The Hon Josh Frydenberg MP

Treasurer of Australia

KEYNOTE ADDRESS

THE AUSTRALIAN STRATEGIC FORUM

The growth in China’s economy and its implications for Australia and the world

The Asian Executive was pleased to attend The Australian Strategic Forum in Sydney on 18 November where the Australian government (represented by Treasurer, Josh Frydenberg), articulated unequivocal support for continued constructive, inter-dependent and robust China / US trade relations.

Below is the official version of the Australian Treasurer’s address.

Introduction

Much has been made in recent times about the powerful drivers of change occurring in the world and in particular in our Indo-Pacific region.

Much has been made in recent times about the powerful drivers of change occurring in the world and in particular in our Indo-Pacific region

I would like to touch on three issues

First, the extraordinary transformation in the Chinese economy over the last 40 years and its integration into the global economy

Second, the challenges and opportunities China’s transformation has created particularly for trade and investment.

And third, how Australia is advancing its national interest
in both its relationship with China and the world.

China’s economic re-emergence

“To get rich is glorious,” said Deng Xiaoping as he set
China on a pathway to economic reform and openness.

After the devastation of the Great Leap Forward and Mao’s Cultural Revolution, Deng’s “socialism with Chinese characteristics,” saw the lifting of price controls, the privatisation of assets and a more welcoming approach to foreign investment

The subsequent transformation of the Chinese economy has been remarkable.

In the two decades prior to Deng assuming the leadership in 1978, the economy had grown by only two-and-a-half times.

5½ per cent over the next five years it is transforming from its export and investment-led growth to a more services and consumption-based economy.

Since 1980, the share of the Chinese labour force working in services has tripled and today services contribute more than 50 per cent of GDP.

As its economy matures, China though will need to address a number of issues including rising debt levels in its SOEs and the implications of an ageing population

With the proportion of Chinese aged over 65 projected to triple between 2015 and 2050 and the household saving rate today in China remarkably around one-third of disposable income, it will be critical that the government fashions policies that generate a better balance between the rate of savings and consumption.

Today China is the largest economy in the world on a purchasing power parity basis and second to the US on a market exchange rate basis.

However, it’s important to recognise that China does not see its economic strength as a historical first.

As Henry Kissinger has pointed out, China was the largest economy in the world for 1,800 of the last 2,000 years, only to be surpassed by the West with the advent of the Industrial Revolution.

Australia like so many other nations has played a part and been a great beneficiary of China’s rise with China the number one trading partner for more than fifty countries, as it is for Australia, and in the top three trading partners for more than 130 countries.

However, in the two decades after 1978, it grew by twenty-one times.

Even as the annual growth rate has more than halved from a peak of 14.3 per cent in 2007 to around 6 per cent today, the Chinese economy is growing off a larger base.

It is adding an economy the size of Spain to itself each year.

Real GDP per capita in China is around twenty-five times higher than it was in 1980, helping to lift more than 800 million people out of poverty.

China’s share of global GDP has risen to around 20 per cent today

With the IMF forecasting China’s economy to grow annually by more than

中国经济的增长及其对澳大利 亚和世界的影响

《亚洲势代》近期在《澳大利亚人报》的邀请下参 加了澳大利亚战略论坛开幕式。在开幕式中,澳大 利亚财政部长Josh Frydenberg就美国/中国贸易 动态以及澳大利亚在其中扮演的角色发表了首次正式讲话。
澳大利亚财政部长的致辞如下(修改版)

近些年来,全球、尤其是我们的盎格鲁-太平洋地 区发生了许多主要的变革驱动因素。

首先,中国经济在过去40年中发生了翻天覆地的 变化,并融入了全球经济。第二,中国的变革创造了挑战和 机遇,尤其是在贸易和投资领域。第三,谈论澳大利亚将如 何在与中国和与世界的关系中促进其国家利益。邓小平在 使中国迈向经济改革和开放道路时曾说:”致富光荣”。

在大跃进和毛泽东的文化大革命毁灭之后,邓小平的中国特 色社会主义带来了取消价格管制、资产私有化以及对外国 投资的开放态度。中国经济的后续变革意义深远。在邓小 平于1978年就任国家领导人之前的二十年中,中国及其经 济仅增长了2.5倍。

然而1978年之后的二十年中,中国的经济增长了21倍,即 使现在的年增长率下降了一半以上,即从2007年14.3%的 峰值到如今的6%左右,中国经济也仍属于飞速发展状态。 中国经济每年增长量相当于一个西班牙,中国的人均实际 GDP比1980年高出25倍左右,使8亿多人口摆脱了贫困。 如今的中国在全球GDP中所占的份额已上升到20%左右。

