Lowy Institute

Professor Andrew Holmes is Foreign Secretary of the Australian Academy of Science. He is Melbourne Laureate Professor of the School of Chemistry at the University of Melbourne and a CSIRO Fellow.

Australia is a competitive, collaborative top 20 country in science. But unless we take a strategic approach to international scientific collaboration, we will fall to small power science status.

The General Electric 2011 Global Innovation Barometer suggests 40% of all innovation in the next decade will be driven by collaboration across institutional and national boundaries. Australia's relatively modest research investment (about $9.4 billion annually) compared with that of our Asian neighbours places greater emphasis on the need to collaborate.

Australia has a closing window of opportunity. Our intellectual and structural capital give us a comparative advantage – foreign scientists, particularly in Asia, want to collaborate with us. But without strategic engagement, this is far less likely to be the case in 10 years' time, given global research investment trajectories, growth in foreign student education in developed countries and increasing international competition to collaborate.

Also of advantage is Australia's considerable standing in terms of esteem, discovery and our ability to solve problems. Our researchers are world class. With just 0.3% of world population we produce 4% of the world's most highly cited publications. Our economy is now dominated by the service sector, a growth trend of recent decades that has been supported by the useful and timely application of science to add value and enable new services.

Our scientific expertise is well recognised within the OECD and increasingly in Asia where research and development spending is growing rapidly. In 2009 Asia's spending accounted for one-third of that spent globally on R&D, up from one-quarter in 1999. According to the US National Science Board, real growth over the past 10 years in China's overall R&D remains exceptionally high, growing at about 20% each year. The Chinese biotech industry alone is projected to be worth 4 trillion yuan (AU$620 billion) by 2015.

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The Australian Academy of Science has long argued that Australia's international scientific engagement must be strengthened through strong government support, as global scientific endeavour ramps up and shifts towards Asia. Enhanced strategic ties to international knowledge production are essential if we're to capture benefits and advantages for Australia.

Australia has some geographic (and linguistic) advantage in Asia but other leading scientific nations are responding to the same shifting dynamics. For example, there are about 50 US Foreign Service staff located in US embassies and consulates around the world designated as Environment, Science and Technology and Health (ESTH) officers.

In China, for instance, the US has ESTH officers in Beijing, Shanghai, Chengdu and Guangzhou. These diplomatic positions are supplemented by more than 20 employees of US technical agencies like the National Science Foundation, National Institutes of Health, Centers for Disease Control and Prevention, Food and Drug Administration, and Department of Energy, who foster collaborative efforts with China. They are supported by about 150 additional staff from the US State Department's Bureau of Oceans and International Environmental and Scientific Affairs.

The US State Department's 2010 Quadrennial Diplomacy and Development Review confirmed that, in a world of increasingly fast-paced change, 'science and technology must be enlisted in an unprecedented fashion.' In November 2009 US Secretary of State Hillary Clinton announced the appointment of three prominent US scientists as science and technology envoys to bolster collaboration with Muslim communities around the world. Professor Bruce Alberts, a former President of the US National Academy of Sciences, has just completed his term as a Science Envoy focusing on Indonesia.

By contrast, Australia has two Minister-Counsellors, one in Brussels and one in Washington DC, to provide support for the Commonwealth's Innovation, Industry, Science, Research and Tertiary Education portfolio. Reflecting the export value of tertiary education services, we do have an international education network which has a dozen officers. Mostly in Asia, they manage bilateral and multilateral education and training engagements. With resources widely acknowledged to be insufficient, the Department of Foreign Affairs and Trade undertakes excellent but small science diplomacy projects, such as providing speaking opportunities in Asia for eminent Australian scientists.

Australia's international engagement efforts have been diminished in the wake of recent federal budget decisions. One unfortunate consequence of the 2011 termination of the productive 10-year International Scientific Linkages program is the lack of strategic international guidance and support to direct our national research effort. Without national coordination we are not able to make the most of the 96% of high-citation research that occurs overseas.

Without doubt, a strategic effort to engage scientifically in the Asian Century should be a national priority.

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Part 1 of this article is here and part 2 is here.
 

Consider a single political-diplomatic start date for the idea of the Asian Century.

It is 1988 and Deng Xiaoping is meeting Rajiv Gandhi. China's leader tells India's Prime Minister: 'The 21st century can only be the Asian Century if India and China combine to make it so.'

It's a powerful vision. Yet Deng's proposition for how the Asian Century might work draws me to an opposing vision in Bill Emmott's book Rivals, which predicts a power struggle between China, India and Japan. Emmott quotes a senior official in India's Ministry of External Affairs: 'The thing you have to understand is that both of us – India and China – think that the future belongs to us. We can't both be right.'

The two quotes encapsulate the biggest question for the Asian Century: how much cooperation will be necessary to counterbalance the inevitable conflicts of interest and intention? 

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The India-China dynamic – a troubled history leaning against so much promise – is an excellent reference for pondering Canberra's effort to create a White Paper on Australia in the Asian Century. Note that the century will not merely centre on Asia, but will be Asian. Perhaps this means that decisions as well as the direction – the ownership as well as the onus – will be Asian. This is real if you-name-it-you-own-it stuff.

As an Asian Century unrolls through coming decades, there might well come a time when it is China and India that meet to make the big calls, as Deng prophesied. That is a new world for Australia as much as for everybody else in Asia. Such a thought explains why Australia is a recent convert to the term Asian Century; it has really only blossomed as a defining term for Canberra in the last two years.

By launching a White Paper process 12 months ago on Australia and the Asian Century, Julia Gillard supercharged the concept. Having knocked off the eminently Asia-literate Kevin Rudd, Gillard was reaching for her own Asian colours.

To add a bureaucratic perspective to the process, the fingerprints on the language shift all belong to Treasury, not to Foreign Affairs. It was Treasury that really started using the phrase Asian Century, putting it in the Treasurer's mouth in the budget speech last year and using it to predict internal changes for the Australian economy. And it is not some foreign affairs nerd but the former head of Treasury, Ken Henry, who is running the Asian Century inquiry.

