 Good afternoon again, and welcome to the final kind of discussion now. We have to finish by, I think, 10 plus four, for the major speech by David Mimison. So, therefore, let's get started. The final kind of, in choosing the topic of scholars and the subject, we saw that maybe it's useful to relate a big thing, relating to Chinese economy and sometimes we also are rising China. And we also want to do something about tobacco things, and, you know, here, Australia and China, even out of a relation. So, the panelists consist of the following scholars. The first one is the professor, Du Yang. He's one of the rising stars in China, and together he's one of the leading scholars in studying the so-called turning point. So, Du Yang first speaks a lot about the topic, even though the chapter in contributing is related, but it's not directly relevant. I saw this maybe when we tried to conclude this one. So, we are highlighting some of the big issues relating to the turning point debate. Finally, we have a professor, Peter Dresdell, and from Chinese National University. And the background of that is the professor, Christopher Fendley, contributes a chapter for the book, highlighting the big issues on the bilateral relations of China and China. And Christopher cannot be with us today. And Peter, again, is presenting some of the ideas and conclusions from Christopher's chapter, and also I think Peter will bring it all. So, we are trying to limit each speaker to about less than 10 minutes, and then we finish all the presentations, and very much to participate in the discussion. So, without overview, Professor Du Yang. Thank you, Professor Schoen. We would be pleased to be here. And it's very, very important to me that this is a very interesting conference. What I'm going to talk about is the economic development after the turning point in China. And I'm going to talk about the challenge and also opportunities. So, in China, in particular, on the main market, we have a hard discussion about whether China, which is a turning point, and what's the impact of the turning point. Although it's a controversial issue right now in China, some of the impact change outcomes have significantly changed. For example, the frequent left shock is happening in both the rural areas and in the interior of China. Also, the other level back now is the right wage. From the MBA, we can see 20% of the wage increase for migrant workers in 2010. In nominal terms, in real terms, the 60% of the increase. So, everybody is talking about the immigration actually, the income is also growing very fast. But yeah, we're not going to discuss more about the way China is reaching the turning point. I'm going to focus on the impact of opportunities and the challenges. In particular, in China, which China is facing with the stage of middle income development. So, the first thing, I want to emphasize the challenge because of reaching the turning point, the increase of wage for low income groups has provided opportunities to reduce income inequalities. For example, through semi-migration, rural people get opportunities to get in the rural-led markets. But this kind of migration rule was ignored, especially in the income statistics. So, according to the migration statistics, there are more than 150 people in the meeting migrant workers in 2010. So, if you count the income into the income inequality speculation, that will play a role in reducing income inequalities. Also, as I mentioned, the increase in income for low income groups is helpful to reduce the income inequality. So, here is some examples we get in micro data, but I'm not going to put the very details. The second thing is the reason reaching the turning point is actually it is helpful to rebalance the economy because the increase in income for the low income groups who have the high marginal percentage of consumption. So, this will pay no actual rules in rebalancing the economy. In 2010, mostly driven by wage income groups, the rural household income grew nearly 11 percent, which is the first time faster than the urban household. The third opportunity, which China has developed means that they must have provided a signal to transfer the food to China. In fact, if you look back at the trial for farming lands in previous five or ten body lands, you can find many times the government has the best to transfer the economic and food pattern. But the actual pattern has not taken place. One of the most important reason is the absence of the incentives for tax fraud, including wage rules. But the increasing wage of the turning point stimulates the economic rules driven by tax accumulation through production of the goods. But not only the opportunity, the turning point also provides a challenge for the economy growth. Firstly, we find that there are less shrinking of the economic rules from the labor reallocation. Going to previous studies, in the first two decades after reform, labor reallocation accounts for about 20 to 24 percent of GDP growth. But according to our new estimation, this share shrinks to 16 percent. In particular, recent years, only less than 10 percent. The second effect is the possible food shortage after the turning point. For example, at the turning point, the marginal productivity of labor in agriculture could be greater than zero. That means further migration from out of agriculture could cause loss of cultural output in agriculture, which means this is kind of a challenge to agriculture development in China, which is why China is a country valued very much on food security. The third thing is the wage growth could translate into price inflation. Through several channels, the first level of the poll is the effect of a short time may be to increase in price by tax, which eventually translates to general price inflation. The second thing is the low income rules have higher marginal productivity of consumption, and the income rules increase the demand for vegetables, for example, the foods. The third thing is the increase in unit labor costs may cause price inflation if we increase how much labor actually grows. And also, because after the turning point, employees see the rapid change of labor