From 3 to 5 November at the Crown Convention Centre in Perth, the most significant bilateral conference between Germany and Australia and the wider Asia-Pacific region redefined the depth of economic linkages between our countries and the wider region. Political and business leaders explored new investment and trade opportunities with a special focus on the growth in the Asia-Pacific. The event was a fantastic success and brought together a diverse mix of professionals from Germany, Australia and Asia-Pacific countries, including senior government ministers, diplomats and trade advisers; CEOs and company directors; manufacturers and suppliers; exporters and importers; professional associations and industry bodies; service providers; and sponsors from blue-chip companies.
To gain a better impression of the APRC, please visit the official Flickr page for the German-Australian Chamber of Industry and Commerce, with easily navigable albums devoted to each day and the relevant social functions. Photos are also tagged according to their session and are available for download.
The APRC was covered extensively in social media and by a range of international publications. Visit the official Twitter profile @AprcPerth to see how the conference unfolded and click on any of the listed hyperlinks below to reach their corresponding news stories.
The Australian (subscription required)
The West Australian
Australian Financial Review (subscription required)
Sydney Morning Herald
Videos by Deutsche Welle
North Korea’s growing nuclear threat, China’s global ambitions, continuing terrorism strikes: the world order is more unstable than it’s been for generations. Navigating this terrain demands focused and strategic leadership.
North Korea’s entry into the nuclear club is challenging a generation of leaders largely untouched by prolonged major conflict and the shadow of nuclear war. For Australian leaders, this is new and complex territory. Australia must work harder to encourage strong US engagement in the Asia-Pacific and support strategies that bolster the credibility of America’s extended nuclear deterrence to discourage allies (Japan, South Korea) from considering their own nuclear capabilities.
Australia needs to strengthen its own capacity to be a regional leader in security. I’m not sure we are really up to that task. It takes more money, effort and engagement than we are usually comfortable with. A nuclear-armed North Korea underscores the point that we can’t hide from our own region when it comes to major security challenges. So, a key lesson is that we need to do more for our own security interests, as uncomfortable as that might be from a defence spending or foreign policy engagement perspective.
What we need right now is calm, strategic, focused leadership from politicians able to take (and reject) advice and with a capacity to think laterally beyond current policy settings.
China – a complicated challenge
China’s ascendency challenges the current liberal international order. As a dominant power, China is a repressive one-party state that denies many of the freedoms we regard as essential to Australia’s way of life. If they were to dominate our region, it’s likely that they would want to impose an order that we, and many of our neighbours, would find uncongenial. Can China be persuaded to accept the international liberal global order? In my view, that’s not likely under the current Chinese leadership.
On capability, many factors complicate China’s possible rise to global dominance – the Party; internal corruption; the role of the military; pollution; demography – the list is as familiar as it is long. I doubt that China will or can achieve a globally dominant position, but it certainly is well on the way to being a regionally dominant power, which is almost as complicating for Australia.
Substantial strategic differences
We have had the benefit of China’s economic growth for a generation, which has reshaped the Australian economy. Now come the challenges of having allowed ourselves to become too dependent on a country that defines its strategic interests quite differently from us. It turns out that China isn’t just a large economy operating with a similar set of values to liberal democracies. China expects that our economic dependence on them should extract political and strategic concessions from Australia: a weakened alliance with the US; signing up to its ‘One Belt, One Road’ initiative (OBOR); shutting up on the South China Sea. None of these are sensible policy responses for Australia. The challenges of dealing with a stronger China are very substantial.
OBOR is part of an integrated strategy that blends Chinese political and strategic goals along with economic ones. The long-term challenge for the West is to resist being drawn into a web of economic OBOR relationships that undermine our political and strategic freedom of action. OBOR is ultimately designed to advance Chinese objectives. It seems naïve to imagine that it’s always going to offer win-win outcomes for other countries.
Big threats ahead
As the world order evolves, global trade and commerce continues regardless – but the backdrop is increasingly unstable and dangerous. There are a series of threats Australian business and political leaders should anticipate, among them the risk of a major conflict on the Korean Peninsula. I put this at about 50 per cent in the next six to nine months. There is also the inevitable risk of a terrorist attack on Australian interests both here and in South-East Asia sometime over the next 12 months.
Cyber-attacks and/or cyber-facilitated IP theft on business interests are happening daily. There is also the danger of an incident in the South or East China Sea leading to a ship shrinking or aircraft downing. I put the likelihood at 20 per cent in the next 12 months. Regional instability is major concern: instability in the Pacific Islands region, leading to the deployment of Australian forces to stabilise an area (50 per cent in the next few years), and instability in China or a policy dispute with China that leads to a downturn in Australia’s economic relationship with Beijing (50 per cent).