This is not just inside Canberra tea-leaf stuff. When the White Paper was launched, this column argued that, if there was a real conceptual shift on display, it was Australia starting to abandon its firm attachment to the construct of the Asia Pacific. The country that invented APEC (well, co-invented it with Japan) was readjusting the settings. 

Australia and Japan and plenty of others built the Asia Pacific model because it gave an explicit role to the US. It aligned Australia's strategic and economic interests.

To shift from the Asia Pacific Century to the Asian Century is to re-frame the power equation and the hierarchy. All this matters for politics and government, for bureaucracy and the chattering classes. It tells us something of Asia's impact on Canberra's perceptions; call it the power of economic gravity. To be precise, this tells us something about how China is messing with a lot of minds in Canberra, colouring the thinking even if the actions seem all to be directed at a more fervent embrace of the US alliance.

The use of Asian Century phraseology is one point where Australia is diverging from the US, even during the pivot moment. No Asian Century for the Americans. Both President Barack Obama and Secretary of State Hillary Clinton proclaim that we are in the Pacific Century, which builds naturally on the American century we have just emerged from.

As an example of the point, see Hillary's Hawaii speech last November, entitled America's Pacific Century. The thought was given its most emphatic expression by Obama's declaration in his speech to the Australian parliament: 'The United States is a Pacific power, and we are here to stay.' Obama's speech in Canberra was notable, though, for his repeated reference to the Asia Pacific; even for the Americans, the Pacific Century nomenclature might have to stretch a bit.

As the previous column noted, the Australian Defence Department lines up with Obama in its affection for the Asia Pacific as a descriptor that explicitly embraces the US.

The Defence Minister's Lowy speech last week gave plenty of play to the Asia Pacific. Indeed, Defence likes to spell it as Asia-Pacific. The hyphen is just one more example of a fundamental tenet of Australian policy: anchor the Americans in Asia. Stephen Smith encapsulated Defence's view of the Asian Century with this line: 'In this century, the Asia-Pacific and the Indian Ocean Rim, what some now refer to as the Indo-Pacific, will become the world's strategic centre of gravity.'

With Defence's new affection for the Indo-Pacific, we are nearly back with Deng Xiaoping in 1988. The one big change made to Deng's Asian Century perspective is to make it a three-way not a two-way partnership. In the Defence rendering, it will be the US along with China and India that define what the century becomes.
 
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Part 1 of this article here.

The Asian Century White Paper has to be broad enough to touch the conceptual edges of the Defence White Paper that will come out in the middle of next year. Notice the key word here is 'touch' rather than 'enmesh' or 'integrate'.

The two White Papers will nod rather than embrace. The Defence White Paper will be marked by linguistic obeisance rather than conceptual obedience to the Asian Century master plan. Economists and strategists speak different languages and often seem to see different worlds. Henry's take on the strategic issues posed by China has an economist's insouciance, drawing on the faith that money speaks all languages:

A lot of people have observed that Asia’s growth means that, for the first time, Australia is facing a future in which our largest trading partner is not a partner in a close alliance friendship, or even the partner of a close ally. I don’t know that that matters much, but it’s a development that is worth thinking about.

Hear that, all you strategists at Russell Hill HQ obsessing about China? think about it, by all means, but all that military/alliance stuff doesn't matter that much. Relax, Russell.

Asian Century White Paper supremo Ken Henry seeks to subsume the strategists by making their concerns only one of the three domains he will range over: economic, social-cultural and political-security. By seeking to look out 'just' to 2025, Henry avoids the crystal ball malfunctions inherent in the Defence attempt next year to reach out beyond 2030 towards 2050.

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Peering to the second half of the century, Defence simplifies things by seeing only three great strategic powers: the US, China and India. The Defence demotion of Japan to middle power status is a fascinating call. Interesting to see if that view of Japan's future gets a tick from the eminent economist, Dr K Henry.

Note also that Defence has not surrendered completely to the Asian Century; the Asia Pacific is still popular because that construct makes the US role explicit. The big China speech the Defence Minister gave in June was entitled, 'Australia and China – Partners in the Asia Pacific Century'. Mark that title as a bit of cheekiness from Russell directed up Kings Avenue towards the Prime Minister's Department.

The vision of the Asian Century Ken Henry is brewing in PM&C is going to have to convince diverse audiences. And some of the sceptics, residing close to hand, will get a chance at their own White Paper next year.

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Matching the message to the audience is one of the defining choices in any attempt at communication.

The problem for the White Paper on the Asian Century is the myriad of messages and the multiplicity of audiences — in Australia and beyond. Ken Henry is near the finish in his grapple with the audience-message mix. Now he confronts the issue of crafting a sharp document while trying to say a lot.

The Canberra coconut wireless reports that the drafting process for the White Paper expanded in line with the ambition. The alarm bells started to jangle as the draft flew north of 400 pages towards 500; this would be a weighty tome for a weighty topic. The latest scuttlebutt bulletin reports that the drafters have seized machetes to hack back the foliage and pare the wordage.

Henry has driven the sharpening process by not trying to look much beyond 2025 and by putting the focus on Australia's relationships with six countries: China, India, Indonesia, Japan, South Korea and Vietnam.

Dr H has already flagged his embrace of the theme that Australia must develop 'Asia-relevant capabilities' through language and education to match its economic and political needs. The shorthand version of this is a reverse Colombo Plan: to go into Asia in the same way that in an earlier era, many from Asia came to Australia.

The word Bob Hawke used to describe his vision for Australia was 'enmeshment' with Asia. In describing the path for Australia — government, institutions, business and individuals — to be part of Asia's future, the key word for Henry is 'integration':

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Across the areas of analysis in the White Paper a single word keeps cropping up - it’s the word ‘integration’. Integration within the region is what is happening on a daily basis. Integration does not mean creating some great homogenous society or imposing the values and culture of any country upon the people of another. What’s happening in the region is largely an economic integration — building on the progress made in the post-war period. That integration has to be taken further.

The prescription Hawke offered in the 1980s was complex and controversial at the time; in the second decade of 21st century, the Hawke choices look relatively low risk. Hawke's enmeshment was a more neutral vision than Henry's integration. Equals can enmesh. The course Henry is plotting, by contrast, assumes Australia will be doing the integrating. This is the 'all change for Asia' message expressed by the head of the Prime Minister's Department, Ian Watt, in predicting that Asia's rise will impact on all aspects of Australian society and institutions.