outcomes, so they have high expectations from employers, then increase a more leveled dispute from the status to have the significant increase of a leveled dispute in recent years. And the final thing I want to say is a challenge to women type of relation, because the way of conversation between skilled workers and master workers disincentive to people, disincentive to the kids to stay in school. If we look at this picture, the real time wage for migrant workers and high operational graduates actually very close in recent years, that provides a signal for disincentive for the school, for the people who are doing the school. So the policy here is to add for time, if we want to have a middle income type, the core policy is to improve that leveled productivity, in particular the leveled productivity. But to achieve this goal, the policy of women type of relation, where it is including more of the education right now and reforming the education system and so on, that's where it is. Thank you again and good afternoon everyone. Thank you to the organizers for keeping climate change on the agenda. China does have a uniquely important role played in the climate change, the response level response to climate change. So I was asked to step in for Yong Cheng, who unfortunately, Yong Cheng Zhang, who unfortunately can't make it today. His paper is in the book and then the young master poker safety was about five. Hey, isn't it the book? I gave Beijing a recent pact at the conference on China. So in just 10 minutes, I think Yong Cheng's chapter has got really two main points, as usual, it's very stimulating, interesting work. Two points one are profoundly depressing and one profoundly encouraging. So the depressing one is it's a capitulation of the work that he's been doing over the last few years and presented at early conferences, on what from his perspective would be a just allocation of the global emissions of our countries. And he comes at it as many scholars do from a developing country, background, from the point of view of accumulated emissions. You know, climate change is a stop problem. The problem is not the flow that goes in the emissions, the problem is the accumulation of emissions over the decades in the atmosphere. So we should divide up responsibility for that problem, not according to how much you're emitting today, but according to how much you've emitted since some point x, where x might be when the industrial revolution began. And that has a very radical implication, so we're very happy Australia's announced an 80% reduction target by 2050, but according to this sort of formula, Australia should have 100% reduction target by today. In other words, we've used up all our quota, because we've been using such a lot, produces such a lot of emissions for such a long time for so few people that we use that by quota. And so it doesn't mean we have to shut down totally, but any future emissions we'd have to purchase permits on the world stage. So, you know, that just gives you an idea, it's depressing because the purpose of its arrival wrong, but it gives you an idea of a gap. You know, Australia thinks it's going a long way, but it's going to do 5% by 20, 28% by 2050 from the Chinese, or from at least one eminent Chinese scholar working in an official kind of think tank, you know, doesn't get to the starting line. So that's one, I guess, of the key problems will have to overcome at the international level, if you're going to get a proper agreement. The optimistic message is drawing on some more recent work that he's done, where he's sort of challenging this whole premise of burden sharing. You know, if we only need to worry about how to share up the cake, if we think it's a burden, but if we think it's something good, well then people will want to get a slice of the action, we don't need to, we don't need to force them, we don't need to argue about it. And here he's putting forward this very radical point of view that, well actually, let's not think of mitigation as a cost, let's think of it as a benefit, a very radical point of view. It's really giving two reasons for this. The first is the sort of first mover advantage. You know, if the world is going to go down this road of low carbon, we're going to do a lot more windmills, a lot more turbo, a lot more technologies. Then if you're the country that can develop those technologies and develop the, actually get the manufacturing spot, you know, that's going to propel your growth, you're going to be a global supplier for the next big challenge. So if you can get, you can get a first mover advantage. That's the first argument. And the second is a sort of shuperterian one. You know, the growth is driven by waves of innovation. And we've had the industrial revolution, transport revolution, IT revolution, and this is the next revolution. And so this is the next big wave of innovation. It will have short-term costs, but the long-term benefits will be sustained or increased growth. So that's very encouraging, if it's true, because then, you know, let's all get on with it, right? We've got nothing, we've got nothing to lose. I won't, you know, I'll leave it to you to encourage you to read the article, decide for yourself. But it is certainly very interesting after both those perspectives. But just to give you a bit of, to lead into, you know, what is more of a basic update on climate change in China, I think this work points to the direction in which climate change policies go in China, which is sort of a green growth model. So climate change is a concern that is taken seriously, but it's not a self-standing concern. It is one of a bundle of issues that is driving reform. And the other issues are things like reducing local pollution, but there are also things like industrial policy. You know, if you look at the five-year plan, it is the low-carbon industries that are targeted for development. So China does take climate change seriously, but not as a self-standing issue as one of the complex of issues. I'm sure, you know, you'll know the developments in China, the evidence that it is taking seriously, it's had in place this target to reduce energy efficiency by, or