根据国际货币基金组织的预测,中国经济在未来五年将继 续以平均5.5%或更高的速度增长,起增长方式也从出口和 投资为主,转变为以服务和消费为基础。自1980年以来, 从事服务业的中国劳动力比例已增长了两倍,如今,服务业 占GDP的50%以上。随着经济进入成熟期,中国也面临着 一些问题,包括国有企业债务水平上升以及人口老龄化的 影响。

预计到2015年至2050年,中国65岁以上的人口比例将增长 两倍,目前中国的家庭储蓄率约为可支配收入的1/3,尤其 重要的是,政府所制定的政策必须更好地平衡储蓄率和消费 率。如今按购买力平价计算,中国是世界上最大的经济体, 而按市场汇率计算,中国仅次于美国。

但是我们需要了解的是:中国并没有意识到其经济实力其 实由来已久。正如亨利·基辛格(Henry Kissinger)所指出 的,在过去2000年的岁月中,中国在1800年中都是世界上最 大的经济体,只有在工业革命来临之后,中国才失去了主导 地位。像许多其他国家一样,澳大利亚对中国的崛起也发 挥了作用并成为重要受益者。中国现已成为澳大利亚等50 多个国家的第一大贸易伙伴,在全球130多个国家中排名前

三。中澳双边贸易关系如今每年创造的价值超过2000亿美 元,其中三分之一是我们向中国进行的出口。

每年有超过100万的中国游客来访,超过20万的中国学生在 我们的教育机构学习。这是互惠互利的关系。在2018年, 我们有19种出口铁矿,其中80%出口到中国用于制造钢材, 其产量足以制造1万座悉尼海港大桥。中国进口铁矿石总量 的60%来自澳大利亚,液化天然气进口总量的45%来自澳 大利亚,这些资源都用于支持中国前所未有的城市化进程, 在过去的四十年中,超过3亿人从农村转移到城市。

在此期间,中国在澳大利亚的投资也有所增加。2010/11年 至2017/18年批准了总值超过2,680亿美元的投资,约占需 经过第三轮批准程序外商投资的19%。2015年,对非储蓄 型城市领域的私人投资高达11.54亿美元,不需要第三轮批 准。中国投资数量增加,投资范围也已扩大到传统资源领域 以外。在17/18年,商业地产和住宅地产投资在第三次获得 批准的中国投资中所占比例最大,服务业投资快速增长,现 在占农业、林业和渔业投资总额的两倍以上。

源源不断的投资流,让中国成为澳大利亚总直接投资价值 第五大国家,仅次于美国、日本、英国和荷兰。在澳大利亚 的所有投资须遵守严格的国家利率。应纳税账户,以及包括 其影响、竞争、税收、总体经济和国家安全在内的各种因 素。我们都特别重视对关键基础设施的投资,无论是能源、 水、电信或交通等传统领域,还是数据管理等新兴领域。在 这方面,不仅是澳大利亚一个国家采取这种做法,美国、英 国、日本甚至中国本身也在一定程度上采取了这种做法。

外商投资与来自世界各地的其他资本流入,帮助澳大利亚弥 合了国内储蓄与支持经济持续增长所需资金之间的差距。

澳大利亚工作机会中五分之一都与贸易相关,十分之一的来 自直接外商投资的企业。这是毋庸置疑的事实。贸易和投.

Our two-way trading relationship is worth more than $200 billion a year with one third of our exports going to China

Over one million Chinese tourists annually visit our shores and two hundred thousand Chinese students study in our educational institutions.

It’s a mutually beneficial relationship

In 2018-19, our iron ore exports, 80 per cent of which go to China, help create enough steel to build the equivalent of ten thousand Sydney Harbour Bridges.

Our exports to China make up 60 per cent of their total iron ore imports and around 45 per cent of their total LNG imports, helping to support their unprecedented urbanisation which has seen more than three hundred million people move from regional to urban areas in the last four decades

Chinese foreign investment has also increased in Australia over time.

Between 2010-11 and 2017-18, over $268 billion worth of investments have been given approvals, which represents around 19 per cent of foreign investments subject to FIRB approvals.

Following entry into force of the Australia-China Free Trade Agreement in 2015, private investments in nonsensitive sectors up to $1.154 billion do not require FIRB approval.

While Chinese investment has increased, it has also broadened out beyond the traditional resources sector.

In 2017-18 commercial and residential real estate was the largest recipient of FIRB-approved Chinese investment with services also featuring prominently now representing more than double the amount invested in agriculture, forestry and fishing.

This continued flow of investment has seen China become the fifth largest foreign direct investor in Australia by value of total holdings behind the United States, Japan, the United Kingdom and the Netherlands

Foreign investment in Australia is subject to a strict national interest test that takes into account a broad range of factors, including its implications for competition, taxation, the broader economy and national security

We are also paying particular attention to investments in critical infrastructure, be they the traditional areasof energy, water, transport or telecommunications, oremerging areas like data management.

