Cabinet archives: China is still crucial: Howard and Costello

The key to getting the China relationship back on track is trust and ­respecting differences, say John Howard and Peter Costello.

Then prime minister John Howard and then treasurer Peter Costello in May 2000. Picture: AAP

China remains critically important to the Australian economy and the key to getting the trade ­relationship back on track is re-­establishing mutual trust and ­respecting differences, argue John Howard and Peter Costello.

“We have to first and foremost understand how important China is to Australia’s economy,” the ­former prime minister told The Weekend Australian in an exclusive interview. “China is a very ­important customer and we shouldn’t lose sight of that fact.

“We can’t have it both ways. We can’t say, as we frequently did, that we avoided the worst effects of the GFC for two reasons — firstly, we were in very good fiscal shape courtesy of the Howard government’s policies and, secondly, we had this wonderful resources trade with North Asia, particularly China.”

Mr Costello agrees that Australia cannot afford to “ignore” China, emphasising that it would be ­mutually beneficial for both countries to repair the relationship.

“China is one of the world’s two great powers and it is a great power in our region and we cannot ignore it,” the former treasurer told The Weekend Australian.

“We want China to respect us and our differences. They will say they are entitled to be treated with respect, and they are, they have a place.

“It is in our interests and their interests that we continue to trade with each other.”

Last month, reflecting on their time in ­government from 1996 to 2007 — a period in which the Australia-China relationship was elevated to a new level — Mr Howard and Mr Costello both stressed that current President Xi Jinping was a very different leader to Jiang Zemin and Hu Jintao, the two Chinese presidents who preceded him. “China has changed under Xi Jinping,” Mr Howard said.

“The main reason the relationship between Australia and China has changed and got more difficult is that Xi Jinping is a very different president from either Hu Jintao or Jiang Zemin. He is more assertive. He is more aggressive.

“You have to ask yourself why is China being aggressive towards us? There is no fundamental reason for it. I don’t think the fact that (Australia) called for an inquiry into the pandemic is a good enough reason. That doesn’t convince me.

“The foreign interference legislation is quite justified. I don’t see our foreign investment policy as having taken a distinctly anti-­Chinese trend.

“One of the great difficulties — and this is based on my experience of having chaired three high-level dialogues in the past four years, two in Australia and one in Beijing between the Australian side and the Chinese side — is that they just do not accept the notion of a free media.”

Both Mr Howard and Mr Costello agreed Australia was being unfairly treated by China and should not waver from defending its values or its sovereignty. “What you have to do with China is find things that we have in common and focus on them,” Mr Howard said.

“It is no good having ideological debates because they are not going to change and we are not going to change. I think the government has been very effective in standing up for Australia’s rights.”

“We cannot be bullied and we will not be bullied,” Mr Costello said.

“But by the same token, do we want to be a good trading partner with China? It is finding that path where we respect them and, more importantly, they respect us, and we trade with each other even though we have differences.’’