8 May 2009
'Topping out' Ceremony for the Australia Pavilion at Shanghai World Expo
Subjects: Shanghai Expo; Free Trade Agreement talk; Rio Tinto-Chinalco talks.
MR CREAN: This is a very impressive start to what I think is going to be a magnificent building. It was interesting yesterday that in discussions with the Party Secretary for Shanghai, he not only commented about the haste of progress on the Australian site but that it's the first amongst all foreign exhibitors. I told him that we always like being ahead of the pack, but he really commented about the design and the uniqueness of it so I think this is going to be a pretty impressive presentation and statement of Australia's creativity, innovation, its "can-do" approach; a great statement for our relationship and out ability to work here with the Chinese.
QUESTION: Simon there has been some criticism that you are spending $83 million on this when the Budget is charging into deficit and people are losing jobs.
MR CREAN: Well this is an investment in our future and China is essential to that future. Trade figures this week alone highlight that even in the global financial downturn, relations between these two countries are thriving, is strong. It's driving us at a level that we wouldn't otherwise be at and it's a statement of their interdependence.
Now you might remember that it was the former Liberal Government that actually committed to this project, yet only allocated a million dollars to it. Now if you think you can build that for a million dollars, then it just goes to show how out-of-touch they are and if they're really saying that this is a bad investment then they're even further out-of-touch. This is an investment commensurate with our relationship with China, commensurate with our ambition in going forward. This is an economy with whom we have to expand the relationship. China is the place to be. And we've got to get a greater slice of the action and this is going to be part of that exercise. And I'd say also, it's not just Government money in this. This is also the private sector, the partnership, the two-track approach we're talking about in developing the relationship with China. Not just government to government, but business to business, and business working in tandem with Government to promote the twin objective of sustaining our economic future and building a stronger partnership with China.
QUESTION: Speaking of trade, a minute ago...for example the interview you just did in Wuhan kind of expressed some frustration maybe with the pace of Free Trade Agreement talks. Is the flurry of investment activity by Chinese firms, particularly in Australia's mining sector, slowing or presenting a barrier to those FTA talks?
MR CREAN: No it's not, it's completely separate. The flurry of investment is welcome. Australia welcomes foreign investment. It doesn't discriminate on the basis of its source. It has a process that's required from wherever the country is, that's seeking to invest and that's to be subject to a national interest test as to whether it should be allowed. What I've highlighted in terms of the FTA is a frustration in terms of the progress of discussions at a technical level. That's why I was up here last month to engage at the political level. That's why our Prime minister was engaging at the political level at the G20 meeting. I'm convinced that there is a political will on the part of China to conclude this FTA. We certainly have the political will to conclude it; it won't happen unless the political will exists on both sides. That's not say there aren't sill difficulties but establishing the political will, reinforcing it, is fundamental to us moving forward. I believe we did establish that last month but we would like to progress.
But the purpose of this visit, which didn't go to Beijing and hasn't only come here for Shanghai, is to go to the regions of China, the provinces of China. To go to Wuhan in Central China and Kunming in Southern China. Why? Because we already have existing trade platforms with both of those regions. The commercial-to-commercial base is reasonably well-established. What we want to do is to deepen it, to strengthen it, to build upon it, and to diversify it. Two of the regions that we went to, the two cities that I mentioned, are engaged in great urban renewal. China is going to have the largest urban population in the world. It's going to put enormous demand on their cities in terms of housing and infrastructure spends. Australia can be party of that action, not just in the construction, but in the design, the engineering, the smarts and energy efficiency associated with the modern building codes. That's what Australia's good at. And it's a sector that we need to position ourselves in but we've also seen opportunities in the automotive, agri-business and commercial sectors. Therefore, despite the frustration with the FTA, we're not just waiting for it to happen, we'd like it to conclude but we're getting on with the job. The second track approach, building relationships at the regional level and driving the agenda and the dynamic through the commercial exchanges. Again that's a demonstration of our relationship with the business community, working together, that's what the Expo is about, symbolic of that, and a practical demonstration of it.
QUESTION: We've noticed in the past few months that two Australian exports, iron-ore and coal, have been really strong to China, but on China's side we have an oversupply of both commodities. Are you worried that large exports to China will someday create a backlash on the market price?
MR CREAN: Well I think the market price is always going to be a reflection of supply and demand and we have to accept that. What is important is: stimulus packages that the Chinese government has implemented, some $800 billion worth, going significantly into infrastructures, is clearly going to be of benefit to Australia's resource industry. It's true that in the future it may create a circumstance of over-supply but that's only if the domestic economic activity slows. What's interesting though is the extent to which demand is required to meet China's impressively growing infrastructure spend is that Australia's competing with the rest of the world and winning because it's got a competitive product at a higher quality.
QUESTION: Any progress on the Rio Tinto-Chinalco talks?
MR CREAN: Not while it's in the hands of the foreign investment review board. It sought a sixty day extension. I think it's due to report in middle of June so it's in their hands. It's an exercise that is independent of the Free Trade Agreement. Within the FTA we believe there needs to be an important recognition of the role of investment between our two economies. Investment is a two-way street and as much as we are welcoming of - and China is interested in - investing in Australia, then so to are our businesses investing in China. Investment is the new trade. People are increasingly investing in location, either because they want to develop, in the case of China the resource base to meet its need, or because Australian business wants to get closer to a bigger market. It has to position here, whether it's our financial service market, our construction market, our automotive market - all of those sorts of things. Investment is going to become an increasingly important part of the economic relationship. That's why my argument is: let's understand it and build it into the framework that we're negotiating with the Government in Beijing. Let's recognise the fundamental fact it is a two way street, it's good for both economies, and we're ought to be welcoming of it because it's all about diversification. We ought to be confident in our own ability to expand our operations here and ought to seize the moment in terms of the relationship with China. We ought to embrace it, not fear it.
ENDS
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