Pacific pivot to China?

There is an old Chinese curse, famous around the world: "May you live in interesting times." There is no doubt we do.

There is a great disruption underway, a shift of the world on its axis.

We see it in the rise of the great economies of the Asia Pacific, now driving the world economy, building massive consumer societies and reducing poverty at a record rate.

We see it in the anxiety of those who were beneficiaries of the old world order and who suffered from the financial crisis that hit the Atlantic economies hard.

It is natural for some to have apprehension, to believe that trade, immigration and geo-strategic power are zero sum games. But it is much more complicated than that.

There is certainly a rebalancing underway towards Asia, where the greatest population lives and the rebalance no doubt will have twists and turns that we cannot predict. But the Asian economies are integrated into the global economy and their rise will build the global economy. If we work together.

For the Pacific region, the part of the world where the smallest population lives, this rebalancing of global economic power to our north takes place at the same time as other great seismic shifts.

In recent times the overwhelming consensus of scientific evidence indicates that the Pacific Islands face an existential threat from climate change, every bit as confronting as previous existential challenges of colonialism and war.

Australia and New Zealand, too, are experiencing great change. They have undergone transformational social change as a result of mass immigration that has strengthened their economies and made their cultures much more diverse. Australia and New Zealand are truly connected to the Asian region in a way that previous generations would not have imagined.

No island is isolated from changes in the world.

Notwithstanding the challenge of climate change, the good news for the whole region is that Asia's economic rise brings opportunities to integrate into regional and global supply chains, financial flows and of course high spending tourists and students. Economic health is the bedrock, because economic strength creates the capacity to make choices, to act in our national, regional and global interest.

Let's take the big Pacific island as our first case in point.

Australia is the most economically integrated with China of all G20 economies. China, has, over the last decade, become Australia's largest trading partner, its leading source of new foreign direct investment, migrants, tourists and international students. For China, Australia is a strategic partner, its sixth biggest trading partner, a major source of minerals, energy, food and other inputs for its ongoing growth. The complementarities between the two economies make for a very strong partnership.

Businesses know this and are getting on with the practical work of building relationships. A million Chinese have made Australia their home. Visitors move between the countries at an ever-increasing rate. But hearts and minds in Australia haven't all caught up with the change. The relationship remains fragile and based on superficial stereotypes, rather than a deep understanding and commitment. Many Australians remain more familiar and comfortable with an Anglo-American world and with Australia playing a junior, colonial role, a follower of global power rather than a regional partner.

The Australian Government has recently announced it will develop a new foreign policy White Paper. It has a Prime Minister who says "there has never been a better time to be an Australian." Might a new optimism and confidence about Australia's assets and its place in the world help reassure Australia that it can embrace the change in the world and its growing links with China and the region? Or will any new strategy be constrained by Australia's habit of playing loyal deputy to its traditional global allies and lingering suspicions of Asia?

The crux of Australia's dilemma is whether it can have both a deep economic engagement with China and the region (and a deepening people to people relationship) while maintaining its security alliance with the United States. If it can have both, Australians will be satisfied that the future is bright; if it cannot Australians will become more and more anxious. I believe it can, if Australia is brave enough to put its national interest first and craft an approach to the world that is at once more confident and less colonial, more multidimensional and less vertical. It is possible the election of Donald Trump will hasten the change.

It turns out the Australian White Paper will be very timely.

• Will Australia cast off its colonial thinking and define its interests independently, first and foremost as national interests, pursued through regional and global partnerships?
• If so, can it have a US alliance and a deep and broad partnership with China simultaneously?
• If the US abandons the Trans-Pacific Partnership, will Australia embrace China's alternative, the Regional Comprehensive Economic Partnership?
• Will Australia seek to join the Association of South East Asian Nations and renew a deeper commitment to the Pacific Islands Forum, embracing its own region?

The region as a whole has similar challenges, opportunities and related questions.

Trade between the Pacific Islands and China doubled last year, tourism grew rapidly from a low base and Chinese investors continued to actively explore the region for opportunities. This is consistent with a trend that is linking the economies of the Pacific Islands with China.

Chinese companies are actively engaged in the energy and resources of Papua New Guinea, in the tourism resorts of Fiji and in the vast fisheries across the South Pacific. But the small, developing economies of the Pacific continue to rely largely on traditional great and powerful friends.

This of course is not uncontroversial. Those large, traditional friends of the Pacific carry baggage, as former colonial powers. While they remain significant development aid donors, some of them have appeared reluctant to support the Pacific against the great climate change threat. Some of the leaders in the Pacific are actively "looking North" to cultivate stronger China links, to effect their own rebalance in the Pacific.

There have been Chinese communities in the Pacific Islands for many generations, often managing the retail sector, restaurants and other small businesses. Today, there are many new visitors from China exploring business.

Chinese finance, Chinese business and infrastructure and supply chain links to China can help the Pacific Islands develop faster in the coming years.

Striking a balance will be the challenge, ensuring that development is sustainable and that the unique environment and cultures of the Pacific are strengthened from development and not diminished.

There is a discussion going on across the Pacific about regionalism and we have a range of forums in which leaders and others can meet to find agreement on our priorities and the way forward. This is a fundamentally important discussion, to find strength in working together.

Some of the questions we need to answer include:

• How can the Pacific Islands and the world tackle climate change and its impacts - and can China help if the US and others will not?
• What would sustainable tourism development look like for the Pacific?
• How can we build infrastructure and logistical connectivity to expand the trade in goods and movement of people between the Pacific and Asia?
• What are the governance challenges for nations and regional decision making forums at such a time of change?
• Will the Pacific Islands maintain strong links with traditional friends at the same time as building new links to China and other nations of Asia?

It is true that many believe engagement is a zero sum game and that just as economic, cultural and other engagement with China grows, so must engagement with traditional partners decline. I think the times are far too interesting and our shared interests far too important to be reduced to such simplistic thinking. One thing is sure, the new times require the nations of the Pacific to understand, pursue and defend their own national interests and for us to better pursue our regional agenda together.

Just as Xi Jinping said last week, marking the 150^th birthday of Sun Yat-sen, China has to walk its own path that suits its own conditions. I agree. I think the same is true of the Pacific. We must each walk our own path, paddle our own canoes, to suit our conditions. But the great navigators of the vast Pacific Ocean also know the value of teamwork. We will be more successful if we work together, with old friends and new. Rather than confront these interesting times with fear, I prefer hope and trust in our shared interests.