Australia in Asia

What’s Strine for “Asian century”?

Australia attempts to “embrace its geography”

THREE decades ago Foster’s, an Australian lager, struggled to get a foothold in China. Today Penfolds Grange, an expensive wine, is “carrying the flag” there, as Julia Gillard, Australia’s prime minister, puts it. She cited this change in China’s drinking tastes when she launched a long-awaited white paper on how Australia must adapt to survive in the “Asian century”. Overseen by Ken Henry, who was long the most senior bureaucrat at the Treasury, the new paper lists a series of objectives that Australia should meet by 2025. The most demanding call for every Australian school to be linked to a school in Asia, and for a third of senior civil servants and company-board members to be Asia experts.

An Australian city

The business world has largely welcomed the paper. Mike Smith, head of the Australia and New Zealand Banking Group, or ANZ Bank, one of Australia’s biggest, calls it a “milestone” in the country’s engagement with the region. For a leader who once listed foreign policy as a lesser interest, Ms Gillard has taken up the white paper with zeal. Adapting to Asia’s “unstoppable” rise, she says, is “the next chapter in our nation’s story”.

An earlier prime minister once joked that Asia was the place you flew over on the way to Europe. But for at least 40 years policymakers have grappled with how to make Australia focus on Asia. In that time, the flow of Europeans to the immigrant nation has dwindled. In 2011-12 seven Asian countries were among Australia’s ten leading sources of immigrants, with India first and China second. Mandarin has displaced Italian and Greek as the most commonly spoken language after English.

An Asian city

Behind the government’s eagerness for Asia is the pace of the region’s economic change. One forecast suggests that the Asia-Pacific region will be home to most of the world’s middle-class consumers by 2030. Asia’s demand for minerals ensured that Australia survived the global downturn without a recession. Mining accounts for about two-thirds of Australia’s exports to Asia, and even more to China. But the paper argues that this boom will pass, and that Australia must become better at selling other things to affluent Asia, including food and wine, education, health care and financial services. Mr Henry worries about complacency. He wants Australia to ditch the old mindset of thinking about Europe and America as its chief natural markets. Instead, it must “embrace its geography”. His paper cites Blundstone, a Tasmanian bootmaker, as a model for how Australian firms can adapt as regional ones. Faced with extinction, 142 years after it was founded, owing to Asian competition, Blundstone is starting to thrive from partnerships in Vietnam, China and India.

An Antarctic city

Ms Gillard (now former PM) pledged an immediate start to putting three of the paper’s objectives into practice. By engaging with schools in Asia, all Australian students will be encouraged to learn a “priority” Asian language: Mandarin, Hindi, Indonesian or Japanese. Visa rules will be loosened to encourage more Asian visitors, especially tourists from China. And Australia will appoint a Jakarta-based ambassador to the ten-nation Association of South-East Asian Nations (ASEAN).

A European city

For the moment Ms Gillard has steered clear of the white paper’s views on the main worry for foreign-policy wonks: how Australia should manage any conflict between America, its closest ally, and China, its biggest trading partner. Australia, the paper says, welcomes China’s rise and accepts that its military growth is a “natural, legitimate outcome of its growing economy and broadening interests”. A recent poll by the Lowy Institute, a think-tank, found most Australians do not see China as a possible military threat.

Cultural hurdles stand athwart the paper’s aspirations for Asian integration. The same Lowy poll showed that only about a third of Australians support more Asian-language study and Australia’s inclusion in Asian political forums; far fewer want more Asian investment and immigration. Another survey by CPA Australia, an accounting body, found that Australian businesses, other than in mining and farming, typically rate Asian markets as less important than domestic ones. Australia, it says, risks being a spectator in the Asian century. The drafting of Ms Gillard’s next chapter could be painful work.

An Indonesian city

From the print edition of The Economist, taken from HERE.