How to get ready as the US-China trade war spills over to other countries


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China is the world’s second largest economy.
EPA/Aleksandar Plavevski, CC BY-SA

Hongzhi Gao, Victoria University of Wellington; ivy guo, Victoria University of Wellington, and Tarek Soliman, Manaaki Whenua – Landcare Research

The ever-escalating tensions in trade relations between the US and China have caught the nerve of politicians, businesses and the public. This conflict is challenging the traditional approach to trade disputes, which usually involves one of the disputing countries taking the case to the World Trade Organization (WTO) for arbitration or adjudication.

International institutions, including the WTO and the International Monetary Fund (IMF), have warned that the consequences of the conflict could include growing economic nationalism, rising protectionism and a downturn in global growth.

This will have flow-on effects for other countries such as Australia and New Zealand.




Read more:
Huawei or the highway? The rising costs of New Zealand’s relationship with China


A new framework

Both countries have developed close political ties with the US while fostering strong economic ties with China. As China is a top trading partner for Australia and New Zealand, the impact of the US-China trade war on their exports could be significant.




Read more:
What’s worse than the US-China trade war? A grand peace bargain


Although the dollar value of any effect of the trade war is difficult to gauge, a qualitative analysis is important so that policymakers, investors and businesses can develop an informed view of this live event.

To analyse the impact of the trade war on the exports of third-party countries, we have developed a new framework.

The first factor to consider is whether an original demand for products from a disputing country has been redirected to a third-party country. For example, China’s demand for Brazil’s soybeans has sky-rocketed over the past year, with 5.07 million tonnes imported from Brazil in November 2018, up more than 80% from a year ago. It is predicted that members of the European Union, Mexico, Japan and Canada, among other countries, may capture about US$70 billion of US-China bilateral trade affected by the trade war.

The second factor is whether an original supply from one disputing country to another has been redirected to a third-party country. It has been reported that soybean exports from the US to the European Union have increased by 133% from July through mid-September 2018, compared with the same period in 2017.

European Union consumers and downstream businesses of the soybean industry, such as producers of animal feed and biofuels, have enjoyed the benefits of a lower price of soybeans as a result of the additional supply from the US.

Changing international supply chains

The third factor is whether the trade tension has disrupted the global supply chain of an industry (e.g. smartphones) that is important to the third-party country. The levies imposed by the US government on imports from China are said to destabilise international supply chains inside and outside of China that companies have invested in over years. Countries such as Thailand, Cambodia and Vietnam are catching up with China in terms of manufacturing expertise and capacities. Companies from already industrialised economies such as Taiwan and South Korea are considering revamping their home country’s competitive advantages.

Uncertainty in the price and supply of intermediary goods from these countries into the third-party country’s supply chain are critical for determining the spillover effect on the third country.

The last factor is whether the focal industry in the third-party country has developed a proactive response to the risk from the trade war. A proactive response would mean that companies in the focal industry in the third-party country have started to adjust strategic investment in research and development, sourcing, and manufacturing in or outside the US or China.

Risks and opportunities

The trade war will create risks and opportunities to third-party countries such as Australia and New Zealand. Filling the supply and demand gaps caused by higher tariffs on both sides of the trade war is an opportunity for a third-party country. But this requires flexibility in production and export capabilities in companies and industries.

As the trade spat continues, it remains a balancing act for the third-party country dangling between two political and economic powers. We have already seen the tensions between the US and China spill to this region in the context of the US ban on Huawei and its persuasion of Australia and New Zealand to follow suit.

Companies such as Air New Zealand and Sanford have been reported to face challenges on “operational” matters when the country’s political relationship with China is in question.The Conversation

Hongzhi Gao, Associate professor, Victoria University of Wellington; ivy guo, research assistant, Victoria University of Wellington, and Tarek Soliman, Economist, Manaaki Whenua – Landcare Research

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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View from The Hill: Dutton suffers reflux after tasty Chinese meal


Michelle Grattan, University of Canberra

The fallout from the extraordinary revelations about Peter Dutton’s contact with Chinese Communist Party-aligned billionaire Huang Xiangmo is a potent brew, its ingredients the issue of foreign interference and the legacy of last year’s leadership challenge.

A tale full of spooky overtones, mates, ironies, and payback.

Monday’s Four Corners-Age-Sydney Morning Herald investigation reported that Dutton, immigration minister at the time, in 2015 approved a private citizenship ceremony for Huang’s family, who were due to travel overseas.

Dutton justifies the special treatment as being in response to a request from then-Labor senator Sam Dastyari.

That would be the same Dastyari who in December in 2017 announced he would resign from the Senate after revelations that he had promoted Chinese interests, including at a notorious news conference where he stood beside Huang.

(Dutton is generous in responding to personal representations – he, it will be remembered, was the minister who provided a quick rescue service for a couple of stranded au pairs).

Four Corners reported that in 2016 – when Huang was anxious to get his own citizenship – lobbyist Santo Santoro, a former Howard government minister and close to Dutton, arranged a lunch between the businessman and the minister at Master Ken’s (upmarket) restaurant in Sydney’s Chinatown.

Dutton denies the lunch was about Huang’s citizenship bid. “He didn’t make representations to me in relation to these matters,” Dutton said on Tuesday, also stressing he’d received no donation (Huang over several years donated, to both sides of politics, between $2 million and $3 million).

Huang didn’t get his citizenship and last year his permanent residency was cancelled. The officials charged with examining his background and activities judged him unsuitable to be one of us.

The Australian Financial Review reported that, in relation to the cancellation of his residency, ASIO had found he was “amenable to conducting acts of foreign interference”. Cancellation of a permanent resident’s visa is a decision taken by the immigration minister or a senior official within the Home Affairs department, which is responsible for immigration and citizenship matters. By this time, David Coleman had oversight of immigration.

Scott Morrison, desperate to smother what is on most criteria a damaging story coming almost on the eve of the election being called, insists there is nothing to see in Dutton’s conduct.

“I’ve spoken with Peter Dutton about this and there are no issues here that trouble me at all. I mean there’s no suggestion that Peter, in any way, shape or form, has sought or been provided with any benefit here.

“The individual we’re talking about had his visa cancelled while he was out of the country, by Peter Dutton’s department. So if the object was foreign interference, well, the exact opposite is what has occurred.”

But the issue is not whether Dutton himself got a benefit.

The issues are that Huang’s family received favourable treatment via the minister’s office, and that Huang, in hiring Santoro, “bought” himself valuable access to a minister. That Huang came to grief later is not the point.

