 My name is Virginia Halsiger, I'm from ABC TV News here in Canberra and it's my great pleasure to be your MC and host today. The question, the big question today is where is Asia headed? What's Asia's future role in the world and how will what's going on in Asia affect our lives here in Australia, around the region and around the globe? We have been joined today to answer these big questions by an expert panel from the College of Asia and the Pacific at the ANU. Andrew McIntyre is Dean of the College and a specialist on Indonesia and Southeast Asian Affairs. Veronica Taylor is Director of the School of Regulation, Justice and Diplomacy in the College and an expert on Law and Society in Asia. Stephen Hals is Head of the Economics Program here at the Crawford School at the ANU and he's a specialist on India and has just completed the recently released review of Australia's aid program. And Kathy Morton is a China specialist in International Relations and Associate Dean of Research in the College. Welcome to you all. First to our panel, I think it's fair to say that we're all very conscious of Asia's growing economic importance in the world, especially here in Australia. With three quarters of our trade and the largest part of our investment comes from Asia. But what does the emergence of Asia's economic power mean more generally for the world, for where you sit, Andrew? Virginia, the economic transformation that we've been seeing roll out across what we've called the developing world for a long time. But especially here in Asia is having really quite profound flow on effects. Some people are calling this the beginning of the post-Western world. One of our most venerable colleagues here at the ANU, Coral Bell, more evocatively calls it the end of the Vasco-Degama era. But however you want to style it, the general point is the global players that have been the dominant players for a long time. The United States, the big European countries, Japan will not be as dominant as they have in the past. In this part of the world, in Asia, it's largely a region-wide story. Decade after decade of sustained rapid economic growth just has huge flow on effects. A lot of attention is being given to China. It's the most dramatic changes in China. As we all know, within 10 years China has projected to become the largest economy in the world. A lot of attention has been focused on the flow on effects for the military balance of power, particularly between the United States and China. But this is bigger and broader than that. This affects all sorts of social, political and environmental dimensions. And there are precisely some of the things that I hope we can touch on today. And I'm sure we're going to be talking a lot about China. But I just want to come over to you now, Stephen, and have a think about the economics. So let's think about for a moment the economics of this. When we talk about the rise of Asia, India, China, is it all about opportunities? And is it all good news? Or are there risks? Well, I think it's both. And I think, first of all, it is a story of opportunities. And primarily, first and foremost, opportunities for the people living in Asia. So their lives have been transformed in the 20 years ago, say 1990, where more than half of the people living in East Asia, living in South Asia, live below what is the international poverty line, a dollar a day. Today, in East Asia, it's less than 10%. South Asia has followed behind, but still it's less than half of what it was. So hundreds of millions of people's lives have been transformed and they've been taken out of poverty. I think that is the most important consequence of this. The other huge consequence, as Andrew has mentioned, these are rising economic superpowers. And with China, the second largest economy. India is in the top 10 and they're going to keep growing. There are risks, as you suggested. We can all see the short-term risks in the Chinese economy where they're struggling with high inflation. The global economic imbalances that cause the financial crisis haven't been resolved yet. And China continues to accumulate foreign exchange reserves. But I think more importantly than those short-term risks, there are long-term risks we need to worry about. China has an aging population. Its population in a couple of decades is actually going to start shrinking. And also China has yet to make the transition to democracy. And that, of course, raises a lot of questions. I think India, in some ways, has brighter long-term prospects. It's already a stable democracy. It doesn't have the demographic problems that China has. But India also faces uncertainties. It's next to a very unstable country, Pakistan. And we just saw the latest Mumbai bombings. But India also has an insurgency on the other side of the country. Down the east side that we rarely hear of. But it's a sort of homegrown, extreme left-wing insurgency. So India is also an unstable place. So definitely there are risks. We can't predict the future. But given the track record so far, you'd have to expect continued growth. Okay. And those risks are terribly important to discuss. And we'll come back to that. But, Cathy, I want to come to you now as an expert in China. How do we handle the foreign policy implications? I think China's rise focuses attention on two major critical dilemmas. The first is obviously it's leading to greater prosperity across the road. That's having rippling effects. But it's happening at the same time as the world is struggling to provide food, water and energy to an expanding population that's increasingly urbanized. So this resource scarcity dilemma impacts China's modernization drive. It's also driving China's global footprint across the globe. And it's very much at the heart of some of the major foreign policy issues that we're dealing with from geopolitical rivalry, food and energy security, and climate change. The second critical dilemma picking up on points already made by Andrew and Stephen is that China's really at the vanguard of this redistribution of power in the international system. And while on the one hand that's leading to a fair representation of the voices of emerging powers such as China, India and Brazil, et cetera, it's also leading to a lot of uncertainty over international leadership. Who's going to lead the world? What's it going to look like? And how is that going to affect the pre-existing liberal rule-based order that we've come to know and rely upon? And these are exactly the sort of things that I think make a lot of people very nervous too. Veronica, I want to throw it over to you. In a social sense, this rise globally, what effect does it have on us as a society, our lifestyles, our institutions? So one of the really visible changes for us both here in Australia but more broadly is the fact that we're now deeply integrated with Asia. There's an immediate impact from legal and regulatory changes in Asia