CHINA COUNTRY STRATEGY AUSTRALIA IN THE ASIAN CENTURY TOWARDS 2025 Cellist Jian Wang performing with the Sydney Symphony Orchestra. Credit: Sydney Symphony Orchestra. CONTENTS INTRODUCTION China: why it matters . 2 Vision 2025: China and Australia . 5 This country strategy takes forward the objective Connecting communities: of the Australia in the Asian Century White Paper: What we are doing . 7 for Australia to build stronger and more comprehensive relationships with countries across What we need to do . 11 the region. Because of their size, economic links with Pathways to 2025 . 14 Australia, and strategic and political influence in the Connecting business: region and globally, China, India, Indonesia, Japan and South Korea were identified as the initial priority What we are doing . 15 countries for the development of country strategies. What we need to do . 19 . Each strategy outlines a vision of where Australia’s Pathways to 2025 22 relationship with the country should be in 2025 and Connecting governments: how we, the Australian community, intend to get What we are doing . 23 there. The strategies identify opportunities for community, business and government to participate What we need to do . 26 in and contribute to the process of deepening Pathways to 2025 . 29 and strengthening our regional engagement. They reflect the views of Australians, collected during nationwide consultations, and in doing so continue the national conversation initiated by the White Paper, to better identify whole-of-Australia objectives and priorities for the Asian century. These are challenges for all of us. Consultations to develop this strategy were held from 4 April to 31 May 2013. During this period, Australian Government officials led by the Department of Foreign Affairs and Trade undertook face-to-face consultations in each state and territory capital. Officials met all state and territory governments and engaged with business representatives, the community and academic stakeholders. Consultations were also held overseas and in regional Australia. In all, 1,300 Australians attended meetings, roundtables and ‘town hall’-style Sydney consultations, May 2013 . public forums. The Government also received over Credit: Department of Foreign Affairs and Trade. 250 formal written submissions. Front cover images This strategy will be tabled in Parliament and Top left: AFL China Athlete Academy at Guangzhou Sports University campus, 2012, regularly evaluated and updated. courtesy of the Commonwealth Government of Australia. The Government extends its deep appreciation to Top right: The Sydney Symphony 2012 China Tour, courtesy of the Sydney Symphony. all who participated in developing these strategies, Bottom left: The Wujin Lotus Conference Centre designed by Australian Architecture and design firm Studio 505, courtesy of Studio 505. and will continue to draw on the views expressed in Australia’s ongoing engagement with these Bottom right: A school group viewing an exhibition at the 7th Asia Pacific Triennial of Contemporary Art at the Queensland Gallery of Modern Art, courtesy of the countries. Queensland Gallery of Modern Art. 1 CHINA: WHY IT MATTERS Facts: China is Australia’s: Largest trading Second-largest Largest source partner: two-way flow source of skilled country of international of goods and services migrants: 10,000 students: almost 120,000 worth over $125 billion skilled migrants in the Chinese students in in 2012 year to February 2013 Australia in 2012 China’s income per capita China per capita income per cent share of USA 100% India Indonesia Japan 80% Korea Vietnam 60% 40% 20% 0% 1950 1965 1980 1995 2010 2025 Source: Treasury projections in the Australia in the Asian Century White Paper (2012). China’s share of world gross domestic product (GDP) 70% 60% 50% 40% 30% 20% 10% 0% 1980 2010 2025 China India Japan Asia Advanced economies Source: Treasury projections in the Australia in the Asian Century White Paper (2012). 2 Australia and China: In 2013 agreed on new bilateral architecture, with Are working together to advance regular high-level contact including an annual leaders- regional and global prosperity level dialogue to provide strategic direction to the including through the East Asia relationship and to deal with differences as they arise. Summit, G20 and APEC. China’s rise to the top of the global economic and China’s economic reforms will bring further political order is defining the 21st century. By 2025, urbanisation and the emergence of the world’s single China is set to be the world’s largest economy . The largest middle class. By 2030, 70 per cent of Chinese Chinese economy’s size and scale, combined with people will be living in cities . New cities will emerge robust growth, will consistently make China the and current second- and third-tier urban centres will largest contributor to global and Asian economic expand . Urbanisation will spread further west and growth leading up to 2025 . inland, creating new and larger economic hubs in China’s interior . How China manages its transformation from export- and investment-led development to a consumption China’s consumer market is set to become the world’s and innovation-driven economy will determine the second largest by 2015 . Growth in discretionary shape of the global economic system in the coming incomes will lead to surging demand for financial, decades . legal and health services, and higher-quality food, consumer goods and entertainment . China’s urbanisation Economic expansion and urbanisation will further 100% Urban population (% of total) strain China’s environment, infrastructure, energy, Rural population (% of total) food security and education system . The aged will 80% account for a large and growing share of the total population, which will test China’s health and 60% aged-care services . 40% China is emerging as one of the largest exporters of capital, with growing investment interests in Australia, 20% Africa, Latin America, Asia and the Pacific. 0% Urbanisation in China is one of the two 1955 1965 1975 1985 1995 2005 2015 2025 most important factors that will shape the Source: World Urbanisation Prospects UN (2011 revision). world’s development in the 21st century . Joseph Stiglitz – 2001 Nobel-winning economist. 3 China’s economic transformation is changing the Growing demand for education, along with rising regional strategic balance and is a major contributor incomes and globalisation, makes China the largest to global strategic weight shifting to the Indo-Pacific global source of migrants and international students . region . China’s defence capabilities are growing and Chinese students account for 20 per cent of all its military is modernising, changing the balance of international students enrolled in the Organisation military power in the region . for Economic Co-operation and Development (OECD) area, making them the single largest cohort of mobile China’s transition to a new economic paradigm will students in the developed world’s education systems . require skills, knowledge and creativity . From 1998 China is also the main source of overseas academic to 2012, the number of Chinese university graduates talent in the West . Chinese students and researchers increased from less than 1 million to nearly 7 million often seek residency abroad after completing their per year . The majority of graduates are in the science, studies or academic tenure. But the dynamics of the technology and engineering fields, in line with demand worldwide Chinese diaspora show that even if its from China’s manufacturing sector and the new nationals reside permanently overseas, they maintain innovation-led economy . close professional and personal links with China . This China is on its way to becoming a research and creates knowledge networks that connect them with innovation powerhouse . In 2011, its investment in global research, technology and innovation centres . research and development (R&D) grew 23 per cent China’s social foundations are also changing to US$139 billion, making China the world’s second- dramatically . Its population is ageing rapidly, and largest investor in R&D after the United States. While rural-to-urban migration and labour mobility are the scale and pace of change is spectacular – and altering traditional family and community relations . China’s global standing in individual education and Exposure to global cultural currents is changing research areas is increasingly world-class – structural established conventions at home, in workplaces and access issues remain, and China is yet to realise and in broader society . the full potential of its innovation system . The strictly controlled traditional media in China coexist with a diverse and vibrant social media scene . While still closely regulated, social media gives voice to some 500 million ‘netizens’ who regularly set the tone of national social and cultural debates, despite evidence of tightening censorship . Yet, China’s transformation is far from over . The trajectory and impact of China’s rise and how it will engage internationally will have a profound impact on the world in the coming century . The growth of China’s middle class is expected to increase private Lee Mingwei working on a new installation of his work, The consumption in China from around Mending Project at the Museum of Contemporary Art Australia, US$2 trillion in 2010 to US$4.8 trillion as a part of the 18th Biennale of Sydney: all our relations (2012). by 2015 Credit: Image courtesy of Biennale of Sydney. Source: Economic