On July 20, Corrs Partner and Chief Executive John Denton gave a speech to the Leading Education Circle on Asia and how Australia can engage at a time of global geopolitical uncertainty.
Here are his notes:
Asia is not a monolith. It is diverse:
Ethnically, culturally, politically, in religious beliefs and in emotional behaviour
It is also diverse in economic terms, with a large and growing middle class in many Asian countries, but also continuing poverty and serious disadvantage
There is a range from LDCs (Bangladesh/Nepal) to Developed Countries (SG/Japan)
Asian societies do business in diverse ways too. The dominance and importance of family businesses, the mix between government/religious/ethnic/political business groups.
For example, more than 70% of top 200 Indian businesses are family-owned companies or conglomerates rather than modelled on western corporates
Asian Economies trade more with each other than invest in each other
Capital markets are very shallow in the Asia Pacific region
Disproportionate reliance on banking and debt versus financial instruments.
Asia is governed, in many instances, in keeping with this diversity:
Sub-national governments in regional areas can have enormous power, as in China, India and Indonesia
Provincial leaders in many Asian nations are often senior figures within their own central governments, controlling bigger populations than Australia.
Is there a trend away from the big fist/ big man basis of government to a more diverse democratic approach?
Pressure on Umno in Malaysia, Pap in Singapore, rise of Xi, rule of Hun Sen and the shift from Suharto style government to Jokowi in Jakarta.
Asia is characterized by weak institutions (ASEAN and APEC versus NATO, EU and NAFTA) and understandings compared to the Northern Hemisphere focus on strong institutions and binding agreements.
No other country in Asia is more important to Australia than China:
China is huge, extremely diverse and complex – it is a one country EU of ethnicities and cultures
A great deal of governing is delegated to regional authorities out of necessity (too hard to manage from the centre) and pragmatism (ie, a new national banking strategy is being rolled out in regions as a test) and competition between provinces helping reform.
China’s One Belt One Road strategy is well underway and will be transformative
One belt is the roads, trains and pipelines through Central Asia to Europe and Russia.
One road is a plan to connect China with Europe along a maritime route through South China Sea, Suez and the Mediterranean (including Darwin as a key South Pacific gateway).
We are now in a period of genuine global geopolitical UNCERTAINTY.
1. Globalisation is at a turning point:
What drove us together is now driving us apart
The economic benefits of globalisation have been unevenly distributed, and the 99% are frustrated – hence Brexit, Donald Trump and Bernie Sanders
Meanwhile from an average of five per cent annual growth in global trade since 1990, global trade growth has actually slumped to below three per cent for the past five years. By one estimate, 2015 saw a 40% rise in protectionist activity, the worst result since the GFC.
The global trend towards bilateral and regional trade arrangements, from the China-sponsored Shanghai Cooperation Organisation to Russia’s Eurasian Economic Union, could easily turn into bloc-style protectionism
2. Decline of post-WW2 arrangements
The UN and its various institutions have reduced credibility and power
The EU is in some danger
The post-war economic model and institutions like the IMF and World Banks have lost credibility
As the US loses supreme power as the guarantor of global security it faces challenges to the post-WW2 model it created, notably from China
Strategic space is being made for rise of china
We need to have confidence in, and reinforce, our positives: our standards of governance in law and regulation, stable society, pluralism and fairness, and desirable lifestyle.
We need to be realistic about the nature of global competition and more competitive on tax regimes and foreign investment standards. We are very attractive, but not the only available economic partners for our key neighbours. The new trade agreements with China, Japan and Korea are a good step, but by no means sufficient. The return of Pauline Hansen demonstrates that we must keep arguing the benefits of engagement and openness.
We need to protect and enhance education standards at schools and universities. We are plainly falling behind on world performances. This does our young people a great disservice and endangers the opportunities for Australia to be an education hub in the region.
Genuine Asian engagement means:
focusing on relationships
engaging point-to-point and person-to-person
recognising and celebrating Asia’s diverse cultures and societies from sub-national to local levels
building up and out from targeted local relationships and achievements rather than attempting to achieve uniform national successes from Beijing or New Delhi or Jakarta
An educated, curious, confident Australia
Capable of contributing ideas and energy to reshaped global arrangements
An exemplar of a modern plural society
Connected deeply within Asian societies at an economic and cultural level
We will need to be brave: doing nothing is not an option in a complex world
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