by Trelynd Bradley Bowles

Opportunities and Challenges for Australia in the Asian Century by Trelynd Bradley Bowles Australian Foreign Policy Dr. Guy Roberts University of Melbourne Exchanged: University of California, Riverside 14th September 2015

On the afternoon of March 5th, 2015 Julia Gillard, the former Prime Minister of Australia, stood before a collection of students and guests at Brown University for an address. Her topic, Asia and she began by getting straight to the point, My first message to you is a clear one and a simple one; Asia s rise is the opportunity of this century. (Julia Gillard, former Prime Minister of Australia discusses Asian Century 2015). Gillard s statement was evidently clear, as it foreshadows a looming chasm that is set to envelop the region, which includes a multitude of countries including that of her own, Australia. The Asian Century has dawned. Australia has two foreign policy challenges in the Asian Century; a geopolitical challenge of security and a multifaceted economic challenge. Australia has two opportunities in the Asian century; one is purely economic and the other is becoming a hub for developing human capital through education. As Asian countries become more powerful, it is vital that Australia maintains the security of its people in the next century. There has become a recent hegemonic pull between the United States and China, leaving Australia geographically and strategically located between both. The ANZUS military alliance, cultural similarities, and the exercise of American forces/equipment in Australia (U.S. Marines, Northern Territory) all reflect Australia s close relationship with the U.S. (Tay 2011, p. 57). The initial East-Asia Summit did not include the United States but included Australia. The U.S. s recent inclusion past the Fifth Summit by Australian recommendation reflects a platform of cooperation between China and the U.S. (Tay 2011, p. 57-60). Encouraging the United States and China to work together benefits Australia as it ensures balance; acting as a mediator and a promoter of diplomacy is in the interest of its security. At the next EAS

(Sixth), PM Julia Gillard announced the agreement to locate 2,500 U.S. Marines outside Darwin. When questioned if it was seen to counter China she replied possible for Australia to have an ally in Washington and a friend in Beijing. Such a predicament is reflective of the balancing relationship Australia must conduct for the Asian Century. Following the decision to place troops Gillard echoed the sentiment of balance to the U.S. Congress in 2011, praising the U.S.-Australian relationship while attempting to hone down the concept of zero-sum, another gesture of mediation (Gillard 2011). Speeches in the future will also need to target the Chinese government and people, if Australia is to continue the aura of balance. Nevertheless, the speech reaffirmed the fact that the Australian participation in its alliance with the U.S. is perhaps non-negotiable as argued by foreign affairs journalist Greg Sheridan (Green & Gill, p. 168-169). He states that as the first pillar of the Rudd government, alongside continued military cooperation, the U.S. alliance must be maintained. Although maintaining the alliance may be non-negotiable, it is still imperative that Australia brings reconciliation between the two powers. Hugh White in Power Shift addresses that Australia should launch a diplomatic campaign to persuade China and America to work together to build a Concert of Asia (2011). Appeasing both sides and utilizing platforms of diplomacy and multilateral agreements to have both powers work together is necessary for Australia s future. Australia must also encourage the United States to involve itself more with ASEAN and ARF, which are the area s only multilateral process that devotes to security issues (Tellis, Kuo & Marble 2008, p. 257-259). In doing so the United States exercises diplomatic capital in nations other than Australia, so as to balance its strength in the region. This will then provide Australia with a

safer security net/buffer to the north. This then may allow Australia to play a more neutral role as well as assure itself that the security of the United States shall remain. In respect to security, Australia must also bolster the power of its Navy. As the navies of India and China grow substantially, Australia s must as well for the security of its state and the security of its maritime commerce. 99% of Australian s international trade volume comes by sea and it is the fifth largest user of shipping in the world (BTRE 129, 132-133). Its maritime security must be heightened. Currently the Australian Navy is small, twelve frigates, six submarines and a multitude of patrol boats and utility craft (Current Ships 2014). The May 2009 Defence White Paper called for a modernizing of the navy that must be sought, including eight new frigates, and twelve submarines (Department of Defense, p. 59-61). Australia must develop greater strategic naval weight to parallel its growing unique security needs without destabilizing the region. This presents a strategic challenge that should include the realignment of Australian funds for naval defense. Rather than investing in military expeditions, or extensive programs for land forces, Australia should redirect its defense funds the RAN. Rory Medcalf, head of the National Security College, argues that Australia should use the bolstering of its navy so that it may also conduct more exercises with its Asian neighbors, such as China and India (Bateman & Ho, p. 189, 191-192). Doing so will boost an image of cooperation and peaceful interaction in security. In India, Australia has a potential naval ally as a former British domain; building engagement with India without feeding the idea of a containment strategy of China can help Australia s security interests going forward. Andrew Phillips, Senior Lecturer of International Relations highlights the strategic importance of the Indian

