Australia has dug itself into a hole in its relationship with China. It’s time to find a way out



Wes Mountain/The Conversation, CC BY-ND

Tony Walker, La Trobe University

In diplomacy, as in life, if you find yourself in a hole it is better to stop digging.

Prime Minister Scott Morrison has excavated a diplomatic cavity for himself and his country as a consequence of an unwise intervention in the debate about China’s responsibility for a coronavirus pandemic.

After a phone call with US President Donald Trump on April 22, during which the two leaders discussed China’s responsibility for the contagion, Morrison took it upon himself to push forward with an Australian coordinating role for an independent international inquiry into the origins of the pandemic.

Morrison wrote to world leaders offering Australia as a coordinator for an investigation of how the contagion came about. This would include examining the role of the China-sympathetic World Health Organisation in managing its spread.

Why Morrison decided to pursue such an intervention immediately after a call to the White House remains a mystery. In the annals of Australian diplomacy, this may well go down as one of the more questionable forays into international diplomacy.

One would have to go back to Robert Menzies’s vainglorious efforts on behalf of Australia’s imperial masters to mediate the Suez Crisis in 1956 to find an apt parallel.

Tracing the source

More than half a century later, another Australian prime minister has fumbled his way into a contentious international dispute. The issue is to what extent China should be held responsible for its mismanagement of the early stages of the pandemic.

This is an open question, which an independent international panel should investigate. China should not be let off the hook.

But the question remains: what possessed Morrison to project Australia into a lead role in holding China to account? Why did he find it necessary to leave an impression that Canberra was doing Washington’s bidding in doing so?

When Menzies made his inept foray into the Suez crisis, Australia had virtually nothing to lose commercially by intervening beyond concerns about a canal lifeline between the Red Sea and the Mediterranean.

But Canberra has much at stake in this latest diplomatic imbroglio. Unwisely, it has enabled Beijing go after an American ally vulnerable to economic blackmail due to Australia’s dependence on China trade.

All this calls into question the quality of Morrison’s China advice. In Canberra, it is an open secret that the moderating influences of the Department of Foreign and Trade have been sidelined.

Ragged China policymaking has enabled a ragtag group of anti-China government backbenchers, led by Liberal Andrew Hastie, a former SAS commander, to run riot. It was Hastie who, implicitly, likened China to Nazi Germany.

Lack of authority in the China-policy space is attributable partly to an unsteady approach by Morrison, and partly to a void in which the authority of Foreign Minister Marise Payne is barely visible.

No reasonable observer pretends that dealing with a surging and ruthless power in our region is anything but complex. This complexity requires a level of subtlety and firmness that has been absent from Australian policy-making towards China since the Malcolm Turnbull era.

In his legitimate championing of foreign interference legislation, Turnbull found himself in thrall to a hyperactive national security establishment and its hawkish anti-China posture.

As a consequence, he overreached in his declaration on three separate occasions Australia would “stand up” against foreign interference. This was a barely disguised – and highly provocative – reference to China.

No Australian prime minister has visited China since 2016.

In one of the more significant interventions in a vexed China debate, the influence of a security establishment was called out at the weekend by Dennis Richardson, a former director of the Australian Security Intelligence Organisation and head of both the Defence Department and DFAT, as well as a former ambassador to Washington.

Giving voice to widespread concerns about the pervasive influence of such an establishment inside and outside the bureaucracy, Richardson said:

If you’re going to shut the gate in respect of China, well, that’s fine provided we are prepared to accept that puts at risk more than $100 billion of exports that will impact on living standards of Australians. This is the problem when you try to wrap the totality of government under the umbrella of national security.

Trade as political weapon

Australia depends on China for one-third of its merchandise and services exports.

In the wake of Morrison’s diplomatic intervention, it did not take long for Beijing to exact crude penalties on an Australian government that had overreached.

China’s anti-dumping action against barley exporters has put in jeopardy trade worth about A$600 million a year. Its resort to technicalities to exclude meat shipments from four abattoirs has unnerved an entire industry.