“The suggestion that somehow I’ve provided anything to this individual is just a nonsense,” Dutton says. He’d met with him “because he was a significant leader within the Chinese community”.

Duton underestimates himself. He notes that Huang “was interested obviously in politics and other issues of the day”. Of course he was – and access to a minister over a relaxed and tasty Chinese meal yields information and insights.

Malcolm Turnbull had emerged early on Tuesday declaring Dutton had “a lot to explain” and setting up the challenge for Morrison. “Scott Morrison is the Prime Minister and you can’t wave this off and say it is all part of gossip and the bubble.

“This is the national security of Australia. Remember the furore that arose against Sam Dastyari?

“All the same issues have arisen again and this has to be addressed at the highest level of security, priority, urgency by the Prime Minister,” Turnbull said.

“The buck stops with him. I know what it is like to be Prime Minister and, ultimately, you are responsible. So Scott Morrison has to deal with this Peter Dutton issue”.

Predictably, Turnbull didn’t influence Morrison but he did ensure a bad day became even worse for the government.

Turnbull is not an objective voice when it comes to Dutton, who instigated the events that ended in the political demise of the former PM.

But Turnbull’s credentials on combatting foreign interference are beyond question. His government introduced the legislation to counter what has become a very serious problem.

On Monday Duncan Lewis, head of ASIO, told a Senate estimates hearing “the threat from foreign interference and foreign espionage in Australia is running at […] an unprecedented level.”

No doubt if he knew then what he learned later, Dutton would not have given Huang the benefits of valuable face time.

But by 2016 politicians, and especially a minister, should have been alert to foreign interference.

In 2015 Lewis briefed the top officials of the main parties about the risks from foreign donations, and reportedly named donors ASIO believed were acting on the Chinese government’s behalf.

Did Dutton make any effort to check Huang out with ASIO before agreeing to lunch?

Most pertinently, the lunch highlights the insidious power of the lobbying industry in today’s Canberra.

Four Corners had Santoro on tape saying (to unidentified people, not Huang): “One of my best friends is Peter Dutton. He is the most honest politician that I have ever come across, but he tries to be helpful.[…] I can go to somebody in the minister’s office and say ‘can you have a close look at this’”.

According to Four Corners, Santoro charges at least $20,000 for access to Dutton’s office.

Dutton says: “There are lobbyists who are registered on both sides of parliament, people that operate as lobbyists. Their transactions and how they conduct their business is an issue for them”.

Actually, how they conduct themselves and how ministers respond are matters for the democratic system.

That you can write Santoro a cheque and expect to be fast-tracked to the minister’s office (whether that ends in a successful outcome or not) isn’t the way the system should desirably work.

We do have a federal register of lobbyists. But we don’t have enough information about their operations – until they find themselves in the spotlight.

Journalist Primrose Riordan tweeted on Tuesday that Santoro had “just updated his listing on the foreign influence register to include a heap of Chinese companies”.

At the very least, the Dutton affair suggests we need a lot more transparency about what in recent years has become a sunrise industry of politics, and a lucrative occupation for spent politicians.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Chinese investment in Australia is down 36%. It’s time for a more balanced debate about the national interest



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It’s unwise to reply on continued investment from China.
Eric Prouzet/Unsplash, CC BY

Hans Hendrischke, University of Sydney

Chinese investment in Australia fell 36% in 2018, to A$8.2 billion (US$6.2 billion) from A$13 billion (US$10 billion) in 2017, according to research by KPMG and the University of Sydney Business School.

This is despite Chinese investors still generally regarding Australia as safer and more attractive than most other countries. So 2018 need not be a turning point. But it is cause for reflection.



Discussion about Chinese investment in recent years has been dominated by political and security concerns. These concerns need to be balanced by the national interest in economic prosperity. Chinese investment creates jobs, increases export opportunities and deepens relations with our most significant trade partner.

Arguably the pendulum has to swing back to thinking about the economic benefits. We need a more balanced national conversation.

Many losers, one winner

Our data covers direct investments through mergers and acquisitions, joint ventures and new projects. We do not include portfolio investments, such as buying stocks and bonds, which do not result in foreign management, ownership or legal control. Nor do we include residential property sales.

In the mining, agribusiness and services sectors investment fell by more than 90%. In renewable energy it fell by 48%, and in commercial real estate by 31%.

The only sector where investment did not fall was health care, where investment more than doubled to A$3.4 billion. This made health care the biggest investment sector, attracting 41.7% of all Chinese money, relegating commercial real estate (36.7%) to second place.



The declines were driven by state-owned enterprises pulling back on foreign investment. In 2018 13% of Chinese money came from state-owned enterprises, with 87% from private companies.

This reflects the Chinese government’s greater control of capital outflows and pressure to reduce debt levels, as well as the Australian government’s security concerns about Chinese influence.

It also reflects global dynamics. Chinese investment in Australia is no longer isolated from scrutiny of Chinese investment in North America and Europe. Excluding Chinese technology from telecommunications infrastructure is a notable example.




Read more:
Huawei exposes critical weaknesses. We need the infrastructure to engage with China


In the United States, Chinese investment fell 83% to US$4.8 billion from US$29 billion in 2017. In Canada, it fell 47% to US$3.4 billion from US$6.2 billion in 2017.



Balancing competing concerns

Australian governments, corporations and professional advisers need to consider what types of Chinese investments and investors are desired and actively welcome in Australia.

Our report points to areas where Chinese investment is in Australia’s national interest and benefits the global integration and competitiveness of Australian industries.

Health care is a key example.



Chinese investment in health care companies has both provided capital for innovation and facilitated entry into the Chinese market.

Take the Chinese private equity firm CDH buying Sirtex Medical Ltd for A$1.9 billion. Sirtex is an Australian medical device company with a treatment for liver cancer. Its acquisition enables expansion into China, which accounts for more half of the global incidence of liver cancer.

In mining, lithium provides an example of Chinese investment adding value. Tianqi Lithium has invested A$700 million in a processing plant in Perth. The plant will provide about 200 jobs and produce 48,000 tonnes of battery-grade lithium hydroxide for export.

Even in food and agriculture, which has generated much controversy over land acquisitions, we see room for advantageous investment processing and value-adding facilities, such as regional abattoirs.

Signalling Australia’s economic interests in Chinese and foreign investment is crucial to Australia’s prosperity.




Read more:
Chinese-Australia relations may not be ‘toxic’, but they do need to keep warming up


At a time of global uncertainty, Australian politicians, bureaucrats, business leaders, educational organisations and others must work quietly and respectfully with their Chinese counterparts to allay community concerns and consolidate Australia’s reputation as a welcoming and proactive partner.

