Andrew Leigh

LAUNCH OF THE CHINA STORY YEARBOOK

AUSTRALIAN PARLIAMENT HOUSE

TUESDAY, 22 NOVEMBER 2016

***CHECK AGAINST DELIVERY***

Let me start by thanking the Australian Centre on China in the World for inviting me to speak here today. Whenever I visit your premises at the Australian National University, I am reminded of two things. The first is the wonderful work that you produce, like the China Story Yearbook that we are launching here today. And the second, as a long-time occupant of the maze-like Coombs Building, is how much less snazzy my accommodation was than yours.

In these uncertain global times I am reminded of the Chinese proverb that ‘a single tree does not make a forest; a single string cannot make music’. It is in the spirit of the long history of collaboration between Australia and China that I thought we should start with a simple question. What would Australia be like today had China not opened its economy in 1978?

Based just on merchandise exports, Australia’s economy would be almost 5 per cent smaller. That’s $8,000 less for every Australian household every year.

Prices would be higher. Since 2007, the price of goods we import from China has fallen 20 per cent while the price of goods we produce at home has increased by 20 per cent.

Our universities would be nearly $6 billion poorer each year. They would educate almost 100,000 fewer students.

Our tourism sector would earn $6 billion less each year with 1.2 million fewer visitors visiting our attractions, eating in our restaurants and buying our souvenirs.

If China had remained in autarky, Australia would have had no mining boom, and not much of a dining boom. I’m guessing that if we removed from your home every item bearing a ‘Made in China’ sticker, you’d think you’d been robbed. 

Let’s go further still, and imagine what Australia would be like in a world without China. There would be no Chinese New Year celebrations. No books by Jung Chang, Sun Tzu or Cao Xueqin. No art works by Luo Zhongli, Ai Weiwei or Li Jin. Among the inventions to come out of China are paper, printing, gunpowder, the compass, lacquer, acupuncture, dominoes, public service exams, kites and nail polish. And that’s before we get to Chinese food. And I don’t know about you, but I honestly wonder whether a life without dumplings is really a life that’s worth living at all.

Luckily this is not the Australia we live in today. But when extremist politicians denounce free trade, oppose immigration and promote inward-looking societies this is presumably the sort of Australia they long for. But very rarely do we hear such politicians articulate what the costs of disengaging from the world would be to our economy and our society.

Xenophobia is on the rise. Its success is built on the same strategy: purveyors of hatred appeal to people’s darkest fears, arguing that voters can have whatever they want with no cost. But as the ancient Western proverb goes: there’s no such thing as a free lunch.

Take trade as an example. Analysing data from 40 countries, economists Pablo Fajgelbaum and Amit Khandelwal found that free trade increases the purchasing power of the rich by 28 per cent. But more importantly it increases the purchasing power of the poor by 63 per cent. The cost of abandoning free trade is that many people on an average income could no longer afford the clothes they wear, the smartphones they love, the furniture in their house, the cars they drive or the petrol they put in them. Far-right wing politicians rarely discuss these costs when they advocate abandoning free trade or slapping tariffs on Chinese imports.

This is also true for immigration. A 2014 OECD analysis found that migrants contribute more in taxes and social contributions than they receive in individual benefits and can provide a net benefit of up to 2% of GDP to the public purse. Australia’s skilled migration program helps to curb the growth in the cost of health care, higher education and IT services.

But international engagement isn’t just about trade and immigration. It is about working together to solve global problems. This year’s China Story Yearbook focuses on the critical issue of pollution in China. The issue of environmental pollution means many things for the Australia-China relationship. It means working together to deliver ambitious commitments under the Paris agreement. It means sharing Australia’s experiences on many of the complex environmental issues that China is facing like tailoring engineering solutions to address water scarcity and promoting sustainable agriculture. And it means exporting Australia’s fresh, clean and safe agricultural produce into a growing Chinese middle class.

International collaboration and engagement benefits Australia, China and the rest of world immensely. Of course, it has its drawbacks which need to be better managed than they have been in the past. But by working together we are moving in the right direction. Extremist politicians risk reversing the progress that has been made and making all of us worse off. As the Chinese proverb goes, ‘the person who says it can’t be done should not interrupt the person who is doing it’. Let’s hope the far right hears this message.

ENDS