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Agricultural exporters are bracing themselves for further action. Australia’s lucrative dairy trade is vulnerable. Wine shipments are at risk. Wool sales might also be jeopardised.

China will have a long list of potential targets.

This includes thermal coal shipments. These were subjected last year to delays in coal carriers offloading cargo in the northern port of Dalian. Thermal coal from Indonesia and Russia was given preference.

At the time, it was assumed China was inflicting pain on the thermal coal industry in retaliation for Australia’s lobbying of its Five Eyes partners to exclude the Chinese telecommunications giant, Huawei, from a build-out of their 5G networks.

It is hard to exaggerate Beijing’s irritation over the Huawei intervention.

So what should the Morrison government do here that would be constructive diplomacy?

First, government officials need to get beyond a mindset that simplistically references Chinese bullying, as if this is a sufficient response to threats to Australia’s economic well-being.

The pressing question remains: how does Australia deal with a regional behemoth that seeks to bend a global rules-based order in its favour?

This is the reality we have to live with.

Morrison could do worse in the present situation than reset a clear policy towards China that defines Australia’s own interests in its own region.

He should restate words he used in an Asialink speech early in his tenure. He said:

[…] the government is fully aware of the complexity that is involved in our region and the challenges we face in the future […] And we are careful as a government to ensure that we don’t seek to make them any more complex than they need to be.

Morrison should have listened to his own advice.

He might consider writing personally to China’s President Xi Jinping along these lines. He needs to ignore those in his immediate circle and on a cacophonous backbench who would argue relations with China are a zero-sum game.

They are not. There needs to be give and take. This is not yielding to Chinese bullying. This is common sense.

Common sense should put a dampener on a belief that, at the wave of a wand, “supply chains” linking Australia and China can be remodelled. This sort of naïve view loses sight of the fact that, for as long as it is possible to foresee, bulk commodities will form the staple of the trading relationship.

Given this, Morrison would be advised to cease acting like a global traffic cop in efforts to hold China to account for the coronavirus pandemic.

What Australia should be doing – and should have done in the first place – is support international efforts to bring about an inquiry. It will have early opportunity next week when the World Health Assembly considers a European Commission resolution along those lines.

Morrison needs to pay less attention to a China-obsessed national security establishment and give more credence to advisers who actually know something about China. Most importantly, he should stop digging.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.

Australia’s links with China must change, but decoupling is not an option


Hans Hendrischke, University of Sydney

Two events this week have illustrated two fundamental tensions in Australia’s relationship with China.

The first event was China’s ambassador to Australia suggesting a Chinese boycott of Australian exports, due to Australia pursuing an independent inquiry into the early response to the COVID-19 outbreak.

In an interview on April 27, ambassador Cheng Jingye said Chinese tourists and students might have second thoughts about a country “not so friendly, even hostile”.

“And also,” Cheng added, “maybe the ordinary people will think why they should drink Australian wine or eat Australian beef.”




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The second event was the “blindsiding” of federal health minister Greg Hunt at press conference with mining magnate Andrew Forrest on April 29, when Forrest invited China’s consul-general for Victoria and Tasmania to speak.

The diplomatic kerfuffle wasn’t the most significant aspect. It was the point of the press conference: Forrest’s procurement through Chinese business contacts of 10 million coronavirus tests – increasing Australia’s testing capacity 20-fold.

These two events point to two fundamental realities about the economic relationship between China and Australia.

First, the two nations are deeply important to each other.

Second, this coronavirus pandemic has exposed the need to increase local manufacturing and reduce dependence on imports of critical supplies.

Australia’s recovery planning must include policies to underwrite local manufacturing capability. It means our economic relationship with China will change.

But despite the veiled threats from the Chinese government, and the desire in some parts of the Australian community for a split, a great economic decoupling is not an option.

Mutual dependence

Australia depends on exports to grow employment, tax revenue and welfare expenses.