The authors contributed to the Demystifying Chinese Investment in Australia Report.The Conversation

Hans Hendrischke, Professor of Chinese Business and Management, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Chinese-Australia relations may not be ‘toxic’, but they do need to keep warming up


Tony Walker, La Trobe University

When former Trade Minister Andrew Robb took to the ABC’s AM program to sound off about a “toxic” relationship between Australia and China, he exposed a rippling debate about how to manage an increasingly comlex foreign and security policy challenge.

Long gone are the days of the John Howard formula that Australia did not have to choose between its history, meaning America, and its geography, meaning China. Choices are no longer binary.

While the Robb word “toxic” may be an exaggeration, stresses in Australia-China relations are such it is clear we have entered a new and more challenging phase.

For a start, China is undergoing what is, arguably, the most testing moment of an economic transformation that began in 1978 at the third plenary of the 11th Central Committee of the Chinese Communist Party. This is when Deng Xiaoping re-emerged to initiate one of the more remarkable economic shifts of the modern era.

Apart from a hiatus caused by the Tienanmen uprising in 1989, and an economic soft-landing in the mid-1990s, China has bounded ahead economically, and has seemed unstoppable – until now.

China’s economy and political system has encountered the sort of difficulties that were inevitable. Put simply, an investment driven – as opposed to consumer-led – model is running its course, piling up massive government and bank debt in the process.

China risks becoming caught in a “middle income trap” in which a developing country, having enacted the easier reforms, gets stuck in second gear in its effort to push ahead with its economic transformation.

You can only build so many road, bridges, fast trains, airports, ports and housing developments. Many of the latter have become “ghost cities”.

At this month’s National People’s Congress, the annual session of China’s “parliament”, Premier Li Keqiang gave what was, by Chinese standards for these sort of cheerleading events, an unusually downbeat assessment of challenges ahead.

China, Li said, faces difficulties “of a kind rarely seen in many years”.

What is undeniable is that China’s economy is faltering, its ability to create millions of new jobs annually to employ a restless population is being stretched, and its management of a continuing economic transformation has come under unusual stress. US-China trade tensions are not helping.

In counterpoint to the need for a more dynamic economic environment, its leadership, under President Xi Jinping, is asserting even tighter political controls when it should be giving freer rein to its entrepreneurial class.

This is the central contradiction of a model that has delivered what is the most extraordinary event in world economic history since the industrial revolution. But that model clearly has its limitations compared with those, say, of neighbouring Japan, South Korea and Taiwan.

From an Australian perspective, a slowing and, perhaps more to the point, anxious China is not good news. While economists might argue that a slowdown and thus the need for Beijing to stimulate its economy by ramping up infrastructure projects will benefit iron ore and coal exporters, economic pressures more generally should be concerning.

A Chinese regime that feels itself under stress from within and without may prove to be more cantankerous, and unpredictable. Australian policymakers should be mindful of the consequences of China getting through this difficult stage without mishap.

Of course, forests have been felled publishing predictions China would be unable to maintain its remarkable transformation since early glimmers of an opening to the outside world appeared in 1978, two years after Mao Zedong’s death.

This brings us back to Andrew Robb’s observation about a “toxic” relationship between Beijing and Canberra. Referring to the shelving of a plan to develop a health precinct in China to match that of the Texas Medical Centre – the world’s largest medical facility – Robb said central government officials had kyboshed the arrangement due to ongoing tensions with Australia.

Australian medical professionals would have helped establish the facility. Robb said Landbridge (the company for which Robb was consulting) was

told in no uncertain terms by the seniors officials that unfortunately the relationship between Australia and China had become so toxic that this would be put in the bin.

Leaving aside Robb’s own chagrin at losing a lucrative consultancy, what is the fair judgement about the state of Australia-China relations?

And, what of Robb’s criticism of sections of the Australian security establishment, notably the Australian Strategic Policy Institute? He accused ASPI, a hothouse of China negativity, of being “a mouthpiece of the US security agencies and its defence industry”.

Given ASPI’s hawkish views on China more generally, Robb has a point.

His assessment is correct that China-Australia relations were off-track when the decision was made to scupper the Landbridge-proposed medical facility. But it is also the true that by the end of last year the relationship had been “reset”.




Read more:
Australia and China push the ‘reset’ button on an important relationship


Foreign Minister Marise Payne went to China in November for what was described as a cordial exchange. This followed a two-year freeze in relations during which no senior Australian official was welcomed in Beijing.

China had made no secret of its displeasure over speeches delivered over time by both then Prime Minister Malcolm Turnbull and then Foreign Minister Julie Bishop in which they had criticised Beijing’s expansionist activities in the South China Sea, and, in Bishop’s case, China’s political model.

Turnbull compounded the situation when he misappropriated an expression attributed to Mao in proclaiming the People’s Republic on October 1, 1949. Australia had “stood up”, Turnbull said, when unveiling laws designed to curb foreign interference in Australian domestic affairs.




Read more:
Australia needs to reset the relationship with China and stay cool


Next day, Turnbull made things worse by repeating Mao’s words in Mandarin in his description of legislation that was clearly aimed at Chinese influence.

So what of Robb’s comments? Whatever toxicity existed between Canberra and Beijing seems to have dissipated somewhat. However, real risks remain in management of what is Australia’s most challenging relationship.

It is no good pretending otherwise. China is not a benign power. It will seek to get away with what it can. It resists abiding by a roadmap for a rules-based international order, as we understand it. It will use cyber technology ruthlessly to advance its interests by dubious means, on occasions. It will “disappear” foreign nationals of those countries which incur its displeasure. It will invest in agents of influence in the Australian system. This includes universities.

All this requires a level of vigilance on the part of the security agencies, and, possibly, a new White Paper aimed specifically at just how Australia might manage a complex relationship that is likely to become, more, not less, complicated.

Bear in mind one in three export dollarsdepends on a functioning relationship with China.

This is an unsatisfactory situation, but it is the reality.

On the other hand, no purpose is served by yielding to a Canberra security establishment whose machinations risk chilling a relationship that needs to be warmed up, not cooled down.

Former ambassador to China, Stephen Fitzgerald, proffered some good advice this week when he said in a newspaper interview that Australia needed to deepen its engagement with China rather than draw back, since, unlike the US, we are “living in a Chinese world”.

