Ties at ‘tipping point’ amid fears of foreign interference backlash

Business is signalling that Australia’s relationship with Beijing is at a ‘tipping point’.

Chairman of the Australia China Business Council, John Brumby

Business is signalling the relationship with Beijing is at a “tipping point” as it urges Malcolm Turnbull to ensure tensions over new measures curbing foreign interference do not trigger a damaging reduction in the numbers of ­Chinese students or tourists.

National president and chairman of the Australia China Business Council, John Brumby, told The Australian relations were “very finely balanced”, while former Australian ambassador to Beijing Geoff Raby warned that a sustained period of turbulence could reduce international demand for a university education in Australia — an export sector worth $28 billion a year.

The note of caution comes after the Prime Minister last week unveiled reforms aimed at limiting the ability of foreign powers to influence Australian political ­affairs amid uproar over Labor senator Sam Dastyari’s links to billionaire Chinese property developer and Communist Party-linked political donor Huang Xiangmo.

The range of measures to deal with foreign influence also triggered a fierce reaction from Beijing, with the Chinese embassy warning the tenor of political ­debate in Australia was working to the “detriment of political mutual trust” and rejecting “unjustifiable accusations” it was behind a Cold-War style infiltration of Australian institutions.

Mr Brumby — a former Labor premier of Victoria — said the number of Chinese people visiting Australia was expected to increase to 3.3 million by 2026, up from the 1.2 million last year who spent a total of $9.2bn. He also urged political leaders not to forget that China’s emergence as an economic powerhouse over the past 20 years had underpinned Australia’s 26 years of consecutive economic growth.

“The relationship is finely balanced. It is at a tipping point,” he said. “And for Australia, of course it’s crucial to protect national ­security. At the same time, it’s crucial to understand that by far the biggest single factor that has driven Australian prosperity over the last two decades has been the rise of China and we ignore that at our peril ... We are concerned about anything which may harm our ­bilateral relationship.”

Dr Raby — who was Australia’s ambassador to China from 2007-11 — said the introduction of measures to crack down on foreign interference was unlikely to trigger any official economic ­retaliation from Beijing, but ­argued it could result in a damaging image problem for Australia if steps were not taken to smooth over differences and to reset relations.

“If the Chinese government projects Australia as an unfriendly nation and they sustain that, then it could well have an impact on tourism to Australia and the education sector because outward- bound Chinese tourists who are potential students or parents will feel perhaps less comfortable coming to Australia,” Dr Raby said. “I think that will only happen if it were a sustained effort by the Chinese government.

“There needs to be some high-level engagement. I think it would be very helpful if the Prime Minister set out very clearly our interests in the China relationship and why it’s an important relationship.”

Mr Brumby said overseas students contributed “one third of all of the income of Australian universities”.

Immigration Minister Peter Dutton yesterday continued to keep up the pressure on Bill Shorten over what he told Senator Dastyari before the NSW senator allegedly gave counter-surveillance advice to Mr Xiangmo in 2016. “Mr Shorten still has significant questions to answer about his own involvement in his discussions with Mr Dastyari,” Mr Dutton told Sky News. “If he (Senator Dastyari) is a double agent, he shouldn’t be in the Australian Senate and Mr Shorten ultimately needs to show the leadership to sack Mr Dastyari and to send a very clear message to the rest of the Labor Party.”

Mr Dutton also made clear he did not think China would put trade restrictions on Australia in retaliation for the Turnbull government’s tougher rhetoric against foreign influence. “I don’t think that is appropriate and I don’t think that is what the Chinese will do,” he said.

Business Council of Australia chief executive Jennifer Westacott said it was important to preserve business consistency as well as regional stability by striking a delicate balance between economic and security imperatives.

While she praised the government’s recently released foreign policy white paper, she said it was critical for business to “know that Australia’s foreign policy will not change on a whim based on domestic political expediency”.

“The biggest concern for businesses remains barriers to entry, the roadblocks to investment and trade between nations,” she said. “Business is focused on working through these ‘behind the borders’ barriers to trade and investment as the best way to ensure regional growth lifts the economic tide for the entire region.”

Chief executive of the International Education Association of Australia, Phil Honeywood, warned there had been times where China had responded to ­periods of tension by targeting higher education markets.

“There have been examples in the past where the government of China both directly and indirectly have turned the proverbial tap off,” he said. “This occurred with Chinese students going to New Zealand about a decade ago because of concerns about the quality of education provided in New Zealand. That was quite a massive downturn for the New Zealand international education industry.

“There is a precedent for us in our own region. The more recent reminder is the Lotte department store chain from South Korea who had their stores boycotted in China, along with tourism into South Korea being discouraged by the Chinese government.”

China introduced unofficial sanctions against Lotte after it allowed land to be used for the deployment of the Terminal High Altitude Area Defence missile defence system after Seoul reached an agreement with Washington in 2016. The company’s supermarket sales in China fell 95 per cent, while Chinese tourism to South Korea nearly ground to a halt.

Mr Honeywood said the value of Chinese students to Australia’s largest services export was about $8.5bn but Chinese families would “think twice before they decide for political reasons not to send their child to Australia”.

Vicki Thomson, the chief executive of the Group of Eight universities, said: “It is important that the right balance is struck between national security and the needs of our students,” she said. “We are working with government to ensure this occurs.”