Back to the Future

Greg Dodds

International relations | Asia, Australia

17 March 2014

Greg Dodds on Australia’s Asia problem.

I usually find the term “Asia” useless and even dangerously misleading. It encourages the idea that all the countries in the region are homogenous and share a mutual affinity. One can therefore “like Asians” or “be interested in Asia”, worthy sentiments indeed but also ones that duck the years of hard work necessary for people to get on top of even one of the major cultural groups in the Region.

On the face of it, the Gillard Government’s Australia in the Asian Century White Paper looks like a reprise of this vanilla approach to Asia, like the menu of an “Asian restaurant” with beef rendang, bibimbap and sushi all thrown in as if they naturally belong together. A roll of Quickeze is the normal  Australian contribution to any such dining experience.

And yet the White Paper may have, perhaps inadvertently, stumbled on an important point. We always talk about the fruits of our bilateral relationships (China is our largest export market, Japan our number two source of direct investment, etc ) as if that makes us an integral part of Asia’s development but the Asian market is now more than just a sum of its parts. The major thrust of trade and investment development in the future will be from interaction within the region and less from investments from outside. To access this business, Australian companies need to work from inside the market, usually with Asian partners, to identify and win such projects and opportunities.

While Kennichi Ohmae’s prediction of a borderless world has not come to pass (and is unlikely to in this part of the world), Asia’s economies have interdependencies that are not obvious when viewed from Australia, particularly through the shallow and meagre coverage of Asia by the Australian media. With the exception of our major banks and ventures like a WA steel company in Vietnam, Australian manufacturers are content to sit at home and wait for business to come to them.

It was not always so. Twenty years ago, Austrade began a programme of pairing Australian engineering and materials firms with Japanese trading companies to win projects funded by Japanese aid money in Asia. The trading companies had the experience and connections while the Australians brought the cheap(er) materials and services. It worked: with a list of successful bids and established connections behind them Australian companies were set to enjoy a business stream that could continue for decades.

But it didn’t. The appreciation of the Australian dollar made many Australian suppliers uncompetitive, the GFC and Japan’s own extended crisis saw many projects suspended and the trading companies for the most part reverted to their old Japanese suppliers.

But more, much more, than currency movements, the idea of being relaxed and comfortable promised by the Howard government gave Australians permission to put their feet up and take the occasional sickie when things got a bit hard, both literally and metaphorically. The difficult stuff wasn’t necessary any more it seemed; the study of Asian languages in schools collapsed and strong balances of trade became an entitlement rather than something that had to be earned.

And Austrade doesn’t do that stuff now anyway. It has reverted back to being a “normal” government agency, perhaps even a relaxed and comfortable one.

So the Asian Century White Paper could be useful in getting us back into the game but the familiarity of the themes and ideas? Wasn’t there a thing called the Garnaut Report in the 1980s? Australia seems to have refined this process of identifying the “Asian problem” every few decades, commissioning an enquiry and then largely ignoring the recommendations.

This commitment to the cyclical view of history might be OK and might even be a little bit Asian in its own way if it was shared by our neighbours but unfortunately their economies are on a linear expressway that is as straight as an arrow. Indonesia to become the world’s seventh largest economy by 2030; crikey, where did that come from?

Finally, to an Asian audience, symbols symbolise; they reflect a reality just like the famous puppet shows of the Region. An Australian Labor Prime Minister makes a public show of knitting booties for an English newborn prince and invites 2500 American marines to Darwin? And the Coalition leader is always talking about the Anglosphere and has pronounced that “Very few Australians would see the US as a foreign country”? And our neighbours are supposed not to notice?

As the joke goes, an Englishman asks an Irish farmer for advice on how to get to a certain town. Looking thoughtful, the Irishman replies: “Well, I wouldn’t start from here”. As the joke implies, we don’t have any choice on where we start but let’s at least see some movement this time. And in the right direction.

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