Gillard lifts bilateral relations to new level > Global Times

17/04/13 3:37 PM

Gillard lifts bilateral relations to new level

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Global Times | Carlyle A. Thayer Published on April 16, 2013 20:23

Illustration: Liu Rui/GT

Australian Prime Minister Julia Gillard recently completed her second visit to China since assuming office. Her six-day trip may prove a pivotal moment in bilateral relations. Last year Gillard initiated a wide-ranging study of Australia's relations with Asia. The findings were encapsulated in a white paper entitled Australia in the Asian Century, which stated that "Australia will have more comprehensive diplomatic ties with countries across the region, especially with key regional nations - China, India, Indonesia, Japan and South Korea." The tone of Gillard's visit was set on April 7 when she met President Xi Jinping. Xi stated he wished to take bilateral relations "to a new level." As a result of discussions held on April 9 between Gillard and Premier Li Keqiang, bilateral relations were raised to a strategic partnership that will develop, to use the words of Australian officialdom, through a "new bilateral architecture." This new architecture will include annual meetings between China's premier and Australia's prime minister. This will not be an alternating exchange between their respective capitals, but a meeting held in conjunction with a multilateral gathering such as the G20, APEC or East Asia Summit. China first proposed a strategic partnership in 2007 and Australia demurred out of concern for the reactions by Japan and the US. Now Australia joins an elite circle of states that have negotiated similar highlevel meetings.

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Gillard lifts bilateral relations to new level > Global Times

17/04/13 3:37 PM

Also on the agenda are an annual foreign and strategic dialogue between foreign ministers, an annual strategic and economic dialogue, and working-level discussions between the Australian Defence Force and the People's Liberation Army of China. Australia would like to build on existing military cooperation with China, an area where Australia is ahead of most Western countries, including the US. Working-level discussions that are scheduled for later this year are likely to focus on regional security interests. If they occur prior to the release of the Australian government's 2013 defense white paper, they could serve as an opportunity for China to present its views. Australia would also like to promote trilateral military cooperation by adding the US to the mix. China and Australia also reached agreements on a number of other important issues. For example, the People's Bank of China approved direct trading of the Australian dollar and the yuan. Only Japan and the US have this status. This agreement will lower transaction costs and potentially facilitate the use of Chinese and Australian currencies in bilateral trade and investment. To have a major impact, however, China will have to allow its currency to float on the market, deregulate its financial markets, and permit its private companies to decide where to invest. In the meantime, Australia will have to work to remove obstacles to Chinese investment that has given rise in China to the perception that its foreign investment is being treated differently from other foreign investors. Australian Trade Minister Craig Emerson argues that no Chinese applications for investment have been rejected. China is Australia's third largest source of major investment proposals following the US and the UK. But it is clear that Australia's national interest test and ownership caps set conditions that some Chinese investors object to. It is now up to both sides to kick start negotiations on a free trade agreement that have languished for nine years. The timing of Gillard's visit could not have been better coming immediately after the leadership transition in China. AustraliaChina political relations clearly have overcome the torpor of the last four years. Both parties wish to expand and deepen the relationship beyond its transactional or commercial base. It is wrong to view the new strategic partnership, as an article entitled "Sino-Australian partnership shows path forward" in this paper on April 11 argued, as a big step in luring Australia away from the US and Japan. All four countries are economically interdependent and all require a stable regional environment to prosper. The China-Australia strategic partnership is not a "strategic victory" for China, but a "win-win" situation for both. The author is an emeritus professor of the University of New South Wales at the Australian Defence Force Academy, Canberra. opinion@globaltimes.com.cn Posted in: Editor's Picks, Top Asian Reviews, View Points Actions: E-mail | Permalink | Comments (0) | Kick it! | DZone it! | del.icio.us

