Newly-elected Council National Chairman Frank Tudor holds great hope for the Australia China Business Council, as an organisation which is uniquely placed to facilitate understanding between China and Australia at a troubling time of extraordinary global financial and economic uncertainty.

The celebration of the Lunar New Year is a reflective time when the world’s greatest annual migration takes place as Chinese people take time out to travel and gather with family to contemplate the year that has past (Year of the Rat) and celebrate the New Year of the Ox.

As legend would have it, the race to determine the order of the animals to be represented in the Chinese zodiac saw the cunning quick-witted Rat hitch a ride on the back of the methodical steadfast Ox to cross the winning line first. It is perhaps noteworthy and reassuring that the success of the rat and global recovery in 2009 rests on none other than the dependable shoulders of the patient, tireless, hard-working and trustworthy characteristics inherited by people born in the Year of the Ox.   

The Year of the Rat was indeed telling in that it highlighted cultural commonality and economic inter-dependency across the planet. We stood in awe as China brought together the global village and presented a magnificent Olympic Games. We then collectively reeled as the interconnectedness of the global economy was clearly demonstrated as the US financial crises adversely affected the real physical economy and ultimately led to a downturn in export-orientated production in China, Germany, Japan et al.

China as a large exporter and banker to these major economies has also naturally been adversely impacted.

China’s reform programme initiated by Deng Xiaoping in the 1970s relies on export-led growth and the World Bank now forecasts China’s economy will grow 7.5 percent in 2009 compared to the double digit growth in recent years. For the last 20 years, China’s spectacular growth has built up its enormous foreign exchange reserves which have funded US consumption and propped up the US current account deficit. Internally, growth has been the foundation for a harmonious and stable transition to an urbanised and prosperous China.

The challenges faced by China’s leaders as the country celebrates the 60th anniversary this year of the founding of the People’s Republic of China are, in many ways, as significant as those facing incoming US President Obama. 

This year China faces the challenges of global pressures and GDP growth rate falls, rising unemployment rates and the consequent potential for civil unrest. 

In turn, China as the world’s third largest economy and as Australia’s second-largest trading partner has developed a significant appetite for imports of Australian natural resources. The benefit of the resources boom generated by Chinese demand in Australia has weakened and will be noticeably eroded as coal and iron ore contract prices and volumes are renegotiated through early 2009. Australian households who have enjoyed the benefits of the complementarity between Australia’s resource-based industries and China’s manufacturing industries will consequentially be adversely affected and the efficacy of Australia’s leaders’ policy making will be tested.  

Given the above it is particularly encouraging to observe that leaders in both countries have reacted quickly to bolster domestic consumption. China’s 4 trillion yuan investment plan, measures to stimulate bank lending and accelerated re-building of Sichuan after the tragic devastation of last year’s earthquake are without question decisive steps.

The excellent relationship between the leaders of both countries built over many years and enhanced by Prime Minister Rudd’s affinity for Chinese language, culture and history has, amongst other things, re-invigorated efforts on negotiations leading to bilateral trade and investment liberalisation

Success in these endeavours is imperative to restoring consumer confidence and economic recovery. Issues will inevitably arise in commercial resource offtake/equity negotiations, contemplated investments backed by enormous sovereign wealth funds and the scope and concessions made in Government-led free trade negotiations which will test the strength of relationships on both sides.

The Australia China Business Council is well positioned to play a valuable role in facilitating appreciation of each other’s drivers/circumstances with a view to achieving win-win outcomes. Recent discussions between myself and Consul General Li Shugang indicate that the Chinese Government is very supportive of the efforts of the ACBC to address these issues and to promote greater trade and co-operation between Australia and China.

Happy New Year! 春节快乐!

*At the AGM in November, the National Board for 2009 was elected and Kevin Hobgood-Brown formally stepped down as Chairman. Kevin led the Council through significant change during his tenure as Chairman and has been a significant figure in the growth of the relationship between Australia and China. The council wishes to thank and acknowledge Kevin’s commitment to the ACBC over the last three years and his ongoing support by remaining on the board as “Immediate Past Chairman.”

A special vote of thanks was also recorded for the retiring Immediate Past Chairman, the Honourable Warwick Smith, acknowledging his outstanding contribution to the Council over many years.   

**The ACBC’s Canberra Networking Day is scheduled for March 2009 in Parliament House. For more information on this event: T:  +61 2 9252 4277  or visit: www.acbc.com.au