Australia-China relations must work for both nations

“If you don’t know where you are going, every road will get you nowhere,” Henry Kissinger said when his autobiography, Years of Upheaval, was published in 1983. Key questions on where Australia’s complex relationship with China, our largest trading partner, is going and how to seize opportunities and manage the sharper edges were at the centre of The Australian’s Strategic Forum in Sydney on Monday. The speakers’ insights were expansive and detailed, ranging across strategic issues future generations will face to the economics of Chinese investment. The forum was held amid concerns over China denying entry visas to Coalition MPs Andrew Hastie, chairman of the parliamentary intelligence and security committee, and his colleague James Paterson. Escalating violence in Hong Kong also loomed in the background.

China’s rejection of those visas, as Department of Prime Minister and Cabinet former head Martin Parkinson said, was a sign of its diplomatic immaturity. In standing our ground on issues such as foreign interference, he said, Australia effectively was laying down boundary markers: “Essentially we are engaged in a negotiation with China about our future sovereignty; that is, about the limits of where our interests and values will be protected.” In coming years Australia could expect complex, often fraught diplomacy over trade, higher education and strategic jostling.

In his keynote address, Paul Keating focused on the big picture, arguing that while Australia needed the US to be a balancing force in the Asia-Pacific, Donald Trump was not taking multilateral events in the region seriously. Neither the President nor US Secretary of State Mike Pompeo had attended the recent East Asia Summit. Being the balancing and conciliating regional power was hard, Mr Keating said, “if you don’t turn up … If you pawn the crown it is incapable of being redeemed at the same value.” That direction had begun with Barack Obama and was likely to continue, regardless of which side of US politics won next year’s election. Mr Keating argued Australia’s foreign policy lacked “any strategic realism” and was leaving the nation unable to manage the rise of China effectively. He said Australia should be actively involved in creating a web of co-operative regional ties but should steer clear of any assumption that China’s rise was incompatible with US interests.

But Dennis Richardson, former head of the Defence and Foreign Affairs departments and ASIO, had a different view. Mr Richardson said a “few missteps” aside, the government had got China policy pretty right. There was a consistency, he noted, between the major parties on China. Australia’s policy on China had been consistent for years and was likely to remain so.

Josh Frydenberg was optimistic that a trade deal would be struck between the US and China after global investment and growth had been affected by the tensions between the two largest economies. It was critical, the Treasurer said, that a global rules-based order be restored. As he pointed out, the relationship between Australia and China needed to “work for both countries”. Where an alignment of interests existed, it was important to work effectively. Maintaining public sentiment in favour of foreign investment that supported jobs and growth was critical, he said, in areas where security was less of a problem. But Mr Frydenberg, sensibly, has extended the definition of critical infrastructure to include data. Doing so would protect Australians’ privacy in regard to Chinese companies applying to buy health companies, for example.

Speaking via a video link, Steve Bannon, former chief strategist to Mr Trump, was the ultimate pessimist about China’s dark side, warning “we have to confront this totalitarianism”. Those worried about the economic impact of a bad relationship with China, he said, should acknowledge “this is a historic time”, likening it to Europe in the 1930s. David Gonski, chancellor of University of NSW, where 15,000 of 23,000 international students were from China, said hosting Chinese students was good “soft diplomacy” for Australia because they stayed for an extended period and received a “good product”. The economic reality, University of Queensland vice-chancellor Peter Hoj said bluntly, was that Australian universities, without a major boost in funding, would not be able to maintain quality in the event of a decline in the number of international students, who paid $8bn in fees annually.

At the outset of the forum, The Australian’s editor-in-chief Christopher Dore said its goal was to “identify a path through the diplomatic and economic maze that confronts us”. Speakers identified a range of pathways. But as Paul Maley noted, “anyone expecting clarity to emerge from the fog of Sino-Australian relations should prepare to be disappointed. Disputes over trade, human rights, foreign interference — as well as the occasional point of common interest — are not bumps on the road to a normalised relationship with China, they are the relationship with China.” China is richer, more powerful and more politically self-assured than before, witnessed by its militarisation of the South China Sea. But the risk, as Mr Parkinson said, was giving “too much weight to the legitimate security concerns associated with China’s rise” while ignoring “the economic potential, to say nothing of the Chinese government’s phenomenal achievement in lifting some 700 million people out of agrarian poverty and into the urban middle classes”. Balancing those imperatives will be crucial in the decades ahead, as the forum has crystallised.