 Ladies and gentlemen, I'm John Richardson, I'm State Director of the Victorian Office of the Department of Foreign Affairs and Trade. And it's my pleasure to welcome you here tonight on behalf of the Department of Foreign Affairs and Trade and the State Library of Victoria, who have very graciously joined us in partnering and making available this splendid venue. We have a very distinguished audience here tonight for this evening's conversation, including from the State Department, welcome from the State Government, we're delighted to see you here from the Consulate Corps, the Consul General of Spain, the Honorary Consul General of Malawi, and of course senior members of the Consulate of China. We have senior academics here, the Vice Chancellor of Deakin University, Dr. Jane von Hollander. We also have from the State Government, from business, from the cultural community, from many other areas. And so I'd like to welcome you here tonight to this conversation. But most particularly, I want to invite, to welcome our two key guests, our two speakers, Her Excellency Frances Adamson, Australia's Ambassador to China, and the ABC's Jim Middleton. Before I ask them to come up here, I'd like to just explain that they will have a conversation for 40 minutes or so, and then it will be open to questions and comments from the audience, though I would ask you to keep those questions short. We will have two roving microphones to make it easier to communicate, and I should also note that we will actually be recording tonight's session. So it is my particular pleasure to welcome our panelists up onto the stage. Now, many of you will know Jim Middleton. Jim is a very senior figure in the ABC. He is chief presenter of the world, and the world this week on ABC Television, and a veteran ABC reporter. In fact, since Kerry O'Brien left the ABC, he could rightly claim to be not only the doyen of the ABC media team, but I would argue of the electronic media in Australia. When he joined the ABC in 1970, his four decades as a correspondent has centered on political and international reporting. From 1988 until 2007, Mr. Middleton was the ABC TV's political editor in Canberra, covering several seven federal elections as he reported the Howard Keating and Hawke governments. And in that role, he also reported throughout Asia, Europe, and the Americas. And he has been traveling to and traveling in China for over 25 years. So who better to act as a moderator for this evening's conversation with Her Excellency Francis Adamson, our ambassador to China. Jim, welcome. Thank you very much, John. I'm not sure that it's entirely kind to be reminded just how old one is, but thank you very much. The Chinese respect experience and age, so perhaps it's not such a bad thing after all. We are very lucky to have here tonight a distinguished, one of the most distinguished and experienced Australian diplomats, and I think the roll-up, the turnout that there is reflects just that. Francis Adamson has been traveling to and working in and around China for even longer than I've been visiting. So from the mid 1980s, from the late 1980s, she served as in the Australian Consulate General in Hong Kong. She has also served in the Australian office in Taipei in the early years of this century, and she has also had two terms at the very top end of Australia's representation at the Australian High Commission in London. Since just under three years ago, she was appointed Australian ambassador to China, and in that very short period she has visited not just Beijing and Shanghai and the other big centres, but 27 of China's 31 provinces, which is a reminder not only that China is so much bigger than just those cities of which we see so much, but also of the importance of what happens outside those main centres to Australia's relations with China, and various Australian leaders have reminded us of that over the years too. Ms Adamson is also the honorary patron of the China-Australia Chamber of Commerce in Beijing, patron of the Australia-China Alumni Association, member of the advisory board of the Australian National University's Australian Centre on China in the World, and an ex-officio member of the Leadership Council of the Australia-China Youth Dialogue, what a well-rounded CV that is, Francis. But let's get on with it. Let's start with the China Dream, which seems like a simple advertising slogan. Xi Jinping has been using it pretty much and pretty frequently ever since he won the top job and took the top job back at the end of 2012. He's described it as national rejuvenation, improvement of people's livelihoods, prosperity, construction of a better country, and military strengthening. That seems to cover just about all bases. He's also said young people should dare to dream, work assiduously to fulfil the dream and contribute to the revitalisation of the nation. Sounds like something in Australian Prime Minister could be telling our young people, but there you go. What is the China Dream? Why is it, and what is its significance particularly under the leadership of Xi Jinping? Well, Jim, I think the answer to those questions is still in the process of being formulated, but certainly from the moment Xi Jinping, and you mentioned this, from the moment he became or he was announced to the world as General Secretary of the Communist Party of China and he walked out onto a stage a bit like this one, and then he addressed the world's media and one of the first things he spoke about was the China Dream, the revival, the rejuvenation, the great revival in fact of the Chinese nation. And he subsequently in fact quite quickly started to develop the idea. I think many of us could see the instant attraction and his predecessors as General Secretary have over the decades themselves adopted slogans or ideas around which they've sought to craft their leadership. But I think we see he was very quickly, it was within a week or two, into the Museum of China, the National Museum of China on Tiananmen Square, a number of you may have been, into a particular hall called the rejuvenation hall. And there he stood with fellow Standing Committee members. They were all wearing the sort of bomber jackets when the Standing Committee goes on an excursion as it were they tend to dress the same. They were wearing bomber jackets and they all stood in the hall, which shows the paintings and photographs of the period during which China was a sort of century of humiliation as they describe it and the coming out of all of that. And he started to expand on the idea then and he listed amongst the aspects