Grappling with such thoughts explains why the Henry word count would rise. A big document always has bureaucratic benefits, even if the wordage weighs down the messages.

The Asian Century White Paper also has to be broad enough so that it can touch the conceptual edges of the Defence White Paper that will come out in the middle of next year. More on that in a follow-up post.

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Below is part 3 of my interview with renowned US foreign policy analyst Walter Russell Mead; part 1 here and part 2 here.

Q. Walter, you again make an intriguing comment near the close of your previous answer, so I'd like to ask you about 'the emergence of an Asian society of states'. Can you describe what such a society would look like? What are its institutional forms and are there historical models that guide you?

The term 'society of states' might be taken to imply that each member of that society is relatively content with its place in the world. But with the distribution of power in the Asia Pacific seemingly so fluid, is a 'society' of states even achievable, or will the power balance among emerging and established powers need to be settled before they can reach such an accord?

A. It's clear that the balance of power among Asian states is going to be changing in a number of ways. And it's not possible from where we sit now to predict what a fully mature and developed Asian state system would look like. Would it have the same kind of legal arrangements as the EU? Would it look more like a bigger ASEAN? Would there be one umbrella institution, or would there be a society of institutions, with different competencies and priorities? It's a mistake to try to say too much now about how international relations might develop in Asia. But when I think about what American policy would try to promote in Asia, I think primarily about helping to provide a framework within which that future Asian society can begin to develop and grow.

I'm not sure historical models help much when thinking about the future of Asia. There are certainly things you can learn, and there are points of similarity you can find, but I think the essential thing here is to keep in mind the many directions in which Asia can develop, and so the danger of taking a model like the EU is that that model will blind you to all the ways in which Asia is not like Europe.

What's happening in Asia in the 21st century is unique in human history. We've never had so many countries and cultures with such huge populations going through such changes so quickly.

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Asian states face huge challenges in constructing and maintaining their internal orders. Necessarily, many countries are going to prioritise the task of internal construction over creating an external state system. And we're looking at countries that are going through very rapid urbanisation and that are simultaneously industrialising and coming to terms with a post-industrial world. China today spends more money on internal security than it does on international defence.

We're likely to see in many Asian countries that the question of internal stability and order is the question that keeps rulers up at night. The question of the international security structures in Asia is going to be a secondary one. And because the internal struggles and upheavals through which Asian countries are passing are so dramatic and far-reaching, the ability of leaders to build strong external organisations and durable institutions is going to be limited. It's hard to imagine anything that looks like the EU being useful to countries trying to manage this set of pressures.

China, for example, can't make big concessions in the South China Sea without creating a crisis of domestic legitimacy for the government. And given the balance of risks that the government sees, it's going to choose domestic peace over international harmony.

At the moment, Asia doesn't even have a code of conduct for managing maritime disputes in the South China Sea. To leap from this situation to imagining a hypothetical future Asian international framework requires a little bit more confidence in my prophetic powers than I feel like I can summon.

The main quality that a society of states would have to have is the ability to avoid settling disputes through war. More than anything, Asia needs a generation of peace so that each Asian country can develop and concern itself with its internal social and political growth. The question is whether states think they can improve their condition by a mix of cooperation and competition without war, or whether they think violent conduct is the only way to provide for what they consider to be the minimal security and dignity they require. I doubt we'll ever see a world in which every country is completely satisfied with its place. But being unhappy is not the same thing as planning a war of revenge.

Flexibility may be the most important characteristic of any Asian international structures that do get built. China doesn't want a war over the South China Sea, especially not a war with the US, but the government also doesn't want to risk its power domestically by being perceived as weak and unreliable. Vietnam, the Philippines and other countries involved in these territorial disputes face some of the same issues. So we're looking at tentative small-scale flexible arrangements that over time might grow into something else.

Personally, I'll be happy if we find a way through the difficulties of the next ten years, and then we can start thinking about what we need to do next.

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Below is part 2 of my interview with renowned US foreign policy analyst Walter Russell Mead; part 1 here. This interview series will mark the close of our Australia in the Asian Century feature, though you'll note from Walter's answer below how easily this discussion flows into the debate we're now staging about China containment in our Australia's defence challenges feature

Q. Walter, I’d like to press you on the last part of your previous answer, where you said 'the US goal in Asia, as in Europe, is not to dominate a region but to promote the emergence of a peaceful order which meets the needs of the people in the region but offers good economic opportunities to the US and keeps security threats from emerging.'

There is a notable difference between Cold War Europe and Asia today, is there not? The US recognised a Soviet sphere of influence in eastern Europe and treated the USSR as a strategic equal. By contrast, rather than a bipolar balance of power as we had in Europe in the Cold War, the Asia Pacific is today marked by US strategic predominance, which Washington shows no signs of surrendering. In fact, the US ‘pivot’ can be read as an attempt to reinforce this predominance.

Is this situation sustainable? As China grows to become the world’s largest economy, will it be satisfied to leave US strategic pre-eminence undisturbed, or will it seek to balance? Will the US accommodate this Chinese ambition, or resist it?

A. First, the Soviets really didn't consider the postwar division of Europe a fifty-fifty split. The US got the rich countries that had been historically the most advanced, with the most technology, the most resources, the highest overall level of development. The Soviet Union, devastated by the war, was left with parts of the Balkans and the most war-ravished parts of Europe.

Then, when I look at Europe today, I see that the US is strategically dominant, but other countries, like Germany, France, and Russia, conduct independent foreign policies. So I don't think that a preponderance of military power is the same thing as quasi-imperial domination.

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Now we turn to Asia, where we see asymmetrical power balances between the US and China. The US may be dominant at sea, but no one is expecting the US to invade China, or fight another land war in Asia. So in that sense it doesn't seem so entirely different from the situation with the Soviet Union. But the thing to remember is that China has enormous economic clout in the region and this is likely to keep growing. So the US and China may each end up having certain kinds of supremacies in the region, and the economic interdependence between the US and China is so great that both countries would be very reluctant to break their relations or head into a military confrontation.

