Australia's challenges in the Asian Century

18 March 2013

Australia is going to have an increasing role and influence in the Asian Century, and NSW and Sydney must play an important role in that, according to Peter Grauer, Chairman of Bloomberg.

"Australia's economy, both during and since the global financial crisis, has become recognised as one of the world's most resilient," Mr Grauer told a NSW Business Chamber event in Sydney earlier this month.

"Your currency is now the world's fifth most traded and regionally, if not globally, has assumed the kind of safe haven status that was once almost exclusively assigned to the US dollar.

"Your 1.4 trillion dollar pension fund system is among the best managed in the world, and overseas markets, including those in Asia, must be intrigued by the possibility of those funds being diversified.

"You have in excess of $100 billion of two-way trade annually with China. If this is the Asian Century, then Australian commodities are stoking the fire in the belly of the biggest dragon of all."

In spite of those strengths, Mr Grauer said, Australia has a challenge to seize all the opportunities presented by the Asian Century.

"When most global investors think of Asia's financial centres, they think of Hong Kong, Singapore, and to a lesser extent Tokyo; and maybe even some others before they think of Sydney. That has to change. But if Australia is prepared to visibly and enthusiastically embrace its place in Asia, then I think it will.

"Clearly Sydney and NSW are extremely serious about your future as a financial centre. The impressive plans for Barangaroo represent your physical commitment to this and I applaud you for the vision that has gone into this project, concentrating the financial, technical and talent base into an attractive hub for major banks, finance houses, hedge funds, insurance groups and international firms operating here.

"But with your role in the regional economy and your trade partnerships with its largest economies, you have an opportunity to position yourself more visibly and compellingly as a key day-to-day influence on what's happening in Asia both now and in the future.

"Seizing that opportunity involves a focus on both the substance and the positioning of the role Sydney has to play in the wider regional and global financial system. New York has Wall Street, London has the 'city' and the compact nature of the Hong Kong skyline is dotted with a swathe of the who's who of finance companies and global brands.

"Each of these global financial centres has become iconic in their positioning, but equally has defined themselves by the complementary nature of their role in global financial markets.

"Finding, embracing and defining Sydney's unique positioning in the context of Asia and global markets will be part of the challenge, and perhaps it's already there but could be more recognised."

Mr Grauer said Australia's trading and business relationships within Asia, and with China in particular, were such that Asian markets, if well-informed about what was happening in Australia, should take cues from Australia and not just from the US and Europe.

"There are major news flow and economic data from Australia that drive the agenda for the region. Australia is an integral conduit to a new day and the start of the week, and ultimately the curtain raiser for Asian financial markets.

"Because yours is an economy which, when many others were faltering or falling backwards during the GFC, has proven that you can respond independently."