Prime Minister Tony Abbott has firmly cast his trip to North Asia to be all about trade and investment. There has been much focus on free trade agreements with South Korea, Japan and China, Abbott’s destinations this trip. But for all the hype the real value, business-to-business deals, seem to have been lost in translation.
The PM’s travelling party of chief executives is heavy with vested interests, yet they will spend most of their limited time on the ground with Abbott, not the Chinese.
James Packer wants a casino in Tokyo, and BHP Billiton chief Andrew McKenzie and the slew of other mining executive are doubtless travelling with Abbott as a thank-you for dumping the mining tax. Likewise, media moguls Kerry and Ryan Stokes will be whispering in his ear about media reform. By dropping plans at short notice to make the PM look good, they all know they have favour now tucked in their back pockets. That is the way of the world.
Abbott’s first stop in China is the Boao Forum for Asia, where Andrew Forrest’s Fortescue Metals Group is a long-standing sponsor. Forrest’s brainchild, the Australia China Business Dialogue, was launched at Boao last year and excludes government, steadfastly refusing to waste its time on meaningless reports or communiques.
Instead, it’s designed to foster the business-to-business links that Australia painfully lacks. A handful of Abbott’s party such as Seek’s Andrew Bassat and ANZ’s Mike Smith will stay in Boao for the dialogue, where they will be joined by a bunch of other business folk including Macquarie’s Nicholas Moore and chairman Kevin McCann, outgoing NAB chief Cameron Clyne (he announced this morning he’ll stand down in August) and his chairman Michael Chaney. Some of Abbott’s party will lag behind for this and head straight for Beijing, missing an almost meaningless stop in Shanghai.
Five years ago Forrest would have struggled to pull a crowd, but now he has rustled up former deputy prime minister Mark Vaile, who has carved out probably the most successful post-politics career in China of anyone since Paul Keating, as well as Future Fund chairman Peter Costello, who is becoming a regular Boao attendee and panellist. One of Australia’s most China-savvy lawyers, Corrs boss John Denton, is a regular.
Facing them across the table will be a very impressive Chinese delegation, amongst others, the bosses of two Beijing-controlled companies responsible for uber-dud investments in Western Australian iron ore. Jia Baojun, chief executive of Sinosteel — which paid US$1.2 billion for Midwest Corporation. Then there’s Chang Zhenming, chairman of CITIC Group; it owns the Sino Iron Project, the most expensive investment by any Chinese group in Australia, at US$10 billion and counting and still years from completion.
Forrest will be hurt that his mate the PM is set to depart for Shanghai before the dialogue starts; even Julia Gillard stopped in last year.
Meanwhile, in other parts of China, Austrade has done a remarkable job under extreme pressure – after being handed a massive task in an almost impossible timeframe colloquially known as a shit sandwich: to organise a four-city “Australian Business Week”. There will be about 80 events all up, Andrew Robb’s office said last night.
But the real action in China lies not in hotel conference rooms, buses and airports but with the officials in Beijing and to some extent the provinces.
Perhaps most worryingly, and a sure sign of Abbott advisers’ tin ears, China’s main economic ministry, the National Development and Reform Commission, was keen to hold targeted get-togethers and explore investment opportunities. The NDRC signs off on all significant offshore investment. Sadly, the Prime Minister’s office decided a 1200-person lunch with Australian business people in Beijing was more important. Most of the state premiers are organising their own visits; New South Wales Premier Barry O’Farrell will co-lead the Shanghai financial services forum with federal Trade Minister Andrew Robb. Small Business Minister Bruce Billson will host the Guangzhou day of the business-fest and Robb will also travel west for a day in Chengdu.
The trip comes at a delicate time, with the Chinese furious over Abbott’s Cold War-era embrace of Japan. There is also very real and growing Chinese frustration with Australia’s highly regulated and unco-ordinated investment environment, despite the spin the government is putting on it.
Australia’s state and federal governments all compete with each other for investment; add in Austrade’s limp “Australia Unlimited” brand, and there’s little sense of a co-ordinated national approach. It’s something the Europeans and North Americans do so much better — they come to Beijing with small, targeted groups and walk away with tens of billions of dollars in business deals.
While Abbott is getting valuable face time with the prime ministers of Japan and China and the presidents of South Korea and China, that Beijing vignette seems to underscore the lack of focus on tangible results. Hopefully, the PM and his people have something up their sleeves.
This story was originally published by Crikey, crikey.com.au, 3 April 2014