 Well, thank you very much Professor Andrew McIntyre for the warm words of welcome and also the kind invitation to join you here at Anews College of Asia and the Pacific. I'd also like to thank members of the diplomatic corps for being here. It's wonderful to see two good friends, Professor Peter Drysdale and Michael Estrange. Are you a doctor or are you a professor? Probably all of those things together. But both men have made a huge contribution to Australia's diplomatic community, to our thinking around foreign affairs and to paving a way for us to go forward. I had the pleasure of first meeting Professor McIntyre as you mentioned through the Australian-American leadership dialogue and ever since then I've come to greatly respect his intellect but also his deep commitment to the region and strengthening Australia's relationships with the region. And I say to you tonight, Andrew, to you and your colleagues, you are playing a vital role in Australia's intellectual conversation with our region, both within our own country as well as directly with our neighbours abroad. And so I think as we are in the Asian century and the many significant challenges and opportunities that that creates, there could be no more important endeavour for you and your colleagues to pursue. So thank you very much. As we gather here in the Headley Bull Theatre, it would also be remiss of me not to make mention of this great Australian and internationally renowned scholar. As a student at Oxford in the 1990s undertaking an MFIL in international relations. I would often hear Headley Bull's name and indeed his seminal work The Anarchical Society was prescribed reading. When first published in 1977, Bull's conception of international order in contemporary society and in particular the way that great powers managed their relations with one another in the interest of international order was truly groundbreaking. It helped us all better understand the dynamics of the Cold War. Today, 35 years on, Bull's work is just as interesting and as relevant as we seek to understand the new global order where the United States and China are viewed as a new G2, the two largest militaries and economies in the world. Today, I want to talk about the rise of China from an Australian perspective and make two essential points. One economic and one strategic. First, despite the current slowdown, China will continue to grow strongly over the medium and the long term. If Australia is to fully capitalise on the opportunities available, we need deeper personal relationships at the highest political level and we need new bilateral mechanisms in place such as a free trade agreement. Second, Australia must not fall into the trap of making a false choice between China and the United States as conflict is not inevitable between these two great powers. As China's overriding priority is economic development and domestic stability, it would be extremely wary of risking a conflict even with an economically weakened United States. The consequence is that the United States, Australia's strategic guarantor, has good reason in my view to consider that it can successfully engage China in a global order based on a balance of power structure. First to the economic environment, Chairman Mao may have been the founding father of the People's Republic of China but it is Deng Xiaoping who has made the country what it is today. His economic reforms, the use of market-related strategies including the welcoming of foreign investment, domestic competition and a degree of private property rights, unleash the economy from the most destructive elements of the Cultural Revolution and the Great League forward. To get rich is glorious, Deng is alleged to have said. Understanding that China needed some distance from the legacy of Mao who was, in his words, only seven parts good and three parts bad. The result is that the China of today is on a remarkable trajectory of economic growth. Averaging 10% growth year on year, China has increased the size of its economy, twentyfold over the last three decades. It has become the second largest economy in the world and in the process lifted 350 million people at a profit. To keep pace with this rapid industrialization, thousands of miles of expressways, high speed rail, hundreds of airports and millions of cars have been built. The country now has more expressways than the European Union combined. We'll build more than 20,000 new skyscrapers by 2025. China is the biggest single vehicle market in the world producing more than 20 million cars annually for domestic consumption and by 2020 we'll have more miles of high speed rail that can be found in the rest of the world put together. China has also become the largest trading partner for nearly all its million owners including Japan, India, South Korea, Philippines, Malaysia, Thailand, Taiwan and of course Australia. Australia's annual two-way trade has grown from 113 million dollars 14 years ago when we first established diplomatic relations to 121 million dollars today, more than a thousand-fold increase. Australian exports to China grew 22% last year and now comprise 27% of our total exports. To put this number into perspective, where John Howard came to office in 1996 less than 5% of our exports were down for China. Iron ore dominates making up more than half of total exports to China but coal, LNG and wool also feature prominently. In each of these commodities, Australia is China's largest supplier. Investment too has been growing rapidly with China, not including Hong Kong. Investment has been more than 13 billion dollars in Australia at the last year making us their number one destination to foreign direct investment. Australia records that the compound annual growth rate in Chinese inbound investment into Australia has grown by almost 90% per annum since 2006. In