James Riley
May 28, 2015

The Premier & the Party Secretary

The Premier & the Party Secretary

Mike Baird and Hu Chunhua, extend the NSW and Guangdong relationship

Every time a senior delegation arrives in Sydney from China’s economic engine room of Guangdong – and they arrive with increasing frequency – Neville Wran’s stature in Australian history grows a little bit bigger.

Mr Wran is already a giant in the political and economic history of New South Wales. But his prescience in signing a sister-state relationship with Guangdong has delivered tremendous benefits over many years to the state, and to Australia. That prescience will be remarked upon for years to come.

It was 1979, and was the first Australian state relationship in China. And it was Guangdong’s first such agreement anywhere. It was, at the time, truly historic – and much has been built on that history.

It is also one of those splendid and fortuitous quirks of history that the Guangdong Party Secretary who signed the original agreement was Xi Zhongxun, the father of the current President of China.

Not the spiritual father, or metaphorical father, but literally it was Xi Jinping’s dad.

All of this is interesting only in so much that it underscores the great weight, and the great value, of the special 35-plus year partnership of Guangdong and New South Wales.

It is no surprise that subsequent premiers have followed Mr Wran’s lead on China. In recent times, Barry O’Farrell made China relationships a top priority, and Mike Baird made sure Guangzhou was his first international visit when he became premier.

This week’s visit by Guangdong’s Communist Party Secretary Hu Chunhua is the second high-profile visitor from Guangdong inside a year (provincial governor Zhu Xiaodan was here last September.) Mr Hu is also a member of China’s central Politburo and is identified as a contender for higher office – his predecessor Wang Yang is now a vice-premier in the central government.

Mr Hu is also the most senior Chinese politician to visit Australia since the illusive free trade was initialled. He was afforded Guest of Government status by the Commonwealth, bestowed on only a tiny handful of foreign visitors each year. And of course has also been in Canberra this week for talks.

So what do you do when the top political statesman from China’s biggest provincial economy comes to town? You sign a lot of MOU’s, and you point to a whole lot of recently signed contracts. Mr Baird talked up the relationship – two-way trade between China and NSW is now worth $30 billion. And 72 per cent of Chinese investment in Australia comes through NSW.

Of course, the focus was on the mainstream commodities that make up the bulk of the trade relationship – coal, iron ore, petroleum/LNG and now agricultural products and services. But equally, trade in services is now more than a footnote in any conversation about China trade.

No mention of Australian information technology here – but why would there be? The opportunities exist for Australian companies in the services sector are driven in part IT innovation, regardless.

Mr Hu says China is looking to Australia for health services and pharmaceuticals, clean technologies for industry, and renewables innovation in the energy sector, and increased two-way investment in agricultural innovation.

Mr Hu’s visit to Sydney coincided with a trade delegation and exhibition at the Hordern Pavilion of companies from Huizhou (also in the Pearl River delta, near Shenzhen and Guangzhou) – a city known for its advanced manufacturing in electronics. The Chinese flat-screen TV and monitor manufacturer TCL is based in Huizhou, which also hosts foreign manufacturers like Samsung and Sony.

The Huizhou trade representatives in Sydney this week weren’t thinking much about how they might better integrate with the Australian tech sector. They are more interested in buyers for their consumer electronics products.

And as the international general manager for Adayo Corp Denny Zhang said, Australia “is not famous for its technology.” Of course, he said Australia is famous for many, many things in China – Bondi Beach, koalas, our universities – but technology is not one of them. Adayo is a multi-billion dollar electronics giant, a maker of in-car electronics systems for most of the world’s automotive manufacturers.

Huizhou Department of Commerce deputy director Shi Jing Shun says there should be opportunities for Australian IT companies to engage directly with new Chinese technology brands as they come out in to the world.

Mr Shi has managed four overseas trade missions from Huizhou, since the municipality joined with China’s push to create banded export-facing companies from its base of OEM manufacturers. The first was in San Paolo in 2012, followed by Moscow in 2013, Johannesburg last year, and now Sydney.

The Sydney exhibition is the first in a developed economy, he says. There is a reason the municipality selected Australia as its first developed economy destination: It is a smallish, containable size, it is friendly and it is safe. There is a lot for the Huizhou manufacturers to learn here before attempting to enter giant markets of Europe and the US.

This does not apply to giants like Adayo and TCL, but it smaller manufacturers and services firms. This is an opportunity for Australian companies, Mr Shi says.

Education remains a key market for the China Australia relationship, critical to building the business relationship. Most significant of the MoU’s signed this week were between the University of Technology, Sydney (UTS) and the Huizhou University, and the acknowledgement of a relationship between UTS and Guangzhou’s Sun Yat Sen University.

For the tech innovation sector, this is where Australia can exploit a competitive advantage. Australia already hosts tens of thousands of Chinese students doing courses ranging from business and economics to post-doctoral work in advanced analytics.

These students are an important resource. For most, returning to China with new qualifications is the goal. But we should be trying to convince as many technology and business students as we can to stay.

Government is on the right track with its New Colombo plan. Under this scheme, about 520 Australian students will study in China in a sponsored capacity at some level. This is important and will pay long-term dividends for the relationship in the same way that the presence of so many Chinese students in this country is beneficial.

It is time to push this relationship harder through student exchanges, and perhaps target our efforts at the high-value technology sector. An expansion of the New Columbo Plan would be most welcome.

But we should also consider new ways to encourage Chinese student entrepreneurs to remain in this country. We should relax the work restrictions that apply to students – particularly those that work in the tech/entrepreneurial space.

A new class of entrepreneur visas has been discussed for years. This should now be seriously considered. Our pipeline of venture funding is improving quickly. Is it time that we seriously encourage the best entrepreneurs from around the world to set up a business in Australia?

I think it is. And we should start with those from China.

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