Australia can’t afford to miss out on Belt and Road

Australia can’t afford to miss out on Belt and Road

Thu, 17/05/2018 - 14:28
Belt and Road

From an Australian perspective, it is easy to understand scepticism, misunderstanding and questioning of a trillion-dollar infrastructure plan that stretches over decades, not years.

With federal elections held every three years, the Australian political system simply is not designed to handle the scale of major, game-changing projects such as what China has proposed through its Belt and Road Initiative.

While China has its five-year plans, President Xi Jinping has ensured his grip on power won’t be released any time soon, allowing him the political leeway to commit to long-term nation building at a level far surpassing the ability of any Australian prime minister.

And with Australia being the sole country on its continent, there’s also no potential for international engagement on mega projects like what China is doing on Belt and Road.

Adding to that lack of familiarity with projects of the scale of Belt and Road, is the fact that Australia’s long-term strategic and security relationship is with the United States.

With China’s status as Australia’s biggest trading partner, and the country’s economic prosperity inextricably linked to the People’s Republic, the federal government has been faced with the challenge of how to balance growing tension between its two most significant allies.

Looking forward, it is becoming clear that Australian business simply cannot afford to be complacent and wait for the government to act on Belt and Road.

The resources industry is expected to get a natural boost in demand from the mammoth initiative, however, the whole point of Belt and Road is to enhance connectivity between the countries involved.

One potential outcome is that iron ore miners with deposits in locations such as Africa or Kazakhstan could become more attractive trading partners for Chinese steel manufacturers than the Australian miners, which operate in a much higher-cost environment than their potential competitors.

In the services sector, many European countries have already launched comprehensive delegations, particularly in the areas of finance and law, areas in which Australian companies have significant capability, as well as operational experience in the region.

Chinese enterprises have already awarded more than 1,800 Belt and Road-related contracts in 61 countries, valued at more than $US32 billion.

If business keeps waiting for government to react, China’s opportunity of a century may just pass Australia by.

Building on existing relationships with China and seeking out new collaborative opportunities would seem the only way to ensure Australia is not left behind on Belt and Road, which after five years is rapidly transitioning from vision to reality.

While Australian business may prefer to wait for government guidance on the initiative, it would seem the economy would be better served by embracing the opportunities that are available without waiting for an official green light.