"In 25 to 30 years, Australia will be to China much as Hong Kong once was," says the government official, who has been dealing with China for two decades. "There will be 5 to 10 million tourists coming here from the mainland each year. Our universities will be dependent on Chinese students. Large amounts of prime real estate in the major cities will be owned by Chinese investors. I see very large parts of the farming and mining sectors in Chinese hands. How else can a country of 20 million people survive and prosper in this part of the world, with a rising China?"
From the standpoint of 2005, that scenario seems overwhelming. Some might say it's unrealistic, a straight-line projection that ignores the risk of unforeseeable events or friction in the relationship. How easy is it, after all, to predict the behavior of an authoritarian regime that leads 1.3 billion people? But for governments and the forward scouts of free enterprise, such future-gazing is vital. To a medium-sized country like Australia, China's economic and political rise seems irresistible. The two countries have been been growing closer for some three decades, since Australia gave diplomatic recognition to the communist People's Republic in 1972. China's growth and reform have continued with barely a blip since 1978. But trade and the movement of people go back a lot further, as Fu Ying, China's Ambassador to Australia, notes. "The history, habits and nature of our peoples have laid the foundations for the extension of relations," she says. "We are able to understand each other."
When Prime Minister John Howard visits China this week, his meeting with President Hu Jintao and the announcement of Free Trade Agreement talks will take the headlines. In private, Howard's message to Beijing's elite will be that an open economy like Australia's welcomes more Chinese investment, particularly through direct stakes in resource projects. As well, Howard will be trying to persuade Beijing to open its markets to Australian financial services, agriculture and manufacturing companies. "China insists that it be characterized as a market economy," says an Australian official. "Well, it's not just a question about a label. China needs to internalize the concept and produce the conditions of a market economy."
Since 1996, Howard's practical diplomacy - focused on deals, dialog and trade - has been well received by Beijing. "The comfort level is rising," says Ambassador Fu. Howard speaks of a "partnership for prosperity" between the two countries. "When we think about the future of Australia in the world, we inevitably think of a world where China will play a much larger role," he said last month, in an address to Sydney's Lowy Institute for International Policy. "China's economic dynamism is something we feel palpably in this country." In the 1840s, thousands of Chinese indentured laborers and free settlers were drawn to a thriving colony. Today, 430,000 people, including merchant bankers, students, artists, gamblers and tourists, move between Australia and China each year; if Hong Kong is included, the figure almost doubles. China's rise is easing Australia's isolation, putting it close to one of the hubs of the world economy. But it is also taking a toll: last year, for example, China used an extra million barrels of oil a day, helping drive up prices - and making for a lot of grumpy Australian motorists.