and we saw that recently in discussion about beef exports to Indonesia. What is really quite important is that Asia's a very, very place. We have wealthy Singapore, middle-income China, low-income Cambodia and the governance and regulatory capacity of those countries is very, very different and they impact us differently and in unexpected ways. The big change here is the rise of China as a rule-maker. So China has a powerful vote within the World Bank. It's an assertive foreign investor. It's quite likely that at some point China's foreign assistance to regions like Africa which is currently in the form of hard infrastructure like sports stadiums and bridges is going to morph into rule-making assistance for legislative change and that will dramatically change the world that we live in because we currently visualise the regulatory and legal divisions in the world as being the United States, Europe and Japan. That's about to change and we therefore need to really monitor and engage quite closely with both the rise of China and the impact that it's going to have within the region. With that overview, I just want to come back to growth, to concentrate on that just for a moment. I guess I must have been out myself, I've made a lot of assumptions that this growth is going to continue and continue. But Stephen, as an economist, is that the case? We look at China and India as being such enormous populations with a huge appetite for resources at the moment. But can we just assume this growth is going to continue or are you anticipating a slowdown? You can't assume it will continue, but there will be some slowdown in China but the most likely outcome is that it will continue. I think the key reason for this and this is something that's often forgotten is that these are still poor countries. So when I said at the start they're much less poorer than they used to be but they are still poor countries. I mean the per capita income of China is now not much more than one-tenth of what it is in the US or here and India is then half again as only half as rich as China. And just to put that in more concrete terms because those are abstract statistics or I think that they tell a story if you think China is a very advanced country no doubt has a booming middle class but how do they cook their food in China? Well, more than half the people don't use electricity, don't use gas they're still using wood, charcoal or coal, traditional fuels and if you look at India, India is much poorer than China more than half the children in India are underweight because they're malnourished. So these are still countries have a long way to go on the development trajectory they're still confronting problems that we solved a long time ago and that has two consequences one is that they've got a lot of potential to keep growing that's a good side but what's different is that we're used to having the richest countries as the most powerful countries but what we're seeing now are these emerging superpowers that are still poor countries and that means they're going to have very different priorities and play very differently in the international sphere I think Yeah, it's an interesting way of putting it because when you look at the growth rates in China and India both over 10 I think we're looking at 10.3 for China and 10.4 for India so much higher than Australia's growth down at 2.7 it's an interesting way to say but nevertheless they're poor countries They are still poor and even in 2020 when China becomes or we expect to become the biggest economy it'll still be a poor economy its income might be about a quarter of that in the US so yes, these countries are progressing they do have a booming and very large middle class but we shouldn't think of them as developed economies I want to ask you too about India the issues that have arisen recently about governance and certainly corruption do you see that as being a major obstacle to further growth and progress? That's a very difficult question I think the strength of India is this very robust democracy it's a democracy that works there's no fundamental threat to India's democracy and that gives it enormous stability it has this corruption it somehow managed despite all this corruption to grow to increase growth to 6% in the 90s and then 8% and now it can get towards 10% it seems to me it can it is a risk but the biggest problem with the governance problems in India is on more on service delivery on translating that growth into benefits for the poor in getting education and getting health and setting up a safety net so it's certainly a constraint on the country's development but I don't see it an experience doesn't suggest that it's actually a fundamental constraint on growth the system that very strong dynamic private sector in India has worked away around those problems and there is also I think a dynamic as you get a growing middle class they put more pressure on the government and you can see some areas of government that have definitely become more responsive rather than less My question is given the shallowness of Australia's relationship with China which has traditionally revolved around cricket, commonwealth and curries and perhaps more recently commodities just interested to know perhaps what aspects of trade are underdeveloped between two countries You said China but you meant India I think didn't you? Yes, sorry, yes Underdeveloped trade so what's underdeveloped as trade opportunities? So those of us sitting in the university sector see all sorts of potential for movement in both directions in the education and the science and technology field Governments on both sides are keen to get movement in science and technology and movement in students and research collaboration going More controversial is of course uranium India's got a big interest in uranium less controversial and often overlooked is what Australia can be doing in the food space in all sorts of ways as India's middle class gets larger and larger there's going to be an interest in all not just rocks and minerals from Australia but food related products the technologies, the services the processes that go around there's all sorts of things that Australia can be connecting with India on Okay, yes please I think it's a little bit outdated to think we're just on the curry and the cricket, Australia's trade with India is booming and it's gone up, India's now the seventh largest trading partner it's I think increased five-fold in the last ten years so we have a rapidly expanding trade relationship with India, I think the problem with India is that we've left our run with India too late we haven't taken India seriously I know when I came back after living in India for six years to Australia 2005, tried to get people more interested in India the feeling was it's not a priority relationship with India comes and goes they're too bureaucratic, they're too socialist But when you say we've left it too