Australia had a choice with China: kowtow or stand up. We made the right call

When Anthony Albanese clasped Xi Jinping’s hand in Beijing’s Great Hall of the People on Monday, it marked the end of the first generation of a geopolitical struggle that began some two decades ago.

We received public notice of Beijing’s intentions to dominate Australia in a revelation in 2005. A diplomat working at China’s consulate in Sydney defected to Australia and announced that Beijing’s campaign already was under way.

Illustration by Dionne Gain.Credit:

“In accordance with their fixed strategic plans, the Communist Party of China had begun a structured effort to infiltrate Australia,” said the defector, Chen Yonglin, “in a systematic way.”

Why us? Australia had been selected as a “weak link of the Western camp”. The party’s intention was to split Australia off from its alliance with the United States. We were to be a vassal state and a valuable one.

But Australia was in an economic swoon over China and nothing would be permitted to stop it cashing in. The Chen case was widely reported and promptly forgotten.

“Let’s all get rich together!” Chinese Premier Zhu Rongji had declared to a Sydney ballroom full of businesspeople in 1997, and that’s exactly what was happening.

Australian Prime Minister Anthony Albanese at the Temple of Heaven in Beijing.Credit: David Crowe

Beijing’s strategy involved many layers. Of course there is traditional state-on-state espionage. But it was vastly broader.

The party ran an influence campaign, partly through its United Front organisations operating in Australia. Rich businesspeople were dispatched to live in Australia to set up empires of influence. Their methods included political donations, sponsored trips to China, major investments and board appointments designed to win ecosystems of support.

And, of course, there was overarching economic entanglement. What Australia considered to be straightforward business was intended by Beijing as a tool of geoeconomic and geopolitical dominance.

In the year of Chen’s defection, China was Australia’s second-biggest export market, after Japan, and accounted for 12 per cent of our total exports. By the time COVID struck in 2019, China was buying 38 per cent of all Australian exports, more than double the share going to Japan.

We’d become the most China-vulnerable of all the world’s developed economies. It was imprudent to entrust so many of Australia’s national income eggs to one basket.

Incredibly, we’d made this blunder once before with a similar over-dependence. In the 1950s and 60s it was with Britain. It ended badly when London joined the European Common Market in 1973 and unceremoniously dumped Australian trade preferences. Australia had failed to learn the lesson of its history and was about to be schooled once more.

When Xi took power in 2012, he intensified the party’s drive to domination and broadened it. Beyond Asia, beyond Australia, beyond the Indo-Pacific. As he put it in speeches: “I will put China in a position to take the initiative and assert dominance.”

He didn’t limit or qualify the extent of this dominance. His initiatives and his ambitions extended globally. Australia was merely, as China expert and former journalist John Garnaut put it, “the canary in the coal mine”.

Beijing’s plan was working, and it was not the only major capital to think so. In Washington, Australia appeared to be the country most likely to “flip” from US ally to China lackey, as White House Indo-Pacific Coordinator Kurt Campbell has said.

Former prime minister Tony Abbott with Chinese President Xi Jinping at Parliament House in Canberra in 2014.Credit: Andrew Meares

Did Australian governments understand the quiet takeover that was under way? The intelligence agencies understood clearly and privately warned ministers for years. The spies also gave quiet warnings to selected major companies to protect them from being compromised unwittingly.

But no politician wanted to risk interrupting the intoxicating inflow of Chinese billions. Prime ministers and ministers spent years tiptoeing around the dragon in fear. What interrupted this apparently inexorable absorption of Australia into China’s sphere?

The process of political takeover or “elite capture” was exposed when the media reported that Labor senator Sam Dastyari – forced to pay $5000 to settle a lawsuit – had that paid for him by Chinese billionaire Huang Xiangmo.

Dastyari was drummed out of parliament and Huang declared persona non grata. Shockingly, Dastyari had broken no rules. Australia was now revealed to be wide open.

Malcolm Turnbull was the prime minister to call a halt to the party’s unchecked takeover. With Labor’s support, he banned Huawei, toughened laws against foreign interference and snapped Australia out of its torpor. Others followed with further defensive measures.

Xi decided that Australian resistance had gone far enough when the Morrison government called for an international inquiry into the origins of COVID.

He applied four-part coercive pressure – trade bans, a political freeze, detentions of Australian citizens as political hostages and the calculated harassment of the RAAF and the navy. And then delivered a set of 14 demands, starting with a diktat that Australia accept more Chinese investment.

Xi had shown his true face. Australia would kowtow or it would stand up. We stood up. Public support, as polls showed, swung heavily against Beijing. Both major political parties acted in the national interest.

To his credit, Morrison not only shrugged off the coercion, he marshalled national assets to strengthen Australia’s position. With Labor’s support, he joined the Quad, strengthened relations with Japan, India and others and proposed AUKUS.

The Albanese government continued Morrison’s initiatives and went further and better – its work with Pacific Island states stands out in securing Australia’s strategic hinterland. The government set out to reinvigorate Australia’s defences according to the Defence Strategic Review.

The government made no substantive concessions to Beijing but only moderated its rhetoric. Australia’s exports, with the sole exception of wine, successfully diverted to other markets. Australia has now reduced its dependency on China exports from 38 per cent to around 30.

Xi reversed course. Under the pretext of cooler Australian rhetoric, Xi has undone almost all the elements of coercion policy. It was an embarrassing failure that only encouraged other nations to stand up to his bullying. As The Economist magazine headlined: “Australia has faced down China’s trade bans and emerged stronger.”

So Australia survived the party’s first generation effort. How many more should we expect? “The consolidation of the socialist system,” says Xi, will require ceaseless struggle for “up to ten generations.”

Peter Hartcher is international editor.

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