So I don't see the US, for example, as seeking to marginalise China economically or to block Chinese investment in other countries. And there are clear political consequences for countries for which China is both their largest market and their largest source of foreign investment. So when I think about a new order in Asia, I'm thinking about a kind of three-dimensional chessboard, and while the US and China may dominate on different levels, overall I'm not so sure you could describe this picture as total American domination.

And furthermore, I don't think it should be America's goal to try to be dominant on all three levels of that chessboard. The US is likely to seek some kind of balance.

The other big difference between Cold War Europe and Asia today is that there were no powers in Cold War Europe comparable to India and Japan today. The geopolitics of Asia today has more moving parts than the geopolitics of Europe during the Cold War. And that also points toward some kind of balance, rather than some kind of unipolar domination, either by the US or by China.

In the long run, I don't think the barrier to Chinese military domination is simply one-on-one competition with the US. Other countries like India, Australia, Japan and Vietnam, to name only a few, would respond to a Chinese military buildup. So we're not really talking about a one-on-one, China versus the US, bipolar competition. We really are talking about the emergence of an Asian society of states. And the US goal is not to overpower China by its own military might, but to promote the emergence of that wider Asian order.

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Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the Asia Development Bank Institute, Tokyo.

Stephen Grenville ('Democracy and Indonesia's economy') notes that government decision-making has become much more difficult in Indonesia since the end of the Soeharto era. One of the standard gripes in the business sector these days is that 'at least corruption was centralised under Soeharto; with democracy the system is so chaotic that you never know who to pay to get things done!'

Another standard gripe is: 'People say that we have democracy in Indonesia, but what we really have is "democrazy".'

It's true that it's often hard to get things done in Indonesia. There are delays at every turn. But there are two fundamental aspects of this problem that the international development commentariat often doesn't seem to think about very carefully: corruption and 'money politics'.

Corruption has received enormous attention in Indonesia in recent years. An impressive stream of big names has been caught up in corruption inquiries conducted by the well-known 'KPK' (Corruption Eradication Commission or Komisi Pemberantasan Korupsi). The latest big fish to be caught is the former senior deputy of the central bank (Bank Indonesia), Miranda Goeltom. In what has turned into a remarkably high-profile case, Miranda has been charged with corruption in connection with the payment of more than $2 million to MPs for vote-buying during her election as Deputy Governor to Bank Indonesia in 2004. She will come to trial this coming week.

But there have been downsides to the intense campaign against corruption in Indonesia.

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One is that many public servants have become fearful of campaigns against corruption which sometimes verge on witch-hunts. Senior officials fear being noisily charged with corruption over even trivial misdemeanors and have thus become extremely risk-averse. Many government approvals – including many quite reasonable business approvals – are now often badly delayed because officials are reluctant to sign anything with the faintest whiff of risk.

The second problem is the way that the growth of democracy in Indonesia has led to an expansion of 'money politics'. As Stephen Grenville notes, the election campaign for the governorship of Jakarta has been accompanied with all sorts of expensive populist activities. Somebody has to pay for all of this fun. Fund-raising is now a major challenge for any aspiring politician in Indonesia.

It's not clear what to do about the huge problem of money politics in Indonesia. In fact, the international development commentariat hasn't come up with many answers to the key question of how to fund democracy in developing countries.

The operations of a vigorous political industry cost money. In Indonesia there are now over 20,000 politicians in central, provincial and district parliaments. All of them need to run offices, keep supporters happy, and support frequent campaigns. The major political parties often hold big jamborees in grand Jakarta hotels with up to 1000 delegates flown in from all parts of Indonesia. The delegates attend dinners for several days and spend up big on generous expense accounts.

There is now widespread agreement in Indonesia that the high cost of politics is a major problem. The former deputy head of the Corruption Eradication Commission recently said that 'the commercialization of authority for the sake of winning elections and building and sustaining power and wealth' is causing great harm. He pointed out that, among other things, this problem contributes to the 'rampant issuance of mining concessions' because regional politicians find it easy to raise the money they need by selling mining and plantation concessions.

Nobody disagrees that democracy is flourishing in Indonesia or that the campaign against corruption is a vital part of good governance. But it would be a useful step forward in the international development debate if it was more widely recognised that democracy and anti-corruption measures bring new challenges.

One of the major challenges is that, in some important ways, the management of government becomes much harder. The old ways of cutting corners were an unacceptable way of running a country, but they were fast. When modern ideas about good governance bring ever-growing layers of bureaucracy, the system clogs up. Purists wouldn't be happy but there is a lot to be said in favour of Merilee Grindle's practical idea of focusing on 'good-enough governance'.

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Just as the American journalist James Fallows believes modern China can be viewed through the prism of its aviation industry, I have long thought that a pretty good study of modern-day Australia could be written by examining its tourism sector.

Like shrimp on a barbeque, there are so many juicy morsels from which to choose. The quest for national identity; changing ideas about Australia's place in the world; how the global view of 'the land down under' is based still on clichés and outdated stereotypes.

Tourism exposes the city versus bush divide and the interstate rivalries that speak of Australia's fragmentary federation. The industry row of the moment, for instance, centres on the failure of Tourism Australia's new advertising campaign to include any images of the Great Ocean Road in Victoria.

For our purposes, the sector also offers useful lessons about Australia in the Asian century, because an Anglo-centric mindset is being overtaken by Asia-centric thinking. Visitors from New Zealand, the UK and US used to be the core customers (the controversial 'Where the Bloody Hell Are You?' campaign was pretty much meaningless elsewhere). Now it is the Chinese upon whom the sector is increasingly reliant.

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In 2010, China became Australia's biggest inbound tourism market, and is now the most rapidly expanding market. Over 500,000 Chinese visited Australia in 2011, an almost 20% increase on 2010. By 2020, Chinese visitors are projected to inject up to $9 billion into the Australian economy, double their present contribution.

No other sector of the Australian economy has tried so hard to understand this emerging market. As part of its China 2020 Strategy, Tourism Australia conducted research not only in the primary cities but also the secondary. It showed there were big opportunities for Australian operators in places one would expect — Beijing, Shanghai and Guangzhou — but also in secondary cities like Chongqing, Nanjing, Shenyang, Shenzhen, Tianjin, Wuhan and Xiamen. As a result, Tourism Australia will expand its marketing from 13 cities to 30 by 2020.