Overall, our geostrategic outlook is worsening, becoming increasingly unpredictable and leading to a greater risk of instability and conflict. In particular, the situation on the Korean peninsula could potentially become as serious as the Cuban missile crisis of October 1962. The potential for a devastating conflict on the peninsula in 2018 is worryingly high.
Peter Jennings PSM is Executive Director of the Australian Strategic Policy Institute and a guest speaker at the Asia-Pacific Regional Conference in Perth from 3 to 5 November.
Despite the gloomy headlines about Brexit, there’s a strong upside for enterprising companies keen to establish or expand their European presence.
Much of the commentary about Brexit paints a dire picture of economic prospects when the UK withdraws from Europe in the northern spring of 2019.
What critics miss or fail to mention is that the strong conditions that have fuelled European growth, particularly in Germany, are likely to continue for some time.
That’s good news for Australia. Our economic relationship with the European Union is robust, with the EU Australia’s second-largest trade partner behind China. The services trade is a major and rapidly growing component. Our two-way investment is substantial and increasing and today the EU is Australia’s most significant investor.
Europe has traditionally been dominated by London, and Brexit will clearly shift focus across the English Channel to the formidable trade bloc that continues to underpin the global economy.
In recent years, Australian companies have largely underestimated the untapped value of the Europe and the potential to partner with powerhouses like Germany on commercial and research initiatives. Our focus has been primarily on the Asia-Pacific, another significant and fast-growing trading bloc in our neighbourhood.
However, in an era when growth is increasingly challenging to achieve, we and other Australian companies believe Europe is a massive opportunity if pursued with a level of commitment and sophistication.
To succeed, Australian businesses must deepen their understanding of European markets and cultures like Germany, where healthy private-public relationships have underpinned years of innovation and strong growth.
These partnerships are critical. They take time and mutual trust to develop. Identify how to enter a relationship on the best risk-adjusted basis. Take a first tactical step, supported by a sound long-term strategy.
Looking ahead, global opportunities are promising but not without risk.
Around the world, massive pension funds are looking to partner on significant infrastructure projects that will create benefit not only for financiers but also for construction companies, related businesses and industries, and communities.
On the one hand, the world needs economic growth, but there’s very little monetary or fiscal capacity left to drive it. Policy-makers are hoping investors will fuel it, but policy and political approaches will be absolutely crucial in creating attractive investment conditions.
Australia can learn a great deal from Germany’s success and its leaders’ long-term thinking and bipartisan approach on jobs and investment, social issues and complex challenges like climate change.
Brett Himbury is Chief Executive of IFM Investors, a leading global provider of investment services across infrastructure, debt investments, listed equities and private equity. He will be a guest speaker at the Asia-Pacific Regional Conference in Perth from 3 to 5 November.
China seeks a multipolar world but a unipolar Asia. China is taking the gloves off, confident that it has acquired the necessary muscle. Given China’s strategy to become the dominant player, Asia’s power dynamics will remain fluid, with the US-China power equation being a central driver. We could see the emergence of a constellation of democratic powers, with common interests, working together to ensure a power equilibrium in the Asia-Pacific region.
India – a natural ‘bridge’
Because of its geographical location, India is the natural bridge between the West and the East, and between Europe and Asia. India has moved from its long-held non-alignment to a contemporary, globalised practicality.
In essence, this is resulting in India becoming multi-aligned. By building close partnerships with different powers, especially democratic powers, India is seeking to pursue a variety of interests in diverse settings and advance its core priorities. Through forward thinking and a dynamic foreign policy, India could truly play the role of a bridge between the East and the West.
Growing energy competition
Energy poses a special challenge for global leaders as it is the leading contributor to the carbon emission problem. Even as the shale revolution has eroded US reliance on energy imports, competition over energy resources remains a key dimension of the new Great Game.
The global shifts in economic power are reflected in the changes occurring in the energy and materials sectors, with the growth in demand moving from the developed to the developing world, principally Asia. The resource-related risks range from mercantilist policies to lock up long-term energy supplies and volatility of energy prices to energy resources serving as a driver of territorial and maritime disputes, as illustrated by Asia.
Trade and territorial risks
As the world order evolves, global trade and commerce continues regardless – but the backdrop is increasingly unstable and dangerous. There are a number of threats and challenges facing the Asia-Pacific region, including efforts to unilaterally change the territorial or maritime status quo, sharpening competition over natural resources, the rise of illegal maritime non-state actors such as pirates, terrorists and criminal syndicates, the accelerated military modernisation programs, and attempts to employ trade as a political weapon to punish other states.