to improve energy efficiency by 20% over the last five years. Whether or not it's got there is a bit unclear, I think, in the data, but it's certainly, it's got close. It's put in a lot of effort to get there. It's adopted a target for the next five years to reduce, or next 10 years, actually, to reduce emissions intensity by 45% from 2005. That's a very ambitious target, according to analysis across Kano and others, including myself, who try to look at this. It's at least as ambitious as the titers of Western countries putting up. And then perhaps most ambitiously of all, you know, China's trying to slow its growth rate down. And this is not just a short-term overheating issue that they're trying to slow growth down. This is a long-term structural shift. And I think that's really unique, you know. I can't think of another case where an economy has a deliberate policy of trying to slow a long-term growth. But there is China's policy. The growth was 11% in the last five years. The next five years plan is meant to be 7%. And that's not a flaw, that's the target. As economists, we find it very difficult to comprehend that it might be a good thing to actually lower the growth. Of course, China's not doing it just for climate change, and it's not going to succeed. But it is climate change is one of the considerations that is actually getting them to try to reduce their growth. Now, so this wouldn't take it seriously, but it's a very difficult challenge. It could have the long-term benefits, which Long-Chin points to. It's going to be very difficult to achieve. I mean, you know, slowing the growth. I'm sure you talked about this this morning. I'm sorry I couldn't join. Slowing economic growth, rebalancing. It's not clear that China has the nose which leave us to push or how to push them to really achieve that goal. It has to introduce a carbon price. It has plans to do so on a pilot basis. But more importantly, for that carbon price to be effective, China has to report the energy sector because at the moment, the cost of pass through mechanisms is very weak. And if you can't pass through a carbon price when it's introduced, it's not going to have a big impact. And then finally, it's difficult challenge for China because of the international interventions and the lack of leadership being shown by the United States. I think that puts China in a very difficult position as the emerging super power. It's unable to free ride on the dominance of power because the dominance of power isn't providing the leadership on which you could follow behind. So I think climate change is something certainly taken seriously by China for a number of reasons, but it's a very difficult challenge for the country. And that's why China is used by both the proponents of climate change action and by the opponents because both camps can find something to point to. If you're a supporter of action saying Australia, you can point to the vast number of policies that China has, both technological and fiscal policies to make a transformation to a low carbon economy, slow the growth in emissions. But if you're a detractor of action in a country like Australia, then you can point to the fact that underlying rate of emissions in China is still extraordinarily high. And I think in the last five years emissions in China have grown about nine percent a year on average, which is higher than even the sort of most pessimistic business as usual projection. So looking to the future, I think it's a very uncertain prospect. We can imagine a very optimistic outcome in which China takes on more of an international leadership role and the ratchets up. Its mitigation policy succeeds in rebalancing the economy, including this structural shift in the economic growth rate. But we can also bear in mind the difficulties. Imagine that China just won't succeed in getting to those goals and be much more hesitant at the international level. Personatic China has a long way to go before we can get to the optimistic end of that spectrum. But there's no doubt that that's the direction in which it's moving. And I think the long chain of paper is just one element of the popular minister's path. Thank you so much. Thanks very much. But at the end of the day, we ask, I suppose, what are all these developments in China mean for the relationship between Australia and China and what are the prospects of the changes we've discussed throughout the day mean the relationship with China? What I'm going to do in the brief time available is to put the relationship in some kind of perspective that leads to an assessment of where we need to go on the relationship. The relationship with China is already our biggest economic partnership and it's a much bigger economic partnership in all its dimensions than I think most of us understand. It's much more than a commodity's relationship. It's what I call a commodity's plus relationship. The detail of all that is very helpfully set out in the paper that Christopher Finlay has written for the update by then. I want to draw on that paper but not buy myself of that paper and make some remarks about the nature of China in the relationship. And certainly I don't want to hold Christopher hostage to the conclusions that I will draw at the end of this presentation. Getting a bead on the importance of the relationship is half the doubt because I think it's all come across so quickly the speed and pace of the development relationship but at both ends of the relationship we haven't yet comprehended the two importance of relationship, the scale and how we need to manage it in a rather different way from the way in which we manage the relationship in the past to ensure that both countries get most balance of relationship. The core of our relationship with China like the core of our economic relationship before our major partners in Northeast Asia is the strategic element in China's resource and energy trade security. It's also a strategic element in Australia's prosperity and political security. So if you think of it in that way it's Australia's grand deal with Asia and in this context with China in particular. Providing reliable resource and energy trade