About a quarter of all corporate tax revenue comes from mining. Most that is from exports to China, Australia’s largest trading partner by far. Coal and iron ore exports sales have been holding up well. Fortescue, in fact, expects to export more iron ore (177 million tonnes) this financial year.



There are no substitute markets of a similar scale to take up Australian exports in mineral resources, nor in agricultural produce or international education.

But China has few viable alternatives to Australia as well.




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Certainly not in the supply of iron ore, gas and coal.

Not for agricultural produce, where Australia has high a reputation in China.

Nor for education. There are few English-speaking countries to begin with, and the biggest market for Chinese students, the United States, is looking decidedly more hostile and unsafe.



So our dependence is mutual. Decoupling won’t happen.

Onshoring on the agenda

But nor it is an option to return to the pre-COVID-19 status quo.

The model of Australia “being willing to export commodities and import finished goods is old and broken”, declared a member of the federal government’s new National COVID-19 Coordination Commission this week.

The commission was established last month to advise the government on “actions to anticipate and mitigate the economic and social effects of the global coronavirus pandemic”.

Liveris is a Darwin-born chemical engineer who rose to become chief executive of The Dow Chemical Company (now DowDupont, the world’s biggest chemical maker. Top of the agenda he signalled this week is “onshoring”. In other words, restoring local manufacturing capability.

“Australia drank the free-trade juice and decided that offshoring was OK. Well, that era is gone,” he said. “We’ve got to now realise we’ve got to really look at onshoring key capabilities.”

A new form of globalisation

There is a clear national interest in developing our own manufacturing in critical export industries such as health, cybertechnology, renewable energy and agribusiness.

Doing so will include Australia in a global trend to reduce reliance on one continent or one country.

Some might call this deglobalisation. It is not.

Diversifying production and bringing it closer to markets and consumers is simply a new form of globalisation.

To achieve it, Australian businessess will need to invest heavily in new technology to take advantage of digital manufacturing, automation and artificial intelligence.




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With the possible exception of some critically important services or products, only globally competitive manufacturing will be sustainable. It will need to be high-tech and innovative manufacturing. It will not mean the return of traditional manufacturing industries.

We’ll still need each other

Australia needs China to make this transition.

Advanced digital manufacturing requires substantial investment in technological capability and production facilities. China is already manufacturing and exporting advanced production equipment.

China will also be a crucial market for any exports, with many opportunities for Australian manufacturers that align with demand in the huge Chinese market. Chinese investment will help develop these export opportunities, as it has with exports like dairy.




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So neither Australia nor China stand to gain from decoupling the two economies. Our economic co-operation will change with onshoring. But mutual dependence will not.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.

Jokowi’s visit shows the Australia-Indonesia relationship is strong, but faultlines remain



AAP/Rick Rycroft

Colin Brown, Griffith University

Indonesian President Joko Widodo – Jokowi – has shown himself to be generally less interested in international affairs than his predecessor, Susilo Bambang Yudhoyono (SBY). He has also been less committed to the Indonesia-Australia relationship.

Nonetheless, Australia’s invitation to Jokowi to address the parliament, and his acceptance of that invitation, suggests the bilateral relationship is strong, at least at the governmental level.

Both Morrison and Jokowi referred in their parliamentary addresses to the fact this year marks the 70th anniversary of the establishment of diplomatic relations between Australia and Indonesia. Morrison reflected backwards, noting Australia had been an early supporter of Indonesian independence, and had been chosen by Indonesia to represent its interests on a UN committee involved with the Indonesia-Dutch dispute then underway.

Jokowi chose to look forward, to 2050 and the 100th anniversary of the start of diplomatic relations. He identified four major steps he suggested the two countries should take together to strengthen their bilateral relationship, and to contribute to regional peace and security.

Two of these steps were fairly predictable recitations of established policy.

The first was cooperation in furthering democracy, respect for human rights, counter-terrorism and anti-radicalisation strategies. He spoke against identity politics, disputing the idea it was cultural clashes that divided the world. Implementation of these principles remains fraught with difficulties, but the parameters of the problems are well-known in Jakarta and Canberra.