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China Australia Take Bilateral Relations to the Next Level Carlyle A. Thayer* Prime Minister Julia Gillard just completed her second visit to China since assuming office. Her six-day trip may prove a pivotal moment in bilateral relations. Last year Gillard initiated a wide-ranging study of Australias relations with Asia. The findings were encapsulated in a White Paper entitled Australia in the Asian Century. Of the 25 objectives to be reached by 2025, objective 23 stated that, Australia will have stronger and more comprehensive relationships with countries across the region, especially with key regional nations China, India, Indonesia, Japan and South Korea. Prime Minister Gillards itinerary included addressing the Boao Forum on Hainan Island, visiting Shanghai, and meeting with her counterpart Premier Le Keqiang in Beijing. The Australian delegation that accompanied her was billed as the most senior government delegation to visit China. The tone of Gillards visit was set on April 7 when she met President Xi Jinpin. President Xi stated he wished to take bilateral relations to a new level. As a result of discussions held on April 9 between Prime Minister Gillard and Premier Li bilateral relations were raised to a strategic partnership. This set the foundations for Australia to achieve objective 23. The Australia-China strategic partnership will develop, to use the words of Australian officialdom, through a new bilateral architecture to include: Annual meetings between Chinas Premier and Australias Prime Minister. This will not be an alternating exchange between their respective capitals, but a meeting held in conjunction with a multilateral gathering such as the G20, APEC or East Asia Summit. China first proposed a strategic partnership in 2007 and Australia demurred out of concern for the reactions by Japan and the United States. Now Australia joins an elite circle of states that negotiated similar high- level meetings - the European Union, Germany, Russia and the United Kingdom. China and US relations are structured differently. An annual Foreign and Strategic Dialogue between foreign ministers. An annual Strategic Economic Dialogue between Australias Treasurer and Minister for Trade and the Chairman of Chinas National Development and Reform Commission. Working level discussions between the Australian Defence Force and the Peoples Liberation Army. Australia would like to build on existing military cooperation with China, an area where Australia is out in front of most western countries including the United States. Working level discussions that are scheduled for later this year are likely to focus on regional security interests. If they occur prior to the release of the Australian Governments Defence White

2 Paper they could serve as an opportunity for China to present its views. Australia also would like to promote trilateral military cooperation by adding the U.S. to the mix. Preliminary reports indicate that China is open to developing stepped up military cooperation with Australia but is reserved on trilateral arrangements.

Experts Group on carbon trading. The purpose of this Experts Group is to share information on carbon markets. China is drawing up policy for a carbon emissions trading scheme and could benefit from insights into Australias experience.

China and Australia also reached agreement on a number of other important issues. For example, the Peoples Bank of China approved direct trading of the Australian dollar and the Chinese Renminbi. Only Japan and the United States have this status. This agreement will lower transaction costs and potentially facilitate the use of Chinese and Australian currencies in bilateral trade and investment. To have a major impact, however, China will have to allow its currency to float on the market, deregulate its financial markets, and permit its private companies to decide where to invest. In the meantime, Australia will have to work to remove obstacles to Chinese investment that has given rise in China to the perception that its foreign investment is being treated differently from other foreign investors. Australias Trade Minister Craig Emmerson argues that no Chinese applications for investment have been rejected. Australias Foreign Investment Review Board approved AUD $16.2 billion in Chinese investments in 2012. China is Australias third largest source of major investment proposals following the United States and the United Kingdom. But it is clear that Australias national interest test and ownership caps set conditions that some Chinese investors object to. It is now up to both sides to kick start negotiations on a free trade agreement that have languished for nine years. The timing of Gillards visit could not have been better coming immediately after the leadership transition in China. Australia-China political relations clearly have overcome the torpor of the last four years. Both parties wish to expand and deepen the relationship beyond its transactional or commercial base. It would be wrong to view the new strategic partnership, as the Global Times (April 10) argued, as a big step in luring Australian away from the US and Japan. All four countries are economically interdependent and all require a stable regional environment to prosper. The China-Australia strategic partnership is not a strategic victory for China but a win-win situation for both. *Emeritus Professor, The University of New South Wales at the Australian Defence Force Academy, Canberra.