The Asian Century

In the twenty-first century, we can confidently predict two trends. First, Australia will become more ethnically diverse. And second, we will become more enmeshed with Asia. The next generation of Australians will be more likely to have been born in Asia, travelled to Asia, worked in Asia, or married someone from Asia.

That’s why the Asian Century White Paper, which the government has commissioned from former Treasury Secretary Ken Henry is so important. Rapid economic growth in China and India isn’t just drawing millions of people out of poverty – it’s also placing Australia closer than ever to the economic centre of gravity of the world economy. This isn’t just a mining story (Australia’s service exports to China exceed our coal exports), it’s a story that illuminates the evolution of our national character.

We believe that the Asian Century has five big implications for Australia.

First, we should focus on the opportunities, not the threats. Straightforward trade theory tells us that Australia will be most prosperous if we focus on our comparative advantage – the things we do better than other nations. This means that as the outputs of other countries change, it will invariably affect our comparative advantage.

Managing industrial transformation is an important challenge for our nation. It is also important that we maintain a bipartisan conversation about how structural change is vital if we are to continue increasing living standards. Every day, thousands of Australians lose their jobs, and thousands find a new job. No government can – or should – try to prevent every job loss. And no opposition should seek to block change by engaging in partisan politics over job churning.

It is often said that Australia is ‘competing’ with Asia. But in our reflections on industrial change, we must acknowledge that Asia is our most significant export destination, and that eight of our top ten trading partners are already in the Asian region. Demands for services like education, tourism and technical expertise, and goods like high-quality agricultural produce, will only increase as the preferences of consumers adjust to their new middle-class status. The OECD projects that the proportion of the world’s middle class residing in Asia will increase from 28 per cent in 2009 to 66 per cent by 2030. The growth of the Asian middle class means a massive increase in consumption and spending on imported goods and services, the supply of which Australia is well placed to provide.

Second, we should revitalise the push for a Republic. As the only Anglo-Celtic country in the Asian region, we have an extraordinary opportunity to harness the rise of Asia. Yet there is a mentality that when we punch out at the end of our time working in or visiting China, we come safely home to the Anglosphere. For example, only 20 per cent of Australians currently working in China can speak Mandarin. Our political and cultural institutions reflect an attitude in which Australia is a dependant of the British crown. Despite the world’s economic centre of gravity shifting towards the Asian-Pacific, the notion still persists that Australia is located in the antipodes, far away from where the important decisions are made. We can no longer afford to think of ourselves as simply visitors to this region, when it is from this region that the future will be shaped. By becoming a Republic, we would be able to stand proudly independent of the United Kingdom, and announce to our neighbours our readiness to be involved in our region.

Third, we must improve the Asia-literacy of all Australians. Increasing Australia’s skill base in Asian languages must be a strategic priority. Better language capacity is crucial to trade negotiations, and to picking up the opportunities offered by businesses across the region. Just as compelling are the social and cultural benefits of enabling people to communicate with people from other backgrounds. A strong command of language allows listeners to far better understand differences in culture; to understand not just what is said, but why. If we want Australia to have a place at the table in the Asian Century – to even understand the opportunities available – we will need to adjust our Asian language competence from a level suitable for backpackers to one that fits the boardroom.

While we agree that it would be a good thing for more Australians to speak Mandarin, Hindi or Vietnamese, it is also vital to take a hard-headed look at the reasons behind the low take-up of such languages. Such an analysis should take into account the basic economic principle that acquiring a language is not costless, and recognise that for our nation, Asian language study is an investment in a safer, affluent and more engaged nation.

Fourth, we should increase the Asia-literacy of our politicians. At the federal level, we can be proud to have some parliamentarians of Asian descent, who speak Asian languages, and who have lived in Asia. But there is more work to be done to ensure that our politicians continue to look like the electorate. Too few members of parliament are absorbed in Asian art and literature, and too few travel regularly in our region. There are plenty of parliamentarians who follow every twist and turn of United States or United Kingdom politics, and but not enough who understand party politics in India and Malaysia.

Fifth, we should engage our neighbours in trade, aid and diplomacy. As Hugh White’s provocative Quarterly Essay has illustrated, the rise of China creates significant challenges for Australia. We do not believe that Australia should resile from our deeply-held support for open markets and open societies. Allowing the Renminbi to rise to an appropriate level would be good for Chinese consumers, as it would increase their buying power and help to curtail domestic inflation. Encouraging China to deliver more of its foreign aid through multilateral institutions would help donor coordination and poverty reduction.

Similarly, while the Association of South-East Asian (ASEAN) has built a strong and generally progressive community of nations, its policy of non-intervention in national affairs must not be used as an excuse for social reforms to languish. Australia must focus its diplomatic and development capacity on encouraging Asian nations to harness their growth for the benefit of their own populations, the region and the world.