Trade can be used as a cudgel by informally boycotting goods from a targeted country, erecting non-tariff barriers to keep out foreign competition, subsidising exports, halting strategic exports, or encouraging consumer boycotts or domestic protests against specific foreign businesses. The Asia-Pacific region must also deal with climate change, overfishing, and degradation of coastal and other marine ecosystems.
Mixed outlook ahead
Some pundits romantically saw the Cold War’s end as heralding a new age in which geoeconomics would dictate geopolitics — a thesis reminiscent of the nineteenth-century liberal belief that growing trade and financial interdependence would make war obsolete. That trade is not constrained by political differences in today’s market-driven world, with rival countries boasting fast-increasing bilateral trade, has not stopped powers from playing on the grand geopolitical chessboard.
In the coming years, the geopolitical outlook will likely remain murky as major powers compete for greater influence and relative advantage.
Brahma Chellaney is a Professor of Strategic Studies at the Centre for Policy Research in New Delhi, and a specialist in international security and arms control issues. He will be a guest speaker at the Asia-Pacific Regional Conference in Perth from 3 to 5 November.
China’s rise is reshaping the political and economic order against a backdrop of volatility and rampant nationalism.How political and business leaders navigate this uncertain landscape is critical to future stability and growth.
China’s rise as a global power is a challenge to its regional neighbours and to the world at large. The main problem is that China’s tributary-style approach towards regional security contradicts basic elements of the international order, in particular the principle of equal state sovereignty and the non-use of force in international relations.
Long-term, China’s regional neighbours have two choices: accept Chinese suzerainty or fight for sovereignty. Neither prospect looks appealing,and all governments in the region are trying to avoid making such a decision, especially given the uncertainty around the leadership the US is prepared to exercise. This dilemma will only grow with the size of the Chinese economy and as the People’s Liberation Army acquires new capabilities.
‘One Belt One Road’ –a complex agenda?
The ‘One Belt, One Road’ (OBOR) initiative is China’s attempt to create a global infrastructure that will serve China’s economic as well as military interests. To a certain degree, Beijing is emulating what the US established after World War Two in many parts of the world. The concern is that unlike the US, which was doing this in the name of a liberal international order based on free trade, non-use of force, good governance and individual freedom, the Chinese understanding of the international order looks far different.
Aside from their preference for free trade, there are few elements in China’s approach towards the international order that other nations might find attractive. China is not a benign hegemon, whose superiority is accepted by others in return for it delivering social goods such as peace and economic prosperity. Only authoritarian leaders might find it interesting to co-operate with China. Hence, while OBOR might be seen as an interesting approach towards improving international infrastructure, there are growing concerns about the long-term strategic interests associated with this initiative.
New risks in the changing world order
China’s ascendancy creates a range of challenges for the US, Europe and Westerns nations such as Australia. The liberal international order of past decades was dominated by the West, in particular the US. This dominance is being tested by China and other rising powers such as India, Iran and Turkey, and by the declining power, Russia. Prudent diplomacy requires the readiness, on the one hand, to stick with this liberal order and defend it wherever possible. On the other hand, we must accept the realities of a world in which non-liberal powers have grown in size and where strategic competitions are playing out that entail new risks.
The West needs strategic vision and leadership, but it is hard to find it. The traditional leader of the Western world, the US, is no longer fulfilling this role. President Trump shows no understanding of the complexities and challenges of the international world and he has a very short-sighted understanding of America’s global role. There are many responsible politicians in the US who are trying to keep this leadership role alive as much as possible (both in the Administration and within Congress), but their influence is limited. The reluctance of the US to assume global leadership was already evident during the presidency of Barack Obama, but under President Trump this retreat has accelerated.
New strategy needed for North Korea
North Korea’s entry into the ‘nuclear club’creates another layer of complex diplomatic and security risk. I don’t know what the most prudent response is. What I do know is that so far no one seems to have a strategy to deal with North Korea. Prudence alone is not a strategy, since it could further aggravate the situation. A bold strategy, however, might provoke a major war that kills millions of people on the Korean peninsula and beyond. The problem is that we don’t know all the dimensions of the strategic challenge we are facing. We haven’t seen the whole picture yet.
