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China's one road is the right road for Australia

By Adrian Pursell | | Updated: 2017-05-31 16:19

2017, the year of the Rooster, is also the year that Australia and China celebrate 45 years of diplomatic relations. The last 45 years has seen significant changes in both countries. How will Australia’s future look in another 45 years? When I talk to my friends about how Australia will fair with the rise of China, I can only see a tremendous amount of opportunities and optimism, not only because we have a large amount of commonalties but because of our culture. Our openness, humour, honesty and our love of sport and food are underlying factors to our strengthening of ties. I prefer to look at the similarities rather than the differences.

I see Australian traditional manufacturing still finding it difficult to remain competitive despite the adoption of world’s best practises including Lean Six Sigma and automation. This is without the effect of the Australian dollar. A lot of Australian companies have taken different steps to remain competitive while still trying to keep the major components of production in Australia. Like having some of their labour intensive component manufactured in China while keeping the main production process based here in Australia. Also a lot of Australian companies have taken the plunge and just moved their whole manufacturing operation to China. Unfortunately, when we do this, we let go of our innovation, as we all know it comes from the factory floor as we continue to look for improvements. In saying this, good companies with live manufacturing systems can also counteract this. These can be seen as some of the negatives in our two-way relationship but I believe this is where it ends. I have also seen Australian business turn full circle from out sourcing to on shoring as their international sales have surpassed their Australian sales.

As China continues to build One Belt One Road (OBOR) initiatives, this only enhances Australian companies manufacturing in China. The more China opens paths, the more Australian companies can take advantage by riding on the camel’s back. The facts are simple, Australia has a small population with a low PPP (Purchasing Power Parity) compared to the other G20 countries. So Australia needs to trade. Australia has a good opportunity to take advantage of the initiatives that China is making, by utilising low cost manufacturing, allowing Australian designed and developed products to be competitive globally. By opening up, these trade routes only helps. Combined with our other markets that remain competitive such as education, tourism and agriculture, they allow Australia to have a two-way-income stream that is dependent on OBOR initiative — more market exposure for Australian products manufactured in China and more money for the Chinese people to spend on Australian products or in Australia.

Australia's two-way trade with China pushed past $140 billion for the first time in 2016. The Australia-China Business Council has shown that trade with China generated the equivalent of $10,000 per Australian household in the past year alone. So these are, by any measure, important relationships. Australia's outgoing ambassador to China, Geoff Raby, recently said that: "Arguably, no country has benefited more from China's rise than Australia. And no country wants to see China's economic growth sustained more than Australia."

As countries develop and engage more closely with the world around them, they tend to do this in three broad phases: the first consists of trade in goods, the second in services, and the third sees increased investment flowing in both directions. This is a dynamic we're watching play out between Australia and China right now, and Australia needs to view investment from China as an opportunity, not a threat. Trade in goods between China and Australia is booming. China now takes a quarter of Australia's exports, and there are only six other countries in the world that import more from China than we do. The figures are astounding: China represents almost 48 per cent of global iron ore demand, 41 per cent of zinc, 39 per cent of copper, and 36 per cent of nickel. It is also a collaboration partner in research and innovation in the automotive, manufacturing and agricultural sectors.

Australia is also finding success in the delivery of services. The two heavy hitters are education and tourism. There are currently 136,000 Chinese students studying across Australia. A decade ago, there were just 9000. As for tourism next year, visitors from China are set to outnumber those from anywhere else. The third phase of development lies in increased investment. The US has invested almost $550bn in Australia, the UK $472bn, and Japan $117bn. China, on the other hand, already the second largest economy in the world, which ranks 7th has only invested just $74.9bn. In my humble view, China should be number one. Australia needs a National Water Scheme, could China be the investor?

This is only the tip of the iceberg as our Chinese neighbours become richer having more expendable income while also getting a better handle on the English language. It is being stated that China will become the largest English speaking nation in the world in two decades. This will mean they will be more open to new leisure time activities that we take for granted in Australia such as camping, fishing and all the other crazy stuff we do. I think Australians have the best ability to show the Chinese how to have fun. Let’s face it we are good at it and we enjoy seeing others have fun also, especially if it’s their first time.

It’s just plain common sense if China expands its trade routes, Australia will benefit! It could be said that Australia more than any other country wants to see these opportunities succeed. Put it simply, it’s a win-win for Australia and China. As China grows by default other Asian neighbours will also benefit increasing the prosperity of the region a by-product of this is peace. It’s true we are in the best place geographically and we have a fantastic culture that we can exploit to our mutual benefit. Our culture has been influenced by our Chinese immigrants that have been in Australia since the 1800’s truly an important ingredient in the makeup of our great country.

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