light of these trade and investment numbers, it's no wonder that Jeff Raiden Australia's former ambassador to China has said whether we are comfortable with this or not the reality now is that China will be the dominant economic force in our national life. It is true there are signs that China's economy is slowing down but this is to be expected given the speed and the scale of the growth that we have seen in years to date. Europe and America's woes are having their impact with 55% of China's GDP trade dependent. China's exports to Europe, it's single largest market, nearly 20% of total exports are down 16% year on year. The impact of falling exports has been compounded by an over reliance on domestic investment as opposed to domestic consumption as a source of China's GDP growth. In China, only 35% of GDP is consumption, a figure which will inevitably lift over time. China also has a suboptimal demographic trend where the average age by 2020 will be 37 compared to just 29 in India. This means that more people will be living longer requiring services and support from a relatively smaller number of young people. This poses not just a major economic challenge but also a social challenge too. But all in all with annual GDP growth trending well above 7% and the government having the capacity to either ease interest rates or introduce another stimulus package, China's economy in the words of the Economist magazine will quote, not crash. In fact, in the medium and the long term, I believe China will only grow stronger. The process of mass urbanization still has a long way to run. While 10 million people move to the cities each year, half of the 1.3 billion people in China still live in rural areas. Considering that China has 93 cities with over 5 million people, the mind boggles at the huge industrial capacity that will be created when these cities are both fully populated and infrastructure ready. Just a few weeks ago on a recent trip to China, I visited an industrial park in Shanghai, one of hundreds that have found throughout the country. In this mini-city, there was over 45 Fortune 500 enterprises from America, Japan and Europe employing more than 100,000 people, many of whom live on site and work in various manufacturing industries and computers to pass through vehicles. The size and the scale of this undertaking was something to behold. The point is that hundreds of millions of Chinese are now getting the taste of what it means to have real disposable income and they are hungry to get more. One doesn't have to look far in Beijing, Shanghai or Guangzhou for signs of opulence and wealth. And while this can create serious divisions and disparities, it also fuels aspiration among a middle class that has swelled to more than 300 million people. In each case, people are looking for opportunities to work themselves up the income chain. And when one understands that China's GDP per capita is still only 17% of that found in the United States, there is still a lot of room for China's wealth to grow. None of this new found power and prosperity is any surprise to the Chinese leadership. Rather, it is a return to the dominant position they held before the quote Century of Humiliation between 1839 and 1949, which saw a number of tragic events in Chinese history, including the Okian Wars in Britain, the destruction of the emperor's summer palace, the Japanese invasion of Manchuria and the rape of Manchina. As Kissinger emphatically points out in his book on China, quote, China produced a greater share of total world GDP than any Western society in 18 of the last 20 centuries. Repeat that, China produced a greater share of total world GDP than any Western society in 18 of the last 20 centuries. And in 1820, China produced over 30% of world GDP, an amount exceeding the GDP of Western Europe, Eastern Europe and the United States combined. The question then becomes for Australia. Given where China's economy has come from and where it is projected to go, is the Australian government doing all that it can to capitalize on the opportunities available? I believe that the answer is no, and that the government can do more, much more. Our Prime Minister seemed disengaged from the China story. Since assuming the top job, Julia Gillard has spent only 48 hours in the country. Contrast this with the record of German Chancellor Angela Merkel, who last week made her second trip to China in just seven months, and has already made a remarkable six visits to China since 2006. A company by seven cabinet ministers and a large business delegation, Merkel's intensive engagement with China is delivering results. Annual two-way trade between China and Germany hit $169 billion last year, an 18.9% increase on the previous year. Germany is responsible for nearly half of all of European exports to China, and on this most recent visit, Merkel and Premier Wenja Bao inked a $3.5 billion deal for the sale of 50 Airbus planes to China. This deal was on top of 10 other agreements, signed in areas including health services, information technology and environmental matters. Like Australia, Germany is this year celebrating 40 years of diplomatic ties with China, but their special relationship with the inverted commas with more than 40 different identified channels for dialogue is more energetic than ours. This was not always the case. In the years 2001 to 2006, John Howard visited China five times as Prime Minister, including travelling the senior business delegations. In his autobiography, he talks of the personal relationship he enjoyed with President Jiang Zemin and the, quote, material contribution it made to bilateral ties, including the $25 billion LNG export deal agreed in 2002. Likewise, Labor Prime Ministers Bob Hawke and Paul Keating both developed good relationships with Beijing, something Kevin Rudd and Julia