late do you think we're not making up for lost time now? We are, we're trying to now, but we're a latecomer and whereas with China we recognised 1973 I think we were one of the first or the first country to recognise China so we've always been we've had that first mover advantage now we're trying to court India but of course now everyone's trying to court India so we're in the queue Did you want to enter that? I think Australians don't realise just how far back in the queue we are in India's estimation I remember when I was a student here 25 years ago one of my close friends was from India and I visited with him a few years ago in Delhi, he's a senior diplomat these days and he was trying to be nice to me but his basic message was we don't have time to think about Australia I thought you were deliberately being provocative when you said the shallowness of Australia's relationship with India but it would appear that that is a very fair comment I just want to move on to the issue of commodities again when we're talking about growth this is something that has been very pertinent to Australia during our discussion about the mining tax of course we talk a lot about iron ore being the core and we know that Australia has shipped 260 million tons of iron ore to Chinese steel mills alone and that our export there has skyrocketed over the last 10 years from around 5 billion dollars to 61 billion dollars which raises the question and I'd like to bring from our audience Andy Kennedy in here it raises the question is there enough of this commodity resource to go around or is there a possibility that a lack of the resource might cause conflict I think this is a very interesting question and I'd sort of like to open it to the panel the extent to which competition for iron ore between different Asian countries and competition over energy resources more generally between different Asian countries is something that worries you about the future of Asia or not Does it worry you as an expert in this area I think I'm less worried about iron ore than I am about energy resources more generally and that's because energy resources in some cases at least are tied up with territorial disputes like we see in the South China Sea and the East China Sea and that makes it very difficult to exploit those resources and really resolve a sort of distribution of those resources over time and that's something I worry about a little bit and we'll see what happens I'd like to throw that open to the panel and of course you've raised that important issue of the South China Sea which again raises the issue of the tensions with the USA as well I'd like to throw that open to the panel who'd like to pick up on that Veronica Somewhere where we see this happening somewhat by stealth is Central Asia there's a very quiet between China, Japan and Korea to secure energy resources in Central Asia but it's being followed through multiple tools including aid policy scholarships diplomatic overtures and cultural exchanges but the Silk Road policy of each country is clearly directed towards energy security what interests me about that is the way in which Central Asia is very peripheral to the Australian view of Asia we haven't really invested in expertise we're not putting a lot of human resources into deep study of Central Asia or about the relationships and competitions that are going on in that part of the world a similar argument could be made about parts of South Asia Can I ask you do you think that we're not putting in those resources those efforts because Australia until now has not understood that or has that been a choice? It's a combination of factors in part it's geographic distance in part it's an effect of having invested very heavily in the places that were important to us as trade partners and were more proximate to us in part it's about coming to only a very recent understanding about the importance of the Islamic world and the importance of diversifying beyond North East Asia and the Pacific our immediate neighbourhoods and in part it's just being a little bit slow on the take up It also goes back to the point about India I mean to be honest we're the College of Asia and Pacific but I mean we've really been the College of East Asia and the Pacific when Australia said Asia it's really meant East Asia I think it's only really in the last few years that we've started to look beyond East Asia to the South Asian subcontinent to India, Pakistan, Bangladesh and going further west again and Australia's not alone in this when lots of countries in East Asia talk about Asia they mean East Asia too and it goes to the patterns of economic interconnection that have grown up over the last half century and we're all starting to look beyond that now Are we also suffering a little bit too from the fact that Australia has been so connected to the US and the alliance there has been so much our focus that we have failed to engage our own region because we didn't feel or haven't felt for a long time that we've needed to Partly I think Australia has long been active engaging as Steven said to our north but that's long been a core focus for us and that's been regardless of geography demands that we do that I think it's true that historically we engaged less with India in part because of our alliance relationships if you go back to the character of the world during the Cold War era India was not part of the world that we focused on but it wasn't just because of that there were also these economic factors trade that was making us look north there weren't the economic links that were making us look west I think it's also a question of we're rethinking region at the moment in part because of the glowing complexity of trade patterns and energy resources and the routes across the Indian Ocean etc and if you're for example sitting in Beijing and you're thinking of region you're not just thinking maritime Asia you're thinking continental Asia and the Indo-Pacific because you're sitting there surrounded by 14 borders so you do tend to think of Central Asia in fact they do very much think about Central Asia as we know so in a sense that there's a naturalness to us sitting here in Australia and looking up to the maritime Asia rather than the borderland I think that's not to be too negative I think Australia has played a useful bridging role between the east and the west we are part of the western alliance part of the alliance of the US but we are in Asia or next to Asia and we have been an advocate of Asian and global for it through promoting APEC, through promoting the G20 through promoting more influence for Asia and the World Bank and the IMF so I think we have been a good you've played a useful role I'm going to jump forward here but do you feel Stephen that we still have a significant major role to play there or have we been overtaken? No I think no our economy is booming and our resources because of this energy insecurity you