security in return for an amicable and successful and prosperous relationship with China. And that's the core of Australia's economic relationships with all our major partners in Northeast Asia. We provide over 50% of the strategic raw materials for all our major Northeast Asian partners at least those raw materials are important by those economy and that's a central element in the economic and political security and from that of course we derive the benefits of a prosperous economy in consequence. In all of this the development relationship with China there is a Japan president. We've engaged in the development of a relationship with China very much after the same pattern in a way that we engaged in the development of a relationship with Japan in an earlier kind of 30 years ago and some of the same issues of the risen in the development of a relationship with China as arose in the development of a relationship. The Japan president then is very important it's useful and informs the way in which we might think about the management of a new scale of rate for the relationship that we've developed with China in very recent times very rapidly indeed. Of course there is a key difference at least the Japanese case was the development of a trade relationship with an economy out of poverty that had a political system somewhat similar to ours although it seemed exceptional exceptional to some extent in the industrial country world it was a much more familiar political system and so the political system difference has impacted upon in recent times especially in the scale of China the relationship has grown so rapidly. Conceptions of what is its state in the development of the relationship with China come back to that in a moment. The dynamics and structure of the relationship are important this is a very rapidly changing relationship and as I've already said in terms of its economic structure it's changed very rapidly too. Over 25 percent of our exports now that was last year and 90 percent of our imports derived or come from go to and derived from China. So this is our biggest commodity trade relationship now like mine and it's yet to peak in recent times the Japan relationship peaked at about these shares and then fell back as China and other East Asian and other trading partners good importance to Australia. But this is a relationship that's not stacked it's one that's going to see the scale and shares of China and thought was intensity in the relationship between China and Australia grow very big. Australia is already are now the largest destination bar Hong Kong for foreign direct investment at least over the past five years or so that's taken off a bit but that runs at $34 billion by a US estimate and that flow of foreign direct investment over the last five years is larger than any flow of direct foreign investment from China to any other single country. It's larger than the flow of direct foreign investment from China to the United States it's larger than the direct flow of direct foreign investment almost to all Europe and it's just a little bit smaller than the flow of direct foreign investment to all of Africa for example. So it's a big relationship in trade terms and also investment terms but it's also China our largest source of overseas students it's our largest source of individual source of migration and it's our largest source of durable expenditure so it encompasses the whole range of our external economic relations from resources to land and commercial investment the spread of the foreign direct investment interest is also broad in the relationship with China so it covers pretty well everything that there is in our external economic relations apart from deep financial market connections and so on but certainly on the first phase of integration between the two economies we're all really deeply in relationship with China. The projections to 2020 not 2050 only 20 years up suggest that this economic relationship certainly the trade relationship with China will become Australia's most comprehensive trade relationship after that with Britain 60 years ago. It may not rise in terms of trade share that that which we had with Britain immediately after the Second World War in countries within the sterling area arrangements but it's going to get jolly close to that sort of trade share in a relatively short time in a time frame that's reasonably predictable barring a few ups and downs year by year and I want to concentrate on the medium term longer term and she's not the ups and downs issue so that's the relationship there is now and if you ask people out there in the community they know there's a big relationship with China they know that China is important underneath all the polls I think something like three quarters of Australia's for example understand down but do they understand the width and size and scale and complexity relationship with China that has already been fashioned by developments in both China and Australia over the last five years or so except knowing about resource investments and so on the answer to that question is a resounding no and the same is true although there's a lot more interest in the Australian relationship especially over the last five years or so at the other end of the relationship in China so one of the policy issues that this circumstance throws up what strategies should we deploy in managing relationships successfully from both countries viewpoint and a way that doesn't compromise our mutual economic and political interests in the relationship first point I'd make is that you know that's a fairly obvious point but sort of our priority point almost is that we've had under investment in policy development and infrastructure to managing the relationship with China it's a natural thing it's the same kind of natural thing that is the devil China's management of its relationships with the rest of the world because the economy has grown so quickly the relationship with Australia was growing so quickly that we've been catching up we've been playing catching up in managing the relationship with China and I'm sure the minister has just arrived so I can speak frankly indirectly to him