Gillard have failed to do. Hawke has been particularly critical of the current government's, quote, lack of visitation in China. In his words, and I'm quoting Bob Hawke, I think it's fair to say that we have as good a relationship with China as any country did. I doubt if that is the position now. That's a blunt message from one of the Prime Minister's strongest supporters. In the absence of federal leadership on China, state premiers including Ted Bay, Colin Barnett and Barry O'Farrell have taken upon themselves to fill the void. All have led substantial business delegations determined to open doors and win business for their state. With the Prime Minister lagging behind, it had no option but to take the lead. In contrast, Tony Abbott and Julie Bishop on my side have both been more engaged. The leader of the opposition was recently in China and has stated that in the event he is Prime Minister. His first overseas trip will be to Jakarta with the second to include Beijing. Bishop has been to China four times in the past 18 months, the most recent of which was to attend the prestigious Vow Forum in Hainan where no Gillard government member attended. Both Abbott and Bishop have proposed greater people-to-people links between the two countries. Abbott has given his support to the idea of an annual dialogue between business, political, academic and media leaders from the two countries along the lines of the two decades strong Australian-American leadership dialogue. While Bishop has committed the coalition to a reverse Colombo plan to enable hundreds of young Australians to spend time working and studying in the region. I would add the need for a bipartisan young leaders dialogue at the party and the political level, together with the prestigious scholarship fellowship program which could be well endowed by business, enable our best and brightest to study in China. Initiatives such as these and the kind proposed by Abbott and Bishop will only deepen Australian understanding and appreciation of the transformation that is actually taking place in China. This will equip us to have what former Ambassador to China, Ros Garneau, turns and I quote, a productive relationship of the future which sees Australians speak from close understanding of how Chinese see the issues on which we seek influence and of how we ourselves are seen and understood. It must be said that the price Australia pays for a less than fully charged bilateral relationship is that significant opportunities to strengthen ties go unfulfilled. One such opportunity is a free trade agreement between the two countries. Negotiations were initiated in 2005 during the term of the Howard government. 18 rounds have passed with no agreement concluded. To put it in perspective, in 2005 New Zealand also began discussions with China over an FTA. It reached an agreement in 2008 and has since seen its exports to China nearly double. But for Australia as a result of this impasse, we are missing out on an important opportunity to broaden the training relationship beyond a natural resources focus. Financial services, education, agriculture and infrastructure all offer great prospects for deeper links which could be enhanced through an FTA. Foreign investment will also invariably be on the table. Contrary to the media noise, the coalition has a clearly articulated policy on foreign investment. We welcome and encourage greater foreign investment for its key to maximising Australia's productive capacity. Our call for more transparency and lower thresholds, particularly in the agricultural sector, should give foreign investors nothing to fear. Rather, it will help debunk some certain myths that are peddled and enable a rational debate based on established facts to determine what is in fact in the national interest. But far more than just an economic agreement, a successful FTA would also be a positive statement of political intent. It would send a message to the leadership in China that Australia sees itself as a long-term partner. That is why an FTA is so important. So starting at the top, from the Prime Minister down, we must further develop the relationships and the mechanisms that will see our two countries continue to prosper together. Seeing our Prime Minister hop on a plane to Beijing to break the deadlock on the Australia-China FTA would be a very good start. The second topic I wanted to mention tonight was the strategic environment. Nobody can tell you with certainty how the future will play out. That is why we see in our region so much anxiety with China's rise. China's very presence as a great power is a challenge to the status quo. The Pax Americana that was in place following the end of the Cold War is no more. And many of our friends in the region, including Japan, India, Singapore and the Philippines, to name just a few, fear China as a new unchecked hegemon, threatening to them. Each of these countries are rarequipping their militaries and inviting increased American engagement with the region as a means of keeping the peace. In the words of former Deputy Secretary of State Bob Zelig, many countries hope China will pursue a peaceful rise, but none will bet their future on it. But do I think this will lead to inevitable conflict in our region and a battle between China and the United States? The answer is no. And I say this for three main reasons. First, China's priority is economic development. A major incursion abroad would take it off track and arguably threaten the very existence of China's one-party rule. The strange happenings, even over the past fortnight, the unexplained absence of China's leader in waiting, Xi Jinping, gives us a taste of how opaque the power structures really are. China's leadership is all too aware that a lack of continued economic progress is a recipe for domestic instability. Already, there