know our resources are in such high demand our influence is going up I think rather than down and this rise of Asia is the key issue of the world's facing and we are a key part of that so no I think we've got a long way to go and we've invested in the G20 and the question now is how effective is the G20 going to be and how can we help that? Building on that I think Australia is one of several countries in this part of the world that's got great potential to help shape things you leave aside the really big players the United States China and then you look at the rest who is it that has the most impact shaping things But are we exploiting our advantage there? Well I would say if what we're focusing on is our ability to shape the way the region engages with itself I would say there's a range of countries Australia is one of them Singapore is another Indonesia is another Korea is one, South Korea even Vietnam these days countries that aren't large enough to threaten anybody else but they've got ideas they've got diplomatic capital and they're energetically out there pushing ideas and I think that makes a difference Shira are you working on trade and politics now do you think that all this trade and economic growth is, do you believe it's good for political stability or are you erring towards a concern that it could cause conflict? Well there are cases where trade, increased trade and investment causes conflict and there are cases where the conflict actually reduces trade so much like the India Pakistan case that severely hamper trade but the Japan-China case is an interesting example where the trade actually reduces conflict the trade constrains the bad politics and that's importantly because both Japan China are committed to an open multilateral global system with rules and norms that constrain everyone and that's the case for East Asia more broadly they're all very open and committed to the international trading system and importantly the World Trade Organization and so one worry I would have and I think many would have is a weakening of that multilateral system say a collapse of the Doha around and what that does for the regional economy but not just for the regional economy for political stability in the region as well Okay terrific we haven't actually really touched on yet the U.S. and China unless there's something I'd like to throw open to the panel because I think it's terribly important I'm interested to hear you say that the trade can weaken the potential for conflict because of the importance of trade when we think of the U.S. and China is that where we're heading or not? I think with the U.S. and China relationship it is constantly evolving it's not fixed and it has both competition and cooperation characteristics what's unclear is the direction in which it's moving and that's causing a lot of uncertainty in the moment and leading to big debates here in Australia of whether we have to actually choose between a source of security and a source of prosperity and in my view I don't think that it is necessary to make that choice but one of the problems we are facing now is I think there's an emerging consensus that somehow China does pose a long-term threat to Australia and therefore we need to build up our defence forces in order to deal with it which creates this contradiction in sort of building up our defences against this imaginary threat if you like while at the same time working with China to build regional institutions and to socialise China into those regional institutions and also being very dependent on China's resource needs for our trade but this raises the question what messages are we sending to China when for example our Prime Minister invites the U.S. to expand its military presence here in Australia is that the right message to be sending to China or is this part of the contradiction you're talking about? That's part of the contradiction and I think one of my greatest concerns is that we're not having more of a debate about this and to use John Stuart Mill's term we have the slumber of a decided opinion that suddenly this happens without us even realising it is this build up of a sense that yes China is this threat and if you're sitting in Beijing that does lead to the kind of security dynamics that analysts talk about that that defensive posture will be seen as offensive from the Beijing perspective Part of the difficulty we have here is that is the pace of the change because China and the rest of the regions economic transformation is just so rapid the flow on effect from it are also so rapid and what from their point of view or from any given country's point of view can be just providing for one's own defence can be deeply unsettling for others around you and it's happening so quickly we're all struggling to process it. Well it's even really happened faster than China expected it to hasn't it I mean since becoming a member of the Dalai Lama and the growth is taking off so quickly I mean just the fact that that China I just read the other day has now become or overtaken the US as the biggest still second world biggest marketing luxury items for example I thought was rather extraordinary just behind Japan but that in itself simple as it seems would put a lot of Americans noses out of joint wouldn't it no comment I'm not sure it's in vogue at the moment in the United States to be buying luxury items right I think you're absolutely right it's certainly not in vogue Hugh you've written about the dangers of rising Chinese power in terms of whether or not we should be giving room and conceding space or is that too dangerous or should we be in fact embracing these rapid changes yes Virginia I think it is a really critical question for Australia for that matter for the rest of the region and it goes to many of the points of the panel I think are very well made the fact is that as China's wealth grows its strategic power grows in lots of different dimensions whether or not that ends up threatening Australia or threatening anybody else depends partly on what China decides and partly on what the rest of us decide partly how we respond to China's growing power how much space we give it and I think going to Kathy's point we do face some choices we in Australia face some choice about how far we should be willing to change our vision of the way the region works to accommodate the fact that China's now got more power in other words how far we should be willing to accept that America is not going to be the dominant power in Asia as it has been for so long that would be different for us it would be a bit more uncomfortable for us because America is so easy for us to get on with China if we do stick with the United States if we do support the United States and refuse to give China any more space we might be condemning ourselves to a much more hostile relationship with China than we otherwise would need to do so that's a very delicate balance for Australia