That, whether we like it or not, is the case.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

No matter who wins the next election, managing the China relationship will be tricky – and vital



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Since the Whitlam government in 1972, the major parties have taken a similar approach to managing relations with China, albeit with a few key differences.
AAP/EPA/Roman Pilipey

Tony Walker, La Trobe University

This is part of a major series called Advancing Australia, in which leading academics examine the key issues facing Australia in the lead-up to the 2019 federal election and beyond. Read the other pieces in the series here.


China policy will not be a vote-shifting issue in the 2019 federal election. As usual, the economy and tax in particular will dominate this election.

But from a foreign policy standpoint there is no more important issue than achieving a reasonable balance between the United States, Australia’s security guardian, and China, its linchpin economic partner.

Getting the balance right and thus avoid being wedged between its security and economic interests represents what is arguably the most significant foreign policy challenge in Australian diplomatic history since Federation in 1901.

Mostly a unity ticket – but with some key differences

In 1972, the Whitlam Labor government ditched an anomalous attachment to Taiwan as China’s legitimate representative. Since then, China policy has, for the most part, been bipartisan.




Read more:
Australia and China push the ‘reset’ button on an important relationship


Little separates Labor and the Coalition in a relationship that increasingly has been driven by economic ties. But there are nuanced differences.

Senior Coalition and Labor spokespeople have recently delivered addresses in Singapore that provide a useful insight into their thinking.

In January this year, Defence Minister Christopher Pyne spoke at the Fullerton Forum convened by the International Institute of Strategic Studies. A year ago, Labor’s foreign policy spokesperson, Penny Wong, addressed the Lee Kuan Yew School of Public Policy.

Both Pyne and Wong cautioned against allowing tensions between the US and China to divert Australia from pursuing its own interests, even if those interests do not accord with those of its security guarantor. Pyne said:

Unquestionably, rivalry between the US and China will be a feature of our international outlook in the foreseeable future. However, it is critical that US-China relations do not come to be defined in wholly adversarial terms.

In Wong’s case, she says simply that it remains “in the interests of all South East Asian nations that the US remains strategically engaged in the region”.

Where the two sides differ by degree lies in Wong’s assessment of risks to a “rules-based” international order posed by competition between an established and rising power.

She is gloomier than Pyne about the international outlook. She told her Singapore audience:

Whether or not you agree with President Trump’s view that the international rules-based system is not working, there is no disputing the international rules-based order is under its greatest period of stress since the end of the second world war.

Pyne was more sanguine. He said:

Cold War commentary fails to see a fundamental but defining difference, namely the world’s economies are far more closely integrated and mutually dependent than they were when the West contested the Soviet bloc.

How would a Labor government change the relationship?

Where this is leading is that a Labor government would probably make a more conspicuous effort to bolster regional partnerships with the ASEAN bloc and India as a hedge against tensions between the US and China.

Labor might also seek to give itself more flexibility in positioning Australia between its strategic ally, the US, and its dominant economic partner, China. This fine-tuning would need to be carried out subtly to avoid upsetting cornerstone security arrangements that have served the country well.

Wong uses the phrase “constructive internationalism” – borrowed from Labor’s former foreign minister, Gareth Evans, who coined it a quarter century ago – to define Australia’s national interests.

In the Evans formula, the phrase describes a policy that is motivated by values in pursuit of interests. “If interests describe the reasons for action, values describe the motives for action,” Wong told her Singapore audience.

Foreign Minister Marise Payne meets Chinese Foreign Minister Wang Yi in Beijing in November 2018.
AAP/EPA/Thomas Peter

Where both sides of Australian politics converge is on the need to engage China, but not at the expense of disregarding Beijing’s flagrant attempts to assert its sovereignty in disputed waters of the South China Sea. Pyne put it like this:

There is no gain in stifling China’s growth and prosperity … We are not interested in containing China, but we are interested in engaging and encouraging China to exercise its power in ways that increase regional trust and confidence.

The building and militarisation of artificial features in the South China Sea, for instance, has not increased regional confidence in China’s strategic intentions.

This might be regarded as an understatement.

Labor’s position on China’s overreach in the South China Sea mirrors that of the Coalition. Wong said:

Should the Australian Labor Party form government, we will certainly be advocating resolution of territorial claims and the exploitation of fishing stocks and seabed resources through negotiations between claimants rather than through unilateral action such as the militarisation of artificial islands.




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Australian-Chinese author’s detention raises important questions about China’s motivations


In his Fullerton lecture, Pyne raised the possibility of Australia joining “multilateral activities in the South China Sea to demonstrate they are international waters”.

In his reference to so-called FONOPs (freedom of navigating exercises), he stopped short of indicating whether Australia planned to join allies in sailing within 12 nautical miles of China’s militarised features in South China Sea waters. The Coalition has not ruled out this possibility.

What is unarguable is that, after a long period of US strategic dominance, Australia’s security environment is shifting dramatically. Neither major party can escape this reality.

Pyne made some telling points that reflect the extraordinary complexity and dimensions of a region in flux – one that fleetingly, we should remind ourselves, anticipated an American century.

That prospect disappeared in the blink of an eye as China’s spectacular economic rise, linked with an expansion of its military capabilities, shifted the regional power balance.

The challenges ahead

Pyne’s scorecard brings home the scope of the challenge facing the next government, Coalition or Labor, in getting middle-power settings right. Or, put another way, to avoid being crushed by bigger players.

The Indo-Pacific is home to eight of the ten most populous nations on earth. Half of the world’s population calls it home.

Twelve of the member states of the G20, including the three largest economies in the world, are Indo-Pacific nations. And nine of the world’s ten busiest seaports are in the Indo-Pacific, as are seven of the world’s ten largest standing armies.

In the latest Stockholm International Peace and Research Institute (SIPRI) survey of global military spending, Australia ranks 13th. This is ahead of Canada and behind Italy. Five Indo-Pacific nations spend more on defence – the US, China, India, Japan and South Korea.

China’s military expenditures are six times those of Australia’s defence allocation.

Where the Pyne and Wong speeches overlap is in their warnings of the risks of isolationism. This can be read as a rebuttal of Donald Trump’s “America First” policies. Pyne said:

We fall short of our economic potential when parties choose to withdraw behind walls and withdraw from mechanisms designed to make us stronger.

Australia envisages a region that is more closely integrated and where we all collectively reject isolationism. We must work together not apart.

Labor would endorse those sentiments. Wong makes it clear that, for the time being, she would regard the prospect of the US reverting to a more collaborative posture as remote.

