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China in Peaceful Development and its Relations with Australia

ASIA SOCIETY AUSTRALASIA CENTRE
ASIA FOREIGN POLICY UPDATE LUNCHEON

Her Excellency Mme Fu Ying
Ambassador Extraordinary and Plenipotentiary
of the People's Republic of China

MELBOURNE
30 JANUARY 2006

Mr. Hugh Morgan AC,
The Rt. Hon. Malcolm Fraser,
The Rt. Hon. John So,

Thank you for inviting me to speak to you. Today is the second day of China’s New Year and, according to our customs, it is the day to visit relatives.

My relatives are all on the other side of the earth and I am taking you as my relatives. I am glad to share this festival like lunch with so many people together. I have already been in Melbourne for two days for the Australian open. So I want to start by talking about tennis. As you know, two Chinese girls won the woman’s double and thus breaking the history for China in the Grand Slam games after wining the Olympic Tennis Woman’s double.

Not only I missed that game, even the Chinese tennis team did not expect it and booked earlier flight. The two girls and their couch had to reschedule their flight to stay for the finals. While exited about the result, I felt hurt when the commentator who had been quite professional until then, started making political and biased comments on TV.

For example, when the girls were running and trying to get every ball, she said that they had to play well to show loyalty to the government and that the government spent money on them, etc.

When millions of viewers are watching and listening, making such subjective judgment does not seem wise and responsible.

20 minutes after the award granting ceremony, I called the girls to congratulate them. They were in the middle of sorting out the financial part of the award.

I wondered if the commentator would think that they now need to show loyalty to Australia since they are getting an impressive sum of Australian dollars.

In last December I just visited a sport school in Beijing called Shi Cha Hai Sports School which produced several Olympic Medallists. The school was founded by the state in the 1950s and still receives state funning but very insignificant. It runs like most of the sports clubs here and covers major part of its expenditure through commercial activities. Students attending the school pay their own expanse. But those who have talents and yet are from lesser affordable families would receive a grant.

Successful graduates attach themselves to the school by visiting it and giving lessons from time to time and help the school to attract more students because of their success.

Nationalist is never absent in sports. Just like Australian flag is waved and painted on the faces of the funs, the Chinese flag is always seen whenever Chinese players play on international sports ground.

But why for the normal behavior in a normal circumstance, when it comes to China, the media people, some of them, would tend to dip it in vinegar? But I do not blame them. I think it shows the gap of understanding as result of lack of knowledge of modern China.

As an Ambassador, I see it both as a challenge and as an opportunity, an opportunity for me to work hard and make progress in narrowing that gap.

The topic I choose for today is: China in peaceful development and its relations with Australia.

In my memory of over 20 years in diplomatic service, the world has never been free of worries about some kind of threat from China. Earlier it was the threat of China breaking apart. A two-volume book was published in China called East and West and North and South. It is on the political differences between the Southern part of China which was quickly introducing market economy and the Northern part of China which was the political center; as well as the economic gap between the Eastern part of China which was getting prosperous and the Western part which was still in poverty. 20 years later, the concern that those differences would lead to the split of the country did not happen.

Then there was the talk of food threat of China and then military threat, and then resources threat.

We can’t always blame the press for spreading concerns of threats. China with a huge land mass and a huge population is gearing up in full speed for industrialization. Its impact on the world is bound to be strong. It is quite natural that people have questions about why, what and how regarding China’s growth.

The point I want to make is that, first China can’t achieve its industrialization without interacting with the world and China’s industrialization benefits the world. All the statistics show, China’s fast growth and its growing demand from the world have already formed into a huge stimulating power for the global economic growth. While China is showing a big trade surplus with US, Japan and Europe, it has growing trade deficit with most of the economies in the region. It shows that a unique economic cycle is formed with China staying in the middle of the economic chain of the world production and consumption.

China’s growth is positively felt here in Australian. 60% of Australia’s export to China is resources products. We bought about 80 million tons of iron ore from Australia last year, accounting for 40 % of our total import and alumina for 56%. Export increase to China is 17% of Australia’s trade increase. That shows how important our trade is for each other.

I believe the current good relations between our two countries are based on shared interest. The general view of China is very positive here in Australian. Prime Minister John Howard, in his speech in New York September last year, said that China’s growth is good for China and for the world.

We also agree with the Prime Minister that what drives out relations is more than economic interest. We also share the pursuit for peace and prosperity to the region and the world over. There is no denial that our two countries are different in many ways, in political philosophy, cultural background and state of economic level. Sometimes we have different views on certain issues too. But they do not pose obstacles to the advance of our relations and we can always sit down and talk about things and find solutions or just agree to disagree and not to feel bad about it.

Having said that, I am aware that Australians are not without doubts about China’s growth. Is the boom going to continue? Will the demand going to wane?

