19 June 2017


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The late-Ming Dynasty anthologist Feng Meng-long observed “better to be a dog in a time of peace than to be a human in a time of chaos”. This, I’m told, is the origin of the apocryphal Chinese curse “may you live in interesting times”. Leaving aside the merits or otherwise of a canine’s life in peaceful times, it is becoming ever clearer that a human’s life in a time of chaos is deeply challenging.

The truth is that the times in which we live are more than interesting.

The global circumstances that we currently face differ substantially from the kind of discontinuity that our international system has learnt to manage. One of the distinguishing features of the international operating system that has underpinned global order for the past seventy years is its resilience. This resilience has been a function of the complexity of the international system, its multi-dimensional character, and the rules both written and conventional that have governed it.

This was a system designed to deal with discontinuity.

But our contemporary world is characterised by disruption rather than discontinuity. It is of an altogether different complexion, driven by structural factors that include economic and social inequality, the reappearance of nationalism, and the alarming re-emergence of national political groups more driven by ideology than by good policy.

As national leaders and electorates push back against globalisation and integration, they are reasserting national sovereignty as a defence against international breakdown.

This disruption is magnified by new tensions in the basic operating system underpinning the traditional competition for position and power.

At least since 1601, when the Jesuit astronomer Matteo Ricci was admitted to the court of the Wanli Emperor, we have become familiar with the way empires rise and fall as a reflex of their military strength – that is, economic power representing itself as military power. What now confronts us is a world in which economic power and strategic power offer divergent means of jostling for pre-eminence.

The emergence of geo-economic power as a counter to geo-strategic power challenges traditional mindsets and traditional ways of doing business. Comfortable assumptions that military strength constrains global strategic ambition are challenged by the way economic power is focused and organised.

Asia is no less affected by this disruption than is the rest of the world.

In recalibrating our approach to this new and disrupted world, the question for Australia in not whether we are in Asia or of Asia. It is not whether Australia’s culture fits that of Asia. It is not whether Australia’s political system is compatible with the political systems of Asian nations. The basis of Australia’s ongoing relationship with Asia is not a quest for a new identity or a new sense of belonging.

Rather, the basis for a successful and long-term relationship with the nations of Asia is the depth of our understanding of Asia. And that, in turn, is a function of the fact that while we are different from the peoples of Asia we share a common interest in prosperity and security based on an international rules-based order.

The key to Australia’s success in Asia is therefore our ability to understand Asia.

I should note immediately that the very term ‘Asia’ is problematic. As Edward Said pointed out in Orientalism, the West has for almost three centuries lumped together cultures stretching from Egypt to China as ‘the Orient’. But just as ‘the Orient’ is even less homogeneous than what might be described as ‘Europe’, so ‘Asia’ as a descriptor embraces cultures, languages, ethnicities and societies that are fundamentally different one from the other.

As we look west and north to Asia, we see a landmass and a series of archipelagos bookended by Asia’s two historic cultural influences – China and India – and the economic powerhouses of China, Japan, South Korea and India. We also see a group of nations – the members of ASEAN – that have invested continuously for over fifty years in building and maintaining regional stability.

We sometimes forget just what a significant contributor Asia is to the global economy. While China is evidently the engine of the Asian economy, it is important to recognise that six regional economies – Australia, China, India, Indonesia, Japan and South Korea – account for over 28 percent of the global economy. That is greater than either the European or North American share of the global economy. Asia matters, and Asia matters to Australia.

At the beginning of May this year, I spoke at the Jawaharlal Nehru University in New Delhi. In my speech, I drew attention to one of the features that distinguishes China and India from the rest of the world’s great powers: they are both civilisations as well as nation states. China and India existed as great civilisations for the best part of three millennia before their emergence as nation states.

And when, in the post-World War Two dispensation, the dominant role models were the Soviet Union, on the one hand, and the US and its Western allies on the other, it is perhaps unsurprising that China and India have been somewhat ambivalent as they sought to realise their own particular identities as players on the global stage.

But in recent years, particularly under President Xi Jinping and Prime Minister Narendra Modi, China and India have staked their claims as major players.

Perhaps it is the fact that Asia’s two bookends are ancient civilisations as well as powerful nations that gives Asia its complexity. The cultural influences of Buddhism, Confucianism and Hinduism have left indelible traces on the cultures of Myanmar, Thailand, Cambodia, Laos, Vietnam, the two Koreas and Japan. They have also had a massive impact on the cultures of Malaysia, Singapore and Indonesia, where Islam has also contributed to cultural complexity and differentiation.

The large Chinese and Indian communities that live alongside the original ethnic communities across Asia are testament to the energy and entrepreneurship of these two great civilisations.

The European colonial overlay added even greater cultural depth to Asia as nations such as Spain, Portugal, Britain, France, the Netherlands and even Germany sought to capitalise on Asia’s wealth and the industry of its people.

This is the great cultural and social melting pot that has emerged as a major economic and political force. At one level, it might appear surprising that an area of such wide linguistic, cultural, social and religious variation has been able to coalesce sufficiently to rival the more homogeneous societies of Europe and North America. But on closer inspection, the values of tolerance, respect, inclusiveness and thrift tend to favour a more collaborative than competitive approach to managing stability and security.

We need to appreciate that underpinning Asia’s complexity there is a consistency in the preference for a communitarian approach to things as distinct from the individualist bias of most Western societies.

It is precisely that consistency in approach to negotiating outcomes that offers Australia such opportunity in recalibrating our relationships in a time of disruption. But to realise that opportunity, we need to understand what makes Asia tick – we need to understand the cultures of Asia and the mindsets of its peoples.

