Luck and location alone not enough to drive prosperity

AUSTRALIA'S political and business leaders agree the "easy money" days dealing with China are fading and that future success will be harder and pivot on the ability to change our mindsets.

The dominant theme in The Australian-Wall Street Journal "China Century" conference yesterday is that Australia must become China's long-run partner in "its passion for tomorrow".

Beneath frank and confronting exchanges involving business chiefs Kerry Stokes and James Packer on the one hand with Wayne Swan on the other is the recognition that luck and location cannot deliver Australia's ongoing prosperity.

Foreshadowing the Gillard government's pending Asian Century white paper, the Treasurer said it would constitute a pathway to economic reforms and cultural changes with goals focused on the year 2025.

With the peak of the commodity price boom over, Australia's task is to maximise the resources trade yet diversify its economic strategy to agriculture, food and services cognisant of the expanding Asian middle class off the back of China's industrial revolution.

Given his business interests in China, Mr Stokes delivered serious shock therapy - Australia was "off track" with China, it had forgotten the "mutual respect" principle, it was offensive in its lecturing, xenophobic in its suspicion of Chinese investment, and too close to the US in strategic terms. His message was that China no longer viewed Australia so favourably.

Mr Packer was more conciliatory, congratulating Labor on its new strategy, but he warned that China seemed a better friend to Australia than Australia was to China.

After the turbulent Australia-China troubles during 2008-10, Mr Swan said the political ties were now strong. He argued that China understood and accepted Labor's policy on investment from state-owned enterprises and said China had never raised worries with him about our closer military ties to the US.

But Mr Swan's theme was the need for a broader and deeper China engagement. A national effort was required involving not just government but individuals, institutions and people.

Australia must "speak to Asia rather than at it". This meant the embrace of change across "every field of endeavour" - business, academe, the arts. It was a national challenge unprecedented in its scope.

Australia, in short, had to succeed people-to-people in engaging with the world's potentially largest economy without sharing the same political system, heritage or language.