1 Talking Point 6 Week in 60 Seconds 7 China Consumer Week in China 8 Banking and Finance 9 Economy 11 Internet and Tech 12 Auto Industry 20 September 2013 13 Society and Culture Issue 209 17 And Finally www.weekinchina.com 18 The Back Page Will Beijing like the new bloke? www.benitaepstein.com As Tony Abbott takes over as Australian prime minister, what’s the outlook for Canberra’s ties with Beijing? Brought to you by Week in China Talking Point 20 September 2013 Beijing sizes up Abbott Will Australia’s new leader be less friendly to Chinese business interests? Next stop, Beijing: Tony Abbott has said he wants to sign a free trade pact with China within a year oliticians have often been keen But the swimmer supreme this reputation as a Sinophile and fluent Pto take the plunge to get a bit of month must be Tony Abbott, who is Mandarin speaker. But his policy publicity. Mao Zedong was reported now tripling up as Australian prime achievements with the Chinese were to have swum so rapidly down the minister, triathlete and volunteer more limited than he would have Yangtze in 1966 that he started get- lifeguard. Abbott was seen so often hoped. At home he took early criti- ting invitations to compete at inter- in his swimming trunks that his cism as a Chinese stooge (his oppo- national swim meets (see WiC116). election team called a halt to fur- nents labelled him “the Manchurian Beppe Grillo, leader of the populist ther photos, declaring the cam- candidate”) before drawing susbse- Five Star Movement in Italy, made paign a “budgie smuggler-free quent fire from Beijing after a series his own headlines last year by zone”. The ploy worked: Abbott won of rows when Australia blocked Chi- swimming to Sicily across the the vote and was sworn into the top nese investment (see WiC22). His Straits of Messina (which looked a job this week. Aside from more ac- hosts were also left unimpressed by lot narrower on Google Maps, Grillo tion shots from the beach, what else some straight talking during a trip said afterwards). Christine Lagarde, can the Chinese expect from Aus- Rudd made to the Chinese capital, managing director at the IMF, says tralia’s new Iron Man? despite his suggestion that true Photo Source: Reuters Reuters Source: Photo the national medal she won for syn- friends (or zhengyou) could speak chronised swimming also taught an How does Abbott’s China experi- freely on matters on which they dis- important political lesson: “Grit ence compare to his predecessor? agreed. But back in Australia the your teeth and smile.” Kevin Rudd arrived in office with a sniping was that Rudd never man- 1 Week in China Talking Point 20 September 2013 No one-child policy in this family: Abbott celebrates victory with wife and three daughters aged to establish much rapport with So is the country still dependent ble digit levels a few years ago to his Chinese counterparts, even if he on mining and China for its 7.5% this year. But Australia has still could speak their language. growth? done very well.” Abbott starts out with a lot less This was a point the two candidates Because China’s economy is now expected of him, not least because disagreed over during campaigning. so much bigger, it continues to be a of his reputation as a surf-and- Rudd argued that the resources major contributor to commodity de- sausages Aussie more at home in an boom had come to an end, while Ab- mand, even as growth tapers off. Anglo-centric world than an Asian bott saw things differently, claim- Even so, Australian investors have one. Perhaps overcompensating for ing that a change in government been watching the economic data this, he is insisting that he will pur- would “reboot” the mining sector. with concern, especially earlier in sue an “Asia first” foreign policy. Certainly, Australia is entering a the summer when the indicators “It’s not that I lack a sense of the new era after a lengthy period of looked bleak and the Chinese banks community of values’” with Eng- spectacular growth for its com- seemed to be on the verge of a credit lish-speaking nations, he explained modities firms. China played a key crunch (see WiC199). Since then the in an interview to the Lowy Insti- role in the boom, first as a leading mood has improved, with better tute that was picked up by the wider customer but then as financial numbers for trade, investment, retail media, “But in the end your focus backer for many of the new mining sales and production. And longer has got to be on the relationships projects intended to extract more term, Bloxham seems fairly confi- that need the most attention.” coal, copper and iron ore. dent: “Our HSBC house view is that Abbott says “Asia first” is