How do you view the importance of the recently proposed Regional Comprehensive Economic Partnership between ASEAN and its six partners including China and Australia?

Since China's entry into the World Trade Organization (WTO) years ago, Australia has always been a trading nation and certainly for long time now we have been in favor of bringing down barriers to trade and investment. But obviously it is very hard when every member of the WTO is negotiating in what is called a big round of multilateral trade negotiations, at a time when the world economy has been affected by the global economic crisis, the global financial crisis and the European debt crisis. So within various regions and indeed bilaterally, countries have looked to see whether they can achieve at least some of those gains by reducing barriers between them.

We have been attempting to do that through the negotiation over the last six years or so of a free trade agreement with China. It can be difficult to do multilaterally, it can also be difficult to do bilaterally, and we are still working on it. But we think there is quite a lot to be said for a regional approach to this. Australia expresses support for and became interested in the Regional Comprehensive Economic Partnership, but we are also obviously in discussions and in negotiations on the Trans-Pacific Partnership. We do not see any difficulty with trying to do all of these things at once, because we think the global economy needs the reduction of barriers.

I think it will be very interesting to see how each of these proposals develops. Australia is certainly very committed to contributing as much as we can to make each of them successful.

Apart from flourishing trade ties, how does Australia value military-to-military cooperation with China?

Our relationship with China has got a very important and strong economic component to it, but it has also got quite significant and growing defense cooperation components to it as well. For example, Australia is only one of only two countries with which China has a strategic defense dialogue at the highest level: at the level in Australia of the chief of the defense force, and the level in China of the chief of general staff. We have been doing this for 15 years. The dialogue produced quite substantial programs and practical activities—things like high-level exchanges, defense personnel visits and ship visits.

I think we were the first Western country that conducted live-fire naval exercises with China. Last year, we conducted the first humanitarian assistance and disaster relief exercise between the Australian Defense Force and the People's Liberation Army of China in Chengdu. The second exercise has been recently conducted in Queensland. I think there is growing defense cooperation between Australia and China. That is a very good thing.

How can China and Australia jointly contribute to Asian economic growth and security cooperation?

Making economies as open to each other as we can is the way to strengthen economic growth between us, but that's also something we are both committed to in the Asia-Pacific region—whether it's through long-standing processes involving APEC or whether it's through some of the new trade negotiations and economic cooperation agreements that have been launched. So I think there is a lot we can do in that area and jointly through membership in the WTO as well. It is not just about trade; it is about investment as well.

I think China's 12th Five-Year Plan (2011-15) sets out a whole series of policies that China will undertake itself, partly to become less reliant on exports for growth and more reliant on the domestic market. I think there are many Australian companies who are in a position to assist China in implementing the 12th Five-Year Plan.

When it comes to security cooperation, there are broader regional opportunities for us to engage in—whether it is through the Shangri-La Dialogue in Singapore or the ASEAN Defense Ministers' Meeting. I'd also like to mention that from January 1 next year, Australia will become a non-permanent member of the UN Security Council for two years, and China of course is a permanent member. We very much look forward to working with China during that two-year period of our membership on security challenges that will be facing not only this region but the world broadly. I think both sides are willing to do that and we are increasingly capable of doing that.

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