No matter who forms the next government, Australian policymakers are dealing with an end of certainty in a region remaking itself. They will need to be flexible – and resourceful.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Chinese coal ‘ban’ carries a significant political message


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The market reaction to the “ban” was telling, underscoring the problem of being so reliant on a single client.
Shutterstock

Tony Walker, La Trobe University

As a standoff over Australian coal shipments through the northern Chinese port of Dalian continues, it underscores the extent of Australia’s economic dependence on China.

One-third of all Australia’s exports globally are China-bound.

Market reaction to a Chinese coal “ban” was telling and reflected concerns about an over-dependence on one client.

The Australian dollar tumbled before recovering. Coal producers were pegged back.

Initially, the decision was attributed to local customs officials, but this misunderstood the nature of the Chinese regime.

No decision to restrain imports from China’s largest supplier of raw materials would be taken without the imprimatur of the leadership in Beijing.

While the freeze on Australian coal imports through Dalian may prove to be a short, sharp shock, what China’s action does convey is a message that Beijing can turn an import spigot on and off at will.

Why it might have chosen now to remind Australia of its vulnerability to central planning decisions, arbitrarily applied, is not clear. But it’s reasonable to speculate that politics is involved.




Read more:
Huawei executive’s arrest will further test an already shaky US-China relationship


What is notable about China’s action is that it does not, at this stage, affect Russian and Indonesian coal imports. Australia appears to have been singled out.

Australia is far and away the world’s largest coal exporter. It accounts for more than 20% of China’s coal imports, the bulk of it thermal coal for greedy power stations.

China’s foreign ministry has said there is no “ban” on Australian coal imports through the Dalian port. But with demurrage charges mounting on coal carriers obliged to stand offshore for 40 days or more, use of the word “ban” is moot.

If politics is a factor, then several possibilities present themselves in what has been a rocky relationship over the past several years. Beijing could be signalling its displeasure over Australia’s decision to bar the technology company Huawei from participating in the build-out of Australia’s 5G communications network.

Other possible causes of Chinese unhappiness include Canberra’s decision to deny a re-entry permit to Australia for businessman Huang Xiangmo. This follows a decision to deny Huang Australian citizenship on grounds that his links with the Chinese Communist Party render him a security risk.

Delicate late-stage negotiations between the US and China on trade could also be a factor. Beijing might regard meting out a bit of grief to one of America’s closest allies as a reminder of its ability to exact retribution if things do not go its way.

Then there are the twin issues of the South China Sea and China’s push into the southwest Pacific.

Canberra is a persistent – if low-key – critic of Beijing’s militarisation of disputed territory in waters that are subject to claims and counter-claims before international tribunals.

These waters span trade routes through which the bulk of Australia’s seaborne trade passes to its markets in north Asia, including trans-shipment points like Dalian.

Beijing will also not have overlooked a vigorous campaign against its interests being waged by elements of the Australian foreign and security policy establishment.

At the forefront of this criticism is the government-funded Australian Security Policy Institute. ASPI spokespeople have focused particularly on China’s alleged breaches of cyber security.

Sections of the Australian media, feeding off ASPI criticism of cyber breaches, will have added to Chinese displeasure.

Then there are irritants like the continued detention on security grounds of Chinese-Australian writer Yang Hengjun. Yang has been a persistent critic of the Communist Party.

While a freeze initiated by Beijing – during which no senior Australian official visited China for high-level talks for the better part of two years – has been lifted, relations remain problematic.

Foreign Minister Marise Payne went to Beijing late last year for talks with her Chinese counterpart. These were designed to “re-set” the relationship. But episodes like the “ban” on coal shipments foreshadow further difficulties in the Sino-Australia relationship as China’s power and influence grow.




Read more:
Australia and China push the ‘reset’ button on an important relationship


Other explanations offered for what appeared to be, on the face of it, arbitrary action against Australian coal shipments relate to pressures on China’s hard-pressed domestic producers.

In a slowing Chinese economy, competition from higher-quality and competitively priced imports has battered domestic coal producers.

In other words, a number of factors are likely to have been at play in China’s decision to halt Australian coal imports through Dalian, if only temporarily.




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Australian-Chinese author’s detention raises important questions about China’s motivations


These coal shipments, it should be noted, amount to a relatively small proportion of the 300 million tonnes shipped annually.

About 7 million tonnes passes through Dalian. This is coking or metallurgical coal for the steel industry, to distinguish it from thermal coal for power generation.

In 2017-19 coal exports to China were worth about A$13 billion, second only to exports of A$50 billion of iron ore and concentrates.

However, if the ban spreads to other ports Australian exporters will have cause for much deeper concern.

Uncertainties among Australian exporters are not helped by an opaque Chinese system that denies transparent explanations – unless it suits Beijing – of actions that are unfriendly to its trading partners.

China’s slowdown in imports of Australian wine last year is a case in point. The problem has eased, but the episode unnerved wine exporters whose production is geared significantly to a booming Chinese market.

Australian officials will also be concerned about action taken against Canadian nationals who have been detained in apparent retaliation for Canada’s arrest – pending extradition to the US – of the daughter of the Huawei founder.

Meng Wanzhou, Huawei’s chief financial officer, has been fighting extradition through the courts in Vancouver to prevent her removal to the US, where she has been charged with violations of sanctions against doing business with Iran.

The arrest of two Canadians – former diplomat Michael Kovrig and businessman Michael Spavor – for allegedly endangering China’s national security is widely viewed as retaliation against Canada for the arrest of Meng.

What all this tells us is that dealing with a more nationalistic, assertive and ruthless China in pursuit of what it regards as its national interests will become more, not less, difficult.

Western officials can talk about a rules-based international order until they’re blue in the face, but if the rules don’t correspond with Beijing’s own preferences, then chances are it will disregard them.

This is a reality that has taken some time to impress itself on those who might have believed that encouragement to China to live up to expectations of it becoming a “responsible stakeholder” will survive an encounter with Chinese self-interest.

In that regard, Beijing and Washington are not dissimilar in a new era in which a more nationalist US is shunning multilateral trading agreements like the Comprehensive and Progressive Agreement for Trans Pacific Partnership and looking to a narrower self-interest.

The new US-China trade deal is set to be concluded next month. You can be sure that interruptions to Australian coal shipments to China will be very far from their concerns.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

What’s worse than the US-China trade war? A grand peace bargain


Giovanni Di Lieto, Monash University

It’s hard to tell if Donald Trump’s trumpeting of “substantial progress” in trade talks, leading to a cosy weekend at Mar-a-Lago to sign a deal with Chinese president Xi Jingping, represents reality.