are regular demonstrations from Chinese governments that China has pushed off the land and a growing band of young people longing the greater political freedoms, not to mention the internal troubles in Tibet and with the Uyghurs in Xinjiang. As long as prosperity reigns, the leadership has a better chance of keeping these movements in check. China will do everything it feasibly can to fuel its economic machine. Maintaining an artificially peaked currency, flouting intellectual property rules, and trading with pariah regimes are all a means to an end. While the West keeps its distance from resource-rich nations like Zimbabwe and Sudan, China does the opposite, rolling out the red carpet from a Guardian Beijing and sending thousands of its troops to Khartoum to ensure the oil runs free. We might not like this, but this is what China will continue to do. Second, if one looks at China's history as a guide, it is not a prostituting country determined to reshape the natural order. With its 22,000 kilometres of landing orders and 14 neighbouring countries, China has achieved its expansion in the past in the words of Henry Kissinger, quote, by osmosis rather than conquest, or by the conversion to Chinese culture of conquerors who then added their own territories to the Chinese domain. While it has been to war with its natives in the 20th century, including Korea in 1950, India in 1962, and Vietnam in 1979, I concur with Bob Zellick who has argued that China does not, and I quote, seek to spread radical anti-American ideologies, nor does it see itself in a twilight conflict against democracy around the globe, or see itself in a death struggle with capitalism. In other words, in working with the China of today, America does not confront a Soviet Union, Mark II. It is not a zero sum game where one country's game is the other's loss, and therefore it does not require a strategy of containment. The fact that American policy planners are sensitive to and clear about this is reflected in the recent words in Beijing just yesterday of US Defense Secretary Leon Pineda, and I quote, our rebalance to the Asia-Pacific region is not an attempt to contain China. It's an attempt to engage China and expand its role in the Pacific. It's about creating a new model in the relationship of two Pacific powers. This formulation is a positive roadmap for the future where both countries can find a way to actively compete for mutual gain without any compulsion of going to war. The third reason I do not believe that China and the United States are heading for inevitable conflict is that from a military perspective, China's capability remains a long way behind that of the United States. According to the Stockholm International Peace Research Institute, China may be increasing its military spend by more than 10% each year to around $140 billion, but this is still less than a quarter of the annual military budget of the United States. I understand transparency with China's defense budget is a significant issue, but even allowing for this factor, the spending gap is still huge. So while China may sometimes threaten and cajole, the last thing they need or want is a conflict with the United States. I must say with one cable, and that is Taiwan. I believe if Taiwan sought independence, China would put all options on the table. Therefore, given China's relative military strength, these are the United States. Its strategic goals are to modernize its military and maintain and expand its spheres of influence, including with North Korea, Pakistan, Burma, Laos and Cambodia. And to the extent possible, push its historical territorial claims without risking a conflict with the United States. The most immediate example of this is China's activities in the South China Sea. China's decision to establish a legislature to represent the 1,100 people who live on the Spratly, Paracel and Maxfield Bank islands and to establish a garrison command of PRC troops was a provocative act given the competing claims by Vietnam and the Philippines. China is also in a tense standoff with Japan over the Sino-Ku Deo Islands in the East China Sea, which has seen mass demonstrations outside Japan's embassy in Beijing and the temporary closure of Honda, Canon and Panasonic factories in China. I believe the situation has the potential to spiral out of control and it's a real test for the players involved. Indeed, when I was in China just a few weeks ago, the Japanese Prime Minister, Yoshiko Noda, sent an embassy to Beijing carrying his personal letter to President Hu Jintao in which he called for calm over the territorial dispute. While Australia is not directly involved in these competing claims, we do have a stake in the outcome. It is not about the significant fish stocks and gas reserves, each of the parties claim, but about the freedom of navigation for more than one-third of the world's ships that pass through these vital sea lanes of communication. Australia, like the United States, would best be served if these sea lanes remain designated as international waters allowing the peaceful trade and commerce. While Australia is right not to try and involve itself in brokering a solution nor taking sides on particular claims, we do hope that the United States can continue to play a constructive role in calming tensions between the main players and in the process brokering a nonviolent settlement based on an agreed code of conduct. This does offer the best possible chance for a peaceful resolution of the competing claims. In fact, these maritime border issues are a timely reminder to all of us of why it is so essential to have the United States deeply engaged in our region. As the world's strongest military, their very presence acts as a deterrent to aggressive behavior. And should they retreat from the region or, quote, see primacy as some have