to strike it's a very delicate balance for the region to strike and I'd be interested in the panel's views on how far the differences in values between Western societies in China should count in that how far it should affect that question indeed and that's a great question for the panel how do we reconcile those differences too who would like to take that up Veronica I'd like to recast Hugh's choice a little bit through the lens of law and regulation so from the United States we hear an incessant drumbeat of criticism about the lack of rule of law in China and the inadequacy of regulatory responses to food safety to environmental crises to being of citizens including their human rights and those are all legitimate criticisms that Chinese citizens make about their own system as well but there's an opportunity there as well as a threat for countries like Australia the opportunity is to offer constructive regulatory solutions and to engage in a dialogue with China that sees the system for what it is as Steven points out a system existing within what's still essentially a poor country and one that still has a lot of development to take place the other thing that I think is very important there is that China offers enormous potential for experimentation the regulatory approaches that are being taken in China are actually a public good they're going to be relevant models for the rest of Asia and other regions that Australia and other post industrial countries can learn from so the experimentation is important and China itself is also a tremendous location for testing our policy initiatives and solutions in a vastly different location so I'm a little more upbeat about the choices that we have let me follow on if we think about it in stark terms in stark dramatic choices of the sort that he was pushing us to confront does one set oneself down a path that may lead to conflict and war I think values are really important then I think they're really core things that whether one's running a government or just a citizen I think they're core things that we're all back on but I also think it's really elusive and slippery and just what are our values and what are somebody else's values and let me illustrate that in terms of regional relations Vietnam I would suggest has got a different mix of values than this society in all sorts of ways and yet the sorts of choices it faces in China aren't radically different in some ways they're sharper because of geography South Korea the Philippines different values in all sorts of ways and yet they face some similar choices so that's why I say I guess I'm speaking at both sides of my mouth on the one hand I think these are really fundamental but I also think it's much less clear cut than easy conversation often suggests Can I just to put this in a stark sort of context that we can all make sense of just on China when we were speaking of values just if we remind ourselves of the Nobel Peace Prize winner who's currently in jail serving 11 years Liu Xiaobao he wrote about universal values and this is primarily what got him into trouble I'll just quote to you when he was speaking of those values of freedom of quality in human rights and he suggested that democracy and constitutional government are the fundamental framework for protecting those values values that he said are universal values and yet for that the Chinese have imprisoned him so doesn't that highlight this very difficult tension that we have well I certainly think it does very long term it's inevitable that world military strategic power will shift to Asia just by the tyranny of population these are the biggest countries by far and once they catch up they're a long way from the capital income of the US so long term that's going to be where power goes and whether it's a good or a bad thing I think really just hinges on the point you've made whether China makes that shift to the democratic system well does that mean that China is going to become a new system maker well I think in the very long term maybe not in the next 10 years but in the very long term you have to think the most likely outcome is that China catches up to the US in the capital income they've got a long way to go they'll catch up and then by population they will be the vastly the biggest economy the dominance the US has had but they will certainly I think be the most powerful it's already a system shaper one of the system shapers I don't think anyone in our imaginable future is going to be a system maker anymore there's going to be a range of players out there that are in a position to shape but I think we're out of an era where there's anyone or to dominate I think you could say China already have veto power so you've got climate change negotiations you can see you can't get an agreement with those two countries from what we have heard so far today apparently China and the United States are the two most important powers in and beyond Asian Pacific regions but I mean despite their close economic relations there are still a lot of fundamental disagreements between these two countries so as some of our panelists has just mentioned on the one hand China considers human rights feedback Taiwan issues as its own internal affairs but on the other hand the United States seems to often frame such issues as an international problem so my question therefore how will these disagreements affect the Sino-US relations in the years ahead and how will these disagreements affect the development of Asian Pacific region in the future, thank you terrific thank you for that question I'll throw that open to the panel perhaps start with you Kathy thank you that was a very good question I think at the heart of that question is differences in sovereignty and what sovereignty means China has a very conservative and acical understanding of sovereignty in terms of the preservation of territorial integrity monopoly of power etc. from within whereas of course the US has a broader conception as well as many other liberal democratic states now in terms of states being held accountable to allege human rights violations from within what we call the new sovereignty paradigm and at the moment there's little indication that China is moving systematically towards that new sovereignty paradigm if you like so there is a real disconnect there in terms of your question on the internationalisation of territorial dispute you're seeing that also in the South China Sea and this is again a principle that China holds very fast that one cannot interfere in the affairs what it considers to be its sovereign right but there is a problem there because if you look at it obviously the South China Sea is an international of international concern there are various states that they claim to the South China Sea the issues there are global issues of energy of fisheries of maritime security etc and even in Tibet is not simply of a domestic concern it has an international