Most observers, though, will be relieved by his decision to again defer his threat to escalate the US-China trade war and hike up tariffs from 10% to 25% on US$200 billion worth of Chinese imports. (The total value of US imports from China in 2018 was US$493 billion.)




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Trade wars are generally considered bad for everyone. KPMG has calculated a full escalation of the trade war – with a 25% tariff applying to all goods traded (worth US$604.5 billion in 2018) – would cost Australia A$58 billion over the next decade.

But far worse for Australia, and its Asia-Pacific neighbours, could be a deal to end the trade war, especially if it involves a grand geopolitical bargain between the US and China.

Bilateral world order

Considering the US administration’s hard-line approach, for a truly comprehensive deal to occur China would have to subscribe to a serious restructuring of its industrial system. This would ultimately mean phasing out covert state subsidies, liberalising its financial markets and giving up on meaningful technological competition in security-sensitive sectors.

But out of fear an ongoing trade war will harm its export-driven economic progress, and also as an expedient step for advancing its regional hegemony, China might eventually agree to all this as part of a grand bargain.

Essentially, a grand bargain with an “America First” US administration makes sense on the mutually beneficial assumption it would lay the foundations for a bilateral world order.

As part of the deal the US would dramatically reduce its strategic footprint from the Middle East through to the Korean peninsula. The advantage would be it could focus resources on limiting China’s naval role across Indo-Pacific trading routes.

Retreating to a more sustainable role as the indispensable maritime power across the Pacific and Indian oceans would leave China free rein to exert its weight on land in Eurasia.

The US might see that as advantage. Chinese regional hegemony inland would give Russia more to think about on its south-eastern border, rather than causing problems for US allies in eastern Europe. It would also put extreme pressure on India to finally evolve into a subsidiary power to the US maritime empire, one of the wildest strategic dreams in Washington.




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The collapse of the US-Russia INF Treaty makes arms control a global priority


The downside would be that Russia might end up as a subservient commodity supplier to China’s regional empire. Russia’s geo-economic downgrade would strengthen European resolve to run independently of the US, one of the worst nightmares in Washington.

For China, the prize would be achieving the main strategic ambitions of its Belt and Road Initiative, ultimately controlling land trading routes from Beijing to Venice. The strategic cost would be abandoning its maritime ambitions.

Where this leaves Australia

Where would this bilateral world system vision leave Australia?

Certainly worse off than the current situation. With interlocking spheres of influence across the Indo-Pacific rim (US) and the Eurasian landmass (China), at best Australia would become a marginal economic and security appendage of the two hegemons.

Relegated to the role of a price- and rule-taking commodity supplier to China, Australia would remain only nominally a US ally. It would be a rather disposable buffer state at the frontier of two empires, caught between the economic and security crossfire of proxy conflicts.

Weaknesses and opportunities

Compared to this scenario, a protracted US-China trade war may well serve Australia’s national interests much better.

Though tariffs will weaken the global economy, it will hurt the US and China the most. It might even weaken their respective commercial and military grips on the Asia-Pacific region to the point that patterns of more distributed power relations could emerge.




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Why there will be no winners from the US-China trade war


Economic analysis suggests many Asian economies are already relative winners, as tariffs motivate US and Chinese businesses to “decouple”.

Malaysia, Japan, Pakistan, Thailand and the Philippines lead the nations gaining from US and Chinese companies buying goods elsewhere. Vietnam, Malaysia, Singapore and India are the top beneficiaries from US companies shifting production away from China.

Several Asian countries have also seized the opportunity to play the US and China against each other.

The Philippines has revitalised relations with China to manage the South China Sea dispute more independently from the US. This has not stopped it remaining by far the largest recipient of US military aid in Asia.

South Korea has signed bilateral free-trade agreements with both China and the US, positioning itself as an intermediary that will allow American and Chinese companies to trade in a way that circumvents the tariffs.

Malaysia’s government has affirmed strategic neutrality by pulling back from deals that would put it in debt to Chinese investors.

This is arguably an unprecedented opportunity for Australia to start carving a more independent foreign policy.

Our interests lie in taking an active role in promoting a world system truly based on multilateral rules rather than great power relations.

The worst-case scenario for an ongoing US-China trade war is that it turns into real war. But that’s unlikely.

So long as it remains a manageable trade dispute, it is better for Australia, and much of the rest of the world, than trade peace leading to a bilateral world system.The Conversation

Giovanni Di Lieto, Senior Lecturer of international trade law, Monash Business School, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Agents of foreign influence: with China it’s a blurry line between corporate and state interests


File 20190226 26162 bsb4uy.jpg?ixlib=rb 1.1
Australia’s Foreign Influence Transparency Scheme Act obliges individuals to register if they act on behalf of “foreign principals”.
Shutterstock

John Garrick, Charles Darwin University

Former federal trade minister Andrew Robb says he has quit his A$880,000-a-year consultancy job with Chinese-owned Landbridge Group because it didn’t have anything for him do.

Former Victorian premier John Brumby says he has quit as a director of Chinese tech giant Huawei in Australia because he has too much else to do.

Former federal foreign minister and ex-NSW premier Bob Carr has quit his job as director of the Australia-China Relations Institute, an organisation bankrolled by a Chinese billionaire with a history of using donations to cosy up to politicians.

It might be just a coincidence that these decisions have come just days before new foreign influence transparency laws come into effect on March 1.

The new laws are supposed to make visible the “nature, level and extent of foreign influence on Australia’s government and political process”. There is more than enough evidence that greater transparency is needed. But the extent to which the new rules will achieve this is questionable.

Money talks

Federal parliament passed the Foreign Influence Transparency Scheme Act (FITS) in December. The Act obliges individuals to register if they act on behalf of “foreign principals” – be they governments, government-related entities, political organisations or government-related individuals.

Failing to apply for (or renew) registration, providing false and misleading information or destroying records may lead to a prison term of up to six years for individuals and fines of A$88,200 for companies.

Registrable activities include:

  • parliamentary and political lobbying on behalf of a foreign principal
  • communications activities for the purpose of political or government influence
  • employment or activities of former cabinet ministers.

An example of the latter is Andrew Robb.

In February 2016 Robb resigned as federal trade minister and announced he would not recontest his seat. He left parliament in July. Three months later he had his new job, getting paid way more than the prime minister as a consultant to the Landbridge Group.




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View from The Hill: Would Landbridge be on or off the government’s register of foreign interests?