Ocean, and cooperation with India as a means to ensure regional stability and peace (Phillips 2012, p. 137-138). He suggests fighting non-traditional security threats such as piracy alongside India and China as a way to overcome the challenge of geopolitical cooperation. Combating piracy, maritime cooperation with India, and securing a buffer on both oceanic fronts is nevertheless rudimentary without the fortification of the RAN. The challenge for Australia in the Asian Century is also economic; as Asian markets develop and economies rise. Chapter 7 of the White Paper on the Asian Century calls for increased operation and connection in growing Asian markets by Australia (White Paper 2012, p. 20). The APT, APEC, EAS and ARF all reflect initiatives to create an economic security nexus, but either lack Australian involvement or have been unfulfilling in their pursuit of security regionalism for economic activity. Inner disputes between states such as China and Japan, have hindered economic regionalism that could have involved Australia (Tow & Wah 69-70). Australia s lack of involvement also reflects an ousting from discussion on such issues. Australia should seek to involve itself in more multilateral agreements that include its dominant trading partners in China, Japan, South Korea and India. Australia should serve as a mediator; as well as open it s own markets up for business at a lower cost to its Asian neighbors. Such involvement helps integrate Australia within Asian markets. Australia must also create a long-term national infrastructure strategy to progress alongside the economy that allows for Asian entities to invest in Australian infrastructure. The White Paper calls for removing barriers to infrastructure financing (White Paper 2012, p. 11). These financial barriers are discussed by KPMG, a global network of professional firms providing financial advice. These financial barriers

are in the form of tax and divergence of government funds from the private sector. KPMG then notates that Australia must develop the capacity to fund and lure foreign investment from Asian contractors to invest in Australia (KPMG 2013, p. 5). The Asian Development Bank Institute estimates that $8.3 trillion USD will be spent on infrastructure alone by 2020 in the Asian region (ADBI 2009, p. 10). Enticing investment to Australia rather than elsewhere presents a major challenge for the Australian private sector. Strategic Asia states that the resource demand from Asian economies helped Australia weather most of the economic and financial problems much of the world faced in the late 2000 s (Tellis, Kuo & Marble 2008, p. 242-243). The White Paper follows In the past 20 years, China and India have almost tripled their share of the global economy and increased their absolute economic size almost six times over. By 2025, the region as a whole will account for almost half the world s output. (White Paper 2012, p. 6) Meeting the growing service and consumer aspects of Asian economies is key for Australia. UN Consultant Rajiv Biswas highlights the rising Asian demand for energy and infrastructure in industrializing cities that are growing at a rapid rate, as an opportunity for Australia (2013, p. 182). Consumer spending in Asia will rise in the next twenty years, the Organisation for Economic Co-operation and Development (OECD) estimates the middleclass population of consumers with $10-$100 per day purchasing power to rise to 4.9 billion by 2030, 85% of that increase will be in Asia alone (OECD, Kharas 2010, p. 14-15). Australia must promote elements in trade agreements that lower the compliance costs of businesses as well as facilitate trade. Moving toward a grand free-trade agreement of the Asia-Pacific region can allow a streamlined flow of goods that inserts Australian products and natural resources to markets in Asia. Australia s geographical location is undeniably

valuable to the emergence of this growing market. The White Paper states that an objective should be to position Australia as a connecting rod between Latin America and Asia (2012, p. 20). Australia can serve as a middle ground for the west and east as trade then facilitates upward into Asian markets. John Spoehr of the University of Adelaide points out that China overtook the U.S. as the largest destination for Australian exports of merchandise in 2009 (2012, p. 13-15). Iron ore, copper and concentrates are all exports that have dramatically increased for Australia since 1999. In 2000, higher education as an export was worth $196 million, but a decade later education earnings reached $1.05 billion as DFAT reports (DFAT 2009). Providing the Asian middle class with the option to be educated in Australia presents another opportunity. International students from China in South Australia alone have quadrupled since 2004 (Spoehr & Jain 2012, p. 27). Exporting education benefits Australia in two ways, it is economically viable in providing revenue for Australia as the Asian middle class seeks higher education opportunities. It also creates cultural integration that can perhaps promote Asian interests in Australia. Encouraging Australians to undertake courses in Asian languages and study overseas in Asia also provides Australia with economic opportunities. International education promotes cross-cultural interaction and provides a diverse and rich educational experience for Australians as well as those from Asian countries. Programs with Asian nation states to enhance international education and increase cooperation can promote Australia as a regional hub for developing human capital. Nearly four out of every five international students are from Asian countries the Department of Education and Training Reports (2009). As the Asian Century continues, it is imperative

that Australian education stays competitive and expands in order to meet the demand of the growing Asian middle class. In doing so, Australia must circumvent social exclusion by building a socially inclusive society that appreciates cultural diversity (Tazreiter & Tham 2013, p. 234). Students from Asian cultures are not accustomed to Western elements of Australia; building programs of support that financially and culturally help thwart this dilemma should be undertaken. While the rest of the Western world suffered stagnation in regards to international education as a result of the financial crisis, Australia did not. Offering Australia as an alternative to other Western countries can be advantageous to Australia. Providing financial incentives and scholarships to Australians to study abroad in growing Asian universities advances cultural assimilation as well. This can in turn return to benefit Australia, as Asian migrants to Australia seek commonality in cultural respect. Echoing the sentiment of the Gillard speech at Brown University, it is evidently clear that the Asian Century has more than begun. The challenge of security and the economic challenge, and the economic opportunity and the opportunity to utilize Australian education to benefit human capital, are all vital. Understanding these challenges and opportunities as well as the route of action to addressing them will be imperative for the Australian government in the Asian Century to come.