called for, other powers would look to quickly fill the void. This would create, in my opinion, a dangerous imbalance. It would see heightened nervousness and a potential unwinding of key strategic alliances. Indeed, should the U.S. retreat from the region, it would lose substantial credibility with other major powers like India and Russia. And important allies like Japan may take it upon themselves to go nuclear in order to safeguard their own strategic position. Not to mention Australia's own standing with China and others would be severely undermined where we see to be walking away from our ally, encouraging the United States to play a lesser role. Nations are like individuals. They respect consistency and loyalty. I, for one, will not join the chorus of those who are critical of President Obama's speech to the Australian Parliament and the subsequent announcement that U.S. Marines will be rotating through Darwin. Welcoming our troops from our ally is a logical and a necessary consequence of a commitment to the maintenance of peace and stability in the region. For these reasons, alone, it would be folly for Australia to want anything but deep American engagement. We should be actually thankful that our steadfast ally, with whom we have shared interests and values, is in the words of President Obama, all in when it comes to the Asia Pacific region. Ladies and gentlemen, both China and the United States will need to display great statesmanship and mutual understanding if they are to harmoniously navigate the period ahead. A man who understands both countries as well as any is Henry Kissinger, and he has said that both China and the United States need, in his words, to take into account the other's nightmares, recognising that their rhetoric, as much as their actual policies, can feed into the other's suspicions. If challenge, Kissinger has said, the United States will need to do what it must to preserve its security, but it should not adopt confrontation as a strategy of choice. This proposition should apply to both conflicts. Australia has to be careful not to be dragged into making a false choice between the great powers. In my opinion, conflict should be unlikely to occur because in a modern war, against one another, both sides can only lose. It is therefore in their mutual interest to cooperate to maximise their own economic prosperity and security. There is just so much at stake. If the great powers can avoid a tendency to rival and instead engage in competition in accordance with healthy norms, Australia becomes a big winner in the China game. In conclusion, in October 2003, the United States President George W. Bush and the President of China, Gu Xintiao, addressed the Australian Parliament on successive dates. These events went beyond the symbolic. They were remarkable occasions which illustrated to the world Australia's unique ability to develop deep, simultaneous and distinct relationships with these two most powerful nations. Now, almost a decade on, it is time to reassess. We have been the greatest beneficiary of China's rights and there is more to come, but we have no room for complacency. We need to urgently accelerate our political engagement at the highest levels and put in place more effective mechanisms like an FTA. And we too need to avoid the trap of making a false choice between China and the United States. Both are great powers who, in the interest of their own security and prosperity, must get along. The more deeply engaged the United States is, the more stable our region is and the better we all are, including China. Ladies and gentlemen, this is the challenge we face. The alignment of our economic and our strategic interests as we work with our friend China and our ally the United States to create a peaceful and a prosperous future. If we get it right, we have so much to go. If we get it wrong, we have so much to lose. And in essence, the China game is today's world game. And Australia is based better than virtually any other country on earth to play a leading game. Thank you very much. Peter Drysdale and thank you very much, Josh, for the columns and generally 5,000 views on the relationship with China. Two questions. You mentioned at the beginning the importance of China's involvement in the global system as the important stabilizing element in dealing with the rise of China. I'd like to draw you out on that because it seems to me that that's a central interest for Australia. I'll ask you really what can Australia do in that context to secure China's responsible stakeholder role as a global system. The second question relates to that. Basically, I heard your prescription for the bilateral relationship as one of increased leadership dialogues of the kind we've had in the past and the resolution of the FDA problem. I wonder, is there not something more that needs to be done on that? FDA doesn't really articulate in any grand conceptual way the nature of the relationship, the principles of reference and relationships we need there with China and leadership exchanges. I'm not going to do that unless they have a defined purpose or objective. So isn't there something more we need to do in a relationship with China than just more of the same, which is what you seem to be suggesting? Okay. Well, I'll do the second one first and say in politics and in diplomacy, personal relationships now. So my point, Peter, was that I don't think we have those personal relationships at the top now that we have when John Howe was there and indeed when Bob Hawke and Paul Keating were there. And I think that's the issue of visitation which Bob Hawke talked about and I tried to draw a parallel example with Germany. Now, we're in a great position to be in China and to their leaders to be here on a more frequent basis than it is. And so while we do have dialogues, we can