JUST as the story of the world in the past two decades has been the rise of China, I believe Australia's story over the coming decades will be profoundly shaped by our relationship with this still-rising giant.

Of critical importance in this relationship is understanding China's place in the world, and Australia's role in a global economy shaped by China.

Last year, Australia's two-way trade with China pushed past $100 billion for the first time. The Australia-China Business Council has shown that trade with China generated the equivalent of $10,000 per Australian household in the past year alone. So this is, by any measure, an important relationship. Australia's outgoing ambassador to China, Geoff Raby, recently said that: "Arguably, no country has benefited more from China's rise than Australia. And no country wants to see China's economic growth sustained more than Australia."

As countries develop and engage more closely with the world around them, they tend to do this in three broad phases: the first consists of trade in goods, the second in services, and the third sees increased investment flowing in both directions. This is a dynamic we're watching play out between Australia and China right now, and Australia needs to view investment from China as an opportunity, not a threat. Trade in goods between our two countries is booming. China now takes a quarter of Australia's exports, and there are only six other countries in the world that import more from China than we do. The figures are astounding: China represents almost 48 per cent of global iron ore demand, 41 per cent of zinc, 39 per cent of copper, and 36 per cent of nickel.

Australia is also finding success in the delivery of services. The two heavy hitters are education and tourism. There are currently 167,000 Chinese students studying across Australia, 50,000 of those in Victoria. A decade ago, there were just 9000. As for tourism next year, visitors from China are set to outnumber those from anywhere else. In the year to March 2011, 221,000 Chinese tourists visited Victoria -- that's up 40 per cent from the previous year. The third phase of development lies in increased investment. The US has invested almost $550bn in Australia, the UK $472bn, and Japan $117bn. China, on the other hand, already the second largest economy in the world, has invested just $19.5bn.

China's investment in Australia must be viewed as an opportunity, not a threat. An opportunity to boost jobs and prosperity, build collaborations, and strengthen the bilateral relationship. This moment in our history calls for an even closer engagement with China. It's not a time to shut down or step back.

Rod Eddington of Infrastructure Australia recently called for more Australians to get themselves on to the boards of Asian companies. Last month I was appointed to the Board of Directors of Huawei in Australia, and I'm proud to have joined the second largest telecommunications equipment provider in the world. A company that is building the equivalent of a National Broadband Network in the UK, Singapore, Malaysia, the UAE and Brunei. And a company already doing business in Australia, but eager to do much more.

To me, Huawei provides a good model of the kind of engagement we want to see more of between China and Australia, as our relationship deepens: This is the first time Huawei has appointed a local board anywhere in the world. Eighty per cent of staff in Australia are local and staff numbers are set to double from 300 at the end of last year, to 600 by this end of this year.

And importantly, Huawei is a company dedicated to innovation. Almost half of global staff are engaged in research and development, and 10 per cent of revenue is ploughed back into R&D. Last year Huawei spent about $US2.4bn ($2.3bn) on R&D globally -- that's more than 10 per cent of the total amount spent in Australia each year.

This is the fruit of a strong partnership between two countries whose future is inextricably linked. Two countries that both came through the global financial crisis without slipping into recession. And two countries that both understand the need to be more innovative, more productive, and more sustainable in the years and decades to come.

An edited version of a speech at the Australia-China Business Week last week, by John Brumby, the former premier of Victoria and a director of Huawei Australia.