By Trelynd Bradley Bowles - Exchanged: University of California, Riverside

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 middle-

class 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:

       . [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:

        [1 September 2015]

Current Ships of the Australian Navy, 2014. Available from:

       . [6 September

       2015]

Department of Defense 2009, White Paper, “Defending Australia in the Asia Pacific

       Century: Force 2030”. Available from DoD:

       . [4

       September 2015]

Department of Education & Training, 2009, “2009 Annual International Student Statistics:

Focus on 1949-2009.” Available from:

       . [26 August 2015]

DFAT, Department of Foreign Affairs & Trade, 2009, “Analysis of Australia’s Education

       Exports.” Available from: <	
  http://dfat.gov.au/about-

       us/publications/Documents/analysis-of-australias-education-exports.pdf>. [26

       August 2015]

Gillard, Julia 2011, “Julia Gillard’s Speech to Congress.” Available from:

       . [31 August 2015]

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  https://www.youtube.com/watch?v=mivFZ-MaT4w> [2

       September 2015]

Gillard, Julia 2011, “Julia Gillard’s Speech to Congress.” Available from:

       . [31 August 2015]

Green, Michael & Gill, Bates, 2009, Asia’s New Multilateralism, Columbia University

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KPMG, 2013, “Australia in the Asian Century: Opportunities and Challenges” Available:

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OECD, Kharas, Homi, Organisation for Economic Co-operation and

       Development (OECD), 2010, “The Emerging Middle Class in Developing

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  http://www.oecd.org/dev/44457738.pdf>. [6

September 2015]

Phillips, Andrew 2013 Australia and the Challenges of Order-Building in the Indian

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Spoehr, John & Jain, Purnendra, 2012, The Engaging State: South Australia’s Engagement

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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

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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

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White, Hugh, 2011, “Power shift: Rethinking Australia's Place in the Asian Century,

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       Available from: <	
  http://www.murdoch.edu.au/ALTC-

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       [31 August 2015]