Second, Jokowi argued for free and fair trade, both bilaterally and regionally, in the face of increasing protectionism. Here he welcomed the conclusion of the Indonesia Australia Comprehensive Economic Partnership Agreement, which he described as opening opportunities for economic growth in both countries.




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But there were two other steps Jokowi wanted the two countries to take, which were perhaps different from what might have been expected.

First, he called for collaboration on protection of the environment. Some of his remarks were predictable, such as protection of forests and rivers. But he also argued for collaboration on lowering carbon emissions and handling climate change.

Jokowi did not explain what he had in mind with joint action to lower carbon emissions, or managing climate change. Indonesia is a major exporter of coal, and annual forest fires have substantially reduced forest cover. Its political and business leaders are even more divided than those in Australia on climate-related issues and how to deal with them.

What Australia and Indonesia seem to share, it might cynically be suggested, is internal disagreement over the nature of the problem being faced, and steps that might be taken to address it.

Second, Jokowi called for Australia and Indonesia to be “anchors for development programs” in the Pacific region.

Like Australia, Indonesia has recently been paying increased attention to the nations of the South Pacific. Last October, it established the Indonesian Agency for International Development, with a focus on the South Pacific. Speaking at the launch of the agency, Indonesian Foreign Minister Retno Marsudi noted assistance had already been provided to Tuvalu, Nauru, Solomon Islands, Kiribati and Fiji, as well as Myanmar and the Philippines.

Australia’s renewed interest in the South Pacific is linked to the increased Chinese presence in the region. But Indonesia’s concern is less with China than with the status of its easternmost provinces of West Papua and Papua. The movement seeking the independence of this region from Indonesia has its greatest support in the south Pacific, particularly in Vanuatu, though support has also come from Tuvalu and the Marshall Islands.




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Indonesia has formally denied the establishment of the agency was aimed at countering international criticism of Indonesia’s position in Papua. But the suspicion there is a link will be hard to shake off.

Australia’s formal position on the Papuan provinces is made clear in the 2006 Lombok Treaty, which committed each party to supporting the territorial integrity of the other, and not providing support to separatist movements. There is, though, considerable support for Papuan separatism in the Australian community, reflected in the parliament particularly by the Greens. The Greens’ new leader, Adam Bandt, is reported to have told Jokowi, after his address:

Thank you for your speech, thanks for your comments on climate change, now please get something done on West Papua.

There is nothing new in the dilemma facing the Australian government on Papua, but the increased Indonesian focus on the Pacific region could well provide more opportunities for the two countries to differ than to work together effectively.

Finally, Jokowi’s speech was notable for what he did not say.

There was no mention of China’s increasingly activist foreign and defence policy position, especially in the South China Sea. However, given the issue was explicitly considered in the joint statement of the two leaders, the president may have deemed that sufficient.

The other significant omission was any mention of easing conditions for the issuing of visas to Indonesians to visit Australia. This had been widely discussed in Indonesia before the president left for Australia. Scott Morrison did commit to reviewing the visa situation, but Jokowi would be well advised not to hold his breath.The Conversation

Colin Brown, Adjunct Professor, Griffith Asia Institute, Griffith University

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

Define the boundaries in new phase of Australia-China relationship: Wong


Michelle Grattan, University of Canberra

Shadow foreign minister Penny Wong says Australia needs to “define the boundaries” of its engagement with China now the relationship between the two countries is in a new phase.

Focusing on China policy in a Monday address – released ahead of delivery – Wong acknowledges the “substantial and growing differences” in the bilateral relationship.

“It is inevitable that Australia will make more decisions that China doesn’t like. This means that the way the relationship is handled will become even more important,” she says in the speech, to the Australian Institute of International Affairs.

“Although there continues to be convergence of interests, the divergences have become more apparent and acute – due to both Beijing’s increasing assertiveness and greater awareness in Australia as to the implications of the [Chinese Communist Party’s] behaviour and ambitions. We must look at how best to engage effectively with China while always standing up for our values, our sovereignty and our democratic system.”

