By Ted Baillieu
Victoria needs to have a more global focus for a rapidly changing global economy. This means equipping our economy and our people with a high level of Asian literacy, strong intercultural competence, leveraging the deep linkages between our people, targeting and welcoming foreign direct investment. It also means addressing our weaknesses, including Victoria's poor productivity performance.
Victoria and China share a very close relationship that is based on historic and enduring ties developed over many years.
We start from a position of strength in relation to China but Victoria has only scratched the surface in terms of the potential economic and wider relationship between our two countries. It is a relationship demonstrated across education, science and technology, healthcare, tourism and cultural exchange.
Thirty-two years ago when former Liberal premier Dick Hamer signed off on one of Australia's first sister-state relationships with Jiangsu province, I doubt whether even he would have conceived that Jiangsu's GDP would one day become the size of the equivalent of Indonesia, let alone (as is predicted) the same-size economy as Russia by 2020.
It is the rapid growth and expansion of those second-tier and even third-tier cities and provinces, and an economy based increasingly on domestic consumption with projected higher per capita income, that is increasingly contributing to China's economic growth.
Higher per capita income and a demand for consumable manufacturing goods and services are significant for Victoria because while our trading relationship has predominantly been based on primary and merchandise exports, recently there has been an increasing shift to service-based exports, an area where undoubtedly Victoria possesses significant competitive advantages.
The striking feature of China's five-year plan is how sectors of Victoria's economy naturally align with the needs and preferences of China's second and third-tier cities. China is focusing investment in seven strategic industries: alternative energy, alternative-fuel cars, energy saving and environmental protection, biotechnology, advanced materials, high-end equipment manufacturing and information technology.
China's planned increase in urbanisation presents unprecedented opportunities. We are home to some of the world's best urban planners, engineers and architects. We are the leader in new energy and environmental protection delivering green building, water systems management and energy efficiency.
We have strong synergies with China in its move into the biotechnology sector. Victoria is already recognised internationally as the Australian centre for electric vehicle research.
Further, we have considerable strengths in the food export sector. Our China tourist market has grown 500 per cent over the past 10 years.
International education is Victoria's largest export earner and more than 12,000 Victorian students are learning Chinese languages.
The Victorian government is now establishing a Victoria-Jiangsu Chinese Language Scholarship Program. This program will involve up to 50 Victorian higher education students and young professionals a year, involving intensive Chinese-language study at a Jiangsu-based university.
The scholarships, worth $10,000, will provide a much-needed boost for Chinese-focused skill sets for Victoria and will support business and industry.
It is logical that Victoria's starting point in our China strategy is to build on long-standing relationships between Victoria and Jiangsu and Tianjin. However, to take account of the manifest importance of China in world affairs, there is a need for Victoria to strengthen bilateral trade.
It is time for Victoria to lead the way, just as Victoria did many years ago.
We need sufficient resources in China for the scale and magnitude of the China that will exist in 2020 and beyond. The government has decided to examine potential options in relation to additional representation in second and third-tier cities, and we will be looking to strengthen our existing representative offices.
As a first step in upgrading our relationship, the Victorian government will open a State of Victoria Representative Office in Beijing.
Beijing is the epicentre of China's political power, intellectual and cultural pursuits and no doubt a vital centre of finance, trade and commerce, and administration.
By being on the ground in Beijing, Victoria - through its own Victorian Government Business Representative Office - will foster long-term relationships. Unlike the Australian embassy, this office will operate as a "commercial embassy" for Victoria, one dedicated to the all-important relationship.
When we look at China, we must not look at the relationship just through the prism of self-interest. It is always a multi-dimensional relationship with an emphasis on cultural and educational links.
Victoria is moving quickly to strengthen its relationship with China. China is undoubtedly Asia's rising star, but Victoria will undoubtedly star in China's rise.
This is an edited extract of a speech given by Ted Baillieu, Premier of Victoria, to the Australia China Business Council in Melbourne on Tuesday.
Follow the National Times on Twitter: @NationalTimesAU