. Rather, it’s the government’s job to make things improve. That’s precisely what Labor intends to do.

My colleagues Chris Bowen, Jason Clare and Richard Marles, together with me, have advanced our FutureAsia policy to revitalise our engagement with Asia in general. And to get it right with Asia, we have to get it right with China.

The reason for this is, I think, obvious: for their own growth and prosperity, all the economies of Asia rely on China’s enormous energy as a consumer and a producer. China’s economic success is critical to Asia’s success, as it is critical to our own. Labor accepts that as a fact, just as we accept that our long-term relationship needs to focus on maintaining mutual benefit.

Australia benefits from the fact that almost 200,000 Chinese students buy our educational services. China benefits from the transfer of the skills that those students acquire. Australia benefits from the fact that about 1.4 million Chinese nationals visit Australia each year, and spend more than most other visitors. Our Chinese visitors benefit from experiencing a welcoming, interesting, safe and beautiful country.

Mutuality is the key.

Just as Whitlam, back in 1972, could identify mutual benefit at a time when fearmongering about China was the leitmotif of the McMahon Government, so Labor can identify mutual benefit at a time when clumsiness and inconsistency are the leitmotifs of the Turnbull Government. Whitlam’s insight, vision and confidence provided the first critical step that set Australia on the path to a relationship of great benefit to us. Our collective task – one to which Labor is committed – is to ensure that mutual benefit is continued.

All of this requires shared understanding, to which the Australia China Business Council contributes substantially. As the Governor of the Reserve Bank said just a couple of weeks ago, we all have a strong interest in understanding China. And, what is more, as Philip Lowe said, “we all have a role in helping build that understanding”.

It is now more than twenty years since Paul Keating reminded us all that if Australia does not succeed in Asia, it will not succeed anywhere. The Gillard Government’s Australia in the Asian Century White Paper was absolutely right when it noted that Australia is located in the right place at the right time – in the Asian region in the Asian century. And as I noted earlier, for Australia to get it right with Asia, we have to get it right with China.

Getting it right with China is a task that Labor is willing to take on, just as we have in the past. We approach our relationship with China confidently. Our approach is deliberate and measured, aiming to advance the relationship and dealing with difficulties when they arise. And we conduct our relationship with China not at the expense of any other relationship. We do not see it in binary terms, but in a network of relationships that we pursue on the basis of a clear understanding of what our national interests are.

For you, as members of the Australia China Business Council, engagement with China is a day-to-day reality. It is Labor’s aim to support and facilitate that engagement. This is what Labor’s approach to foreign policy is all about – a confident diplomacy reflecting intelligence and tact.

Authorised by Noah Carroll ALP Canberra.