The research also revealed the strength of the Australian brand in China. In the global ranking of 'must visit' holiday destinations, Australia comes out on top, beating Hawaii, the Maldives and France. When it gauged global responses to its new 'There's Nothing Like Australia' advertising campaign, the most positive reaction came from China. In the upper echelons of Chinese society (the people who can afford to travel to Australia) there is clearly both a curiosity and a prevailing sense of goodwill. Time, distance, and cost were the three main reasons for not visiting. But Australia has a bucket-list allure.

Tourism Australia has also been good at Chinese networking. Since Australia gained 'approved destination status' in 1999 (prior to the introduction of ADS status in the early 1990s, travel abroad was allowed only for business and government-approved purposes) TA has built up a 5000-strong infrastructure of 'Aussie specialist' agents in China.

Independent operators have made major inroads. Sovereign Hill, an outdoor museum in Ballarat that recreates the feel of the mid-nineteenth century gold rush, now has four staff in China. It first set up shop there 20 years ago to attract Chinese visitors keen to learn how their forebears chased fortunes in Australia. Sovereign Hill has Mandarin-speaking guides and even a bespoke China tour. It has now attracted over a million Chinese visitors.

State governments are also playing catch-up. The Victorian Government is running a Chinese cultural awareness program aimed at tourism operators and it's spending $8 million on marketing Victoria in China. Chinese visitors are asked to complete exit surveys at Melbourne Airport.

The Chinese influence looks set to change the character of Australian tourism away from the traditional backpacker model. For a start, Chinese visitors tend to head to urban destinations. In New South Wales, 90% of Chinese visitor nights are spent in Sydney. Research shows that visitors are keen to eat Chinese food, especially at breakfast time. Gambling is also an attraction, which is likely to increase pressure on state governments from hoteliers and the entertainment industry to license more casinos.

Asia-themed events are also increasing in importance. Chinese New Year celebrations in Sydney have become so colourful and exuberant that they have been dubbed 'Mardi Gras goes to China.' It is also the biggest Chinese New Year festival anywhere in the world outside of China.

For the tourism sector, there is a downside to China's growth. The resources boom is exacerbating skills shortages, as bus drivers take the wheel behind Haulpak trucks and hotel chefs head to mine canteens, where they can double their salaries. There are now thought to be 36,000 vacancies in the industry.

This is already having a policy-altering effect. Recently, the Australian Government approved a three-year trial that will allow tourism operators to employ seasonal workers from Pacific countries and East Timor. Increasingly, these guest workers will be tending to the needs of Chinese visitors.

China Airborne served as a terrific title for James Fallows' book. It also works as a heading for the latest chapter in the story of Australian tourism at the beginning of the Asian century.

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Below is the first instalment of my interview series with renowned US foreign policy analyst Walter Russell Mead, Editor-at-Large for The American Interest and author of Special Providence and God and Gold. He also runs the lively Via Meadia blog. Walter has been kind to the Lowy Institute and The Interpreter over the years, and it's a thrill to get his contribution to our Asian Century feature.

Q. Walter, judging by your commentary on Via Meadia, it's hard to pin you down or categorise you when it comes to what many in Australia have taken to calling 'the Asian century'. There's some realpolitik there, a sneaking regard for multilateral institutions such as ASEAN, encouragement for leaders who hold China's feet to the fire on human rights, and scepticism toward the idea of American decline.

Another thing I've noticed on your blog recently is your recurring use of the popular TV series 'Game of thrones' as an analogy for the rivalries and power plays now occurring in the region.

With all that in mind, can you say something about the analytical framework you apply when you wrestle intellectually with the rise of China and the Asian century? Do you prefer theoretical models, historical analogies or draw inspiration from fiction? What's the most useful and revealing prism through which to view this phenomenon?

A. Well, there's no one theoretical model that captures reality. My view is more eclectic; I check many sources to help understand what's going on in Asia today. International relations theory, historical analogies, popular fiction — each plays a role in my thinking.

I don't think that we're witnessing the emergence of a liberal multilateral order in Asia today, but it's not impossible that over time something like that would emerge.

There is no single 'prism' through which to view the Asian century. It's a mistake to think of Asia narrowly. If you look only at East Asia, the temptation is to analyse events as binary competition between China and the US, but if you look more broadly at the region from India to Korea and including Australia and New Zealand, it looks less like any two-way competition will determine the collective future of this very complex region.

But the Game of Thrones is my favourite way of talking about Asia. We use it on the blog firstly because we want readers to be excited, to read our posts. The Game of Thrones books and TV show are popular (for good reason), and at its heart, the series is really about foreign policy.

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It's about the mix of foreign and domestic concerns that influence policy abroad. I don't actually think that much of international life is as cut-throat as it is in Game of Thrones. And most diplomats I know aren't as good looking as the show's characters. But in helping people understand the importance of power and influence in international life, this is not a bad example. There are lots of different autonomous power centres. It's not a binary competition between two superpowers. It's a world in which smaller states are pursuing their own goals and interests. Asia is like that — polycentric. The Asian political system is not bilateral or unipolar.

On American decline: I don't see much evidence. In the '90s it seemed to me that people were overestimating the unipolar moment. But it wasn't unipolar in the '90s. In the next decade, people swung too far the other way, hyping America's decline. These are mood swings among the commentariat rather than changes in American power.

In Asia and the Pacific, the situation is broadly favourable for key American concerns. Rising prosperity is not a zero sum game. A richer Asia is a richer America. The US goal in Asia, as in Europe, is not to dominate a region but to promote the emergence of a peaceful order which meets the needs of the people in the region but offers good economic opportunities to the US and keeps security threats from emerging. Though Asia is very complicated, difficult and dangerous, it looks to me like all those objectives are reachable.

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Indonesia is getting good press, with fulsome praise for both the post-Soeharto democracy and the performance of the economy. There are some links between the two.

Democratic performance is usually judged in terms of whether the elections went smoothly, whether the diversity of the population is effectively represented and whether parliamentary debates are carried out in good order. But we might also ask the question: what has democracy done for the economy?