broaden those dialogues out and that's why I quoted Professor Gano because he says you actually have to have an intimate understanding of how you're being perceived over there as well as understanding their perspective. And so I think that face time is really, really important. Taking at much lower level, talking about the reverse Colombo plan, that's a positive step forward. I think it's fantastic that upwards of 150,000 Chinese students are in Australia every year and that upwards of 350,000 Chinese tourists are visiting Australia every year. This is a wonderful way to engage. So I would say I'm not saying more of the same. I'm saying better than what we currently have, Peter, because I think that those personal relationships can matter. The second, the first question you raise about the global order and being a responsible stakeholder, well, that's another issue because, for example, we're seeing atrocities in Syria and China as a member of the Security Council along with Russia has been blocking that. I didn't hold back in talking about intellectual property or an artificially peaked exchange rate. And I totally agree with Wayne Swine when he's come out and he said China should have more of a floating exchange rate. When there are human rights issues, we've got our dialogue where we need to make that vocal. And there have been issues with the Uighurs and trying to block people coming to Australia or with the Dalai Lama. But we have to stand our position on those issues. And I think the Chinese will respect us. And we have to work in the confines of the international organisations to speak out when we think that China is going down the wrong path. So I think, whether it's on the economic, whether it's on human rights, whether it's on trade and trade, intellectual property exchange rate, I think there are various mechanisms for us, Peter, to make it clear to China where we think that they could be doing more. Just as, by the way, we make it clear to the Americans we want them to have a fair little playing field when it comes to trade or the Europeans. This is what I've got. I've got some from a part of the school. I'd like to raise some questions about the political side of the story. Thank you very much for expressing your view in a very articulate way. And you know, you talk about a personal, a very high-level personal relationship. You talk about the mechanism, the view in following the bilateral relationship. You also mentioned about the remarks about the US Defence Minister recently. You also talk about the remarks from a key singer. So I think there are certain elements relating to the issue, rather philosophical. I think the issue is being raised by the former Prime Minister Kevin George. I think you might expect a lot of articles. In that article, you mentioned that the future orientation of the Chinese regime somehow is determined or is subject to the attitudes of Western countries towards China now. So how do you think all these elements actually can be incorporated in this kind of philosophical thinking about influencing, it's not just forging and all engaging, but also influencing the way that the future China regime will change this? Thanks. Thank you very much for a very effective sweeping discussion. I'm another graduate student here in college. I've got a lot of questions, but that's not what a graduate student would have, but I'll limit to one the distant point. We can continue. Before I go on. You talked about, we mentioned briefly the scholarship fellowship program and you talked also briefly about the common birth plan. I just wondered if you could provide some more details on that in particular what sort of numbers you'd be looking at. What sort of age groups of students you'd be targeting and if this would be a more broader across Asia program or if it's just China voters? Well, let me deal with these two questions and I might have to get a clarification, but we haven't, as we get closer to the election I think we'll put more numbers in terms of what the financial commitment will be to ensure that the reverse column plan is well funded. But it's talking about young people, whether it's undergraduates or whether it's post graduates and giving them the opportunity to study overseas and it's not confined to China. Absolutely not confined to China. That's the official part of the decision. What I'd be saying today was my own personal idea was about a well funded prestigious fellowship program. Because you see all these business leaders in Australia who are saying let's get closer a day to China well I'd be saying to them please put your money down. Let's capitalize on this opportunity if you want to get people in Australia, particularly young people to have a better understanding of what's happening here what better way to fund an equivalent fellowship. So I think there's a window of opportunity to go and tap the private sector to put an endowment in place which in that case would be directly China focused. I don't know what Peter Drysdale's committee is going to come up with for their Asian Century idea but I'm sure they're going to have lots of good ideas around greater engagement in this regard I just wanted to put that on the table hoping he'd be in the audience that I and that's not asking the tax pay to pay that's just asking the government to take a lead role because when the Prime Minister goes and speaks to these leading companies and asks for half and that should be a bipartisan approach on behalf of these strange people that create this endowment make it a government policy that's going to carry a lot more weight than the Dean of the Asia School doing an unfortunate say. So I think this could be a major initiative I think there's a window and if you could do it then you can fund like the Monash Foundation does but when I speak to the people