of it. He said exactly what you've said in terms of rejuvenation, of revival of the nation. And that reflects I think China's view of its own civilisation, its view of that period of humiliation and the need for revival. But he also spoke about the need to bring the party closer to the people, to crack down on corruption, which is one of his significant reforms and also to engage in the kind of economic reform that would realise for individuals the sorts of things that play well in our politics to increased incomes, better social safety nets, better health system, better education. So already he was drawing a link if you like between the national level goals and the personal ones and they've been quickly backed up by what one either calls publicity or propaganda depending on one's point of view around Beijing. In fact in virtually now every city in China instead of those big character posters, red background and white letters in treating people to advance the nation or develop the economy or do various things, there are now beautiful what you would call folk art posters with a series of slogans written in very nice calligraphy. And one of them is Zhongguo Meng, Water Meng and that is China's dream, my dream and there's a beautiful little girl in a folk art type pose and it's designed to appeal. There's one fairly near the Australian embassy actually as I walk past it I reflect on what this means for the average Chinese person. Now these things can mean a lot or not very much and I think we're in the process of seeing will Xi Jinping be able to deliver elements of this China dream enough to result I guess in continuing even greater from his point of view support for the Communist Party. So there's a question but in terms of the politics of it the sophistication of the politics it's quite sophisticated and in fact an international public relations company recently took an opinion poll in the United States around recognition of the American dream, a poll in China recognition of the China dream and our audience will know instinctively that the China dream had a higher recognition rate in China than the American dream in America. I remember that initial speech when I was in Beijing when he was in stall and what struck me about it in trying to envelop this in the China dream was on the one hand you had this assertion of the need for economic and political reform but on the other hand a quite clear nationalism as well and I think it's fair to say that in the period since then China's nationalism has been more assertive than we've seen in in in in previous years and what I'm wondering is whether you think that he needs this assertiveness to provide him with the cover as it were to enable him to not alienate people for the fairly difficult economic and political reforms that are required if China is its prosperity is to be guaranteed into the future. Well as you know that's certainly a strain of argument there are many people who make it their business to watch China both from within and from without scholars and others, journalists, commentators, diplomats and this is a key question to which I'm not sure that there is yet an easy answer I mean it's certainly the case that for those of us who live and work in China and I'm sure a number of you will have visited there is a sense in China that China's time is coming there's no to my mind anyway there is not a great deal of of arrogance about that or a presumption because there's still a very a lot of hard work to be done but it is also obviously clear that China under Presidency's leadership is pursuing a foreign policy which is which is active some would describe it as assertive some would use perhaps even stronger adjectives to decide to describe it. It is certainly the case also that he is implementing or embarked upon implementing a very ambitious reform program for which there is not universal support as with any reform program in any society including ours there will be people who will regard themselves as beneficiaries of reform as and that was clearly the case in the late 1970s when Deng Xiaoping embarked on the first wave of economic reform it was almost universally the case that everyone benefited from this with this new wave of reform and economists are indeed calling it a new wave I think there's a much greater sense that there will be beneficiaries there will be winners but there will also be losers so one can easily make the argument the need to be strong externally in order to build support internally I'm not I don't personally subscribe wholly to that because I think even with successful reforms and even with support for those reforms China is simply growing in size growing in confidence and taking what it assumes to be its rightful place in our region and indeed globally. Is it genuinely possible do you think for the Communist Party to maintain its paramount role and at the same time to engage in the kind of economic reforms that will satisfy in particular the middle class but also those that billion the hundreds of millions of people who have been brought out of rural poverty into into greater wealth within China's cities. Well I mean that is the unspoken often actually an explicit bargain if you like between the Communist Party and the people in exchange for continuing support of a of a one-party state the Chinese people are delivered by their leaders continuing economic reform from which they all benefit and and obviously China now has a very large number of billionaires who've clearly benefited but it also has as you said you know hundreds of millions of people who've come from rural areas come from the countryside into the cities in doing so they typically become three times more productive in manufacturing jobs and levels of income rise and that's been the process if you like since the late 1970s the question does the party have the ability to continue to garner that sort of support I think that's one of the drivers of this period of new period of reform but I think Xi Jinping clearly recognises and has said explicitly that the party needs to get closer to the people and that explains his crackdown on corruption it also explains what is a an austerity drive across the party and involving government officials too are no longer acceptable to have expensive banquets with large quantities of expensive Australian wine things need to be done in a more in a more down to earth fashion in a in a fashion that would meet with the approval of the people and that's clearly had an impact not just on the Australian wine but on the the imports into China of