China FTA: Debate ‘more of an irritation for Beijing’

Australia must accept there are legitimate concerns over ­labour costs and productivity, says a former BHP China chief.

Former head of BHP China Clinton Dines. ‘The smarter Chinese businesses will know that to be effective in Australia they are going to have to find middle ground.’ Picture: Nikki Short

One of Australia’s most experienced business leaders in China says debate over the free-trade agreement will be more of an ­irritation than a major frustration for the Chinese, but Australia must accept there are legitimate concerns over ­labour costs and productivity.

Conversely, global experience suggested that bringing in Chinese workers did not always produce the expected results.

Brisbane-based Clinton Dines, who led the BHP China operation from 1988 to 2009, said the FTA document was strategically important to the Chinese, but would not automatically improve Australia’s fortunes.

“What we need to realise is that, at the moment, China is everyone’s bright idea,” Mr Dines told The Australian. “There is a constant procession through China of everyone from everywhere. We really have to ask what are we doing that is different, what are we doing that is distinct … I’m just not sure that is a vigorous enough ­conversation yet.”

We also needed to ask why, after Australian companies had worked so long in the Chinese market, Australia had made less progress than many others. It also could be argued debate over the potential for cheap labour coming here off the back of the FTA was “immature and simplistic”.

“Chinese firms wanting to come to Australia will naturally be looking at ways to reduce labour costs,” Mr Dines, who now works as an international business consultant and company director, said. “By the same token, the smarter Chinese businesses will know that to be effective in Australia they are going to have to find middle ground and middle ways to do this. It will be something that evolves over time.”

His experience in places such as Kazakhstan was that the benefits of bringing in an outside workforce were often overestimated.

“It’s not a conversation about tens of thousands of Chinese workers coming to work in mines and being worked as slave labour. … The Chinese government is smart enough to know not to ­propose that.”

The Chinese took the FTA very seriously because of the potential precedent it created for other agreements with the major developed world economies. “The Australian FTA is important because Australia is a middle economy, a substantial power in the region and respected in the world as a country that does things properly. Agreements with countries like New Zealand and Chile are much simpler and have less status in comparison,” Mr Dines said.