prag- But the concern over the last year the commodity boom is changing matic because the decisions shap- has been whether demand from shape. It’s fair to say that it is slow- ing Australian interests are now just emerging markets can keep up the ing down, but it’s not collapsing.” as likely to be taken in cities like pace, which is why Paul Bloxham, Partly, that’s based on the prem- Jakarta and Beijing as they are in HSBC’s chief economist for Aus- ise that the new investment in Washington. It also means that he tralia and New Zealand, says that mines is about to pay off, as the ad- will visit Asian capitals before going the most common question he is ditional capacity boosts supply. to Europe and the United States. In- asked by clients is “What happens if There’s also the view that the com- donesia is first on the list (“in the China slows down?” position of demand is going to great scheme of things, it’s our most “The first thing to note is that evolve. Coal and iron ore have been Photo Source: Reuters Reuters Source: Photo important relationship”). But his China has already slowed,” Blox- the largest contributors to Aus- next priority is to pay “appropriate ham told WiC from his Sydney of- tralian exports in the past, feeding respects” to Australia’s main trad- fice this week. “In fact, growth has the infrastructure build-out across ing partners, China among them. been slowing for a while, from dou- the Chinese economy (a trend that 2 Week in China Talking Point 20 September 2013 HSBC says has some way to run). But Bloxham thinks that demand for energy is going to be another major feature in the years ahead, particularly as millions more peo- ple move into cities. An example of this newer sweet spot is liquefied natural gas (LNG), with seven major projects soon to start operations in Australia. “Once they’re switched on, the increase in LNG exports is going to be massive, up by as much as 400% by 2020,” he predicts. Bigger picture, the commodity-in- tensive growth path of economies like China also bodes well for the Australian economy. “The countries driving global growth need lots of Chinese tourists like her are Australia’s highest spending visitors natural resources,” Bloxham says. “Western countries had similar needs Chinese feature strongly, constitut- bott delivers on his pledge of equal in the 1950s and 1960s but what ing 40% of international enroll- treatment. we’re seeing now is that demand is ments, far ahead of second-placed Back in Australia, there wasn’t coming from the emerging Malaysia with 7.2%. much discussion of the country’s economies, led by China, as they Both sectors will be helped by a relationship with China during build new infrastructure and as more weaker Aussie dollar, as too will campaigning, says Peter Cai, a jour- people move into cities. That’s good agri-business, another area getting nalist at The Age in Melbourne. The news for commodity producers.” more focus in trade terms. Sales of only real mention of the Chinese meat, oil seeds, cotton and dairy to was an indirect one as part of the Is Chinese demand shaping other Chinese customers have been grow- debate about restricting purchases sectors of the Australian economy? ing and Abbott told an audience in of land by foreigners, Cai told WiC WiC’s Focus edition on Sino-Aus- Beijing last July that he had high this week. tralian ties a little over a year ago hopes that Australia could become The context to this debate: grow- discussed whether a “resources a “food bowl for Asia”. ing political pressure to make it curse” was hollowing out other more difficult for foreign investors parts of the economy. It also ex- But are the Chinese being sent to take control of Australian assets, plored other areas in which Chi- mixed messages in respect to trade particularly in the rural economy. nese demand could boost the and investment? Abbott himself seems to favour a “Lucky Country’s” economy. And On the same trip to China, Abbott tougher line and in June his Liberal as the boom subsides, there are spoke positively about foreign in- Party backed recommendations for early indications of rebalancing to- vestment too, saying that it was “vi- greater scrutiny of sales of domes- wards other industries like tal” for Australia and promising that tic agribusinesses to overseas inter- tourism, where the Chinese are al- any government under his leader- ests. He has also promised to look at ready the highest-spending visitor ship would welcome the Chinese on “extra safeguards”, based on lower- group and are poised to overtake the same basis as investors from ing the limits in which acquisitions the New Zealanders for first place other countries.