Works Cited ADBI, Asia Development Bank Institute, 2009, Infrastructure for a Seamless Asia Available from: <http://adb.org/sites/default/files/pub/2009/2009.08.31.book.infrastructure.seamles s.asia.pdf>. [1 September 2015] Bateman, Sam, & Ho, Joshua 2014, Southeast Asia and the Rise of Chinese and Indian Naval Power: Between Rising Naval Powers, Taylor and Francis, Milton Park. Biswas, Rajiv, 2013, Future Asia: The New Gold Rush in the East, Palgrave Macmillan, London, UK. BTRE, Bureau of Transport and Regional Economics [BTRE], 2007, Estimating urban traffic and congestion cost trends for Australian cities, Working paper 71, BTRE, Canberra ACT.Available from BTRE: <https://bitre.gov.au/publications/2007/files/wp_071.pdf> [1 September 2015] Current Ships of the Australian Navy, 2014. Available from: <http://www.navy.gov.au/fleet/ships-boats-craft/current-ships>. [6 September 2015] Department of Defense 2009, White Paper, Defending Australia in the Asia Pacific Century: Force 2030. Available from DoD: <http://www.defence.gov.au/cdg/documents/defence_white_paper_2009.pdf>. [4 September 2015] Department of Education & Training, 2009, 2009 Annual International Student Statistics:

Focus on 1949-2009. Available from: <https://internationaleducation.gov.au/research/international-staudent- Data/Pages/InternationalStudentData2009.aspx>. [26 August 2015] DFAT, Department of Foreign Affairs & Trade, 2009, Analysis of Australia s Education Exports. Available from: < http://dfat.gov.au/aboutus/publications/documents/analysis-of-australias-education-exports.pdf>. [26 August 2015] Gillard, Julia 2011, Julia Gillard s Speech to Congress. Available from: <http://www.theage.com.au/action/printarticle?id=2224454>. [31 August 2015] Gillard, Julia, former Prime Minister of Australia discusses Asian Century, 2015 (video file), Available from < https://www.youtube.com/watch?v=mivfz-mat4w> [2 September 2015] Gillard, Julia 2011, Julia Gillard s Speech to Congress. Available from: <http://www.theage.com.au/action/printarticle?id=2224454>. [31 August 2015] Green, Michael & Gill, Bates, 2009, Asia s New Multilateralism, Columbia University Press, New York. KPMG, 2013, Australia in the Asian Century: Opportunities and Challenges Available: <http://www.kpmg.com/au/en/issuesandinsights/articlespublications/documents /australia-in-the-asian-century-opportunities-challenges.pdf>. [27 August 2015] OECD, Kharas, Homi, Organisation for Economic Co-operation and Development (OECD), 2010, The Emerging Middle Class in Developing Countries, Available from: < http://www.oecd.org/dev/44457738.pdf>. [6

September 2015] Phillips, Andrew 2013 Australia and the Challenges of Order-Building in the Indian Ocean Region, Australian Journal of International Affairs, [2 September 2015] Spoehr, John & Jain, Purnendra, 2012, The Engaging State: South Australia s Engagement with the Asia-Pacific Region. Wakefield Press, Kent Town. Tay, Simon 2011, Asia Alone: The Dangerous Post-Crisis Divide from America, John Wiley & Sons, Singapore. Tazreiter, Claudia & Tham, Siew Yean, 2013, Globalization and Social Transformation in the Asia-Pacific: The Australian and Malaysian Experience. Palgrave Macmillan, New York. Tellis, A, Mercy, K, & Marble A 2008, Strategic Asia: Challenges and Choices, The National Bureau of Asian Research, Seattle, WA and Washington D.C. Tow, William & Wah, Chin Kin, 2009, ASEAN, India, Australia: Towards Closer Engagement in a New Asia, Institute of Southeast Asian Studies, Singapore. White, Hugh, 2011, Power shift: Rethinking Australia's Place in the Asian Century, Australian Journal of International Affairs, 65:1, 81-93, [3 September 2015] White Paper, The Australian Government, 2012, Australia in the Asian Century. Available from: < http://www.murdoch.edu.au/altc- Fellowship/_document/Resources/australia-in-the-asian-century-white-paper.pdf>. [31 August 2015]