Wong says where limitations around engagement are needed, the “boundaries should be as restricted as possible and as robust as necessary,” with opportunities and risks identified.

Boundaries and terms of engagement would differ between issues and between sectors.

Thus on research collaboration, engagement shouldn’t be ruled out across entire fields, but export controls and visa checks could be used for “a narrow set of the most sensitive defence oriented technology”.




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Wong says while the government has to provide the leadership all stakeholders, including the opposition, foreign policy community and business, “need to work together to identify those opportunities for deeper engagement where our interests coincide and to manage differences constructively”.

She puts the onus on the media “not only to hold the government of the day to account but to ensure they themselves don’t unthinkingly or inadvertently reinforce China’s tactics or narrative”, including by amplifying CCP claims.

Wong says Labor wants to engage in a bipartisan way on China policy, but the government isn’t willing to do so and Scott Morrison “has no plan for dealing with this new phase in Australia’s relations with China”.

“There’s no doubt Scott Morrison is the best political tactician in Australia right now… Is it enough to be a clever political tactician, when key relationships with our nearest neighbours are at stake? Is it enough to play short term political tactics on something so profoundly important as the integrity of our political system or the assertion of our national interests?

“Australia’s Prime Minister needs to look beyond the next manoeuvre, stop undermining his foreign minister and trade minister, and develop a serious long-term plan for Australia’s engagement in the region and the world.

“A serious and long-term plan that can proactively navigate us through the strategic competition between the US and China, and manage this new phase in our relationship with a more assertive China.”




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In a series of sharp criticisms of Morrison’s handling of the government’s policy towards China and foreign policy more generally, Wong includes as examples the PM’s claim Labor was using racism in its attack on Liberal MP Gladys Liu, his labelling of China a developed economy, and his attack on globalism.

Wong’s speech follows the blunt words on China on Friday from Home Affairs minister Peter Dutton, who said the government had a very important relationship with China, but it was going to “call out” instances where the wrong thing was done.

“We have a very important trading relationship with China, incredibly important, but we’re not going to allow university students to be unduly influenced. We’re not going to allow theft of intellectual property and we’re not going to allow our government bodies or non-government bodies to be hacked into,”he said.

Dutton stressed the issue was not with the Chinese people or the local Chinese community in Australia, but with the Chinese Communist Party.

The Chinese embassy reacted with an angry statement, saying that Dutton’s “irrational accusations” were “shocking and baseless”, and a “malicious slur on the Communist Party of China” and “outright provocation to the Chinese people”.

“Such ridiculous rhetoric severely harms the mutual trust between China and Australia and betrays the common interests of the two peoples,” the statement said.

Morrison at the weekend sought to play down the Dutton comments. “What Peter was talking about was the fact that there are differences between Australia and the People’s Republic of China. Of course there are,” he said. Australia was a liberal western democracy; China was a Communist Party state. “I would warn against any sort of over-analysis or over-reaction to those comments. Because I think they just simply reflect the fact that we’re two different countries”.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.

Tory leadership race: it’s Jeremy Hunt (who?) vs Boris Johnson (yes, really), with the future of the UK at stake


Ben Wellings, Monash University

The United Kingdom will have another prime minister by the end of July, when members of the Conservative party choose between Jeremy Hunt (who?) and Boris Johnson (yes, really).

Aside from the morbid fascination of watching this from afar, this leadership contest matters because it will determine who will (presumably) lead the UK out of the European Union, with or without a deal.

One way or another, this will affect Australia’s future trade relationship with the UK.

Selecting a new Tory leader

Selecting a leader of the Conservative party (or Tories) used to be easy. As late as 2003, a series of potential candidates would be “sounded out” behind-the-scenes by grandees, including lords and senior MPs, to see if they wanted the honour of leading the party (and, as a happy by-product, the country).

As with all leadership positions, not everyone wanted the job. When the men in suits offered Sir Alec Douglas-Home the honour of being prime minister in 1963, he famously replied: “Please, please not me!”