of luxury cars of luxury goods even of of sales of their own luxury products so there is an austerity drive underway I mean banquets in the past have had eight to possibly 12 courses a presidency has been treated party members as they travel around the country to take their own lunch with them or at a maximum to to have four dishes in a soup so that encapsulates if you like what it is that he's talking about and not surprisingly this has had some impact it's got widespread support certainly amongst the general populace if not amongst officials themselves beyond these symbols and symbols are always important in politics but beyond the symbols do you think that he actually has other signs I should put it this way that he has sufficient support within the party to carry through his promises as far as corruption at the highest levels we've seen some notable developments in that regard even in recent days but is there any sign of a kickback against that or or do you think that at this stage the signs are good propitious that he will be able to to carry through what clearly is an important measure to to retain the confidence of the people as well into the future again that's a very good question I think part of it goes part of the answer goes to Xi Jinping's own power as a leader now he's been a general secretary for just over 18 months I think he's widely acknowledged within China and and outside as having to use the sort of term of art consolidated his power more quickly and I think probably more comprehensively that many and many people would have expected of a new Chinese leader typically they they come to power with a five-year term in recent years anyway to be followed by a second five-year term and the expectation is that he will be general secretary and president and chairman of the central military commission the three main centers of power for 10 years to have reached the stage that he has after only 18 or 19 months people reckon is that he is going to be a powerful leader in fact many people are already saying that Xi Jinping is China's most powerful leader since Deng Xiaoping I personally think it's a little early to be as definitive about this as some people are prepared to do I think what we see though is the fact that he's not only got those three titles but taken on additional roles as sense as head sorry of a of a new national security commission taking control of leading small groups on implementing reform and on the internet and various other things that tells me that these reforms are very complex there are vested interest ranged against them that he needs to have his hand on every leader every lever of power to make it work but the crackdown on corruption is clearly not just about corruption it's also about I think there's no sort of beating about the bush on this it's about removing from positions of authority and power people who would be likely to oppose what he's doing now we don't the Chinese system is quite opaque when it comes to these important questions it's very difficult for us really to see what is going on but the signs so far are there are I think positive ones encouraging ones for see himself but we've just been through the late last year the third plenum of the 18th central committee of the party that was the typically the economic reform plenum the fourth plenum the next big meeting of the central committee will be held before the end of this year increasingly people are thinking it might not be held earlier than the traditional october or november this plenum is typically a what is described as a party building plenum and I think the broad expectation is that Xi Jinping will use this meeting this important meeting of the central committee with just over 200 senior members of the party to really I suppose coalesce support for what he then needs to do for the next phase of reform and there may well be some particular decisions that come out of that this goes to key personalities and and people for whom that the the sort of corruption the party corruption charge may well prove a sort of career-ending phase if I can put it that way yes the the bourgeois life action there are still people within the structure who are really quite powerful in that regard look I would like to get on to Australia-China relations shortly but if before we get to that I talk a bit further about foreign policy if I may the assertiveness that we have seen in the early Xi years in particular about territorial territorial disputes the south and east China sees moving oil rigs off Vietnam declaration of air identification zones with in relation to the do you Sinkaku islands we're seeing some reaction to that in some way or other with the Japanese announcement of yesterday about reinterpretation of its constitution which allows for a more assertive security stance on the part of the Japanese as well how worried should we be about these developments in North Asia is there a danger from the Australian government's perspective of this getting out of control let me just come back straight away on an important point about Japan what was announced yesterday in Tokyo was you rightly describe it as a reinterpretation of the constitution we couldn't get the constitutional change to enable to enable Japan to exercise the right that every country has under the United Nations Charter for collective self-defense so I think this is something this is absolutely something that the Australian government welcomes we we see a role for Japan in assuming the responsibilities of a normal country given its history since the Second World War so it's really about I mean I really wouldn't would never use the words and you you will not hear any Australian leader use the words a more assertive Japan what this simply does is enable what it will do if accepted domestically in Japan and that's really a decision for them to exercise its UN right under the UN Charter it's the only country which has chosen not to be able to exercise that right to exercise collective self-defense it's a very different thing from an assertive foreign policy is this something that we need to be worried about should Australia be worried about what's happening in the South China Sea and the East China Sea well in as much as tension between countries in the region differences over interpretations of territorial claims in as much as they drive tension create uncertainty create risks for risks of unintended consequences of planes flying too close together of of an incident at sea of a what we what diplomats call a miscalculation then certainly we should be because