Even if it’s not yet publicly spelled out, there’s a growing difference of opinion between Australia’s political and business leadership over China.
Australian business leaders are alarmed about the potential impact on Chinese trade and investment due to the ratcheting up of public tension between China and Australia. Australian political leaders are more worried about the potential impact on national security unless they are willing to risk Chinese ire, including some form of economic retaliation.
These contrasting viewpoints are only becoming more obvious as the Australian government presses ahead with legislation aimed at espionage and foreign interference. Naturally, the government insists its bills are not targeting China but all foreign governments attempting to influence Australian democratic processes.
That rationale convinces no one, least of all the Chinese. The antagonism from a Chinese government that believes it is being unfairly insulted by a middle-ranking ally of the US will only escalate. The rhetoric will inevitably get rougher and tougher. It’s the level of practical retaliation that will really matter.
Yet the Australian government is officially still trying to pretend the 2018 freeze on high-level contacts and visits is just an aberration, indicative of some temporary irritants that will soon be sorted out. Prime Minister Malcolm Turnbull, according to this optimistic scenario, will be visiting China later this year. He shouldn’t be packing his Mandarin dictionary just yet.
Beyond the political antics of rushing to try to get the legislation passed ahead of the byelections next month, figuring out how Australia should deal with an increasingly powerful and assertive China has become one of the most important issues facing the country. But with no clear answer from Canberra – or from business.
Desperate to protect business model
Given China is Australia’s most significant trade partner, the stakes are very high – and razor sharp. The recent visit of Australian vice-chancellors to China, for example, is all about Australian universities’ desperate need to protect a business model that relies on charging increasing numbers of Chinese students very high fees to subsidise their activities.
The vice-chancellors, like so many other business executives, are worried about the financially devastating effect of having that vast Chinese market suddenly withdrawn or reduced.
“What’s the point of trying to sound morally superior on the South China Sea?” puzzles one senior business figure. “China has already done what it wanted to do and will do in future. Australia complaining won’t make any difference on that, but it could easily make a difference to Australia’s trade. It’s obvious China can and will respond to that sort of criticism. And what’s the advantage to Australia in not signing up to One Belt One Road?”
Increasingly aggressive behaviour
Those in government, strongly backed by the national security establishment, are far more sanguine about the economic impact of any Chinese retaliation and more determined that Australia must assert its own values and views as well as react to China’s increasingly aggressive behaviour.
This often results in a rather dismissive tone about the self-interest of business in arguing Australia should focus on commerce only.
“If exports are harmed a few percentage points, so be it,” says one senior security figure. “It’s more important to ensure that Australia’s national interests are protected as much as possible.”
Claiming to be doing just that with the help of the government’s new legislation has become one of the few areas of bipartisan agreement. Labor has made plenty of barbed attacks about the government’s excessively anti-Chinese rhetoric in its aggressive pursuit of ex-Labor senator Sam Dastyari at the end of last year in its determination to grab domestic political advantage. Such political skirmishes will continue.
But following a long list of recommendations from a joint parliamentary committee, Coalition and Labor agreement to pass a new law on “espionage and foreign interference” looks likely. With the Director-General of ASIO, Duncan Lewis, saying Australia is the subject of more foreign influence and espionage efforts than ever before and current laws are inadequate and unworkable, Labor is unwilling to suggest it is any less concerned than the government about this.
Attempts to influence opinion
The Coalition also has another bill to establish a foreign influence “register” to try to limit covert attempts to influence public opinion. The detail of how this could work in practice is not at all clear but it’s meant to suggest that (Chinese government or Communist Party-linked) attempts to change government policy or community attitudes must be public and transparent.
It’s another demonstration, sometimes cited by security officials, that the most significant policy change in Australia’s approach comes from the Prime Minister himself. Malcolm Turnbull is a proud advocate of the huge benefits to the country of having a million Australians of Chinese heritage, including two of his own grandchildren.
But he’s definitely become much tougher in his views of the choices Australia should make in its relationship with China under Xi Jinping, reversing previous suspicions in hardline security circles in Australia and China that he was a little “soft” on the issue.
As former communications minister, for example, Turnbull was determined to allow the Chinese telco equipment giant Huawei to participate in the National Broadband Network, even if only in a relatively peripheral way, before being overruled by then Prime Minister Tony Abbott.
Turnbull is now facing a similar test given Huawei’s desire to participate in the roll out of the 5Gmobile network in Australia. It’s always possible to limit Chinese participation to “non-core” elements of the network to protect the most sensitive areas. That’s what Huawei is expecting and what happens in countries like the UK, for example. But it’s not what the US is recommending or what many of his own backbenchers would advise.
The costs, political and economic, are adding up.
by Jennifer Hewett