They ignored him and he went on to become one of the least successful prime ministers in British history.




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But the sounding-out process was democratised in 1998 so that the party base could have a say. The process for electing a new leader of the Conservative party is that any or all members of parliament (MPs) can put their hat in the ring. If they gain enough support from fellow parliamentarians, they compete against each other in a series of votes among MPs, until there are only two contenders left standing.

At this point, the party members in the towns and shires (the so-called grassroots members) get to vote on who next becomes leader.

This innovation came at a moment in time when the Conservative membership was becoming highly unrepresentative of the country as a whole. And since the late 1990s, the number of members in the Conservative party is declining, the average age is increasing, and the membership is overwhelmingly white. This has led some people to describe the conservatives as “pale and stale”.

Johnson vs Hunt

This time round there were 10 runners. The field became “pale, male and stale” when the two female contenders, Esther McVey and Andrea Leadsom, did not gain the required number of votes to progress to the next round.

Eventually we got down to Hunt and Johnson.

Johnson, the former London mayor and foreign secretary, needs no introduction. Yet, despite a campaign mired in controversy about his personal qualities and his avoidance of most TV debates, Johnson was still in front among party members as of late June.

He may scandalise opinion outside the Conservative party, but the grassroots members still rate him. This is partly because he stands for leaving the EU without a deal on Oct. 31, 2019 – an article of faith among Brexit-supporting Conservatives.




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In contrast, Hunt, the current foreign secretary, is more measured and presents himself as the more likely of the two candidates to secure a deal with the EU, as Johnson is not taken seriously in Brussels.

What’s working against Hunt, however, is that he voted to “Remain” in the EU in 2016, leading some to call him “Theresa May in trousers”.

Of course, Johnson and Hunt’s respective positions on Brexit matter only so much because no change of leader affects the numbers in parliament. The real question then becomes, will the new leader call – or be forced into – a general election to break the parliamentary deadlock over Brexit?




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What this means for Brexit

Brexit has radicalised the Tory base, which is broadly in favour of leaving with a no deal (unlike the rest of the country). A no-deal, or hard, Brexit means the UK would leave the EU without any agreements in place to soften the economic shock of leaving its largest trading partner, the EU. This is now Johnson’s stated position.

Underlying this drift towards a hard Brexit is the de-alignment of voters from the two main parties, which has scared the Conservatives.

The success of the Brexit Party and a threat from the resurgent centrist and pro-Remain Liberal Democrats makes these challenging times for party strategists. In fact, the Conservatives are only united in their dislike of Labour leader Jeremy Corbyn.

Significantly, neither leadership contender really understands the multinational United Kingdom or seemingly cares about the strain Brexit is putting on the union.

Neither candidate has an answer to the Northern Ireland “backstop” issue, for instance, which seeks to avoid the reestablishment of a political border between the UK and the Republic of Ireland in Ulster (the source of past conflict). And a hard Brexit will see increased support for independence in Scotland.




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What’s more, the results of a recent YouGov survey of Conservative party members and their attitudes toward Brexit added more weight to the idea that Brexit is, essentially, an English nationalism movement.

So, in keeping with the permanent state of political misery induced by Brexit, any outcome of the leadership contest and the subsequent UK-EU politics will make almost everyone unhappy.

Both sides feel like they are losing. This is a result of the referendum format; in an election cycle, you at least think your side might have a chance next time.

But deep divisions over Brexit mean that the future of the Conservative party is at stake. Like turkeys voting for Christmas, if Johnson is elected leader, there may not be a next time for either the Conservative party or the United Kingdom.The Conversation

Ben Wellings, Senior Lecturer in Politics and International Relations, Monash University

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”.




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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.




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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.




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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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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.

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



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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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New Zealand’s Pacific reset: strategic anxieties about rising China


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.

