Power and Paranoia: Why the Chinese government aggressively pushes beyond its borders

It was a sunny day in a Melbourne summer, perfect for lunch outdoors. John Garnaut and his wife, Tara Wilkinson, were in the city, without their kids for a bit, and spontaneously decided to eat at one of the restaurants in the city’s famous Federation Square. The former Beijing correspondent for The Age and The Sydney Morning Herald had gone to work for Malcolm Turnbull to write a classified report on the Chinese government’s covert interference in Australia. He had left government service with the satisfaction of having seen the parliament act on it, passing two new laws against covert foreign intrusion, and now worked as a consultant.

But when they sat down at a table at the Chocolate Buddha, the couple found they couldn’t enjoy their lunch. Four people approached, separately, and hovered nearby, uncomfortably close. Men and women. They were conspicuous; it was not a very busy time at the Chocolate Buddha. They said nothing, but would stare at John and Tara until the couple turned to look at them, and then quickly look away. One even sat at the same table, but without ordering, until the waiter asked him to move. He then sat at the nearest corner of the next table. It was unnerving; a deliberate act of intimidation.

John Garnaut.Credit: Alex Ellinghausen

“How are you?” John asked one woman in Mandarin. She said nothing and abruptly left. But, oddly, she returned 10 minutes later wearing a different-coloured shirt. The group persisted even after John and Tara got up to leave, until Tara started to film them with her phone camera. One man was walking directly towards her until she produced the phone, at which point he immediately started walking sideways, crab-style, to avoid having his face recorded.

It wasn’t the only act of harassment against Garnaut and his family, but it was a notably overt one. The message was plain: you have displeased the Chinese government and we are going to punish you. We can always find you, we know where you live, we can act with impunity in the middle of Australia’s biggest cities. We don’t care that you worked for a prime minister. We are not afraid of Australia’s authorities.

It was January 24, 2019. The foreign influence laws had taken effect six weeks earlier.

Their conduct didn’t mark them as professionals. But whoever tipped them off to Garnaut’s whereabouts probably was. Federal agencies were vexed about how to respond. John and Tara took their problem to Victoria Police. The couple sat down with three plainclothes investigators from the Organised Crime Unit at a cafe in Little Bourke Street in August. As Tara recounted some of her experiences, one of the police officers leaned forward and interrupted: “Do you realise the people behind you are filming us?” The stalkers had helpfully provided first-hand evidence to the police. An investigation into potential criminal stalking was under way at the time of writing.

The never-ending pursuit of power, the relentlessly expanding influence and paranoid nature of the Chinese Communist Party means that it will continue to press outwards unless and until it meets resistance. At home and abroad, it imposes one control after another until it is satisfied that it has total control. It is an ideology of authoritarianism animated by a psychology of totalitarianism.

Espionage and foreign interference is insidious. Its effects might not present for decades and by that time, it’s too late.

Duncan Lewis, former ASIO head

The passage of Australia’s foreign interference laws did make something of a difference. But is it enough to protect our democracy? Perhaps the starting point is to ask what we’re protecting against. What does the Chinese Communist Party want from Australia?

Duncan Lewis, who was not only the previous head of the Australian Security Intelligence Organisation (ASIO) but also commander of Australia’s Special Forces, secretary of the Defence Department and Australia’s inaugural national security adviser, is especially well qualified to answer. “They are trying to place themselves in a position of advantage,” he told me in an interview shortly after retiring in September.

“Espionage and foreign interference is insidious. Its effects might not present for decades and by that time, it’s too late. You wake up one day and find decisions made in our country that are not in the interests of our country. Not only in politics but also in the community or in business. It takes over, basically, pulling the strings from offshore.” Note that, although Lewis was a longtime soldier, traditional military invasion does not feature in his answer. This is the modern way of intelligent statecraft, conquest and control without war.

Another expert comes to the same conclusion from a very different lifetime of experience. Anson Chan, the former chief secretary of Hong Kong, occupied a position of trust unique in history. She was the last head of the Hong Kong civil service under the British and the first under the Chinese. She served four years under each, evidence that both powers trusted her impartiality and professionalism. The career civil servant is now 79.