Australia is not alone in this regard with the United States, the UK, Japan and China itself also tightening their approaches.

Together with other capital flows from around the world, foreign investment has helped fill the gap between Australia’s domestic savings and what is needed to fund the continued expansion of our economy

Just as 1 in 5 Australian jobs are related to trade, 1 in 10 Australian jobs are with businesses that have benefited from direct foreign investment.

The evidence is overwhelming; trade and investment equals more jobs and it is consistent with our fundamental values of openness and enterprise.

Australia is stronger, as a result of its economic relationships with China and the world

The Challenges

However, China’s rise is not without its challenges

As Napoleon warned nearly two centuries ago, “China is a sleeping giant. Let her sleep, for when she wakes she will move the world”.

China is now very much wide-awake.

The trade tensions between China and the United States have generated significant economic headwinds and uncertainty that is testing the resilience of the global economy.

With the International Monetary Fund estimating that trade tensions could reduce global GDP by as much as 0.8 per cent by 2020, the negative impact on trade volumes, capital inflows, and investment decisions has been real.

If the threat of additional tariffs are imposed by the United States, it will increase the amount of tariffs to USD $735 billion as a result of these tensions and further weigh on consumer and business confidence.

Managing the Challenges

Against the backdrop of these tensions, Australia’smessage privately is the same as our message publicly.

Trade wars have no winners, just losers.

Differences are best resolved by negotiation and a commitment to a rules-based, transparent trading system.

Such a system is the best guarantor of the world’s future growth and prosperity.

That is why Australia is calling for reform to the World Trade Organisation to ensure it remains relevant and effective.

It is also why we have vigorously pursued both landmark bilateral free trade agreements with China, Korea, Indonesia and Japan, among others and multilateral agreements, including the Trans Pacific Partnership and

资等于更多的就业机会,贸易和投资与我们的开放和企业价 值观相一致。得益于我们与中国和世界的经济关系,澳大利 亚变得更加强大。

但是,中国的崛起并非没有挑战。正如拿破仑在大约两个世 纪前预言:中国是沉睡的雄狮,应该让它入睡,因为当他醒 来时,全世界都会为之发抖。中国现在正在飞速发展,但中 美之间的贸易摩擦产生重大的经济阻力和不确定性,正在考 验全球经济的弹性。国际货币基金组织估计这一贸易摩擦 到2020年可能会使全球GDP减少0.8%,这将对贸易额、投 资决策和资本流动产生负面影响。

如果美国施加额外关税,将关税数量增加到7350亿美元,这 将打压消费者和企业的信心。但在这紧张的局势下,澳大利 亚可能始终不会改变最初公开发表的观点。

贸易战没有赢家,只有输家,谈判和对根据规则做出贸易体 系承诺可以有效解决分歧,这种体系是世界未来发展和繁荣 的最佳保证。因此,澳大利亚呼吁对世界贸易组织进行改 革,确保其在未来具有价值。这也是我们积极寻求双边和多 边贸易协定的原因,包括跨太平洋伙伴关系和最近的区域全 面经济伙伴关系(RCEP)。

美国虽然选择退出TPP,但我们仍然希望他们有一天能再次 加入。但澳大利亚也认可美国在这次贸易摩擦中提出的一 些合理问题,包括工业补贴、强制性技术转让和知识产权保 护。重要的是,这些问题需要从更广泛的角度来审视,我们 要认识到国际合作所带来的裨益。

我与印度尼西亚、加拿大和新加坡的财政首脑最近发表了 一份联合声明,我们在声明中表示,坚持对抗而非对话只会 加剧风险、打击信心并削弱全球复苏的前景。美国和中国 之间的关系是如此重要,而不应被描述为零和博弈,即一方 获利的同时,另一方就要受到损失;中美关系不应该是0和1 的关系。

在以集成供应链为特征的日益全球化的经济中,不应该遵 循美国和中国经济脱钩的观念,这样不仅不会产生理想的效 果,而且会带来很高的成本,还将将结束以出口为导向的经 济增长模式,正是这种模式为我们地区带来了繁荣。无论是

美国还是中国的企业或消费者,都会因全球供应链中的可靠 供应和更低生产成本而受益。

例如,中国出口电子产品中的零部件40%以上来自国外。 波音梦幻客机在美国组装而成,其零件是由150多个国家的 20,000多家公司供应。这些供应链如果脱钩不仅具有破坏 性,还会产生重大和不利的后果。女士们,先生们,把今天 的中美关系与冷战期间美苏竞争作比较并进行评论,并不 适合。