flavour to it not simply because the Dalai Lama internationalised this campaign but also because there is a universal narrative really happening here in the case of Tibet because again it's about marginalised populations it's about struggles over resources development concerns and issues of self-determination that we see in other parts of the world in other parts of Asia not only within China Cathy can I just pick you up on you mentioned the Dalai Lama and this is particularly interesting to me I hosted his event here in Canberra why is it so important for the Prime Minister not to meet with the Dalai Lama is the message to China is the sign language there so important that she must take that position I think for the Chinese government it's of great symbolic value that if you are going to have a relationship and work with China then you have to abide by the one China principle and that relates to Taiwan and also issues in relation to Tibet and seeing the Dalai Lama as seen as an affront from the Chinese perspective and a lack of respect if you like and most importantly meddling in the internal affairs of the state and taking sides the problem is that this is a highly polarised debate very very difficult I've tried it actually not on TV without TV to talk about Tibet and I've been attacked from both sides it's very difficult to be balanced about it and it always becomes a very difficult issue here in Canberra with each time that the Dalai Lama has come through thank you for being here today my name is Paul Ashin I'm a captain of the United States Army and graduate student at the Australian National University and this is a question I've thought a lot about since being here in Australia the debate as well as taking courses by Kathy Morton and Sir Andrew McIntyre what is the balance between expanding ties with China while also maintaining the alliance the Australian-American alliance I guess in other words what is Australia's China strategy I don't think any of us would want to presume to speak on behalf of the government here I think what do you think it should be better question so I think what Australia will do in broad terms is what most other countries in the region are going to do in broad terms on the one hand Australia is in strategic terms concerned just because of the speed and the scale of China's transformation it can't not be Australia will and should look very hard to its alliance with the United States to make sure that's well positioned for the period we're heading into and there's already signs of movement in Canberra on that but that's not all Australia will do Australia will also try very hard to develop the broadest based relationship with China that it possibly can and that won't just be about trade it'll be about all sorts of other things that's where institutions like universities are really important movements of people in all sorts of ways Australia will and should just the way I think most other countries in the region will and should do everything in their power to avoid facing a pointy edge question at the same time as also preparing for the possibility that they might Steven what are your thoughts on that should Australia avoid a pointy ended question I was hoping you wouldn't ask me I could see you slipping away into a chair there shy away from these military questions as a non specialist on these kind of strategic questions we're obviously not going to walk away from the US and China's our biggest trading partner so we're going to straddle both sides as long as we can and there's not much we can do about it we'll be debated about defense spending but largely we are going to be the passive recipient of what happens and a lot of what China is doing shouldn't be defended look at China's role in North Korea China is propping up that regime look at China's role in Burma so there's a lot that China is doing that needs to be criticized but that will China's foreign policy comes from its internal politics and so I go back to the key question for both these international developments and for China's own future is whether it makes that transition sooner or later you think it will have to make the transition from a one party state to a democracy when it makes that transition whether it makes it peacefully whether it makes it smoothly Kathy may I come in there I think too to answer your question Paul that a strategic hedging strategy is not the way to go I'm going back to my earlier points about the mixed signals I think I can so easily lead to strategic miscalculations I mean how can we genuinely if our mission here in Australia a shared mission by America and a shared mission in China to ensure that we have a safe and secure and prosperous regional future how can we do that by building up arms and through the barrel of the gun it's I can't see that happening so I think a more enlightened approach is for Australia to make sure that it puts all the effort and the resources diplomatically, education and public diplomacy into engaging both these nations in our region on areas in which still there are not really strong institutions in terms of conflict prevention and conflict mediation dealing with transnational threats with climate change with food and energy security human trafficking that's on area actually where Australia has been very active dealing with real threats now that we are facing I think is the way that we need to go question of clarification so we're using suggesting those multiple strategies as something that we do in addition to investing in traditional defence type priorities or as alternatives I think one of the problems is that at the moment it's sort of set up as being we can do both in the sense that we're going to build up our defence as a hedge against the potential threat coming from China but at the same time we're going to work to engage China in the region so you suggest we can't do both I don't think that that is a workable strategy if the mission is one of regional peace and stability going to the issue of climate change as China booms and really expands economically what's the prospect in terms of climate change action is it more likely to take after the United States in terms of limited action on climate change or possibly an Australian model or an Australian view in embracing a strong climate change action isn't the recent carbon tax legislation that you've had I think China is critical for climate change absolutely critical and you can see it in the Australian debate China gets used by both sides those who support action point to China being the biggest investor in renewable energy those who are opposed to this carbon tax point to the fact that emissions are still growing rapidly in China there's still big coal-fired expansion and the fact is both are true so there are these contradictory tendencies in China so it's partly to do with the complexity of China but it's also to do with our expectations before