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Stronger ties to India can reduce unhealthy dependency on China
With Julie Bishop and Marise Payne sitting down for two days of talks with their US counterparts, you can be certain that they're spending much of the time discussing a big, shared problem.
Yes, they've already announced that they'll be conferring on the hardy perennials – North Korea, terrorism and the Middle East – in their talks on Tuesday and Wednesday.
But the big, shared problem that is not actually named in the official announcement of the annual AUSMIN talks is China. The fact that Bishop and Payne couldn't bring themselves to name it is an indicator of just how sensitive it is for Australia.
Their press release promised to work with the Americans to "reinforce our shared commitment to supporting an Indo-Pacific that is peaceful, open, prosperous and adheres to the international rules-based order", which is another way of saying "How the hell do we stop China's encroachments?"
And they said they'd discuss with Secretary of State Mike Pompeo and Defence Secretary Jim Mattis "how we can work together to promote infrastructure development, economic growth, strong governance and maritime security in the region, which is another way of saying "How the hell do we compete with China for influence?"
Why is Australia is so sensitive to Beijing? Because it has become so dependent on China as an export market. More than one dollar in every three that Australia earns in exports comes from its sales to China. This is Australia's greatest dependency on any one country since the 1950s when it was an economic colony of Britain's.
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And China wields its trade as a political weapon, as nations including South Korea, Norway, Japan and the Philippines have all discovered painfully. Whenever a foreign country celebrates a trade breakthrough into the Chinese market, the Chinese government celebrates the creation of a future point of political leverage.
What to do about this? As with any area of excessive risk, the simplest response is to diversify. That's why Australia must look to fast-growing markets such as India and Indonesia. And that's what was uppermost in Malcolm Turnbull's mind when he commissioned an expert report on India's potential for Australia.
But the report that the prime minister commissioned with some fanfare last year was quietly slipped out by a minister two weeks ago. It wasn't that the government was trying to keep it secret but it certainly wasn't trying to get any attention for it, either. The Trade Minister, Steve Ciobo, released the report by tweet after 8pm one night, followed by a press release the next day.
It's not that the report is some sort of dud. It's a high quality, 500-page report, containing 90 specific recommendations, written by the former secretary of the Department of Foreign Affairs and Trade, Peter Varghese, who's also a former Australian high commissioner to India.
Perhaps it's because Varghese is quite explicit about the China risk. He notes that India is in "deep strategic competition with China". He notes that there is not just economic advantage but a political logic to a closer relationship with India:
"A strong economic relationship with India strengthens Australia's economic resilience," Varghese writes in his report, titled An India Economic Strategy to 2035. "That is important for a country where 40 per cent of our exports currently go to just two markets with ageing populations," meaning China and Japan.
"India – a large and young population – adds balance and spreads risk in Australia's economic relationships." The India relationship is so badly underdeveloped that, while there are hundreds of direct flights a week to China, there is only one direct flight a day to India. And no Australian airline runs a direct flight to India.
Tourism and business cannot possibly flourish with so few air services. Note that there is a fast-growing Indian diaspora in Australia of some 700,000 people. Plus, of course, another billion or so back home.
And on the politics, Varghese points out that there is an increasing Indian "willingness to work with the US, Japan and Australia in ways which capture the growing strategic convergence of these four democracies".
This is anathema to China. It's precisely the logic of the nascent four-nation grouping known as the Quad, a grouping that Beijing inevitably lashes as an attempt at "containment of China".
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Or perhaps Ciobo didn't want to draw attention to the fact that he was supposed to deliver a free trade agreement with India years ago. Indian Prime Minister Narendra Modi visited Australia in 2014 with mutual promises that a free trade agreement was imminent.
"At that time everyone said all the negotiations were done, it's in the final stages, and the leaders said they wanted it finished in six to nine months," recalls a Sydney-based Indian doctor and businessman, Jagvinder Virk, who's also an active member of the Liberal Party. "Four years now – nothing."
"Due respect to China," says a frustrated Virk, "China has played a big role in this country. We know that Australia has breakfast, lunch and dinner with China. But let's at least have high tea with India."
Yet, in fairness, the difficulties of negotiating a free trade agreement with India are not entirely of Australia's making. The negotiations bogged down because Australia demands a high degree of access to India's agriculture market but also because India demands the right to send big numbers of workers to Australia.
Varghese doesn't see any easy solution but suggests an end-run instead. Australia should throw itself into negotiations for the 16-nation Regional Comprehensive Economic Partnership, which includes India as well as China. This larger deal could open India to a later bilateral deal, he figures.
Yet the larger point is right. Varghese says that India offers Australia the greatest growth opportunity on earth. Australia's merchandise exports to China last year were $100 billion. And those to India were worth $15 billion.
Varghese sets an ambition, healthy but not unrealistic, for Australia to treble the value of exports to India by 2035 to $45 billion in today's dollars, lifting it from number five on the list of Australian export markets to number three.
The test of Australia's seriousness will not be the manner of the report's release but the determination of the government and the business community in delivering on the opportunity.
Of course, India has to do its part, too. Only India can deliver the growth and the openness that it needs to thrive, as well as the market opportunity for Australia to exploit. India has long been a land of infinite potential. Let's hope it doesn't remain that way.
https://www.smh.com.au/national/str...lthy-dependency-on-china-20180723-p4zt5m.html
With Julie Bishop and Marise Payne sitting down for two days of talks with their US counterparts, you can be certain that they're spending much of the time discussing a big, shared problem.