正如哈佛大学教授约瑟夫·奈(Joseph Nye)所指出的, 每年有300万中国游客到访美国,有35万中国学生在美国学 习,两国之间的贸易总额超过5000亿美元,中美间的联系和 相互依存程度比冷战时期的美苏关系更加广泛和深入。虽 然两国之间存在尚未解决的紧张关系,但这不需要构建更广 泛的关系。

中国在世界上的角色日益重要,这种重要性仍然存在:拥 有13亿人口,经济日趋多元化。我们需要与中国共同塑造未 来,因此我们的利益来自以和平方式解决争端,而不是用强 制性的区域性规则和架构。正如总理所说,澳大利亚不会在 美国和中国之间做出选择。美国是我们的重要长期盟友,在 长期合作中,我们与之建立了联系和友谊伙伴关系。中国也 是重要的合作伙伴,但我们都承认彼此间也存在重大分歧, 包括政治制度。

但我们有能力处理这双重关系。2003年,美国总统布什和 中国国家主席胡锦涛在澳大利亚国会发表了讲话,就是处理 这种关系的最佳体现。只要根据彼此的价值观和国家利益 在政策立场上保持透明和一致,就可以共赢。我们在人权、 外商投资和外交政策上可能与中国意见不一致,但是,如有 清晰明了和始终如一的态度,分歧就不会破坏这种必要且重 要的关系。

自邓小平在1978开始改革开放政策以来,中国的经济发生 了翻天覆地的变化。这种变革意义深远也大有裨益。但是, 中国的崛起并非没有挑战,中国需要以有效而合作的方式与 其他国家并肩前行,这样才可以确保全世界持续和平和繁荣 的发展。

most recently the Regional Comprehensive Economic Partnership.

The TPP was a missed opportunity for the United States and we still hope they will one day join.

Australia does, however, acknowledge the legitimate issues raised by the United States in their dispute with China including industrial subsidies, forced technology transfers, and the protection of intellectual property.

Importantly, these issues need to be seen through the prism of a broader relationship and a recognition that international cooperation has served us well.

It’s a point my counterparts from Indonesia, Canada, Singapore and I made in a joint opinion piece published recently when we said “pursuing confrontation instead of dialogue will only exacerbate risks, erode confidence and weaken the prospect of a global recovery.”

The relationship between the United States and China is so significant that it should not be allowed to be framed as a zero sum game, where in order for one to gain, the other must lose. It is not a binary narrative.

In an increasingly globalised economy characterised by integrated supply chains, the notion of decoupling the US and China economies is not only unnecessary and undesirable, but it would carry an enormous price.

It would also up-end the export-driven economic growth model which has delivered such prosperity to our region.

It doesn’t matter whether you’re a business or a consumer in the United States or China, you benefit from the reliable supply and lower cost of production that flows from global supply chains.

Take for example China’s exports of electronic goods, which include more than 40 per cent of foreign content and the Boeing Dreamliner assembled in the United States which is made with parts from over 20,000 companies representing over 150 countries.

Decoupling of these supply chains would be more than disruptive. It would have significant and widespread adverse consequences.

Some commentators have sought to draw an analogy between US-China relations today and the rivalry between the United States and the Soviet Union during the Cold War.
This is misplaced

As Harvard Professor, Joseph Nye, points out, with three million Chinese tourists visiting the United States every year, three hundred and fifty thousand Chinese students studying in the US and a two-way trade relationship worth over US$500 billion, the level of connectivity and interdependence between the US and China is so much broader and deeper than anything that was seen during the Cold War.

There are unresolved tensions but they need not derail the broader relationship.

China and her growing role in the world is not going away

With 1.3 billion people and an increasingly diversified economy, we need to work with China to shape the future so that our interests are advanced through regional rules and architecture that peacefully resolves disputes without the use of coercive power.

As the Prime Minister has said Australia does not need to choose between the United States and China.

The United States is our critical long-term ally with whom we have forged a friendship based on shared values and history

China is also an important partner but we both acknowledge there are important differences including our political systems.

We have an ability to manage these two relationships, illustrated best over successive days in 2003 when the United States President George W. Bush and the Chinese President Hu Jintao addressed the Australian Parliament.

Then, as is now, we are best served by being clear and consistent in the policy positions we take in accordance with our values and national interest.

This may see us disagree at times with China on human rights, foreign investment and foreign policy but by being clear and consistent our differences need not undermine this important relationship.

Conclusion

China’s economy today is unrecognisable to the one Deng Xiaoping inherited in 1978.

The transformation has been profound and the benefits enormous.

However China’s rise is not without its challenges and it will take the world working effectively and cooperatively together to meet these challenges and ensure that global peace and prosperity continue.