We’ll stand up for national interest despite the Beijing bluster

Daniel Andrews has hurt Australia’s national interests with his foolish embrace of a Belt and Road agreement. It sets a state against the nation.

Daniel Andrews at Tiananmen Square in Beijing in 2015.

Australia-China relations are deeply troubled, but not exactly in a unique moment of crisis. Quite regularly, Beijing decides to test or punish Canberra. Beijing does this regularly with many nations. The ostensible cause might be some slight, or some alleged slip of courtesy or protocol by the offending nation, sometimes some arcane mis-reference to history that allegedly “hurts the feelings of the Chinese people”.

Most often the true cause is that the nation in question — Australia or the Czech Republic, Japan or France, Singapore or Britain — has taken some policy action in its own interest that Beijing doesn’t like, such as refusing some strategic Chinese investment.

Even that is not necessarily the real cause. Beijing simply asserts its will and checks if a nation will buckle. Nations that do buckle generally don’t buy a quiet life.

This tumultuous little passage in Australia-China relations saw us finish the week with two new Chinese trade measures. One is to speed up inspection and acceptance of foreign iron ore.

The official Beijing line is that this is not directed at Australia. However, the Chinese government-controlled Global Times always adds the threat. It says the measure will make it easier for Brazilian iron ore and this could hurt Australia.

For some time the Global Times has been saying that Australian exports to China will suffer because of political disagreements between Beijing and Canberra. Is the Global Times making threats to keep us off balance? Is it extracting political mileage out of a genuine move to cut red tape? Or is this the real threat of the Chinese state, lightly disguised — as so much of Beijing’s bullying routinely is — under a slender cloak of fraudulent deniability?

Then there is coal. Beijing has ordered state-owned electricity plants to use less imported coal and emphasise locally produced coal. The energy plants themselves generally don’t like this because Australian coal is much cleaner and more thermally efficient — that is, it produces much more energy per tonne.

This cycle has played out several times. Beijing balances getting cleaner coal plants, which makes it want to use Australian coal, against subsidising domestic producers. This is all disguised because, like so much that Beijing does, if done openly it would clearly breach World Trade Organisation rules and also the China-Australia Free Trade Agreement. In the past, the cycle runs out when power plants clear the domestic backlog. That might be a bit longer this time because the Chinese economy has sunk into such a coronavirus recession. In the first quarter of this year it shrunk by more than 6 per cent.

On Friday, China’s Premier, Li Keqiang, delivered a sober statement to the National People’s Congress. For the first time in its modern history, Beijing will not have an official forecast for GDP growth. The uncertainty is too great. The nearly half-trillion-dollar stimulus package will be directed at small business and keeping existing jobs.

That means there will be no big benefit for Australia from a Chinese stimulus package as there was in the global financial crisis a little over a decade ago. No huge new infrastructure development to suck in Australia iron ore, coal, gas and other commodities.

The commercial stakes are big. Last year Australia exported $79bn worth of iron ore to China and $14bn worth of coal.

Beijing’s earlier trade intimidation was more naked. It imposed absurd 80 per cent tariffs on Australia’s $600m barley exports and suspended shipments of beef from four abattoirs, which affects a similar value of beef exports.

The official technical reasons for these actions are baloney. The notional reason — that we had the temerity to publicly advocate an independent review of the causes and treatment of the coronavirus — is also much less than the real explanation.

Beijing has deep objections to bipartisan Australian policy to ban Huawei from participating in the 5G network, reject a proposed extradition treaty, tighten up national security provisions in the Foreign Investment Review Board, pass legislation to limit covert foreign interference in our politics and support the international rule of law in the South China Sea.

These Australian positions are bipartisan. They are all in our national interest. No self-respecting Australian government could have adopted the reverse position on any of them. They are the real cause of Beijing’s grief with us.

Thus, any alleged misstep from the Morrison government is not the problem. Nor is any over-identification of Canberra with Washington. Australia often disagrees with the US on aspects of China policy. Under the Abbott government we joined China’s Asia Infrastructure Investment Bank when Washington was urging allies not to. Similarly, the Morrison government has explicitly rejected Donald Trump’s kooky conspiracy theory that the coronavirus began in the Wuhan Institute of Virology.

Understanding that problems with Beijing are structural, not the consequence of any failure to sit up straight in class by the Morrison government, is critically important analytically. We cannot work out the best way to respond to these problems if we do not understand their true origins.

Both sides of politics, from Malcolm Fraser onwards, have managed the China relationship relatively well, with few glaring mistakes. Both sides of politics have worked assiduously to make the relationship work.

So here is a hard truth. There is nothing we can do to solve the China problem. We cannot build up structures, treaties, dialogue arrangements, people-to-people links, etc, that will ensure the relationship runs smoothly. We should do all those things. They are modestly helpful in their way.