we're not used to seeing a poor country being a powerful country so they give rise to different expectations so from the point of view of China being powerful we say well it's the world's largest emitter its emissions growing rapidly it must act in fact it must lead unless it acts we're not going to but from the point of view of it being a poor country its emissions are just a fraction of Australia's emissions per capita which is how you measure wealth per capita its emissions are Australia's it's got a lot of other priorities it hasn't got that historical responsibility so from that point of view it's looking to the rest of the world to take a lead and so beyond the immediate debate in Australia what we need to do is resolve reconcile those expectations find somewhere in the middle but if we want China to act it is totally the wrong approach to say well we'll follow China because that is the guarantee not to work we want China to do more and we need China to do more we have to we have to expect China we have to expect China to follow our example not lead us Cathy as I said there are some areas where we should be following China I think on climate change and we have a lot to learn some of their policies on clean energy by over the next decade the Chinese government is investing something like 70, 80 billion US dollars in clean energy and there are many new policies many innovative policies now that the government is carrying out that also could be emulated in other parts of the world so it's not just a one way street I think there's going to be much more exchange of the language it's interesting and this comes at a time when we've just heard that of course South Korea has taken a position or some strong a strong position on carbon emissions and in fact Korea has been pushing very hard the idea of green growth and the East Asian low carbon development path do you think that's got links well green growth is the if there is a future it's green growth it's not climate change itself and it goes back to the point Andy made there's a sort of network or complex of issues that these countries are concerned about they are all energy important so they are worried about energy security they have massive local pollution I think most of the world's most polluted cities are in China so they are concerned about all of these issues as well as climate change and that comes under this package of green growth and they are certainly taking action as Katie said but we have to acknowledge also China is a very capital intensive on a very capital intensive energy intensive growth path China is probably the only country that's trying to lower its growth not just to stop overheating but as a structural shift to permanently lower its growth to reduce the damage to the environment but it doesn't know how to do that so it's a very uncertain situation at the moment and if we want to encourage China to do more you know we need to get more out in front we can't leave from behind Thailand now with the new well with the election of Yen Lak we can hope only that the past five years or so of disunity there will settle what are your thoughts about the broader regional stability at this stage Thanks Virginia there was a time when Australians looking out into Southeast Asia would have considered Thailand to be the number one beacon of stability and tranquility it was the democratic leading light in that part of the world and at least from Australia's perspective we got to know Thailand as a place of perhaps bars and bargains or some such and that combination has meant that Australia and Thailand have developed a very nifty relationship dynamic in all kinds of ways Thailand as you suggested has gone through this particularly messy period though and it's a period that comes right at the end of the current King's reign he's been on the throne for 65 years now and Thailand since the coup of September 2006 has really struggled to work out a new consensus around its institutions all of this now plays into how we see the rest of the Southeast Asian region Indonesia perhaps has replaced Thailand as that shining light as we gaze out to our northern neighbours but Thailand still has the potential to perhaps get itself back on a path where it will be considered once again to be the kind of country that everyone else in Southeast Asia hoping to graduate from a democratic status to perhaps a full democratic status will be looking to emulate So are you optimistic about political stability in that area? I'm optimistic about the prospects of a number of the Southeast Asian neighbours that Australia has but Thailand precisely because so much of its current situation is unresolvable at the end of the current King's reign should be a country of concern to Australia and to Australians we should be doing our best to encourage Thais and others in Southeast Asia who are confronting these very, very messy transitions to be looking for friendship in their neighbourhood and beyond it and Australia can certainly be playing a role there to hopefully in the long run allow the Thais and other Southeast Asians who are struggling right now to pull themselves in directions which will in the very long term we hope be in their best interest Nick, I want to ask you also about Burma I know you have a particular interest in Burma as well what's your view on what Australia's position with Burma should be? Australia currently maintains a very modest set of sanctions against the Burmese government in my estimation those sanctions are limited and symbolic they are spoken in so many different ways but because we have a debate about Burma in Australia which is almost entirely focused on those sanctions we miss the fact that Burma is in its own way struggling out of so many decades of military dictatorship Australia will never be in a position to have any direct impact on Burma's domestic politics but perhaps what we could do for the betterment of Burma perhaps for our own good conscience is to really do our best to engage with those elements of Burma's society who are trying their hardest to try and move out of this long period of darkness into whatever follows our debates about sanctions though don't help that one eye out of I think this is very important to have that in our mind because it's very easy to get carried away I do myself in the Asian century the rise of Asia and you start thinking it's all going to happen Thailand is an example of how things can go wrong I think Japan is an example of how countries can get stuck Pakistan in the 60s, 70s, right through to the 80s Pakistan was seen as much more successful than India now look at Pakistan it's our graduation week and when you say goodbye to students from Pakistan you really feel, not to offend anyone who's going back to Pakistan but you feel sorry that they have to go back there it's such an unstable country so there is nothing inevitable about the rise of Asia Veronica we've