obviously as the economic and strategic weight globally shifts to the Asia Pacific region this is creating a new a new period a period of transition when countries are seeking to assert rights which in the case of China and many others in the region they have asserted for they would argue at least hundreds of years in China's case we go back to the Song dynasty for some of their territorial claims but I think I mean the the pages of the editorial pages of the Australian over the last month or so have hosted a lively debate between the ambassadors of Japan Korea South South Korea and China each of them setting out their own country's view of their territorial claims and why they are without reproach and having read each one of these I am you're briefly persuaded by each ambassador as I read it but I know that they don't add up so there's an element of staking a claim of reasserting a right what it really the important thing for Australia is how all of this is managed how the countries directly affected themselves manage it and there are many overlapping claims around the Paracel Islands the Spratly Islands in the South China Sea it's immensely complicated it's the Australian government's policy that we don't take a position on individual claims but we're very quick to speak out against action which serves to increase tensions certainly any coercive action on the part of any party which is designed to change the status quo so we should be knowledgeable about this we should have a view on this we should certainly be supportive of any actions which provide mechanisms to manage unintended consequences and the the ASEAN countries the Association of Southeast Asian Nation countries in China have for some time been negotiating a code of conduct in the South China Sea we obviously actively support that diplomacy because it will provide a a clearer framework for how to handle these things for the last decade Australian for Australian security policy in relation to China and the United States has been followed what I sometimes term the Howard doctrine that is that Australia does not need to choose between its main economic partner and its chief and most important ally over recent months not so much this year but in the latter part of last year I detected a certain degree of frustration whenever I talked about this with Chinese officials and opinion leaders is this something that you have any difficulty in explaining to the Chinese government if and when it comes up in your discussions your frequent discussions with them in Beijing look it's not to be honest it's not something that I have difficulty explaining I mean we that they have any difficulty well I mean look it's not really it's just it's a it's a sort of construct which is of interest in I'm going to be very choose my words very carefully here amongst authors and commentators and and in universities in in practical terms though Australia has over the last 42 years of our diplomatic relations with the People's Republic of China we've been building a comprehensive relationship a constructive and cooperative partnership across a whole range of areas it's not simply a balance sheet with dollars in each direction for our trade and investment it's a we have certainly some economic complementarities but if you were to measure the totality of our relationship it's it's very much more than that in Australia we naturally emphasise China as our largest trading partner but looking at it from a Chinese perspective Australia is a very important partner we supply over 50 percent of their iron ore for example a significant proportion of their imported liquefied natural gas coal copper gold the commodities part of the story is very well known but increasingly conversations with Chinese will have them acknowledge and speak about the value of the people to people aspect of our relationship the number of Chinese students who study in Australia the number of tourists who visit the partnerships between our universities the the research aspects of those the cultural dimension the work that we do together over the last two years in the United Nations Security Council where Australia's been a non-permanent member and of course China's a permanent member the work we do together in regional organisations such as the Asia Pacific Economic Cooperation Forum China's hosting that that leaders meeting in November Australia's played a leading role in the G20 and we're hosting the G20 leaders meeting in November as well too we have a strategic partnership agreed during Prime Minister Gillard's visit to China last year so you know the Australia-China relationship and our cooperation regionally and globally is a very sort of full conversation the Chinese understand that we are an alliance partner of the United States you know they respect that in some respects I think it makes us more interesting to them they don't necessarily like absolutely everything we do in connection with that partnership but they don't expect to either so when it comes to you know the big choice one over the other I really think that's a false dichotomy I mean there are a whole range of choices that Australia makes decisions that we make in our national interest across many relationships China is one of them United States is one of them but they're the complexities of diplomacy and as a diplomat they are challenges that that I relish so do my colleagues and certainly government ministers and the prime minister do you talked about people-to-people relations education tourism for example China is now takes fully one-third even a bit more of our exports it is hugely important to our future but do you think perhaps that the cultural default position of Australia is still too often Washington New York and London has it caught up with the reality of just how significant this country is to us there's always more that we can do of course but you mentioned when you kindly introduced me that I'd had two postings at the Australian High Commission in London in the 1990s in the mid 2000 2005 2009 so I have a sense of how a relationship where we know each other sometimes almost too well how all of that functions and it's actually been an interesting reference point for me in relation to China which has been another career anchor for me I think you mentioned that I first visited in 1987 I was in Hong Kong in the late 1980s in Taiwan in the early thousands and I've seen during that period over the last 25 years but even over the last three a much greater awareness across Australia of what is at stake in the China relationship a willingness