It is always instructive to note the first jobs taken by politicians after they leave parliament. Those appointments generally reflect relationships already well-groomed.

Landbridge is a privately owned Chinese company, but like many Chinese companies has strong ties to the ruling Chinese Communist Party. Its substantial interests in petrochemicals and ports includes a 99-year lease over the Darwin port, which is considered of strategic importance in China’s diplomatic dance with the United States.

Qualitative differences

China isn’t the only foreign power interested in having influence in Australia, of course. Historical ties have meant that Britain once dictated Australia’s foreign policy. Since World War II the United States has had almost as much power.

Now China, Australia’s largest trading partner, taking about 30% of our exports, looms large. But the power exercised by the Chinese regime is qualitatively different.

For all its economic liberalisation since the death of Mao Zedong in 1976, China remains a one party state, with repression worsening under Xi Jinping. On freedom of the the press, for example, China ranks 176 out of 180 countries.

Commercial, military and political influences are wrapped up together. Lines between state and private enterprises are blurred. When Chinese business interests curry favour with foreign politicians and officials, there’s a high chance that statecraft is also being advanced. “Soft power” is used extensively.

Agent of influence

This is what made the tawdry scandal involving former NSW senator Sam Dastyari so alarming.

Though a humble senator, Dastyari was a key Labor Party fundraiser and powerbroker. He later admitted that vanity and arrogance made him susceptible to the charm offensive of Huang Xiangmo – the billionaire who courted Bob Carr to head up the Australia-China Relations Institute.

Dastyari accepted financial gifts from Huang’s company, including a A$44,000 payment to settle a legal dispute, along with payments from other donors connected to the Chinese Communist Party.




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Such payments made it obvious why he defied his own party’s policy and defended China’s militant stance in the South China Sea. He was subsequently labelled a Chinese “agent of influence”.

These revelations resulted in Dastyari resigning from parliament in 2017. Earlier this month it was revealed the federal government had rejected Huang’s bid to become an Australian citizen and stripped him of his permanent residency visa.




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Why do we keep turning a blind eye to Chinese political interference?


On the basis of these examples highlighted above, there’s a strong case for making influence peddling open and transparent.

Whether the new laws can achieve that is another matter. They may curtail flagrant scenarios where those leaving public office sell their wares to the highest bidder. But to work effectively, the laws and their enforcers will need to constantly adapt and evolve as agents look for creative ways to wield influence from the shadows.The Conversation

John Garrick, Senior Lecturer, Business Law, Charles Darwin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Huawei or the highway? The rising costs of New Zealand’s relationship with China



File 20190219 129545 fuc4q0.jpg?ixlib=rb 1.1
New Zealand’s Prime Minister Jacinda Ardern meeting with the Premier of the State Council of the People’s Republic of China Li Keqiang during last year’s ASEAN summit.
AAP Image/Mick Tsikas, CC BY-ND

David Belgrave, Massey University

Until recently, New Zealand’s relationship with China has been easy and at little cost to Wellington. But those days are probably over. New Zealand’s decision to block Huawei from its 5G cellular networks due to security concerns is the first in what could be many hard choices New Zealand will need to make that challenge Wellington’s relationship with Beijing.

For over a decade New Zealand has reaped the benefits of a free-trade agreement with China and seen a boom of Chinese tourists. China is New Zealand’s largest export destination and, apart from concerns about the influence of Chinese capital on the housing market, there have been few negatives for New Zealand.

Long-held fears that New Zealand would eventually have to “choose” between Chinese economic opportunities and American military security had not eventuated.




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But now New Zealand business people in China have warned of souring relations and the tourism industry is worried about a downturn due to backlash following the Huawei controversy.

China’s growing might

During Labour’s government under Helen Clark (1999-2008) and under the National government with John Key as prime minister (2008-2016), New Zealand could be all things to all people, building closer relationships with China while finally calming the last of the lingering American resentment over New Zealand’s anti-nuclear policies. But now, there are difficult decisions to be made.

As China becomes more assertive on the world stage, it is becoming increasingly difficult for New Zealand to keep up this balancing act. Two forces are pushing a more demanding line from Beijing. One is China’s move to assert more control over waters well off its coast.

For decades, Beijing was happy to let the US Navy maintain order over the Western Pacific to facilitate global trade with China. As China’s own economic and military abilities have grown, it has begun to show that it is willing to protect what it sees as its own patch. Its mammoth island building in the South China Sea is a testament to its new-found desire to push its territorial claims after decades of patience.




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Despite strong words, the US has few options left to reverse China’s gains in the South China Sea


China’s stronger foreign policy is testing what is known as the “rules-based order”, essentially a set of agreed rules that facilitate diplomacy, global trade, and resolve disputes between nations. This is very concerning for New Zealand as it needs stable rules to allow it to trade with the world. New Zealand doesn’t have the size to bully other countries into getting what we want.

Trump-style posturing would get New Zealand nowhere. A more powerful China doesn’t need to threaten the rules-based system, but the transition could create uncertainty for business and higher risks of trade disruption. It is vital for New Zealand that an Asia-Pacific dominated by China is as orderly as one dominated by the US.

Tech made in China

The other force challenging the relationship is China’s emergence as a source of technology rather than simply a manufacturer of other countries’ goods. Many Chinese firms like Huawei are now direct competitors of Western tech companies. Huawei’s success makes it strategically important for Beijing and a point of pride for ordinary Chinese citizens.

Yet, unlike Western countries, China actively monitors its population through a wide variety of mass surveillance technology. Therefore, there is a trust problem when Chinese firms claim that their devices are secure from Beijing’s spies. New Zealand’s decision to effectively ban Huawei components from 5G cellular networks could be the first in many decisions needed to ensure national security.

Chinese designed goods are becoming more common and issues around privacy and national security will get stronger as everyday household goods become connected to the internet. Restrictions on Chinese-made goods will further frustrate Beijing and will invite greater retaliation to New Zealand exporters and tourist operators.

In more extreme cases, foreign nationals have been detained in China in response to overseas arrests of prominent Chinese individuals. As many as 13 Canadians were detained recently in China following the arrest of Huawei’s CFO Meng Wanzhou in Vancouver at the request of US prosecutors.




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Australian-Chinese author’s detention raises important questions about China’s motivations


Declaring the limits of the relationship

If New Zealand is to maintain a healthy relationship with China, it needs to be clear on what it is not willing to accept. It is easy to say individual privacy, national security and freedom of speech are vital interests of New Zealand, but Wellington needs to be clear to its citizens and to China what exactly those concepts mean in detail. All relationships require compromise, so Wellington needs to be direct about what it won’t compromise.