he'll know very well that many issues have arisen in the Australian relationship with China that have surprised him from time to time and surprised us all from time to time so rapidly and have been the pace and scale of the development of the relationship with China it's also a relationship now that is well beyond the management of governments per se we used to have a relationship with China in the early days of developing the resource trade relationship with China it could be managed by a relatively few people in a way that didn't impact vastly on the community well it's a very important relationship from the beginning but that's no longer the case as somebody mentioned this morning every time you pick up a new statement every time you visit the radio use every bit of commentary there is even a stensibly very domestic commentary includes an element that relates back to our biggest economic partnership of all the relationships with China and very often that is has over terms of political discussion one relates to political system difference for example one that relates to security difference for example and that I should suggest is probably overcooked as one of my colleagues said yesterday in our relationship with China at this point and the economic relationship huge is probably undercooked in our relationship with China the enunciation of our relationship with China certainly at a popular level and that's one of the issues I think that certainly our political leaders have to confront and deal with on a daily basis the important thing in managing your relationship but with China or Japan or the other major partners of course is getting things right at home on both sides of the relationship here in Australia if we get things right here we've got robust policy institutions we've got robust processes for dealing with policy problems maybe not all as robust as they should be from time to time but pretty robust processes and those robust processes insulates from many of the problems that might arise in other circumstances where those processes for example in the pacific rams talked about this afternoon are not so robust as they are here in Australia and as we should require them to be here in Australia and if we can require our political masters for them to be here in Australia so getting things right at home on both sides of the relationship is crucial to strengthening the relationship but the truth of the matter is that the cause this has happened so quickly the cause the understanding of all the elements and how they're evolving dynamically in the relationship is as yet not necessarily fully out of the past of dealing with the surprises then there are some things potentially that we can do to get more out of the relationship even than we've got to do and one of those things obviously is broadening the dialogues we have at various levels at the government level at the business level and at the academic level this institution is a very important part of these dialogues but at the business level in particular we've begun to thicken up the dialogues and that's going to be very important in providing what I call balanced in the relationship the same way as we provide a balanced in the relationship between japan's where you're at 40-50 years of its development from a very uncertain pace at the beginning so that's going to be very important to part of getting the relationship right but the other thing I think we do need to think about and this requires a lot of careful thought and a lot of hard work if we're going to get it right is think about rather urgently the idea of negotiating or coming to an understanding on a comprehensive economic agreement or understanding of some kind with China rather similar to the one that we developed through the negotiations in the 1970s with Japan and took the form of the treaty of friendship and cooperation between Australia and Japan at a similar time in the history of the development of the relationship with Japan as we're passing through in the development of the relationship with China now when issues extended rapidly beyond the more betraying issues into the investment issues into the people movement issues into civil aviation issues as we dealt with the expansion of tourism and a whole range of things on which a clear and simple statement of the core understandings of interest in the relationship between our two countries as a reliable source of energy and resource supply and as a reliable and open market for those suppliers from Australia as the core element and all the other things that flow out from that including investment relationship the personnel exchange relationship for students and all the rest of them. So I think it's really time to consider a comprehensive arrangement we've been negotiating an FDA for some time now and we haven't got very far with it and frankly I think we haven't got very far with it partly because and we haven't come to terms with these bigger issues in the relationship the strategic element in the relationship that I mentioned before it's hard to come to terms with them but now the relationship is of such a scale and such importance to the policy and the economy of Australia that we do need leadership on both sides to come to terms with it. I think the key opportunities there is doing that but it will need a bit of courage. That relationship of course will be defined sensibly in its regional and its global context it won't be a definition of relationship that's independent of our global positioning our regional positioning and by how I mean Australia's and China's together and I think providing a reference point like that it's becoming really much more important to the management of the complexity and the politics of the relationship with China than it has been in the past. It's come across as well quickly but I think now is the time to think about a serious need for our strategy for our students and the relationship with China. Thanks for your time. So I think I want to share at least one or two questions that we've already had so we'll be lost. So just maybe one or two questions. In that case please join me to set up our panelists and I'll