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Sunday 20 Aug 2017 | 10:46 | SYDNEY
Sunday 20 Aug 2017 | 10:46 | SYDNEY

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26 July 2011 09:15

Europe rolls out the red carpet for China, while the US too often sees China through a red mist. Building on that image from The Economist, Australia is peering through the red dust of a resources boom to make sense of a giant relationship that must become a partnership. 

Some of the red danger signals are blinking. Australia has moved a long way from the fear of Red China to current worries about the national accounts crashing into the red, if the China boom stalls. 

The previous columns about the need for a new grand bargain to shift beyond mutual respect to a broader partnership are a response to all sorts of debates that are well underway. 

Take a few examples from recent days. The former Prime Minister, Malcolm Fraser, is worried about the 'misleading and damaging' hostility of the Australian press towards China's defence posture. And he thinks Canberra is going the same way: 'The last Defence White Paper was arguably the worst White Paper published in over 40 years. It has been the most damaging, the most destructive, the most extravagant and arguably the most foolish statement of Australian interests'.

The foolish part, according to Ross Babbage, would be for Australia to ignore the 'series of security wake-up calls' China is sending our way. Coming from the business direction, Rio Tinto's China managing director, Ian Bauert, is worried about Australia giving in to 'populist fears or xenophobic attitudes' in dealing with the world's second largest economy.

Some level of concern, even fear, is legitimate, though, because China is 'driving dramatic structural change in Australia'. Christopher Findlay's analysis makes the parallel point that Oz should be equally worried about the red ink problems being exposed by the red dust boom:

Despite the fact that Australia's per capita income is much higher than China's, the continuation of rapid growth in China is exposing a series of policy challenges for Australia, particularly matters of regulatory reform. Many of these are directly related to key areas of interest in the relationship with China, and the manner in which Australia responds will affect the evolution of this relationship. There is also a risk that the boom conditions will not last and the opportunities created by growth in China will be wasted.

Australia's Mandarin-speaking foreign minister obviously dominates the government discussion of China. Kevin Rudd's latest speech on the 'profound' changes pulsing out of China is typical of the qualities he brings to this discussion. Not least, Rudd's push-back argument that it isn't just Oz that has to think new thoughts: 'In the spirit of a good and open debate, I would note that we also need to engage in a debate about China's process of economic liberalisation as well.'

On China, much less attention is given to the thoughts being offered by the Treasurer, Wayne Swan, drawing on his department's growing body of work on how China will change where and how Australia works. Swan's 'Asian Century' narrative is telling Australians they will need to alter their society and economy to get maximum advantage from Asia's rise. The Treasurer gave another version of that speech to the China Update:

The speed and scale of the changes we are witnessing in our region are unprecedented. The shift in global economic weight means big changes in the global economy, and big changes in our own economy. China's rise is changing its role in the global economy, but it's also changing the global political landscape. It's now inconceivable that China is not at the fore of every serious policy makers' mind. There is probably no Treasurer of Australia who has spent as much time as I have thinking about China's rise, its implications for the global economy, and the role it is playing in driving a transformation in our own economy. Nor have any of my predecessors spent as much time engaged with my Chinese counterparts to ensure the relationship continues to evolve.

The effort to evolve the relationship is being obstructed, not helped, by the stalled negotiation on a free trade agreement. That six-year effort cannot be junked, even though it is not going to achieve the declared aim of a high-quality trade deal. The solution is to adopt an old military insight: an officer who doesn't deliver as ordered can either face a court martial or get a medal. The higher command can decide the best response is to declare a triumph, rather than punish a failure. 

In just such a spirit, Australia and China should announce a victory and award themselves a big medal. That is the point of the call for an umbrella Partnership treaty. It's not a free trade agreement. It's bigger and better — a Partnership Pact! Just the sort of thing needed to help peer through the red dust of the resources boom, to re-frame key language and the habits of mind, as well as frame big policy interests.

Photo by Flickr user ColinWynterSeton.

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