New Zealand spent decades during the Cold War debating how much public criticism of the US the government could allow itself before it risked its alliance with the Americans. New Zealanders wondered if they really had an independent foreign policy if they couldn’t stand up to their friends. Eventually nationalist sentiment spilled over in the form of the anti-nuclear policy.

New Zealand is now heading for the same debate as Kiwis worry about how much they can push back against Beijing’s interests before it starts to hurt the economy. Now that the relationship with China is beginning to have significant costs as well as benefits, it’s probably time New Zealanders figured out how much they are prepared to pay for an easy trading relationship with China.The Conversation

David Belgrave, Lecturer in Politics and Citizenship, Massey University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

As Australia’s soft power in the Pacific fades, China’s voice gets louder



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China is broadcasting to more than 1 billion people in several different languages, while Australia sits on its soft power reviews.
Screenshot/YouTube

Helen Vatsikopoulos, University of Technology Sydney

This week, Department of Communications and Arts secretary Mike Mrdak told a Senate hearing our Pacific neighbours will soon experience “the full suite of programs available on Australian networks”. This means the region will see some of our most highly rated reality shows such as Married at First Sight and The Bachelor.

This is all part of the government’s Pacific pivot and the A$17 million package to broadcast commercial television throughout the region announced by the prime minister last year. It’s also part of Australia’s “soft power” strategy, a branding that enables it to influence other countries and have its voice heard.

Australia’s soft power attraction in the Asia Pacific has been in free fall for the past few years. The government is sitting on two major reviews. First is the Soft Power Review – a strong recommendation of the 2017 Foreign Policy White Paper – for which the consultation period ended in October 2018. Second is the Review of Australian Broadcasting in the Asia-Pacific, the consultation period for which ended in August 2018.

The second review was established in 2017. This was the first time the government addressed the issue of soft power in the Pacific since axing the ABC’s Australia Network in 2014. The Australia Network broadcast to the region with redistribution partnerships to 30 countries.

The ABC charter states it has responsibility “to transmit to countries outside Australia broadcasting programs of news, current affairs, entertainment and cultural enrichment” that will “encourage awareness of Australia and an international understanding of Australian attitudes on world affairs”.

In other words, the ABC is already enabled as Australia’s soft power tool. Despite this, the government is giving money to commercial televisions to do the work. At the Senate hearing this week, Mrdak denied this was in breach of the ABC charter because it did not involve broadcasting but purchasing content made by Australia’s commercial broadcasters for distribution to regional broadcasters.




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Lost in transmission: the Australia Network, soft power and diplomacy


The government must move quickly with its reviews and their recommendations, and articulate its policy responses before the next election, if Australia’s standing in the region is to be restored. Because other powers, especially China, are fast filling the gap we’re leaving behind.

The importance of soft power

Soft power is a term coined by Harvard Professor Joseph S. Nye in the late 1980s. He referred to soft power as the ability of a country to gain influence and power through attraction and without coercion. Soft power leads to nation branding or the reputation a nation enjoys in the world.

This is what business academic Yin Fang defines as:

… the total sum of all perceptions of a nation in the minds of international stakeholders, which may contain some of the following elements: people, place, culture/language, history, food, fashion, famous faces (celebrities), global brands and so on.

The 2018 Soft Power 30 Report showed Australia had fallen four places in four years. The report is a measure of the influence of international nations. We are 10th in the overall soft power index but are marked as moving downward: 7th in culture, 6th in education, 9th in government and completely absent from the top ten in the areas of digital, enterprise and engagement.




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Soft power and the institutionalisation of influence


In the alternative, and hipper, Monocle Soft Power Index, Australia sits at number 8. But the report also warns it “… is in need of a shakeup if it is to remain an attractive proposition”.

It praises the country for committing to an official review of its soft power but adds “it’s unclear if that will now be a priority”.

In addressing a seminar on the future of Australia’s broadcasting and soft power in the region, veteran broadcaster and former head of the Australia Network Bruce Dover said:

Where once Australia was a brand in Asia, people knew what the Australia Network was, they knew what Radio Australia was, it’s lost – it’s gone…

He then added that the axing of the Australia Network by the Coalition government “… was for more political reasons about whacking the ABC than a considered view on the worth of soft diplomacy or having a voice in the region”.

The ABC isn’t entirely free from blame. It abandoned the most needy of its audience in Asia and the Pacific by switching off its shortwave radio service in 2017. Citing outdated technology, the ABC was trying to make the most of its severe funding cutbacks by prioritising digital services. And that’s when China moved in and took over the shortwave frequencies.

So, what’s China doing?

The government’s Pacific pivot is about waking up and finding China has expanded into the region, and not just in infrastructure projects but in broadcasting. A recent ABC investigation reported China’s Central Global Television Network (CGTN) is broadcasting to 1.2 billion people in Chinese, English, French, Spanish, Russian and Arabic and is expanding to create 200 international bureaus by 2020.




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Soft power goes hard: China’s economic interest in the Pacific comes with strings attached


This may be, as the ABC suggests, “informational warfare”, where the soldiers may actually be Westerners working for the other side. This year alone, more than 2,200 people lost their jobs in the Australian media.

Edwin Maher was one of the first Australians to work for CCTV, as CGTN was then called. He was a weatherman when I worked in the ABC’s Melbourne newsroom in the late ’80s, but for over a decade he has been a presenter on China’s television. There will be more like him in future.

China is actively recruiting Westerners to front its programs. Australian faces will likely present news on on CGTN, while Australian voices broadcast in English to Pacific Islanders on shortwave.

In the competitive world of nation-branding and soft power, who will know the difference? The new Edwin Mahers will be telling the same stories as Australia, but with a China focus. In 2016 President Xi Jinping announced that the media must serve the party and directed them to tell China’s stories that reflect well on the ruling party and its policies.

This is the reality of informational warfare. The Morrison government must release its two crucial soft power reports and announce a policy framework that will determine our standing, influence and power in the region.

Vanuatu’s Daily Post has welcomed the news Australia will provide entertaining programs to the Pacific. But the opinion piece also says:

Pacific islanders aren’t likely to be very fussy about how that comes about. But if the goal is helping Pacific islanders know more about Australia — and helping Australians know more about the Pacific – then a different approach is needed.

Australia’s soft power is too important to be determined by vengeful payback to the ABC, or by currying favour with commercial television barons. It is about statecraft.The Conversation

Helen Vatsikopoulos, Lecturer in Journalism, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.