I mean some people have been been visiting their whole lives and yet every you know we very regularly get our school groups coming in in fact Victoria has a program of bringing significant numbers of year nine students to China each year so I see young students making their very first visit to China and in between there's every sort of gradation of knowing China or being introduced to it I've made a thing if you like as ambassador and in many respects this is my predecessors have of encouraging people in Australia who are likely to find themselves in a decision-making role in relation to every any aspect of Australia's relations with China whether they're business people vice-chancellors heads of chambers of commerce ministers premiers members of the Australian Defence Force diplomats to know China before they come to those positions of authority and decision-making because there are aspects of it which are not easy to grasp without the understanding and the level of comfort which comes with visits but I think we're actually doing not a bad job of all of that I think across and I've in the last two weeks I've will have visited every Australian state and territory everyone's got plans and strategies that make considerable sense I think and that we're implementing it's not to say we couldn't do more it's not to say that we don't need to do a lot more of this but I think we shouldn't be too hard on ourselves about how well we're doing at the moment from my perspective it's very encouraging there's a huge amount to work with and my I've sort of approached my term as ambassador if you like in a in a deliberately overtly inclusive way because there are so many people many of them no doubt in tonight's audience who have a stake in the relationship with China and have a genuine interest in in deepening and broadening it I will throw this open to your questions of which I'm sure there are many but before I do just one further question I mentioned at the beginning that you had visited in under three years all but four of the 31 provinces in China and as you have said to me you will go as ambassador wherever you are needed why why is it important for Australia to understand that there is more to China than the big cities of Beijing Shanghai Guangzhou what is in what is out there for Australia that we need to do more to ensure that we get the greatest benefit for ourselves from and indeed for China too that's a very big question but one of let me answer it in a in a couple of obvious ways and perhaps a couple of less obvious ones the first thing to say China is a country with a population of 1.3 billion people so simply going to Beijing population 21 million Shanghai population 29 million and Guangzhou doesn't even get us in touch with of course it gets us in touch with key decision makers but there are there are large markets in other areas the coastal provinces typically are much more developed just to take the province of Shandong an hour's flight from Beijing population of close to 100 million people sister state relationship with South Australia a thriving port which receives vast quantities of Australian iron ore a growing market for the clean green produce that we produce for Australian wine for all of these sorts of areas for Australian services so it's a very small market if we only concentrate on the three key cities but China is a bit like Europe in terms of its size and a bit like Europe in terms of its diversity in Europe's case there are countries in China's case there are provinces and there are increasing numbers of Australian companies who have a presence whether they're manufacturing I'm speaking to to blue scope steel this morning if you go out to Chengdu capital of Sichuan province 80 million people where we established a consulate general last year you'll find an ANZ Bank branch opened just a month ago an ANZ Bank call centre you'll see Reem there you'll see blue scope there you'll see surf corp there you'll see a population which is increasingly attracted to Australia Sichuan Airlines for example is now flying direct between Chengdu and Melbourne and via Chongqing to Sydney so they they have a very strong interest in promoting travel to Australia you'll see university to university relationships you'll see Australian study centres 30 of them in universities across China so and you'll also see a huge amount of it's hard to see this directly but a huge amount of Australian iron ore going into steel across mills across China that are then that is then being used to lay what is already the world's largest fast train network which is contributing to the urbanisation of China the growth of cities but you'll also see you know cultural dimension the Rio Tinto is just sponsored for the last 12 months a touring exhibition of art from the Warburton by the Warburton community in Western Australia called our land our body it's been seen by over half a million people in China Sydney Symphony orchestras touring last week and this week I'm missing their concerts they're playing in nine cities across China so you know a straight if you want to look for Australia in China you have to go almost everywhere and when you do go you find some pretty interesting things happening and a huge amount of potential for more I have had a very good now it is your turn I'm sure you have some very interesting questions for the ambassador too thank you your excellency just to reflect on that great American president his adage was we have nothing to fear but fear itself now 30 years ago we used to send Australian volunteers over to China to help lift them out of poverty you know I've been so successful that now we're getting afraid that China's gone too far up the social letter and that's a pity we don't send them over anymore China's not regarded as a third-world country now I am on that business of nothing to fear but fear itself I think our fears are unrealistic but that aside having visited the memorial to the 300,000 massacre the massacre of Chinese I assume you've seen that memorial yeah my wife and I saw it recently now Shinzo Arbo's grandfather was not necessarily responsible for that but he was one of the he was in the army at the time do you think China's fears are realistic about the rise of Japan as a military force the question is are China's fears about Japan realistic? Jim and I had an earlier a conversation earlier in the day when we spoke a little bit about some of these things and of course the history between China and Japan as near neighbors goes back centuries it goes back longer than centuries actually the answer