You might not know it from current commentary, but the much-lauded current rate of growth, benefiting as it does from the boom in commodity prices, is still a little below the average annual growth achieved during the three Soeharto decades. The most notable change since then is the sheer difficulty of governmental decision-making. Legislation is debated interminably, unworkable conditions are added to draft legislation, parliament seeks to involve itself in the detailed on-going administration of everything, and passage of legislation generally requires substantial 'facilitation' payments to political parties.

Indonesia went into the 2008 global crisis with inadequate financial sector regulation because parliament had not passed the necessary laws. More recently, the President proposed a modest increase in petrol prices, which are among the lowest in the world. The case for an increase is straightforward: the energy subsidy is largely enjoyed by the middle-class and rich. Winding it back over time would make room for vital expenditures on education, health and infrastructure. This compelling logic should have triumphed. But parliament chose to effectively veto the increase. As a result, almost 30% of budget expenditure this year will be used for energy subsidies.

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The current elections for the governorship of Jakarta illustrate the populist pressures democracy has brought, with candidates out-bidding each other to offer free public services not just to the poor, but to everyone. The trade-off seems painfully clear. If candidates compete to buy votes at the expense of revenue-raising, Jakarta's nightmare traffic congestion will worsen, the city's regular floods will deepen and public services will remain seriously sub-standard.

Populism and the influence of vested interests show their influence in broader economic policy-making. The rise in import protectionism and a more nationalistic attitude to resources investments are not enough to dampen the current rise in foreign investment, but bode ill for the presidential election in 2014, when these issues will play well with the voters. It is true universally that the public has never been convinced by the economists' belief in the benefits of free international trade. But while most countries (including Indonesia, until recently) have been moving in the right direction, Indonesia is now back-sliding. The prospective candidates for 2014 are all more nationalistic and less economically-rational than the incumbents.

Corruption, a 'one-stop-shop' in the Soeharto days, seems undiminished but more widely spread, creating uncertainty about who should be paid and how much. Just as seriously, the (many) non-corrupt officials are reluctant to make decisions (particularly on government procurement and tendering) for fear of being caught up in a corruption investigation, where the Corruption Eradication Commission has an almost-perfect record of convicting all those brought to trial.

Sitting in Australia and observing the incapacity of our own mature democracy to make sensible decisions on mining taxes, climate change, refugees and a myriad of other issues, and noting the incapacity of governments in Europe and the US to come to grips with their heavy economic challenges, we should of course  not be too harsh in our criticism of Indonesia's nascent democracy.

But to simply praise the trappings of democracy without also examining its performance in the areas that matter most — making good decisions — leaves a gaping hole in the analysis. And good economic policy matters more for Indonesia because there is more at stake. India is at present demonstrating that good economic performance can quickly be undone by democratic dithering.

It may well be that there is a price to pay for democracy in terms of slower growth (and perhaps less-well-distributed growth) and that Indonesians are ready to pay this price in return for the many benefits democracy has brought. Also relevant is Churchill's aphorism that democracy is the worst system, except for all the others.

Democracies evolve over time. There will be politicians who can use the parliamentary process to resolve vexed economic issues in ways which reflect public consensus, informed by rational debate. The balance between what is decided by parliament and what is in the mandate of the government can change, reflecting the skill of the participants. Such evolution holds out the prospect that the dead-weight costs of democracy on economic policy making can be lightened.

Photo courtesy of Wikimedia Commons.

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'It's open season for criticising India's leaders', notes veteran Delhi-watcher John Elliot in his blog at The Independent. He's right, of course. Pack-like creatures that we are, the past week or so has seen a global media pile-on.

Time's cover portrait across much of Asia this week features Indian Prime Minister Manmohan Singh looking vacant and lost. 'Underachiever' reads the headline, a cruel reversal for a leader once celebrated for his unassuming success (and a curriculum vitae which includes degrees from Cambridge and Oxford, the governorship of the Reserve Bank of India and a transformative stint as Finance Minister in the early 1990s).

'India Singhs the Blues' notes Foreign Policy. 'Why the country will pay the price for its wildly overrated prime minister.' In another piece, FP asks: 'Is the world's largest democracy ready for prime time, or forever a B-list player on the global stage?' Both are worth reading. Sumit Ganguly's analysis, which offers a revisionist rake on the expectations that have come to be attached to India, is particularly sharp.

Having myself fired a few arrows at Dr Singh and the ruling Congress Party last month, I thought I would turn to an area where India is enjoying success: the projection of its soft power abroad. Here, arguably, it is outstripping China, its Asian Century rival.

In an essay for Chatham House's The World Today, Shashi Tharoor, the former UN diplomat, Indian parliamentarian and one-time minister in Dr Singh's cabinet, argues that 'India's effulgent culture' has become a prime asset abroad. Bollywood movies are watched the world over. On Afghan television, Indian soap operas are dubbed into Dari. Curry houses in Britain now employ 'more people than the iron and steel, coal and shipbuilding industries combined' (even if many are run by Bangladeshis). America harbours a high-achieving Indian diaspora.

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In just the last 15 or-so years, India's international reputation has been completely overhauled. 'The old stereotype of Indians as snake-charmers or fakirs lying on beds of nails has been replaced with images of software gurus and computer geeks', notes Tharoor. As the world has watched the emergence of its hi-tech and outsourcing sectors, a condescending orientalism has been replaced by something nearing awe. Just read Thomas Friedman's The World is Flat.

This projection of soft power has been largely inadvertent, and 'emerges despite the government', notes Tharoor, the former External Affairs Minister. 'International goodwill has not been systematically harnessed as a strategic asset by New Delhi.' Any strategic advantages, he notes, have been 'unplanned.'

Tharoor is vague on what precisely those strategic advantages have been. But soft power has been particularly useful in Afghanistan, where the Indians have trained much of their recent diplomatic efforts on making the Karzai Government more Delhi-friendly (and more Islamabad-hostile).

India's 'likeability', for want of a better word, has also helped with Washington. Successive presidents, from Bill Clinton through to Barack Obama, have been charmed by India. Such was the mutual affection demonstrated by George W Bush and his hosts during his visit in 2006 that it looked to your correspondent, who was posted in Delhi at the time, like a Bollywood remake of the Hollywood movie of the moment: Brokeback Mountain.