Government report provides important opportunity to rethink Australia’s relationship with India



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Importantly, the new strategy is ambitious, and will be led by, at least for now, the governments of Malcolm Turnbull and Narendra Modi.
AAP/Ella Pellegrini

Craig Jeffrey, University of Melbourne

By 2060, India may be the world’s largest economy. It will certainly be the world’s most populous country. At that point, Australians will ask, “What did we do in the 2020s to build a relationship with this superpower?” They may also ask: “How did economic cooperation with India benefit both countries in the early 21st century?”

The federal government’s report, An India Economic Strategy to 2035, was launched last week in Brisbane. Written by University of Queensland Chancellor Peter Varghese, it is an excellent basis for reflecting on these questions and the wider issue of Australia-India cooperation.

The strategy identifies numerous sectors – health, education, and tourism, for example – that can help enhance economic cooperation, and in which Australia has some comparative advantage. It also specifies ten Indian states as targets for collaboration based on their economic heft, commitment to reform, and relevance to the sectors in which Australia has competitive advantages.

Importantly, the strategy is ambitious. It sets itself the goal by 2035 to lift India into Australia’s top three export markets. It intends for India to become “the third largest destination in Asia for Australian outward investment”, and for it to be brought “into the inner circle of Australia’s strategic partnerships.”




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The strategy emphasises two areas that need attention in order to meet these objectives. First, Australia needs to leverage the strengths of the Indian diaspora, which now numbers about 455,000.

The rapid growth of the Indian diaspora population can be a spur to economic cooperation. The Indian population in places like Silicon Valley drive the IT and biotech booms in India and the US. Canada is highly adept in enrolling its Indian diaspora in projects of national and international development.

Second, Australia needs to build more knowledge of India and support organisations that work on the bilateral relationship. While Australia made a pivot towards China in the last quarter of the 20th century, businesses, governments, and the public developed comparatively little knowledge about India.

The emphasis on China led to a neglect of India in education, media, and the policy sphere. There is a need to rebuild public understanding of India and the institutions that can activate this understanding to achieve lasting impact. Culture and arts will be very important here, both as a sector and enabler – points implicit in the strategy.

Varghese says we need to move beyond constantly drawing comparisons between India and China. “India is not the next China,” he writes. India is a distinct opportunity for engagement that merits discussion in its own terms.

The base from which Australia is working with respect to cooperation is certainly different: Australian exports to India are less than a sixth of those to China.

Two further issues will be crucial for the strategy’s successful implementation. The first concerns the relationship between growth and wellbeing. It is clear that the India Economic Strategy imagines enhanced cooperation not as a basis for economic growth as such, but also higher standards of living.

There is a need to reflect carefully here. We must think not only about spurring growth in the Australian and Indian economies, but also ensuring that growth is meaningful in four ways: that it addresses social and economic inequalities, creates jobs, is environmentally sustainable, and fosters opportunities to lead fulfilling social and cultural lives.

This is where the comparison between India and China is important. Since 2000, India’s economic growth has been not much more than half as effective at lifting people out of poverty as China’s economic growth. This means that for every 1% growth in Gross Democratic Product in China nearly twice as many people are elevated out of income poverty as in India. This partly reflects the depth of social inequalities in India.




Read more:
Australia and India: some way to go yet


In the context of rising concern over inequality in Australia as well, the key question is: How can international economic cooperation create growth that reduces inequalities, generates jobs, and protects the environment in the countries concerned? It is a question that puts Australia and India on the same side of the table.

A second issue concerns the term “navigation”, which is in the title of the strategy. As the Danish anthropologist Professor Henrik Vigh has pointed out, navigation is a great metaphor. It connotes plotting and re-plotting a course on a moving plane. The complexity of that plane in this case calls to mind the six degrees of motion of a boat: pitch, roll, yaw, sway, heave, and surge. The strategy’s recommendations and ideas are excellent, and can be re-calibrated as India and Australia pitch, heave, and yaw.

The ConversationThe India Economic Strategy is an exciting document written with confidence and ambition. It provides a foundation for reflecting on economic cooperation and striving for meaningful growth.

Craig Jeffrey, Director and CEO of the Australia India Institute; Professor of Development Geography, University of Melbourne

This article was originally published on The Conversation. Read the original article.