to the question is very difficult for an outsider to give I think you can only really understand what happens between those two countries if you are Chinese or you are Japanese now clearly there's an element of fear on both sides and both can reach into very long histories to find evidence to support those fears for a country like Australia which obviously has been through world wars has contributed in the way that we have to many to many efforts around the globe in that respect and as a young country it's much easier for us to be able to move on in the terms currently used today it's much harder for us to convince others that that is necessarily what they should be doing but I think there is certainly a recognition within the region within the Asia Pacific region that we will be a stronger region a more prosperous region a more peaceful region if Japan and China can find a way because they are each other's largest trading partners I mean there's a huge amount going on in that relationship but at the moment the Japanese are raising a flag about the Chinese and the Chinese are doing the same about the Japanese or we can really do I think is continue to encourage them and the path will be a very long one before they are able to reach the kind of sort of reconciliation that we would like to see but I think we can show through our relationships with both that it's possible to develop each of those further and we emphasise to both of them the need for peace but I can simply say that I observe on the part of both of them that what they say rings very true within their own societies the extent to which it's objectively true you know we'll have to wait and see Ambassador I used to be a teacher in China and it was one of the most interesting parts of my life I'm often worried about the schizophrenia we have with regards to China we're happy to go and visit them we're happy to have them visit us we love trading with them yet at the same time our well erstwhile American allies tell us that we've got to contain China so we have Marines come here on rotation we have extended our airways in the Northern Territory we have greater facilities now in Western Australia to service shipped from the American 7th Fleet now in reality I don't believe that there's any empirical evidence that China was an imperialistic aggressive nation and yet there seems to be views politically within Australia and even more so in the United States that we want you to we want to trade with you and do business but we're going to encircle you is this realistic I don't think China we have anything to fear from China well I I don't think that it's that it's possible to contain or encircle China I mean that's not something that that is achievable even if we wanted to do it and I don't think we do want to do it actually what we want is a peaceful region a productive relationship but if you look at what Australia is doing across the region in terms of developing relationships and you know the defence part of it is certainly certainly there and is happening across the region so to a deeper political relationships but almost every country in the Asia Pacific region is in a process of further developing its defence relationships with other countries in the region and the one part that you didn't mention that I think is relevant to our consideration of all of this is the defence relationship between Australia and China Australia is one of only two countries which has a chief of the defence force level annual defence strategic dialogue with China for the last and that's been going for 17 years for the last 17 years we have been gradually building the Australian Defence Force and the People's Liberation Army practical cooperation across a whole range of areas we were the first western country to engage in live fire naval exercises with China we were the first western country to to undertake humanitarian assistance and disaster relief exercises with the People's Liberation Army we are every year sees a gradual strengthening of that relationship each of the service chiefs Army Navy and Air Force from Australia has visited China this year for discussions and I've been present at a number of them with their Chinese counterparts where we have you know very sensible discussions about the overall environments in the region the strategic environment discussions about capabilities around transparency and all sorts of things but that's not so much a part of the discussion and debate in Australia because it doesn't quite fit that narrative but that is what we're doing and I will say to you as I've said to the Chinese on a number of occasions the most likely use of the rotating marines in Darwin is for deployment in some humanitarian and disaster relief response with Australia but we are continuing to work with the Chinese there will be exercises later this year that it will involve them but it's happening across the region and China is increasingly exercising and developing its own defense relationships developing its own white paper its own means of explaining all of this and we encourage them to do that because the more the region is knowledgeable about and understands what China's military modernization plans are and what its intent is the more we can concentrate on the other part of all of that which is continuing to to grow economically and to develop prosperity Hillary Clinton has recently warned Australia about the danger of putting all its eggs in the China basket and indeed with Australia's reliance on its trade with China and its exports to China it would seem that there is indeed reliance that the Australian superannuation is reliant upon Shire it would almost seem now with the increasing predictions that China's growth is unsustainable that a crash is inevitable to what extent do you think that Australia does have too many of its eggs in the China basket and what precautions have we taken are we taken to help Australia to sustain Australia's economy in the event of a China crash there's a question there that thinks it's more for Tony Abbott than for you but the but the but the other side of it the other side of the question is is the point that it was raised by Hillary Clinton we are extremely dependent on China to what extent I guess if I may how worried should we be about whether the growth trajectory of China which is slowing whether it is sustainable given that there are and we know a significant problem is associated with its way forward now there are a lot of questions wrapped up in that I will do my best to answer them but Jim please if you feel I've