But Beijing’s strategic ambitions contradict Australia’s national interests. Beijing has an ineradicable pattern of periodic bouts of bullying, intimidation and “teaching us a lesson”. Anyone interested in a primer on the dynamics of all this should read the crisp, brilliant chapter on China in Malcolm Turnbull’s memoir. Turnbull started out more or less pro-Beijing. But under Xi Jinping, as he records, Beijing became more powerful, more aggressive, more inclined to bully and bluster.

Turnbull is hardly a Cold War warrior or militant China hawk but, like any conscientious PM, he defended our national interests and found himself frequently in hot water with Beijing, with ministerial contacts frozen, furious denunciations in the Global Times, etc. As he usefully records, as long ago as April 2018, Chinese ambassador Cheng Jingye threatened that because of “unjust” criticism of China in Australia “trading ties could be damaged”. One thing Beijing looks for in such a conflict is to divide Australians. Sometimes this works and both sides of politics have been guilty at times of doing Beijing’s work. Kevin Rudd in 2008 gave a perfectly sensible, respectful speech at a Beijing University predominantly extolling the achievements of modern China. In a long, positive speech, there was a single paragraph suggesting China still had work to do to improve human rights in Tibet.

This was a mild and reasonable speech, infinitely less offensive than Barack Obama bagging out Australia over climate policy at the Brisbane G20 summit. The official Chinese reaction, though, was furious and the relationship, that nebulous beast, suffered. The Liberal opposition at the time was grossly irresponsible in the way it joined in to blame Rudd for messing up the relationship. This is exactly the dynamic Beijing always seeks. When it is unreasonably abusing an Australian government it can always rely on a section of our politics to take its side.

There is often a “whateverist” quality to the Australia-China lobby. Its mantra seems to be that whatever the Chinese Communist Party says, it agrees with. It almost makes you nostalgic for the honest ideological fellow travellers with the Soviet Union in the Cold War. At least they were sometimes motivated by genuine ideological commitment, however twisted. The China lobby seems mesmerised only by brute power and money. In the recent Canberra-Beijing disputes our politics has held together fairly well. Anthony Albanese is a combative, feisty Opposition Leader but he repeatedly stresses that he and the Labor Party are “as one” with the government over the need for a credible inquiry into the coronavirus.

Nonetheless, Albanese has not made a significant foreign policy speech since becoming leader. He should set out his views authoritatively on the US alliance, the relationship with China, and Australia’s place in the region.

Penny Wong is the most sophisticated senior Labor person on foreign policy. She has made respectable criticisms of the government — it should have locked in more support before going public on the proposed inquiry, its backbenchers talk too much, the temperature should generally be lowered — while maintaining bipartisanism on the key national security questions. Agriculture spokesman Joel Fitzgibbon’s contributions have been bizarre and frequently wrong on basic facts. He accuses the Coalition of “demonising” China and adduces as evidence the reduction of thresholds for foreign investments to be considered under FIRB and the foreign interference legislation.

These are almost nonsensical arguments. FIRB thresholds apply to everybody. And after Sam Dastyari and everything else we have learned about NSW Labor, for a senior frontbencher to claim the foreign interference legislation, which Labor supported, demonises China is grotesque.

Fitzgibbon’s populist instincts often embody a good deal of common sense but he has at best a crazy blind spot on China. Worse is the utterly indefensible obeisance the Victorian government of Daniel Andrews pays to Chinese propaganda. Victorian Treasurer Tim Pallas, like Fitzgibbon and with equal fatuousness and lack of evidence, claimed the Morrison government had vilified China. He also said, confusingly, that he didn’t know why Beijing applied tariffs on Australia but they were a result of the Morrison government’s bad language about Beijing. This is toeing the Beijing line in such an incoherent fashion that it cannot even recite Beijing’s talking points properly.

Andrews has hurt Australia’s national interests with his foolish embrace of a Belt and Road agreement. This contradicts national government policy and federal Labor policy. It sets a state against the nation. Any Chinese investment in Victoria will need FIRB approval, which Andrews cannot guarantee. But Beijing gets its propaganda pay-off straight away.

There is intense hostility to Andrews’s foolish move within the Labor Party. Labor senator Kimberley Kitching denounced the Victorian BRI deal and pointed out it fell at the first hurdle. It provides for unfettered trade between China and Victoria but Beijing has just smashed Victorian barley growers. Beijing won’t provide free trade for Victoria and punitive tariffs for Australia. It’s nonsense.

Bill Shorten conspicuously tweeted his support for an AWU declaration in support of the bipartisan Australian position in favour of a credible inquiry into the origins of the coronavirus. Other influential Labor figures are furious with Andrews. In international affairs, Andrews is a dangerous amateur without the institutional support to equip him to make sensible decisions. Beijing feasts on the ill-prepared and the amateur.

There is no way of knowing how the Australia-China relationship will play out over the next six months., Two huge factors will come into play: what Beijing does in Hong Kong and the US congressional reaction to that, and the role of the China issue in November’s US presidential election.

No Australian government could produce a smooth relationship with Beijing. A good government will manage the inevitable difficulties as well as possible. That’s as much as we can realistically hope for. And the beginning of wisdom is realism.