passed lightly over Japan there and I just wanted to refocus us on Japan because it is very tempting to say well look Japan is stalled, they missed the reform bus, the economy is frozen it's pretty much all over for the world's third largest economy and I think that completely undersells Japan one of the things that is going to happen in the future is that economies within Asia will slow down and the Vietnam that wants to grow rapidly today will eventually be an aging slow growth economy and what Japan really stands for is a very interesting model of how to slow down gracefully and maintain social equality do equity to to citizens and really confront very very complex issues of environmental degradation nuclear risk complex aging society and do it all on a much much tighter budget so caution us to not disengage from Japan too rapidly because it really is an important model for the region I'm sure the Japanese will be very happy to hear you say it's a matter of slowing down gracefully it's a lovely way of putting it I've never heard Steak Nation describe quite like that but look I think that we're going to have to wrap up but I would like to ask each of the panellists just in summary to give us a sense of your optimism or pessimism whichever it might be in regard to Australia's place when we look at the growing burgeoning Asian region around us are you optimistic cautious or a little pessimistic we'll start with you Andrew I'm optimistic I think Australia's got a number of terrific endowments economically, culturally, socially our institutions I think the generation of Australians that are running the country in the broadest sense at the moment by world standards very well equipped what I worry about is the next generation these people surely not and here's why I say that the generation that's running the country again in the broadest sense not just talk about politics community leaders the whole lot came through an era when this country made big investments in what we loosely call Asian literacy and it's declined dramatically and forget about the universities the place to look is the high schools the place to look is the high schools and it's the number of students that are getting Asian languages in school I mean if current trends for a report done just last year if current trends continue in five years there will be no students in year 12 studying Indonesian that is staggering right now this was a two years ago this report there were 300 Australians even Chinese 300 Australians learning Chinese that did not have a Chinese family background even more troubling if you take literacy to mean not just language if you look at what goes on for example in modern history classes year 12 for people that do history in the final exams only 2% opted to do Asian content something like 56% opted to do German content can understand that 16% opted for Russian content 2% that's what I mean I worry about the next generation not because of who the next generation is but what is the failure to understand the importance or the opportunity or lack of encouragement I think it's a mix of things I think and not just Australia many of us have in some ways taken wrong messages out of globalization many of us have it's all one big beige thing and we're all out there and the language is probably English and we can all just get by we can all just get by and at some level that's true but it's not true for deep insight for close connection for nuanced understanding and investment has just gone down in this and partly that's a political thing over many years but also no doubt educational institutions need to take a hard look at themselves as well Cathy optimistic, pessimistic, cautious a little bit of both optimistic because I left England to come to Australia precisely because I thought this is the country that has critical mass when it comes to research and education on the Asia Pacific I think it still does and when I talk to colleagues in Washington or London or other European capitals they're deeply envious of what we've got so let's let's value it and appreciate it but I think again running off from Andrew's point that impons of investing in the future and I definitely applaud the idea of literacy I also think it's important for the future generations to have those opportunities of experience I know that there's a Chinese saying they need a thousand books and walk a thousand lead and I know that I wouldn't know half of what I do about China if I hadn't spent so much time there and had the opportunities and the scholarships to be able to do that because that's where the real learning takes place and that's where you're really confronted with your own worldviews and then the expectations and that's how I think we advance Stephen, optimistic? pessimistic? I'd say overall moderately optimistic but to respond to the point Andrew made on that particular note of Asian literacy I'm less negative and he is, I'm not denying the facts that he cited but if you look at it more broadly there are a number of other trends I think going the other direction so the first is we've got a lot of Asians migrating to Australia come from Asia so we've got that strong link all our international students they nearly all come from Asia they go back but they provide a very strong link and then so many more Australians travel these days and they often travel to and through Asia so apart from the dynamic university students we see here and no doubt there aren't enough which is Andrew's point I think I'm not as worried about Asia literacy I think we're more engaged with Asia than we ever have been Veronica I share that optimism but I also think that Asia's not going to wait for Australia and there are gaps in our knowledge particularly in relation to Islamic Asia particularly in relation to the smaller countries we've talked a lot about China today but Asia is much more than China we need to address those it's not a one time only investment and the investment that we made collectively in the 1980s and 1990s needs to be revisited there's a long lead time for truly becoming literate for truly mastering languages that are complex and one thing is absolutely certain and that is that the challenges being faced within Asia which affect us deeply are becoming more and more complex so the knowledge that served us well and the expertise that Kathy was talking about which really has been a hallmark of Australian intellectual and political life may not be enough into the future Okay, thank you for that and the investments that you talk about of course this college here the College of Asia and the Pacific here at the ANU is an example of that investment and its predecessors that came about after the Second World War but what I'm hearing today is that there is great need for further and deeper investment in Australia's Asian literacy. I thank you very much indeed Veronica, Stephen, Kathy and Andrew, thank you for your time today