Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Foreign Affairs. Will the minister inform the house of the future of the Australia-China relationship and how the budget is supporting Australian businesses to increases their ties with China?

Kevin Rudd (Griffith, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I thank the honourable member for his question. As the budget makes clear in this year's economic outlook the Chinese economy, together with the other emerging economies of Asia, is expected to drive strong demand for Australian exports in the future, which is good for Australian economic growth and good, also, for Australian jobs.

This is reflected in some of the profound changes we have seen occur in the Chinese economy over the last 20 years or so. It is worthwhile the House paying attention to one or two of these key facts. The first is this: 20 years ago—in 1990—the Chinese economy was the same size as ours; right now China has the second largest economy in the world. Sometime within the next decade, or the one following that, China will be the largest economy in the world. In terms of its impact on global merchandise exports and imports China is now the world's largest merchandise exporter and the world's second largest merchandise importer. But what is really important to Australians and Australian businesses is that when it comes to the future of the commercial services sector the Chinese economy is also growing apace. In 2010 China became the fourth largest exporter of commercial services in the world and the third largest importer of them as well.

These are profound changes coming out of the Chinese economic growth model and they are being driven so much by China's emerging cities. Six provinces, by 2020, will have provincial economies larger than US$1 trillion each and we will have 93 Chinese cities, each with populations of 5 million or more. These are rewriting the history of the global economy as we progress through the 21st century. For Australia and our exporters this has profound implications. China is already our largest trading partner—$100 billion—and I say to those opposite that they should bear in mind the fact that Australia's trade with China has doubled since 2007. This is important for Australian jobs.

There are profound policy changes underway in China right now. The previous growth models, which depended on exports and labour-intensive manufacturing, are changing to new growth models, which are based on domestic consumption, quality growth and environmental services as well as the importance of the services sector more generally. This is the change which we are categorising as China 2.0 because it has big implications for the future of Australian exports to China: financial services exporters, construction services, architectural services, green design, environmental services—areas where we have such great strength, including education and tourism services.

Australian exporters must begin to work through the implications that this has for their future export strategies in China. Over the weekend I was with 200 or 300 Australian business representatives in Guangzhou. We have 700 Australian companies in southern China. Australian business needs to be right across this country in the future, and in the major emerging cities that I referred to before. The trade minister and I will be taking this message out to the Australian business community in order to make sure that it is aware of these new opportunities in the services sector and in the major new cities of China as well.

Later in the year the trade minister and I will take a delegation to China to prosecute those interests on the ground. I say to this House that these are profound changes for the global economy and for Australia and we have to be in it to win it. (Time expired)