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Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

12 March 2013

Australia China Business Council
Canberra Networking Day Function

***Check against delivery***

Thanks, it's really great to be here today. It's a great opportunity to talk about the big role which organisations like the ACBC are playing in deepening our engagement in Asia. A few months ago we released our Australia in the Asian Century White Paper which underscored just how much weight the Gillard Government puts on building our relationships in the region. For forty years, the Australia China Business Council has been laying the critical groundwork for this by enhancing our commercial presence in what will be the world's biggest economy by the end of this decade. I know firsthand how much you've done because I've seen it in action. I've seen it on quite a few of my eight trips to China as Treasurer, and frequently here at home in Australia, at events just like this one. As believers in the China story, you probably felt the same way I did last year when you heard all the pessimism out there on China's economy. There's no doubt we had two big risks in the global economy in 2012, but China was not one of them. Rolling crises in Europe and the US dogged the global recovery last year and they are still the biggest risks on the horizon. But there seemed to be a whole industry last year dedicated to the idea that China's economy was going to come crashing down. Well I think we'd now all agree that China's growth has stabilised at a pretty robust pace. I've always been an optimist about China – and I think we've seen that they've still got the policy capacity to manage their economy and they've been getting it pretty right. We also need to keep China's recent growth performance in perspective. China is now 40 per cent larger than it was in 2008. So its growth rate can be 20 per cent lower – say 8 per cent now versus 10 per cent back then – for China to make the same contribution to global growth.

Yes there are risks – as businesspeople putting your capital at risk in China every day you'd be better placed than most to assess these. You know only too well that China will have to keep addressing its big structural challenges like the huge amount of unregulated lending in its financial system and its transition to more consumption‑led growth. But so far, China seems to have managed its transition pretty well. And it was encouraging to hear outgoing Premier Wen say just a week ago that China's continued reform and re‑balancing towards domestic consumption would be critical for China's future. A more moderate pace of growth is consistent with a maturing Chinese economy, as well as the Chinese Government's target for sustainable, high‑quality growth. In fact, I think Governor Stevens put it well when he said 'the medium‑term outlook for China is for a less hectic pace of growth' but with more attention paid to the various risks. In particular, Chinese leaders are beginning to emphasise the fact that a less breakneck pace of economic growth will enable more focus on environmental concerns, inequality, and health and safety. While some pretty clear risks remain in China's economy, I'm confident that the leadership transition – currently in its final stages – will bring a renewed commitment to addressing China's economic challenges.

All of you here today know better than most that what is good for China's economy is good for the global economy and good for our economy. Because Asia's re-emergence, and China's remarkable economic story in particular, continue to change the shape of the global economy. Treasury modelling in our recent Asian Century White Paper projects that by 2025, China's output will make up a quarter of the world's GDP. And by then China's middle class will have quadrupled – hundreds of millions more consumers who will demand more and better goods and services. You know that China is already Australia's largest trading partner, our largest goods export partner and our largest market for services exports. But you are also here because you know that the deepening relationship between China and Australia will continue to be one of the defining features of Australia's economic story in the Asian century. That's why we released our Asian Century White Paper – to lay down our plans for harnessing the opportunities on our doorstep. We're already making great progress on implementing the pathways we set out in the White Paper. A really good example of this is the active support we're providing for RMB internationalisation – in fact next month we're hosting the inaugural Australia-Hong Kong RMB trade and investment dialogue. Treasury and the RBA have also been working closely with the People's Bank of China to set up direct trading between the RMB and the AUD.

There's a significant opportunity here. RMB-denominated trade settlement reached almost RMB3 trillion in 2012 – up 42 per cent in just one year. In addition, the latest data shows the value of RMB payments more broadly increasing by a massive 171 per cent since January 2012. Tapping into this is just one of the policy pathways of the Asian Century White Paper that the government is working on.

We're also investing in productivity, securing relationships within our fast-growing region and creating an Asia-ready workforce. We recently announced a new plan to capture a bigger slice of the jobs, exports and opportunities in our region. A big part of this was building new industry innovation precincts to bring business and researchers together. And providing support for Australian companies to help them grow and compete globally in developed and emerging markets alike. I'm also pleased to announce today that we are redirecting $6.5 million to improve Treasury's engagement in the Asian region as part of our ongoing effort to ensure our public service is focussed on Asia. With this funding, Treasury will deepen cooperation with a number of strategically important partners, including China, India, Japan, Korea, Indonesia, Vietnam and the Philippines. This funding will help drive enhanced cooperation with key finance ministries and central banks in the Asian region on fiscal and macroeconomic policy. On top of this, our new Asian Century Business Engagement grants program will provide more support for businesses to engage with Asia. From 1‑July this year, these new grants will help businesses make the most of the opportunities of the Asian Century by improving understanding of and access to Asian markets. As you all know, it's up to governments to get our policy settings right, but much of Australia's economic success in Asia is going to come down to the hard work, innovation and entrepreneurialism of people like you. So much knowledge and experience resides outside government.

We must keep engaging with China and greater Asia right across the board—through business-to-business links and people-to-people links. We need to deepen the flow of ideas, of trade, of people that's already taking place through bilateral cooperation, whether it be through direct currency trading, or by through events just like this one. That's what the ACBC has been doing for the last forty years. That's what today is all about. So let me once again thank you for inviting me along to this great event.