Business leaders say a shift of thinking, and realisation that Asia is the key global economic growth driver, must underpin Australia’s approach to China
8 July 2020 | Toby Thomas (Image: Evangeline Shaw)
The nation’s peak business group, the Business Council of Australia is calling on a “Team Australia” approach to revive the economy and key trade relationships. A report co-authored with the Asia Society of Australia says a fractured approach to Asian engagement is hurting the economy, at a time when many in business are questioning the government’s approach to China.
The report says there must be a clear-eyed understanding of mutual interests and greater coordination between business and government when engaging with our biggest trading partner.
Business Council chief executive Jennifer Westacott says, “Just as it has been for the last 30 years, Asia will continue to be crucial to Australia’s economic growth. If we get this right Australia can emerge from the COVID-19 pandemic well positioned for another three decades of better living standards, new jobs and higher wages.”
“It isn’t just governments that need to adapt and change, businesses must work to understand their markets, build trusted and lasting relationships and look at new and innovative ways to embed themselves in emerging markets.”
Its key recommendations come at a time where the majority of Asian economies are tipped to record their weakest economic performance in the past 60 years, however, China is emerging as the only G20 nation forecast to post economic growth in 2020.
With continued COVID-19 outbreaks, the full extent of the hit to the United States, Europe and South America is hard to quantify. The report says “this may accentuate the shift in the world’s centre of economic gravity toward Asia.”
There are positive implications for Australia, what the authors call a “second chance” of building a more strategic relations with our key trading partners.
Getting the China relationship right
The business taskforce behind the report, which included analysts from PWC and academics from Sydney University, delivered 25 key recommendations, six directly address the need for deepened engagement with China at multiple levels.
Improving China relations based on the principle of “China and” as opposed to “China or” is one of the primary recommendations. The report provides, “Australia must maintain a comprehensive and multi-faceted economic relationship with China in a strategy which focuses on the national interest.”
Says Taskforce Chairman, Mark Van Dyck, “Australian business understands the opportunities in Asia but we have made relatively limited progress on building wider trade, and in fact in some markets we are losing ground.
“It’s critical we penetrate our existing markets in Asia more deeply. They still hold a massive opportunity for us.”
“By 2030, 50 percent of the world’s food and 40 per cent of its energy will be needed by a growing middle class of 500 million people in Asia.
The Business Council led report, says a framework modeled on the National Cabinet could be the solution to better understanding our largest economic relationships and the ramifications of interaction with China at multiple levels.
The report calls for greater sharing of professional talent between Australian and Asia. It also points to the lack of Asian-Australians in key leadership positions, across both business and government, as a waste of local talent that could be key to fostering greater economic opportunities.
A possible solution, says the report, would be the appointment of a National Talent Commissioner to oversee the process.
The unprecedented demand for Australian commodities by China have seen the value of Australia’s exports as a proportion of GDP reach 29% as of last year. While much is made of the single-market over reliance of Australian exports, as a percentage of GDP Australia’s exports rank quite lowly among major developed economies.
The report says a realistic target for Australia could be exports representing 35% of GDP by 2030, pointing out, “Australia should present a single Team Australia face to our trading and investment partners through its new national brand based on its competitive advantages and enhanced cooperation between business and government.”
Still the lucky country?
According to one of the lead authors, Australia runs the risk of the Asian opportunity “quite literally passing us by.”
PWC Partner Andrew Parker says, “Australia has a strong reputation as a safe place to do business and as a reliable partner. COVID-19 has likely enhanced that reputation. As we enter the COVID-19 recovery phase, Australia is well positioned to help less developed neighbours. With one of the world’s largest pools of pension funds, our capabilities in technology, innovative ideas, and our concentration of talented people – we can contribute to all the key drivers of economic growth.”
Far from COVID-19 becoming the pretext of a regional threat, Asia Society CEO, Philipp Ivanov says it presents an opportunity for rebuilding. “Australia has a chance to capitalise on Asia’s economic recovery and our own successes. Despite the economic damage of COVID-19, Asia is likely to remain the epicentre of global economic dynamism.
“Our challenges are in execution and coordinated effort. It is about maintaining trade with China while expanding to other mature and emerging markets in the region,” he says.