Certainly these new friendships helped when it came to signing the US-India Civil Nuclear Agreement. Soft power here helped nourish the idea that an emergent India would meliorate the world rather than destabilise it.

That agreement also came about because of the trustworthiness and all-round decency of Manmohan Singh. In diplomatic circles, Brand India is linked inextricably with Brand Singh. Barack Obama has praised him as 'a wise and decent man.' He is portrayed as a global elder. So that is one of the major downsides of this week's rash of negative headlines, and the personal attacks on Dr Singh. India's soft power has come to be linked with its soft-spoken Prime Minister.

Photo by Flickr user timparkinson.

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In my search for images to accompany blog posts, I often find photos that are amazing but just not quite right for that particular post.

For John Larkin's recent piece about Asia's male-dominated corporate sector, I was looking for a crowd shot of Asian white collar workers, preferably all male or at least with few women in the shot. The search word I picked was 'salaryman', a term that has become synonymous with the Japanese white-collar worker.

As usual, I found some lovely images, and I wanted to share a few. Many have a sombre flavour, and together they perhaps give a jaundiced view of Japanese life. But they are evocative.

Photo by Flickr user jamesjustin. 

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Photo by Flickr user valhse.  

  

Photos by Flickr users JanneM and SnippyHolloW.

Photo by Flickr user MyMapOfJapan.

Photo by Flickr user St Stev.

Photo by Flickr user showbizsuperstar.

Photo by Flickr user Clint Koehler.

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Australia is being told of 'dramatic' shifts to its society and institutions because of the Asian Century. Being changed by Asia is not new; but the fact that this is being openly discussed, even embraced, does mark a departure from previous habits.

Often in Australia, the big shifts start quietly so as not to alarm the voting customers. Think the end of White Australia or building a new economic relationship with Japan after World War II.

The safe political position is to proclaim that nothing will change while gently adjusting the steering wheel. A prime example was the Holt Government's hushed action in 1966 to start dismantling the White Australia walls while staunchly denying that basic immigration policy was shifting. Whitlam rightly gets most of the credit because not only did he totally inter the old discriminatory edifice, he actually proclaimed the action loudly.

The Holt position has had some influence on the way politicians in recent decades have promised that Oz would engage or enmesh with Asia without having to alter anything of Australia. The fact that this was never quite true didn't lessen the strength of the assurances from figures as different as Paul Keating and John Howard.

In their long battle over ownership of the Asia story, Paul Keating and John Howard both stressed the enduring strengths Australia offered the region. Keating said Australia would go to Asia as 'a society which is rare in its cultural diversity, richness and tolerance, and a country which is strong and integrated with the region around it'. The Howard mantra was that Australia faced 'no choice between its history and its geography'.

From both Keating and Howard, the underlying message was that Asia would love us as we are and ask no more of us on the journey. The import of the Asian Century inquiry is that the old comfort level is eroding; now the station announcer is telling the passengers, 'All change for Asia!'

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The 'all change' whistle is being blown by Australia's top public servant, the head of the Prime Minister's Department, Ian Watt, who predicts that Asia's rise will impact on Australia in all sorts of realms: 

The opportunities and challenges that accompany this rise are being and will be felt across all aspects of Australian society and our institutions, not only the economy. Asia's growing weight and influence will bring dramatic changes and dramatic opportunities.

When Dr Watt uses words like 'dramatic' something is afoot. His conclusion is that the Australian public service is one of many institutions that will have to transform to become more outward looking and 'genuinely Asia capable'.

Australia is entering a new phase of the Great Asia Project that has obsessed every leader since the 1972 (the starting date is John Howard's, the title is mine). Australia knew Asia existed before 1972, but didn't want to have to translate geography into policy. The importance of the Great Asia Project is the acceptance that Australia must function as part of Asia, not apart from Asia.

The current shift is that discussion is now about what Asia will do to Australia, rather than what Australia will offer to Asia. The positive in this is that Australia's ability to shift has long been evident, even if in the past our leaders didn't always want to talk about it too loudly as they were turning the wheel.

The previous column noted that Australia has already traveled a considerable distance over the last half century in responding to the demands of the Great Asia Project. The factors and the actors that have driven us have been the subject of outstanding books recently, from Peter Hartcher and George Megalogenis. (See Pollytics for an admirable account of the sweet economic numbers that have given rise to talk of Australian exceptionalism.)

Naturally enough, these explanations about sweet spots and Oz moments offer well-woven tales of politics and economics. Yet it is the social and cultural mix of Oz that will be at the heart of an Australia that shifts and reshapes to respond to the promised dramatic growth of Asia's weight and influence. On that front, the sociologist John Carroll offers a succinct reading of the cultural conditions that have set Australia up as a can-do nation:

  • Australia, as the fourth most urban country in the developed world, 'has a talent for modern cities that is rare'. Australia's ability to create liveable cities and suburbs, he argues, is on par with our agricultural productivity and post-war multicultural immigration.
  • Civic culture combines a practical democratic temper with inclusiveness and scepticism which are excellent traits to foster economic inventiveness and creativity.
  • Australia has developed a 'local version of the Protestant work ethic' which has contributed to the nation's economic exceptionalism.

Professor Carroll mixes this with 'the sense of the Australian way of life' – an ability to be both relaxed and serious – to produce economic dynamism and a broad culture. That sounds like a country with the ability to adapt to the Asian Century. 

Photo by Flickr user State Records NSW.

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John Larkin reported from Asia for more than a decade for the Wall Street Journal and Time Magazine, and is now based in Australia.

Western economies can learn from Asia's resilience against financial crisis. But Asia's male-dominated corporate sectors could take a cue from more egalitarian counterparts in Europe, the US and Australia.

A new report by consultants McKinsey & Co has confirmed what many Asian women, and probably many men, already knew: Asian women face unique and outsized barriers to career advancement, particularly if they covet a seat on a company board.

Anyone familiar with Asia won't be surprised by McKinsey's assertion that much of the region adheres to traditional gender roles and values. McKinsey also notes that Asian cultures are many and varied, which makes it hard to generalise.