Over the past two years, North Korea has surprisingly accomplished major strides in its missile program and with its nuclear weapons. All experts agree North Korea doesn’t have the technological and industrial base to achieve such accomplishments. Who has helped them? It’s hard to believe that this assistance has come through black market forces alone. Rather, it is prudent to assume that some kind of political complicity was involved –most likely by Beijing and Moscow. I wouldn’t exclude the possibility that either Russia or China has actively supported the missile program and the miniaturisation of nuclear warheads. If true, how should we now regard China’s and Russia’s role in this crisis? Is China really a responsible actor that seriously seeks a ‘political solution’? Or are China and Russia provoking the US through a proxy such as North Korea in order to put the US position in East Asia in limbo?
Beware the unstable new playing field.
As the world order evolves, global trade and commerce continues regardless –but the backdrop is increasingly unstable and dangerous. There is one thing political and business leaders should understand: we are back in a period of international strategic competition. It is no longer the competition between the free world and the communist world,and it isn’t a return of the 19th century balance-of-power system. What we face is a still-loose coalition of authoritarian-ruled states and kleptocratic power verticals who fear the spirit of democracy and freedom and who see the weakness of the Western world as an opportunity to deconstruct the liberal international order that was formed by the US and its allies in the decades after World War Two. Unlike the Cold War period, trade relations between the West and those states don’t have a pacifying effect on international politics.
The nationalism and protectionism that we’re witnessing are more or less a direct consequence of a growing inequality in our societies. They also reflect the loss of trust in the future and in our political institutions and in basic tenets of our societies. A major factor for explaining these developments is the de-industrialisation that has bedevilled all Western states. Nevertheless,the causes for the loss of trust in institutions have much deeper sources.\
Against this backdrop, there is a growing need for the Western world and its allies to co-operate in multilateral institutions. The problem is that many of the existing institutions don’t function anymore because of strategic competition (such as the UN Security Council or the G20), while other institutions are limited geographically (NATO) or by scope (G7, OECD). We lack a Western caucus where matters of economy, finances, security and international order are addressed simultaneously.
Overall, I’m currently not very optimistic. This period of Western dominance is coming to an end and the opponents of the Western world, of democracy and open societies and liberal institutions, are gaining momentum. We must remain vigilant about the possibility of dramatic shifts in international relations with far-reaching consequences. The times, they are a ‘changing.
Professor Joachim Krause is Director of the Institute for Security Policy at the University of Kiel in Germany and a guest speaker at the Asia-Pacific Regional Conference.
For those of us in Australia and around the world who thought that globalisation and the free trade push were a never-ending positive cycle, recent political developments in the United Kingdom and United States have been a wake-up call. There is no doubt that people, particularly those at the lower end of the income scale, have felt left out of globalisation and missed the benefits of free trade.
That’s reflected in the Brexit decision and in the vote for US President Donald Trump, and Australia has not been immune to levels of anti-foreign rhetoric. So if these developments are a wake-up call, what’s the take-out for leadership? There are three key things that require focus from political, business and community leaders to enable the next phase of global trade in the digital era.
1. Continue to make the case for free trade.
Australia’s prosperity as a small, open, trade-dependent economy relies on freely trading with the rest of the world in commodities and increasingly, services. While other major economies can turn inwards, especially the US with its talk of ‘America first’, that’s not in Australia’s interests.
I would argue that it’s not in US interests in the longer term either, but they’re perhaps better placed to manage in that mode for a period of time. In the latest Director Sentiment Index – a sample of the Australian Institute of Company Director’s 40,000 Directors – 57 per cent of directors are confident in business growth, despite Brexit, the Trump administration and concerns over European economies. However, directors are concerned about the shift to protectionist policies and believe government should push back against protectionism and continue to pursue free trade.
Asia will continue to be a trade focus for Australian companies, with 35% of our merchandise exports going to China and a further 40% to other Asian economies. However, there are opportunities in a free trade agreement with Europe and for one with the UK once they leave the EU. It might be the subject of an interesting debate at the conference to consider what the UK’s priorities will be once they leave the EU, and what that means for Australia. I’m also interested in the discussion around the opportunities for growing two-way trade between Australia and Germany. Is the opportunity bilateral or is it via trade with Asia?
Australia is largely a commodity exporter rather than a manufacturing exporter, but 70% of our GDP is in services, so that must be a focus for any future trade agreements. Large law firms like King & Wood Mallesons and accounting firms like PWC and KPMG demonstrate the potential for Australian firms to operate on a global basis. Where Australia has other strengths in services, including in tourism and education, it’s a matter of identifying models for sustainable expansion into Asia and globally.
2. Have a conversation about how we can get better at sharing the benefits of globalisation and free trade, and better support workers in disrupted industries.