at the Monash Foundation they tell me overwhelmingly the vast number of people are off to Oxford or to American universities or to Cambridge and so forth they're not actually taking those scholarships to go into Asia and now obviously there's going to be the language challenges and so forth but as we know in our region we've got some of the great universities some of the National University of Singapore's up there universities in Japan University of Beijing and so forth so I think there are really good opportunities there on your issue so just to clarify it was you were saying that how do we get the is it the current leadership to be more modern than they're thinking? No no no the attitude of a Western country is more incumbent power towards the rising power now it sort of influence the future direction and orientation of the policy and the region in the future and so the engagement now the approach is basically whether it is that you believe the zero sum game or the positive sum game or whether it is that you came you came you come into the approach not just you individual it's a philosophical issue whether the West Seas that's right whether the West Seas is a zero sum game I don't think it does I think that's why the Panetta comments were really interesting by the way this visit and I don't know if he's left yet but he was in Beijing yesterday this was the first visit that he has made to China in official capacity but it was also the first time an American Secretary of Defense had spoke at the Naval or the Army College or the Military College and so what I said I read that as being is reaching out and while I was in in China a couple of weeks ago Hillary Clinton was coming after her trip here in the Pacific and the Cook Islands and so forth so I think the Americans you know you've got to understand the context we've just gone through the most painful experiences in Afghanistan and Iraq they've got $14 trillion of debt there is congressional gridlock as to how they're going to pay back some of that debt and they're talking about cutting $1 trillion out of the defense budget now something's got to give doesn't it something's got to give fortunately for us it seems that they're placing a real emphasis on our region but I just think the last thing any American government wants is to see a heightened conflict with China and they don't want to see that over Taiwan they don't want to see that over disputes in the East China Sea or in the South China Sea so I'm much more positive and I think someone like Henry Kissinger is having a significant impact even in his elderly years because he's written a very important book he's published an important piece in foreign affairs not that long ago and nobody doubts Henry Kissinger's credentials as an American patriot in fact you know a lot of people from the left have been critical of Kissinger in the past that he's a former secretary of state national security advisor who's saying to America don't look for a fight with China and can I just say one interesting one interesting footnote here is the US American presidential because I think there has been a difference in the language that Obama has used and that Romney has used and Romney has said on day one he's going to call China call them for violating trade rules and for artificially piquing their currency so that's quite a strong position where Obama's been a bit more nuanced so I think there will be a different tone if it is a Republican administration but I think the overriding view in Washington is we want to stand up we don't want to be pushed over here we're not going to allow our interests to be trampled or more importantly we're not going to allow our allies to be let down but we want to keep this at a level well below conflict I'm right under one of these fellows at the Oracle Services of the Dean of the College of Education so I might have to stand up for that now I'm curious on one point I'd like to point on the need for higher education and it's interesting that you can compare Australia with Germany and Merkel because Merkel's been criticised strongly in Germany for not going to China enough you can compare Merkel's efforts to those but criticism is simply from a coal he won't want to be a matter of business obviously I raise this not to sound like a smart ally but to make the point that everyone wants more engagement with China everyone's trying to do the same thing and a lot of it is not on our side necessarily perhaps the willingness to go there it's a willingness on the Chinese side to have us to meet your comparison on Penet's visit to Penet's visit where Penet couldn't see Xi Jinping because he heard about swimming and Penet got to speak at the party school how do you think Australia therefore can make itself more attractive to China so that we can actually have these visits and a lot of the mechanisms you see for the next generation as the most effective to do that Karen once we're getting time and pressure so I'm going to ask questions to be short and answers to be short so it's a quick question the Trans-Pacific Partnership between the US and a lot of the countries in the A-Pacific what's your stance on that one that's being criticised for being somewhat isolationist or containment related to China and I wish to know what you could say well I don't think they've shut the door on China in terms of the Trans-Pacific Partnership I think it's a good thing because I think multilateral trade is obviously preferential to bilateral agreements but the problem is for the Doha round we've just had nothing for so many years so I think Australia's been right to pursue bilateral FTAs quite successfully so I support the Trans-Pacific Partnership I think it's a good agreement I mean don't forget Australia and New Zealand and the Eurasian Agreement which is I think a significant