Now let me share with you some new development in China. Last December China went through a review of the economic statistics. The finding surprised China and the world. Apparently, China’s GDP had been significantly underestimated. Instead of 1.6 trillion US $, the actual figure is 2.26 trillion thus overtaking United Kingdom and France, turning into the No. 4 economy in the world. The reason is that for many years, the private economic sector is not all included in the GDP counting for lack of the right means in the national economic survey. Even now, some of the smaller private businesses are probably still outside the survey.

There are other positive results of the review. The economic growth of 2005 was 9.9% and the investment and consumption balance is healthier than originally estimated. The new figures have prompted the international institutions readjusting their predictions of the time when China turns into the No. 1 world economy from 2040 to 2030.

But I need to remind you that the per capita GDP of China, though increased from 1000US$ to 1740 US$, its ranking is moved only from 1 to 100. That means China remains a developing country and for a long time to come.

China’s rise is going to be a long term phenomenon of the world and China has to meet many of the challenges on the way, i.e. environmental issues, safe working conditions, still existing poverty and regional gaps etc.

We are keenly aware of the seriousness of these problems. Without solving or easing them, China will be like carrying water on the wings when trying to fly into the sky.

Last year, many new terms appeared in China’s policy statements, including harmony in society, scientific manner in development, green GDP, energy saving society, environmentally friendly society etc.

We have to reverse the single purpose way of driving for economic growth only. It is important to find harmony in all aspects of development and allow all people in the society share the benefit of growth.

This is also reflected in our relations with Australia. For example, we have initiated Coal summit last year which is focused on improving mining safety in China. We are importing the technology of methane extracting before mining, clean coal power generators, solar cell making technology etc. Another project I am really working hard promoting is grassland management.

The fact that China and Australia could work on such socially important projects is a good demonstration of the healthy state of our relations.

Trade is expanding at an impressively high speed. Last year our bilateral trade reached 350 Aus $, turning China into second merchandize trading partner of Australia. I am optimistic about growing into your No. one trading partner, over taking Japan as Australian-Japan trade is growing at a speed of 2-3% while ours is growing at over 25 %. There are already 250 Chinese companies operating in Australia. I am actively promoting Australia among the Chinese business world, encouraging some of them to consider listing on the Australian stock market for example.

80,000 students are studying in Australian universities until the end of last year accounting for a quarter of your international students and the rate of increase is 25%. Tourism is also jumping by 29%, about 300,000 tourists from the mainland visited Australia last year.

However, that is only 1% of the total Chinese tourists visited overseas. Last year over 30 million Chinese toured the world, spending 235 million dollars a month, turning China into one of the sort after markets of tourism. The average Chinese tourists spend 2200 Aus $ here, higher than most of the tourists from other countries, probably because they can’t find many things to buy that are not made in China.

To ensure a lasting healthy economic and trade relations between our two countries, we are also working on a bilateral FTA which will enter its substantive negotiations this year. After three rounds of meetings, the two sides have had better understanding of each others’ expectations. As far as I see it, agriculture many be one of the areas of difficulties. Australian side certainly would like to have greater market access in this area and China has to take into consideration the interest of the agricultural sector which accommodates 800 million of the Chinese population.

Some ague that given the size of Australian agriculture, the maximum effect would be a few percentage points. However, for China, it may mean 100% of livelihood for some people in the farming area. Therefore we got to be very careful when moving ahead.

China has long been an agrarian state. In its long history, key underpinning factors for the dynasties changes were stabilities of farm areas.

Nowadays, agriculture remains the center of politics. Though 20 years of reform has lifted hundreds of millions of people out of poverty, the rural living standard is still much lower than the urban population and 150 million people regarded as in access on farm work while 6 million new rural laborers are joining the working force every year. This is already a serious challenge for China. I hope Australian side would understand the sensitivity of China in the agriculture area.

Having said that, many other sectors both in China and in Australia stand to benefit in FTA and therefore both sides are genuinely committed to the negotiations.

Now before I finish, I want to spend a few minutes on our cultural exchanges. I think nothing can be more effective in promoting understanding and bringing peoples closer than cultural exchanges.

China has opened to the cultures of the world as soon as it opened its door in the late 1970s, from Hollywood to Japanese electronic music to the recent Korean TV series, China has seen an entirely new generation with modern culture appreciation.

Likewise, Chinese culture with its 5000 years of long history is also sweeping beyond its boarder. You can find Chinese element in many international culture products such as fashion design and film production.

In China’s history, every great wave of cultural encounter with the world brought major progress in China and in the world. Now we have cultural exchange agreements with 145 countries and a dozen’s of cultural centers and 100 Confucius schools in the world, including one in Melbourne.

This year, we are promoting a major culture program in Australia called Experience China. It involves over 20 projects running throughout of the year with 700 artists and performers joining the program.

The aim is to bring China closer to many more Australians and attract tourists both ways. I would like to thank all those sponsors in China and in Australia, in particular, BHP Billiton, Rio Tinto and Qantas who generously helped with the Olympic Exhibition to be on in April.

I invite you to join us in these cultural exchanges with your attendance and support.

Thank you.