An ethical leap
While Australian companies are focusing on making profits from the burgeoning Chinese market, they are now being asked to consider how they might help alleviate poverty and enhance human rights when they do business there.
A report released in Australia this week by a group called the Business for Poverty Relief Alliance says, that while corporate Australia is supportive of and active in social investment, most companies have been 'less than active in ensuring that poverty is addressed in their closest export markets', which include China.
The alliance, formed last year to work with poverty relief agency World Vision Australia, includes among its members, leaders from companies that are key players in the Chinese market, including insurance giant IAG and investment bank, Macquarie Bank.
Not surprisingly, the alliance's report argues that it makes good business sense for companies to help alleviate poverty and operate sustainably in developing-world markets like China.
Many of the alliance report's recommendations are sensible and uncontroversial. But there are some ideas which, if taken up, might give business a broader role in developing-world markets, like China.
For example, the report notes that Australian companies 'should commit to contributing an appropriate proportion of their social investment to poverty relief initiatives, commensurate with the exposure of their operations to developing countries and indigenous communities'.
In China, there are plenty of opportunities to put this recommendation into action, particularly in rural areas.
As Sandra Polaski, from the Carnegie Endowment for International Peace, and Li Shantong and He Jianwu, from China's State Council Development Research Centre, have noted in a study published recently: 'Despite unprecedented progress in reducing the most severe poverty, about 70 per cent of the population still survives on very low incomes, defined at the World Bank standard of US$2 per day.'
If the Australia-China free-trade agreement becomes a reality over the next few years, this will provide an unprecedented opportunity for Australian agri-businesses not only to employ workers under decent conditions, but also to help build badly needed social infrastructure such as health centres, water systems and even educational facilities.
And when Australian mining giants like BHP Billiton and Rio Tinto look at exploiting the untapped potential of western China's vast mineral reserves, they also have an unrivalled chance to help radically improve the lives of millions of people who live in some of the remotest and toughest conditions on Earth.
One recommendation in the alliance report may prove problematic for Australian companies operating in a political environment such as China.
Business, the report urges, should become involved in 'policy dialogue and advocacy', and work with governments to 'achieve efficient public administration and service delivery, fair and transparent regulations, respect for human rights and the elimination of bribery and corruption'. In other words, business should become more like NGOs when it comes to standing up to government policies inconsistent with human rights and transparency. In the context of China, there would not be a day that goes by when Australian and other foreign companies are not confronted with some aspect of life which creates an ethical dilemma.
What is, for example, a construction company operating in China to do when it works alongside corrupt local officials, or where people are forcibly evicted from their homes and land without adequate compensation and against their will, so a new business park or apartment block can be built?
Is it wise for that company to take a strong public stance against such practices?
There is no easy answer, although one of the report's suggestions is for business to join with advocacy groups and NGOs to help bring cultural change in an ethically challenging environment. If business executives feel uncomfortable about protesting publicly in developing countries like China, then there is no reason why they shouldn't push the Australian government to give more in international aid, according to the alliance report.
In fact, notes the report, it is in business' interest for Australia to lift the amount of aid it provides to poorer countries.
Simon McKeon of Macquarie Bank, who helped to commission the alliance report, noted this week that investment by 'government and business in developing robust communities in our region is a wise long-term investment'.
What, then, should Australian businesses be telling their government about aid programmes in China?
This year, Australia has committed A$41 million (HK$266 million) in foreign aid to China. And in 2005, both countries signed a five-year development co-operation programme designed to assist the Chinese in key areas such as water, health care and governance.
These initiatives need to be augmented by private-sector schemes, particularly in China's rural areas.
In other words, Australian businesses can work alongside government aid programmes to help at least make a small dent in alleviating the absolute poverty that afflicts about 100 million Chinese today.
Greg Barns is a political commentator in Australia and a former Australian government adviser