I've missed something bring me back to it the words a China and crash are not ones that I have ever used together nor would I I mean it's it's sensible obviously for us to to think deeply about China's economy to be knowledgeable about it it has grown for over 30 years at a rate higher than 10 percent it is currently growing and projected to grow at a rate of around seven seven and a half percent just in terms of the maths if that is sustained and I think there are very good reasons why it will be I mean not without some variation from time to time but but 10 years of seven percent bit over seven percent growth means that China's economy doubles in size every 10 years so the growth that we're currently seeing seven and a half percent is equivalent to about double that growth back in if you go back to 2008 we would have needed 14 percent growth in China to generate the demand that is being generated by seven percent now now I'm not saying the Chinese economy can't crash but what I'm saying is the Chinese economy has very considerable potential for growth the Chinese still regard themselves as a developing country there are still more than a hundred million people below the recognised UN poverty line there is still amongst the still relatively small middle class in China there is huge potential I mean whether it's a hundred million or possibly a hundred and fifty million at the moment there is very substantial scope for growth China is reorienting its own growth model for one that has been from one that's been reliant on export markets which was the earlier model to one which will be driven increasingly by domestic consumption last year for the first time services delivered within China contributed more to gross domestic product than the manufacturing sector so that rebalancing economic rebalancing is a work in progress it will be given further impetus by the economic reforms that were announced at the end of last year and which have a horizon really a 10 year time horizon so I've always been for the last 30 years of the China soft landing school rather than the hard landing school although I do think it's sensible for Australia obviously to to continue to develop a range of markets the point about are we too dependent have we got too many eggs in one basket I mean the fact is that the Australian economy and we Australians have benefited benefited tremendously during a period the global financial crisis when the rest of the world particularly the rest of the western world has really struggled economically and Australia is you know the only or there may be one other western country which has had continuous economic growth for 23 years most people in Australia no longer remember or are too young ever to have experienced a recession and while there's been you know a very high quality economic policy management in Australia during that period it is you know in my mind it's clearly the case that China's made a substantial contribution to that now if you're an exporter and you're producing iron ore for example and China's demand is there are you going to say to yourself I'll stop now because I don't want to be too dependent on that market I mean the fact is 52 billion dollars in export receipts came to Australia last year as a result of iron ore exports to China alone as a third as half of our total exports it's a third of total trade and we say you say we're dependent I say China is relying on Australia for over half of its imported iron ore an absolutely crucial strategic import and input into its steel industry so we're in this together and as long as we're in this together in the way that we are I am confident that it will continue to be a very productive relationship it is the world's second largest economic entity and it's in our neighborhood so of course we are going to be developing the kind of relationship that we have with China if we didn't frankly we'd be negligent but Australia's you know history geography natural endowment there's more that we can do to spread the risk if you like but I dispute and you possibly wanted me to dispute the fundamental premise that you put forward thank you ambassador pleasure to see you in Australia I'd just like to ask a question it's just perhaps a flip side of the last question you've spoken very clearly about the the depth of the relationship between Australia and China the economic relationship the government relationship even the defence relationship and the people the people issues and we've got much to be proud for that but the rest of the world is also you know seeking to play the China game and you know on an economic front I think over 124 nations now account China as its number one trading partner something that we felt very proud of a few years ago in our own right do you think that Australia is working hard enough and fast enough to stay on top of the relationship and maintain the position that we're currently enjoying at the present thanks very much David and I should point out to those who may not know you David Olson was chairman of the Australian Chamber of Commerce in Beijing for a number of years has a long-standing business in China and knowledge of it are we doing enough yes I mean it's an immensely competitive business if you like the world is beating a path to China's door and China's leaders are very actively engaged in in travel and developing relationships and we'll all get a sense of that perhaps a better sense of it when President Xi visits Australia for the G20 leaders meeting in November makes a bilateral visit a state visit afterwards I think Australians will then see will understand more he'll whether he becomes a household name or not is another matter how do I mean as a government how have we positioned ourselves in relation to China I think a key thing and I mentioned it earlier was the strategic partnership that was agreed with China last year on on the face of it that can mean a variety of things but the key element of it the really beneficial part of it was that we establish what's called an annual leaders meeting dialogue and mechanism with China China has such a formal mechanism only with a handful of other countries with Russia with Germany with France it took two years of patient diplomacy to achieve that and what that means now is that Premier Li Keqiang and our Prime Minister sit down together once a year in a formal structured setting with officials on both sides having prepared months in advance to to take our ways in which we can take our relationship forward announceable such as last year's around direct trading between the