If we look in detail over the 60 year history of the People’s Republic, it is inevitable we will zero in on 1978. That year saw the single most important decision taken by any national leader in the twentieth century. That was of course, the decision of Deng Xiaoping in late 1978, to open up China to the outside world and move China towards a market economy.

There is no more single important decision taken by any national leader, in the twentieth century – that tumultuous century – than Deng’s decision to reform China’s economy.

I made my first visit to China in 1978. Now after 81 visits, I have had the opportunity first hand – over the whole of the period of this move to a market economy – to witness the impact of that decision upon China, the region and the world.

It’s worth noting that the spectacular economic growth of China that emerged in the 1980s spooked the Soviet leadership, eroding its confidence in the command economic model. This was an important element in the eventual undermining and collapse of the Soviet Union.

I witnessed first-hand the impact of Chinese economic growth on the Soviet Union during a visit to Moscow in the 1980s. What was meant to be a 20 minute meeting with Gorbachev ended up lasting over three hours. Gorbachev was fascinated with what was going on in China. He knew that I was very close to the Chinese leadership and what was happening and wanted to talk about this at length.

What of China’s impact on the region and the rest of the world? The statistics are well known, so I won’t spend much time on them, but I will focus on one key statistic. Since China’s opening up and reform, 400 million Chinese people have been lifted out of poverty. All the gratuitous preaching about limitations in China overlooks the greatest contribution that could be made to human rights: that is, the right to be taken out of poverty. Deng made the greatest contribution to humanity by lifting his people out of poverty.

Now China is on the way to become the second largest economy in the world. Soon China will be passing Japan to assume that position. At some time in the middle of this century, it will become the single largest economy in world.

When I hear my American friends express concern about the fact the Chinese economy will overtake the United States, I remind them that, when China does reach that position, it will simply be resuming a position it has occupied for most of the last 2500 years.

The spectacular growth of China is important for China’s material well being, for the Chinese people’s pride and for the region as a whole. The economic growth of China has importance for China, the region and the rest of the world, especially North America and Europe. No country other than China, however, has benefited more from China’s spectacular and unprecedented growth for over 30 years than Australia.

I look back on the development of this relationship with a considerable amount of personal pride.

I became Prime Minister in 1983. In my first press conference to Australian and international correspondents, I said then, the single most important external issue determining our future economic wellbeing would be our increasing enmeshment with Asia in general and China in particular. There was some degree of skepticism but of course, there is none now in regards to the significance of Sino-Australian trade.

Sino-Australian trade in goods and services, in 1982/3, amounted to less $ 1 billion. Contrast those figures with 2008. Last year, exports to China were $37.1 billion and imports $36.6 billion.

I look back to my discussions with Premier Zhao Ziyang in 1984. When I was in Beijing, I took the initiative in establishing the beginning of the synergies between our iron and steel industries by proposing that the Chinese invest 50 per cent in an iron ore mine in Western Australia. This, the Premier readily agreed to.

In that discussion, however, although Premier Zhao looked forward to growing trade, he expressed the view that it would always be a balance in favour of Australia. I emphatically replied, no and that Australia intended – as we did – to reduce our trade barriers. This created opportunities for Chinese manufacturers to come into Australia and meant tremendous growth in trade between our two countries. Our resources have made an enormous contribution to the physical growth of China.

One of the largest developments in the bilateral relationship is the export of Australian education, the most under-emphasised aspect of the Sino-Australian trade relationship. Chinese graduates from Australian universities act as life long ambassadors for Australia, at home or abroad. You have a permanent investment of goodwill. Our education industry is Australia’s 3rd biggest export industry. Our single largest contributor of international students is Chinese.

On the environment and climate change, we are very pleased there is significant co-operation in the development of clean coal technology. I welcome very much the statements of Hu Jintao in New York. They are significant and to be welcomed in indicating a preparedness that China has in helping to meet this great challenge that confronts the world. I hope and believe that co-operation between Australia and China can be to our mutual benefit and the strength of our bilateral relationship can act as an example to the world.

Statistics show the economic interdependence between our two countries. These statistics, however, do not fully reflect the strengthening of the official and people to people exchange between our nations. It is fair to say, that under Whitlam at the end of 1972, Fraser, myself, Keating, Howard (though he had a rough first 6 months) and up until fairly recently, the current Australian government has consistently maintained good relations with China. It would be fair to say no country has had a better relationship with China than Australia.

We must recognise – and we’re foolish if we don’t – that the relationship over recent times has come under strain. This is not the place to analyse all the reasons for that and what can be done, and is being done, about it.

No relationship is more important to the future well being of Australia than the relationship with China. It impacts on all Australians. But both Government and private citizens have to work together to restore the relationship to the optimal level it has had for so many years.

The Hon. Bob Hawke AC was the Prime Minister of Australia from 1983-1991. This is a digest of a presentation delivered on 24 September at the ‘Australia-China Investment Forum’, Hilton Hotel, Sydney at a forum hosted by the Australia-China Business Council.