one and I think we thank the Singaporeans who did a lot of good work with us on that and Indonesia and others but I'm all for Trans-Pacific Partnership on your point I take one point and I disagree with the other I take the point that there has been a tradition in Germany of high level visits and that's true with Helmut Kohl but if you compare Merkel's like Cameron in the UK is relatively newer or others she has been a standout Sarkozy and his predecessors she has been a standout and by the way she did go and see the Dalai Lama a few years ago and got in a lot of trouble for that with the Chinese but she's been able to make a stance on some issues and engage regularly so I would say to you that she has been a good role model in some respects in terms of the high level engagement but I don't accept that Australia is not going to be invited or welcomed over there and I think they have been significant high level Chinese visits here we'd always want to have more but the leader in waiting I think it was in Australia in 2010 and together with the vice premier leader in waiting here at this university so there we go with the government at the time on principles and so forth so I think the Chinese would love to have us there more regularly on a regular basis and I think we just have to go there with things to say and things to do and that means for us to be creative we're not going there just to wear out the carpet we're going out there to try to lock in some agreements on a range of issues and it was said before that the FTA is not a capture it's not but it's still I still think it's a facilitator of deeper trade ties, broadening trade ties and as I said in my speech I think it's a sign of political intent as well I mean if you think back to the Australia US FTA that's a pretty complex deal very complex dealing with agriculture and intellectual property in the pharmaceutical industries and the movie industries but at the end of the day George Bush and John Howard got together and they capitalized on their good relationship and they were going to get this done and it got done pretty quickly in that context and obviously the relationship with China is very different and the investment issue will be controversial the agricultural issue will maybe be a bit controversial and a few other things but let's get it done because I think it will bed down a broader relationship in the middle and we'll make that the last and we'll keep talking over groups in the middles I'm usually I'm working as a management consultant in the power sector my question is you know it's good to see you making a point saying well we need to as a government we need to engage in war at the top I want to bring in more opportunities of reaching the channels whereas my question is to say well as from the distance apart from the warming mining pool in the recent years what are the areas for businesses to get ourselves greater you know to consider opportunity for campfires opportunities Good question well firstly the head of the BCA Tony Shepard together with Twiggy Forrest and a few others made quite a prominent visit to China maybe it was a month ago it was reported front page of the Australian with the sole intention I think it was Mike Smith head of the ANZ and a few other senior Australian business leaders with the intention of saying let's start a high level business dialogue so let's start a high level business dialogue and so I think that will be very useful in terms of the areas well financial services are going to be important legal services I noticed my old law firm, Malice and Stephen Jakes I have to correct the record I did my articles there but then I went straight to work in government after I did my articles I didn't do five years there but Malice and Stephen Jakes is now merged with King and Wood which doesn't sound like a Chinese firm but they took an English name but they are a Chinese firm the biggest I think in China certainly one of the leading firms in China and so you know that's going to open doors Monash University has been I think the first University Australian University to be granted an opportunity to run a campus in China and I've seen in recent days reports of 1500 graduate students, masters and PhD students going through there agriculture I mean there's going to be lots of opportunities in agriculture I'm a big believer that we need to export more of our export 60% of what we've produced today we're not about to starve in a strip but in the rest of the world the growing population and the water stress and the changing diets you know as more people move into the middle class suddenly their diets change so it takes seven kilos of grain to make one kilo of meat and so you know as people move in the middle class they move off grain solely to a meat diet and so we are in a great position if we hadn't stuffed it up over a lot of cattle exports to Indonesia we would be riding a gravy train there but I think there are opportunities in many other areas in China in financial and legal services with agriculture and telecommunication I think Telstra I think has a major presence in Hong Kong but has been held back from getting into the mainland now that's got to be an opportunity as well so I think there are plenty of opportunities and can I just say one point I talk about higher level of engagement and visitation I mean I wrote the speech a few days ago certainly and I also published in The Australian but yesterday last night I turned on Lakeline ABC and I saw footage of Dennis Richardson the head of Department of Foreign Affairs speaking at a conference last night and his point was we're doing these higher level engagements so here's the government's top Mandarin in this particular area and seem to be head of defense out there saying we've got to do better with high level engagement with China