Australian dollar and the Chinese currency the renminbi beneath that overarching construct we've agreed a foreign and strategic dialogue led by foreign ministers on both sides also on an annual basis and a strategic economic dialogue which was held for the first time in Beijing last week when Joe Hockey as Treasurer and Andrew Robb as Minister for Trade and Investment went to Beijing together and and sat down and with the National Development and Reform Commission chairman Xu Xiaoshu now we can't having achieved that we can't sort of sit back and say we've done that because it is a competitive business we need to use those opportunities every year we need to be very focused not just as an embassy not just as a as a as a government bureaucracy at the federal level but we need to do this in a very comprehensive joined up way to ensure that we can advance Australia's interest both in terms of the opportunities but also in terms of some of the perhaps difficult conversations that we need to have from time to time both sides want to do this from time to time about things that worry us so you know we can't let up I think we are holding our own I think we're doing reasonably well in some areas but we can always do better and that's one of the reasons I'm traveling the country now is to talk to people about what we should be doing what we should be doing next to build on the achievements that have been made possible so far. Good evening Ambassador my name is Rebecca Kassan I'm the CEO of the Committee for Geelong you might have seen maybe on Monday evening that Q&A came to Geelong we were very pleased that our great city was highlighted to life to the nation we do have largely business members of our organization and given as it was highlighted by Q&A on Monday evening that Geelong is going through a bit of a transformation at the moment the feedback that we're receiving from some of our members is that particularly there are businesses and investors in China who are starting to a little be a bit wobbly about their investments largely in Geelong so given your expertise what would be your advice for Victoria's second largest city to really advertise to China and its investors that Geelong is is an okay place to invest. Well thank you very much indeed for the question and I apologize I'm a fan of Q&A Q&A came to China once I try and watch it when I can but I was speaking to an audience in Brisbane on Monday night but I'll make a point of catching it on on replay and the relationship I mean there is parts of regional Australia which have a substantial stake in the China relationship and obviously you know for Geelong you are already going through a period of of of adjustment and and ultimately we all hope transformation but the particular issue that you raised is and it sort of links with what Jim and I were talking about earlier only about a month ago I visited Jiangxi province which is a central Chinese province it was one that I hadn't been to before but I knew the party secretary and Ostrade which is very sort of active for Australia in developing trade and investment partnerships arranged for me to meet two local vehicle manufacturers one of them called bonluck buses and the other called the Jiangling Motor Corporation in discussions with both of them it became clear to me that they are already sourcing some componentry in the case of bonluck buses they're actually sourcing steel from Australia for the buses that they then export back to Australia they've got about a 20% share of the bus market in Australia but they know that for countries like Australia and other developed countries using Australian steel enables them to pass the the quality tests the assurance tests that they need to but it wasn't just about steel it was about components about seats and seatbelts and at the Jiangling Motor Corporation it was about components that they some of which they were already sourcing from Australia they know Australia well they've been working with us for a while but as a result of that conversation they agreed during a visit to Australia that they were already planning to visit Geelong to hold meetings with which Ostrade's in the process of organising local component manufacturers because the global vehicle supply chain if you like is is changing and it makes a lot of sense they realise I was quite struck by this because I hadn't realised it that it makes a lot of sense to them not to source obviously whole vehicles in Australia not to make whole vehicles in China but to bring the components where we do make well where we have a comparative advantage where we have registration recognition certification across developed country markets to use those because to start from scratch in those certification processes is something that takes a long time is very expensive so I wouldn't want to over state what that might mean but what it what did strike me is that there is real potential for which we are now going to try and explore in more detail to try and link what is a global driver of automotive production and and indeed demand domestic demand in China for cars is just of all kinds is going like this with parts of Australia that have particular skills and expertise not only in manufacturing but also in in design also in a number of the aspects of of producing developing testing safety testing vehicles that we do well so that's probably the best answer that I can give at this stage but let me just say you're very much on our radar ambassador this has been very interesting indeed China is such a huge place and of such importance to Australia that I wish we could go on for much longer unfortunately I have a television program to present a little bit later in the evening and I know the ambassador has a very busy schedule too so I fear that we will have to leave it there for now we appreciate your expertise your insights and the candor with which you have dealt with these questions I appreciate it I'm sure all of you do too ambassador thank you very much thank you Jim I must say from my point of view it's been a real privilege to sit in and participate on such a fascinating conversation which has been so broad ranging into the future of China China's foreign policy Australia's relations with China it's been a real privilege to be here tonight to join in this conversation that the two of you have led and I'd like just to reiterate my great appreciation and thanks to both of you for joining us tonight in this conversation her Excellency Ms Francis Adamson our ambassador to China and the ABC's Jim Middleton thank you very much indeed