Yes, they've already announced that they'll be conferring on the hardy perennials – North Korea, terrorism and the Middle East – in their talks on Tuesday and Wednesday.
But the big, shared problem that is not actually named in the official announcement of the annual AUSMIN talks is China. The fact that Bishop and Payne couldn't bring themselves to name it is an indicator of just how sensitive it is for Australia.
Their press release promised to work with the Americans to "reinforce our shared commitment to supporting an Indo-Pacific that is peaceful, open, prosperous and adheres to the international rules-based order", which is another way of saying "How the hell do we stop China's encroachments?"
And they said they'd discuss with Secretary of State Mike Pompeo and Defence Secretary Jim Mattis "how we can work together to promote infrastructure development, economic growth, strong governance and maritime security in the region, which is another way of saying "How the hell do we compete with China for influence?"
Why is Australia is so sensitive to Beijing? Because it has become so dependent on China as an export market. More than one dollar in every three that Australia earns in exports comes from its sales to China. This is Australia's greatest dependency on any one country since the 1950s when it was an economic colony of Britain's.
RELATED
CHINA
China's trillion-dollar project changing the world
Add to shortlist
And China wields its trade as a political weapon, as nations including South Korea, Norway, Japan and the Philippines have all discovered painfully. Whenever a foreign country celebrates a trade breakthrough into the Chinese market, the Chinese government celebrates the creation of a future point of political leverage.
What to do about this? As with any area of excessive risk, the simplest response is to diversify. That's why Australia must look to fast-growing markets such as India and Indonesia. And that's what was uppermost in Malcolm Turnbull's mind when he commissioned an expert report on India's potential for Australia.
But the report that the prime minister commissioned with some fanfare last year was quietly slipped out by a minister two weeks ago. It wasn't that the government was trying to keep it secret but it certainly wasn't trying to get any attention for it, either. The Trade Minister, Steve Ciobo, released the report by tweet after 8pm one night, followed by a press release the next day.
It's not that the report is some sort of dud. It's a high quality, 500-page report, containing 90 specific recommendations, written by the former secretary of the Department of Foreign Affairs and Trade, Peter Varghese, who's also a former Australian high commissioner to India.
Perhaps it's because Varghese is quite explicit about the China risk. He notes that India is in "deep strategic competition with China". He notes that there is not just economic advantage but a political logic to a closer relationship with India:
"A strong economic relationship with India strengthens Australia's economic resilience," Varghese writes in his report, titled An India Economic Strategy to 2035. "That is important for a country where 40 per cent of our exports currently go to just two markets with ageing populations," meaning China and Japan.
"India – a large and young population – adds balance and spreads risk in Australia's economic relationships." The India relationship is so badly underdeveloped that, while there are hundreds of direct flights a week to China, there is only one direct flight a day to India. And no Australian airline runs a direct flight to India.
Tourism and business cannot possibly flourish with so few air services. Note that there is a fast-growing Indian diaspora in Australia of some 700,000 people. Plus, of course, another billion or so back home.
And on the politics, Varghese points out that there is an increasing Indian "willingness to work with the US, Japan and Australia in ways which capture the growing strategic convergence of these four democracies".
This is anathema to China. It's precisely the logic of the nascent four-nation grouping known as the Quad, a grouping that Beijing inevitably lashes as an attempt at "containment of China".
RELATED ARTICLE
TOURISM
Tourism boosted by Indian visitor boom
Add to shortlist
Or perhaps Ciobo didn't want to draw attention to the fact that he was supposed to deliver a free trade agreement with India years ago. Indian Prime Minister Narendra Modi visited Australia in 2014 with mutual promises that a free trade agreement was imminent.
"At that time everyone said all the negotiations were done, it's in the final stages, and the leaders said they wanted it finished in six to nine months," recalls a Sydney-based Indian doctor and businessman, Jagvinder Virk, who's also an active member of the Liberal Party. "Four years now – nothing."
"Due respect to China," says a frustrated Virk, "China has played a big role in this country. We know that Australia has breakfast, lunch and dinner with China. But let's at least have high tea with India."
Yet, in fairness, the difficulties of negotiating a free trade agreement with India are not entirely of Australia's making. The negotiations bogged down because Australia demands a high degree of access to India's agriculture market but also because India demands the right to send big numbers of workers to Australia.
Varghese doesn't see any easy solution but suggests an end-run instead. Australia should throw itself into negotiations for the 16-nation Regional Comprehensive Economic Partnership, which includes India as well as China. This larger deal could open India to a later bilateral deal, he figures.
Yet the larger point is right. Varghese says that India offers Australia the greatest growth opportunity on earth. Australia's merchandise exports to China last year were $100 billion. And those to India were worth $15 billion.
Varghese sets an ambition, healthy but not unrealistic, for Australia to treble the value of exports to India by 2035 to $45 billion in today's dollars, lifting it from number five on the list of Australian export markets to number three.
The test of Australia's seriousness will not be the manner of the report's release but the determination of the government and the business community in delivering on the opportunity.
Of course, India has to do its part, too. Only India can deliver the growth and the openness that it needs to thrive, as well as the market opportunity for Australia to exploit. India has long been a land of infinite potential. Let's hope it doesn't remain that way.
https://www.smh.com.au/national/str...lthy-dependency-on-china-20180723-p4zt5m.html
but just in your wet