It feels like we have entered an era of populism, whether it’s of the right or left, and whether it’s in Europe or America or Australia, there are some superficial answers being offered to very complex questions.
It’s easy to tell people that these foreign companies or someone ‘other’ than us is taking our jobs – this is much easier to understand than explaining the impact of artificial intelligence, robotics and the fourth industrial revolution. There was an industrial revolution which took away a lot of the more low-paid manual jobs but what we’re faced with now is an enormous revolution where high-paying jobs are also in danger and may disappear. The changes that are happening are global and the pace of change is rapid. Australia might have been an island in another century, but we’re not now. Unfortunately, many people have stopped listening and part of that is the income gap between the beneficiaries of globalisation and those who feel left behind. This requires serious attention and it’s also important that business, political and community leaders explain what’s happening to people’s jobs. That must be a dialogue with people, not talking down to them.
Companies do a lot of good work contributing to the community and there has been strong leadership in supporting workers to make the transition to new industries. For example, Toyota is to be commended for its investment over the past two years to retrain staff for the next phase of their careers given the company will no longer be manufacturing in Australia.
3. Ensure that companies are prepared to manage through ongoing disruption.
Markets can change quickly and we all know that whatever industry we are in, disruption is occurring, whether it’s the taxi industry being run over by Uber, the hotel industry seeing Airbnb coming at them or banking being transformed by digital platforms. There should not be a company board, whether it’s listed, government or private, saying ‘we’re fine, everything will go on as it is’. Everybody is seeing change and disruption, and seeing that ramped up. What’s essential in this kind of operating environment and what leading companies are doing, is ensuring they’ve got a diverse skill set. Gender is one part of that, but it’s also about companies experiencing change ensuring they’ve got people around the board table who’ve got experience in rapidly-changing industries, who know how to lead people through change, who understand overseas trends.
It’s also an issue if you’re a business with clients in Asia and you’ve got a board made up predominantly of white Anglo-Saxon males of a certain age. Or do you have on the board people of Asian heritage or who understand Asia, which could include people from Australia who have spent a large part of their working lives in Asia? In this regard, we’re seeing a change, but it’s still changing quite slowly. It’s one thing to go into a local market and get local advisers on board as consultants or contractors but it’s another to have people around your board table who deeply understand the markets you’re operating in.
The shifts that are happening in business at the moment are significant and they are global – and we do need to heed the wake-up calls if we’re to successfully navigate the period ahead. We haven’t reached a tipping point, but we’ve reached an interesting point and the 2017 Asia-Pacific Regional Conference will hopefully see key business leaders and politicians argue the case for both a continuation of free trade but also for all of us getting better at sharing the benefits of that trade.
Elizabeth Proust is Chairman of the Australian Institute of Company Directors. She is speaking at the 2017 Asia-Pacific Regional Conference as part of a panel on ‘The Future of Global Trade Agreements and the Resulting Opportunities in the Asia-Pacific.’
A November conference highlights our ties with one of the world’s leading economies
(Senator the Hon Mathias Cormann)
One of my responsibilities over the past three years has been to leverage my German-speaking background to help us broaden, deepen and strengthen our bilateral relationship with Germany.
Continuing to strengthen our bilateral relationship with Germany is very much in Australia’s interest. We are like-minded on international issues and share many core values. Germany is also the fourth-biggest economy in the world and the largest economy in the European Union. It is a substantial European political power. We hope to successfully conclude a free-trade agreement with the European Union in the not-too-distant future. Importantly, the European Union as a block remains our second- largest trading partner and our largest source of foreign direct investment.
To read the full story please follow this link.
Thursday, 29 June 2017
Australian Finance Minister, Senator the Hon. Mathias Cormann, will visit Germany next week to attend the G20 Summit in Hamburg. Before and after the summit he will speak at several other occasions, including the German Asia-Pacific Business Association’s “Australia Talk”, to highlight the great opportunities that come from strengthening the ties between both countries. As patron of the upcoming Asia-Pacific-Regional Conference (APRC 2017) from November 3-5 in Perth, Australia, he will promote this unique opportunity to stakeholders from the political and business world and German media. Through the strengthening of the trade relations with Australia as a gateway to the Asia-Pacific region, German companies gain access to some of the fastest growing economies worldwide. The APRC 2017 offers an ideal platform for information and discussion, connecting with potential business partners and the identification of new opportunities in Australia, Germany and the Asia-Pacific region.
The videos feature a range of keynotes and addresses by top speakers at the Asia-Pacific Regional Conference. You can also visit the German-Australian Chamber’s YouTube channel for additional content.