Can’t afford to miss the Silk Road to China

THE 150 Australian companies accompanying federal and state government ministers and premiers to this week's truly big export summit in Shanghai don't seem to have got the memo about the new Cold War that's supposedly engulfing relations with our biggest trading partner.

While there is some anxiety on the part of many senior business figures, worrying about what to say when their Chinese counterparts ask them what the hell is going on in Canberra, mostly this is a week of deal making and relationship building.

The Chinese business sector see the frosty relations between Canberra and Beijing as an irritation, accepting the added layers of difficulty in a grin-and-bear-it stoicism.

After all, there's not much they can do about it. Also, in most instances is doesn't affect the company-to-company relations.

There have been some deals which have hit the fence, like a high-end health accelerator plan which could have seen joint ventures between Australian and Chinese health care providers to modernise what's a seriously underdeveloped sector of the economy in the Middle Kingdom.

To understand where Australia and China are its necessary to look the path that's been taken.

Two developments, in Australia and the USA, have had greatest influence. The rise of a China phobia within the intelligence and military communities in our respective capitals has led to an instinctive resistance to approving any significant infrastructure investment from China.

There is a genuine concern about the activities of many Chinese government entities, and the grounds for this can be legitimate.

More often than not it's overstated and driven by fear.

On top of this there's US President Donald Trump's dual tactics of stoking an already dangerous trade war will China and his setting up Beijing and the communist leadership as a counter narrative to Russian meddling in the eyes of American voters.

The Chinese don't like the trade war but they are not about to take a step back. So far, every Trump move imposing massive tariffs across the economy has been met with a commensurate reaction.

They are also looking elsewhere, proving to their own people and the world that a country as big as China can get by without needing to show its cap to the USA.

Through the Belt and Road Initiative - a global approach to Chinese backed infrastructure through direct investment using loans and some joint ventures - the Chinese are trying to return to the glory days of the Old Silk Road when their country dominated so much of world trade.

That was before what's often referred to as the 150 years of humiliation: a time under British rule, war with just about everyone, the revolution and then decades of underdevelopment and poverty.

In 2016 a PwC report calculated the spread of countries signed up to the BRI covered a third of the global economy and just under half the world's population.

All up this BRI venture could involve and trillions of dollars of infrastructure investment.

The complementary trade and economic outreach from China is happening this week in Shanghai where the China International Import Expo is attracting more than 3600 companies from over 130 different countries, trying to attract the attention of about 150,000 buyers.

The CIIE in Shanghai follows the Canton Trade Fair in Guangzhou and the Hangpu International forum, where Communist Party Central Committee grandee Bijian Zheng spelt out the influence of the massive changes in US attitude towards China.

"What the US has started makes us more alert and awake from now until 2025," said Bijian, referring to the trade war.

The Chinese put on a brave face when quizzed about the trade war but there are increasingly significant signs it is starting to bite.

Alibaba, one of China's two giant tech companies, has recently issued a profit warning and the central government has deemed the firm effectively too big to fail.

President Xi Jinping takes both the BRI and this week's Shanghai Expo very seriously, referring to them as keys to economic prosperity - and global might - which can be shared throughout the population.

A recent prediction from the World Economic Forum gives China the largest middle class in the world within a decade, spanning 65 per cent of its almost 1.4 billion people.

This consumption driven growth will itself increasing GDP in China by about 6 per cent a year, which is worth about $11 trillion.

This is an economic explosion that Australian companies cannot afford to miss out on. Recent difficulties in the relationship appear to be settling down, something that will only be to the benefit of Australian companies and workers.

Dennis Atkins is The Courier-Mail's national affairs editor. He travelled to Guangzhou and Shanghai on a study tour organised by the Australia China Research Institute based at the University of Technology Sydney

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