As Australians, we are good at taking things in, examining them and studying them. We are good at standing outside, looking in. But what we now need to do is engage, and that means coming to terms with the variety and depth of Asia’s cultures. And as you would all understand, the main window into culture is language – and this is a skill that we as a nation continue to ignore.

The Asian Century White Paper, released by Prime Minister Gillard in 2012, spells out our dismal record in learning Asian languages.

“Between 2000 and 2008, the share of Australian students learning a tertiary accredited language other than English in Year 12 dropped in a time where overall student numbers increased by almost 9 percent. In 2008, less than 6 per cent of Australian school students studied Indonesian, Japanese, Korean or Chinese (Mandarin) in Year 12. Fewer Year 12 students studied Indonesian in 2009 than in 1972. And, while Japanese remains the most widely taught language in Australian schools, student numbers fell by 16 per cent from 2000 to 2008.”

Our monolingualism is a liability. It is a national problem in search of a national response. The lack of demand for Asian languages in our schools, the lack of primary school teachers to stimulate the interest of children in learning an Asian language, the lack of effective leadership at both the corporate and governmental levels – all of these point the need for language education to be a national priority.

A better understanding of Asia will enable us to realise the emerging economic opportunities. In April this year, the Asian Development Bank (ADB) published its Asian Development Outlook 2017, subtitled “transcending the middle-income challenge”.

In this extremely thorough and comprehensive review of Asia’s development prospects, the ADB is upbeat saying

“Developing Asia is set to grow steadily, and is well positioned to handle any (my emphasis) risks that might stem from policy uncertainty abroad”.

It goes on to say that GDP across Asia will expand by 5.7 percent in 2017/18, and that it will continue to be the largest regional contributor to global growth.

The ADB comments that, since it opened its doors in 1966, cumulative national development efforts have transformed the region so that, today, roughly 89 percent of the population lives in a middle income economy. As the review notes, the current development challenge is to climb one more rung to high income.

To raise national incomes to the next level, Asian economies need to increase their productivity through a judicious mix of innovation and entrepreneurship, human capital investment and infrastructure development. And these are precisely the areas in which Australia has a unique opportunity to work with Asia – to our own advantage and that of our Asian partners.

There are three areas in particular in which a recalibration of Australia’s place in Asia will draw on Australian expertise while at the same time putting high national income levels within reach. They are: enhancing educational quality; facilitating structural change through infrastructure investment; and the development of sound policies and institutions.

Australia has had long experience in the delivery of tertiary educational services to Asia through the Colombo Plan. Thousands of young Asian leaders studied at Australian universities and subsequently went on to be leaders in Asia’s inexorable rise. But the contemporary need is different from that of fifty years ago.

The demand now is for education in depth: the skills and qualifications that extend right across Asia’s economic enterprises. International surveys such as the Programme for International Student Assessment (PISA) and Trends in International Mathematics and Science Study (TIMSS) indicate that Asia, with the exception of Vietnam, is crying out for investment in quality education at the secondary level.

And what Vietnam’s experience suggests – and Vietnam ranked 8th out of the 72 economies covered – is that sound education policies do close the gap. Australia is uniquely placed to work in this arena.

Of course, some of our universities are already in partnerships with universities across Asia. But this needs to extend into the secondary and primary school systems if our Asian neighbours are to build their skills in depth.

Infrastructure development is another area in which Australia has a long history of constructive engagement with Asia. This has been less a function of investment than it has of grant programs targeted at specific projects. What is now needed is a far more systematic approach to infrastructure development, along with more innovative funding models.

What the ADB is telling us is that economies that are moving from middle- to high-income levels are likely to place a greater emphasis on reliable electricity supply and ICT than on transport, basic communications, water supply and sanitation.

This is where China’s Belt and Road Initiative (BRI) may also play into national development plans. As I’ve outlined previously, the BRI provides valuable opportunities for bilateral and multilateral cooperation, but these have to be realised case by case to ensure mutual benefits are delivered.

The ADB review notes that, as the nations of Asia move towards high income generation, sound policies and institutions will play a vital role, as they did in Asia’s transition from low to middle income.

When I was Minister for Climate Change in the Rudd Government, I quickly became aware of just how useful, and in demand, Australia’s century-long experience in enacting laws to support economic development and building accountable institutions was in constructing emissions trading schemes in China.

We sometimes appear a bit diffident about our capacity to organise things. The fact is, however, that we are good at creating innovative legal and institutional arrangements for dealing with unforeseen challenges. The structure of the Paris Agreement reflects many of the ideas put forward by Australia in earlier negotiations. And the Clean Energy Finance Corporation – a signature initiative of the Gillard Government – addressed market failure with regard to the financing of clean energy projects.

For Australia, building institutional strength in Asia is a low cost investment in a high yield activity since level playing fields and competition rules are essential foundations for sustained economic development.

The key to realising the opportunities for a reinvigorated Australia in Asia lies in greater economic integration.

This requires two related developments: new policy settings that support investment and trade expansion into Asia; and new entrepreneurial skills that mitigate risk through local partnerships.

A recalibration of how we understand Australia’s place in Asia in a time of disruption requires us to re-think the way we have traditionally viewed Asia and to devise a contemporary way of talking about Asia.

I would like to conclude my remarks on the recalibration of Australia’s place in Asia in a time of disruption by reminding everyone that the obverse of our ability to understand Asia is our ability to understand ourselves. And here it is worth recalling the powerful insight of the Indonesia-born, Malaysia-educated Australian citizen, Wang Gungwu who observed, a quarter of a century ago:

“Paradoxically, what Australians value about their culture: the law, the respect for human rights, the parliamentary system, which are not features of Asian societies, are what attract Asians”.

As we deepen our understanding of Asia, we should take confidence from the fact that Asia actually values the fact that Australia is different. We should value this difference, too.