Still, the trend is unmistakable. McKinsey's survey of 744 companies from the stock exchanges of 10 Asian markets found that women are under-represented on every rung of the corporate ladder. This imbalance persisted even in countries with high female labour participation rates like China and in markets such as Malaysia, where more than half of university graduates are women.

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The discrepancies are particularly obvious at board level. Women hold an average 6% of board seats across the 10 markets studied compared to 15% in the US and 17% in Europe, says the report entitled Women Matter: An Asian Perspective. Australia's 13% was the region's highest rate of female board participation.

The worst offenders were South Korea with a paltry 1%, Japan with 2% and India with 5%. Interestingly, countries influenced by Chinese cultures showed relatively high levels of female board participation. Hong Kong, for example, fills 9% of its board positions with women, followed by mainland China at 8%.

By far the main barrier to advancement was what McKinsey calls 'the double burden' of working while caring for families. It detects a cultural influence here, especially in countries like India, South Korea and Japan, where women are often solely responsible for household duties. The report also identified the reluctance of women to promote themselves and an absence of female role models.

The resulting disparity represents 'a huge waste of talent' that could otherwise be tapped to fill the senior management void across the region. The report draws a positive correlation between financial performance and the presence of senior women, attributing this to supposedly female behaviours such as people development and collaboration.

On the Asian street, some economies are feeling the pinch of their failure to promote women.

In South Korean cities, 61% of jobs are held by men, according to a report in the Chosun Ilbo citing data from Statistics Korea. The report said the number of employed women in their 20s fell 26,000 in May from the previous year. In rapidly-ageing Korea, continued failure to replenish a shrinking labour pool with female workers could spell serious economic difficulties ahead.

Can Asian companies lift their gender game? 'Girl power' is gaining ground elsewhere in the region — witness the recent protests by women in burka-like robes decrying sexual harassment on Shanghai's subway trains and the metro's entreaties that they dress modestly.

McKinsey believes it will be an uphill struggle, given cultural norms against gender equality. It suggests a three-pronged approach: management commitment to diversity and targets for senior women, development programs to equip women with skills and networks, and enablers like childcare to ease the double burden.

Asia shook off the global financial crisis with relative ease. Tackling a problem so rooted in its own cultural biases will take longer.

Photo by Flickr user diloz.

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Not long after arriving in Sydney, I ran into a young Australian architect who outlined what seemed like an astonishingly heretical theory: that the best way to improve the quality of local architecture was to demolish the Sydney Opera House.

Jorn Utzon's unfinished masterpiece, he reckoned, had a paralysing effect on local design. The presence in such a prominent site of such a world-renowned building meant that Australian architects were virtually resigned to defeat when it came to producing something better. Australia's finest post-war building, for all its internal imperfections, had a dulling rather than inspirational effect.

Could it not be argued that Australia's most influential post-war book, Donald Horne's The Lucky Country, has produced a similar phenomenon? Horne's thinking was so brilliant, and his portrait of post-war Australia so bulls-eye accurate, that it was difficult to improve upon or challenge. Nor did it help that the title came to be embezzled, much to Horne's lifelong annoyance, and that his thesis is commonly misinterpreted to mean that Australia's abundance is solely due to its resources, which is not what he argued.

Sometimes I have wondered whether intellectual life in Australia, which Horne found so stultifying in the 1950s and 1960s, might have been livelier had he never written the book. Other writers would have felt a responsibility to think more deeply or with more originality. We would not have been anywhere near as beholden to Horne, whose other works are good, but not so masterful.

Then, before this blasphemy takes firm hold, I re-read Lucky Country and am reminded of its indispensability. Few books on my shelf have been defaced by such heavy marginalia: scribbles, comments, underlinings. Honorific graffiti.

In an elegant post, with a few Horne-like flourishes of his own, Graeme Dobell urged that the Lucky Country be required reading for anyone pondering Australia's relationship with Asia. Initially, I had intended to compose a feisty riposte arguing that Australia needs to break free from the intellectual shackles of Lucky Country. Its approach should be post-Horne. Take him out of the debate. Start with a cleaner slate. You get the idea.

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As I warmed to my task, things looked especially promising when I retrieved my copy of The Lucky Country (it is usually close at hand) and noticed that the chapter 'Living with Asia' had hardly any notes in the margin. Could it be that Horne had little of lasting note to say on Asia?

Suffice to say, he does. Indeed, I had forgotten that his prologue begins on the terrace of the Carlton Hotel in Hong Kong, with whisky in hand, discussing the White Australia policy with his Chinese host. 'Be careful of the Chinese', his host warned.  In his chapter on Asia, phrase after phrase, now daubed with ink, leaps from the page. How about this for modern-day resonance?

Australia's problem is that it now exists in a new and dangerous power situation and its people and policies are not properly reorientated towards this fact.

Or this?

If the impressions has been given that no in Australia ever thinks of Asia, it should be pointed out that this is now far from true. There has been a huge shift in attitudes. Sensations burst into the newspapers, seminars are held, articles are written. But the interest is sometimes that of someone momentarily attracted to an idea.

He warns against viewing Asia as a monolith: 'The lumping of all Asians together can create a mindless panic.' He reminds us, with foreboding, that the 'history of Asia is a spectacle of rampaging power just like the history of any other continent. And the attitudes of modern Asians to power are those of human beings. Some of them love it.'

He identifies a strand of thought 'not widely represented in Australia outside intellectual and left-wing groups', who would have it that 'Australia will never be trusted by "Asia" unless it withdraws itself from its alliance with America and declares itself to be non-aligned.'

Horne also urged his fellow Australians to accept the reality that 'we're all Asians now.' Then comes another passage that deserves to be pondered anew:

To take our ideology of fraternalism seriously and apply it to Asians could lead to a creative awakening among Australians...And it carries obligations greater than expressions of goodwill...’We’re all Asians now,’ does not relieve one of decision-making; it simply beings to define the problem.

Substitute the word 'opportunity' for 'problem' and this 50-year old statement still sounds as if it could have been written this week.

So Horne has thwarted me, and so has Graeme Dobell. If you want to understand Australia's role in the Asian Century, heed Graeme's advice. Brush the dust from your copy of The Lucky Country, as much an adornment to Australian post-war life as Utzon's glorious shells.

Photo by Flickr user magical-world

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