Australasia and Asia

An insightful column by Fran:

But with China poised to overtake the United States within a decade as the world’s largest economy, it is no surprise that the implications of China’s rapid economic rise were given considerable focus during New Zealand and Australia’s first joint Cabinet meeting in Sydney eight days ago.

Herald inquiries indicate Rudd went to considerable lengths to outline why the two Australasian countries should move closer together at a strategic level through maintaining “close foreign policy settings” during a lengthy overview he gave as co-chair of the joint Cabinet.

The issue barely rated a mention in the two prime minister’s joint press statements. But Herald inquiries indicate that Rudd strongly positioned the impact of China’s rise on Australasia during a lengthy strategic overview.

Several Cabinet Ministers from both sides privately credit the “risks based” analysis – above all other factors – as paramount in the Rudd Government’s decision to focus on New Zealand’s strategic utility to Australia, by moving to finalise single economic market negotiations by 2015. And to increase military co-operation to protect (if needed) supply lines between Australasia and the region during possible fractious times ahead.

This would explain why Australia has gone from luke warm to highly receptive on the move to a single economic market.

For most of our existence our location has been a barrier economically. In the next century, we may find being so close to Asia is a life saver. The US economy, and to a lesser degree the EU, could struggle to match Asian economic power in a few years.

Under this scenario, Australia – as a country with “middle power” pretensions – will increase its regional impact by drawing New Zealand further within its own strategic sphere of influence.

This is where NZ needs to be a bit careful. While I am fully supportive of closer economic ties with Australia, we must not lose our identity. NZ is generally held in higher esteem than Australia with most Asian countries – partly because we are non-threatening, but also because we have never been seen as the US Deputy Sheriff.

Rudd – who thinks deeply about strategic issues – believes that unlike previous downturns, Australia and New Zealand cannot rely on American consumers to quickly refuel global economic growth through another debt-fuelled spending binge. Both New Zealand and Australia thus needed to focus on how to sustain their respective economies.

Both prime ministers share the belief that it is in the countries’ interests to strongly brand Australasia as an investment destination focused on quality products and lifestyles, and, are concerned at the upcoming “war for talent” implied by changing demographics.

Key, in particular, sees a future where both nations will have to pay “near global price” to attract and retain highly-skilled people such as doctors, lawyers and engineers.

By drawing closer together the two “Europeans in Asia” will be able to more strongly position themselves as the Asian century develops.

This makes us closing the gap with Australia even more important. You want to keep doctors, lawyers and engineers? Well maybe then allowing mining on 0.0001% of the conservation estate is not the end of the world.