Comment: Open for Business

Rowan Callick looks at the change in government in Australia and what it means for the Australia-China relationship.

“Australia is open for business” again. These were among the first words spoken by Tony Abbott after winning the election in September. They were words especially welcomed in Beijing. For the last few years have mostly been restless years in the relationship between Australia and China – albeit culminating in a new formal framework established in the final period of Julia Gillard’s leadership. Businesspeople in both countries – who have in recent times been to the fore in promoting closer ties – have felt that opportunities have gone begging.

But the new Australian prime minister appears determined to build the relationship around the solid basis of constantly increasing mutual economic dependence, while at the same time wishing to widen it out. Due to the fortunate timing of the election immediately before a succession of big annual leadership summits, Abbott has already been able to hold talks with China’s top two leaders, President Xi Jinping during the APEC summit in Bali, Indonesia, and Premier Li Keqiang during the East Asia Summit, which followed immediately, in Brunei.

Abbott told Xi that he wishes to conclude a free trade agreement with China within 12 months, following a slowdown in the talks, now in their ninth year, to a virtual standstill after 19 rounds. He said he wishes to promote the diversification of the economic relationship into new sectors where it is presently thin.

Xi invited him to visit China, and Abbott responded that he would take with him – probably in April or May 2014 – a senior delegation of State Premiers, as well as business, academic and cultural leaders, to underscore his commitment to developing a broad-based relationship. Abbott and Premier Li welcomed the prospect of intensified negotiations towards an Australia-China FTA and Mr Abbott’s planned visit to China. They also discussed the often fraught situation in the South China Sea and progress towards the development of a Code of Conduct to promote strategic stability – long sought by ASEAN nations and now acceded by the new Chinese leadership team, helping to defuse tensions in those waters, through which most of Australia’s global trade flows. The Australia-China relationship is now relocated within the context of the first major policy thrust of the new Abbott government – a rapid intensification of ties with Asia overall.

Abbott’s first overseas visit was to Jakarta, and he and his Foreign Minister Julie Bishop and the newly titled Trade and Investment Minister Andrew Robb have been flying hectically around the region and meeting as many leaders as possible. Robb held talks with 18 counterparts in Bali alone, and was planning to visit by the end of November, the three key countries with which Australia has longstanding, bogged-down FTA negotiations – China, Japan and South Korea, Australia’s three biggest export markets whose share of total Australian overseas sales last year reached 57 percent. He has already indicated that pragmatism will trump the long-held requirement for fully comprehensive arrangements, without which no deal could be concluded.

Robb says: “We’re not going to hold out for 100 percent [in these negotiations]. If, say, 90 percent is there I’ll put it to Cabinet.”

Robb is the first Liberal to become Trade Minister since 1956 – the role previously going, within coalition governments, to the National Party that represents largely regional interests, and whose deputy leader Barnaby Joyce, now Agriculture Minister, has been especially hostile to foreign purchase of farmland.

But in talks in Jakarta with President Susilo Bambang Yudhoyono, Abbott welcomed Indonesian investment in pastoral properties, especially in tropical Northern Australia whose rapid development is now subject to a white paper that will deliver its recommendations within a year. A mere day later, Indonesian agribusiness giant Japfa Foods announced it would buy two outback cattle stations – welcomed by the Abbott government. This would appear to encourage further Chinese diversification of its investment in Australia into rural industries and other sectors to complement its dominant interest to date in resource ventures.

The governments of the major states are now also in the hands of the coalition, and they too tend to be strongly supportive of greater Chinese business involvement. West Australian Premier Colin Barnett wants to remove the automatic referral to the Foreign Investment Review Board triggered by state owned enterprise activity: “The reality is the big industries in China, at this stage, are all state-owned and I don’t think we should in any way discourage their participation.”

The new coalition government in Canberra is likely to relax the increased restrictions that Labor had begun to impose on the issue of temporary 458 visas for skilled workers and managers, and being free of the strong trade union ties of the previous Labor government, may be more inclined to countenance greater participation by Chinese employees in their investments in Australia.

The promised repeal of the mining tax and the carbon tax are further issues, about which Chinese corporations have consistently complained, likely to make such businesses commit to greater participation in the Australian economy. Australian corporate leaders have already expressed increased optimism about the priorities of the new government – whose Chinese counterparts are in many cases also comparatively new. James Packer said that Abbott “putting Australia’s economic development and interaction with China as a priority will lead to things happening in the tourism industry,” where his casinos draw significantly on income from Chinese visitors. And Wesfarmers’ chief executive Richard Goyder says the new Abbott government has a “brilliant opportunity” to showcase Australia as a destination for foreign investment as the nation prepares to host next year’s G20 meeting in Brisbane.

Abbott also had the opportunity, in his prime ministership, to compare notes with neighbouring New Zealand leader John Key, who flew to Canberra for their meeting, and who was able to talk about the pragmatic way in which his country concluded its FTA with China five years ago.

Bishop said while in opposition that she would like to see Canberra start negotiations also with China’s special autonomous region of Hong Kong, which has requested talks on a double tax treaty and on a comprehensive economic arrangement, both of which New Zealand has already concluded. She said: “There’s already a great deal of business between Australia and Hong Kong, which is a window in and out of China. In that context, it’s very important.” 

*Rowan Callick is the Asia-Pacific editor of The Australian, and the author of the new book Party Time: Who Runs China And How.

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