Universities have the knowledge, skills and technology Australia needs

Universities have a lot to contribute to Australia’s global strategy.

We all know the world has changed. We’re staring into the face of a new cold war which, in the worst case, could one day be hot one.

China looms as the new antagonist. But, at the same time, we are beset by the mother of all contradictions because of the extent Australia is economically beholden to China.

David Uren, writing in the ASPI Strategist last November, put it plainly.

China buys 100 per cent of our nickel exports, 95 per cent of our timber, 83 per cent of our iron ore, 77 per cent of our wool, 76 per cent of our lobster, 64 per cent of our cotton, 57 per cent of our wood chips, and 55 per cent of our processed food.

China also buys 31 per cent of our education exports (worth over $12bn in 2019). That’s a high level of dependence for universities but small compared with the degree to which other industries have put all eggs in the China basket.

But, as with many of the other China-dependent industries, there are no viable alternative export markets for universities if Beijing suddenly decides to shut off the flow of students.

Right now we are particularly vulnerable. Of about 140,000 Chinese who hold Australian student visas, 85,000 are in China and unable to travel to Australia.

Not all of these visa holders are currently enrolled in courses but those who are, are studying online. The Chinese government could, if it chose, cut internet links to China for Australian educators. It would put many Australian universities in a desperate financial position.

What can Australia do in this predicament?

It’s not an exaggeration to say we are facing our greatest challenge since World War II.

One aspect of it is strategic and diplomatic. We need to build strong and trusted alliances in the region. Another aspect is economic. We need to create sovereign capability for many products, develop homegrown skills and technologies, and find new export markets. Then there is the defence problem. We need to rapidly increase our capability and strength.

It’s a complex and difficult problem. It requires clear-eyed commitment by government, as well as the flexibility and guile to play a deep and long game.

And although we hear about the “beating drums of war” from Home Affairs Department chief Mike Pezzullo, it should be clear that there’s no strategic upside to provocation. It sounds tough, and might play well, but it would be subordinating Australia’s vital interests to short termism.

Defence Minister Peter Dutton — whose rhetoric about China has been notably sharper in the past few weeks — should also avoid falling into that trap.

More than a century ago, US president Theodore Roosevelt famously said of high-stakes international relations: “Speak softly and carry a big stick.”

So, in other words, don’t get into a tit-for-tat with China using hard words, which could damage our economic interests and worry potential allies.

Instead we and our allies should make it quietly clear to China that the risk of, say, invading Taiwan is not worth the likely cost. We alone don’t have that big stick. But working in concert with our allies we do.

We also need to build homegrown capabilities in many areas of technology. So here’s some advice for government. Set aside things you don’t like about universities and talk to them about the things they can do and that Australia needs.

I think you’ll find them ready to give heart and soul.