“I don’t think Australians understand the sort of country they’re dealing with. Look at the way they are infiltrating, even in Australia,” she said during a visit to Melbourne in 2016. “Australia is a very open society, so it wouldn’t occur to most people the designs of the one-party state. And it wouldn’t have occurred to the people of Hong Kong until we experienced it first-hand. No one should be under any illusions about the objective of the Communist Party leadership: it’s long-term, systematic infiltration of social organisations, media and government. By the time China’s infiltration of Australia is readily apparent, it will be too late.”

Chan stepped out of retirement to support the campaign to keep Hong Kong’s autonomy, as promised by Beijing under the Basic Law, which serves as Hong Kong’s de facto constitution. As a result, once trusted by Beijing to administer Hong Kong, she is now denounced in Party media as “an important pawn for anti-China forces in the West to meddle in Hong Kong affairs”.

Paradoxically, perhaps, while China’s conduct outwardly seems offensive, from within it is designed to be defensive. “The Chinese Communist Party’s priority is to pre-empt all perceived threats to state security,” says Samantha Hoffman of the Australian Strategic Policy Institute, an expert on China’s use of technology for social control, “which means the Party must not only protect its existing power, but also continuously expand its power outward in what feels like an attack to China’s targets”.

The prominent New Zealand sinologist Anne-Marie Brady explains why this came about. From the very beginning of the People’s Republic in 1949, “influenced by China’s recent history and guided by Marxist-Leninism, the Chinese Communist Party stressed the importance of resolving the foreign presence in China, eradicating the harmful, taking what was useful and bringing it under Chinese control”. The system for doing this, its waishi system for managing the foreign world, “is a defensive tactic to control the threat of the impact of foreign society on the government’s political power”, says Brady. The system is “part of a cultural crisis, a conflicting inferiority/superiority crisis that Chinese society has faced since its earliest contacts with the technologically superior Western world in the 19th century”. To the outsider, it appears that today’s China is so mighty that it must have outgrown such timorousness. Yet the psychology and the policies of an impoverished and uncertain new republic of 70 years ago remain operative today.

Controversial businessman Huang Xiangmo has been accused by ASIO of being a covert agent of Chinese government influence - and had his Australian permanent residency cancelled.Credit: Ryan Stuart

The good news here is that the party’s intrusions are not intended to be malicious, but that’s little consolation because its intrusions are aggressive nonetheless. Further, it means its quest for perfect protection is both paranoid and never-ending. You cannot reassure a paranoid person that he or she is secure; nor can you reassure a paranoid political party-state that it is safe. Its systems and policies are structured to expand endlessly. Under this mindset, the greater China’s reach, the greater its ability to protect itself. So it must not stop reaching.

China’s President, Xi Jinping, has told his party that it must brace for a long ideological struggle. Early in his tenure he gave an internal party speech, not released until six years later, in which he said that “the eventual demise of capitalism and the ultimate victory of socialism must be a long historical process”. Regardless of how China seems to us – and it’s hard to think of today’s China as communist or even socialist in its economic principles – this is how it sees itself.

Xi portrayed China as the challenger striving to defeat a stronger, more established West: “We must profoundly understand the self-regulating ability of capitalist society, fully appraise the objective reality of the long-term advantage of Western developed countries in the economic, scientific and military spheres and conscientiously prepare for all aspects of long-term co-operation and struggle between the two social systems.” He warned his party that it would not be “a walk in the park”. It was likely to continue long beyond the lifetime of anyone alive today. He quoted the former paramount leader Deng Xiaoping’s 1992 insistence that “consolidating and developing China’s socialism will take dozens of generations”.

So how have the new foreign interference laws helped brace Australia for this mighty struggle? Apart from incurring Beijing’s displeasure and earning Australia a place in the Chinese government “freezer”, with a ban on high-level visits and a go-slow on Australian coal purchases, that is. The laws did tamp down some of the activity by the groups organised in Australia to do the work of the United Front Work Department, the Chinese government agency tasked with organising Chinese populations overseas covertly to serve its strategic interests.

Some of the United Front community and cultural associations have become more circumspect about their connections to the Chinese government, removing references from their websites. They have become more cautious in the bellicosity of their statements of support for Chinese government policies. One of the larger United Front affiliates, the Australian Council for the Promotion of Peaceful Reunification of China, has become less active, as it’s seized by an internal split over just how overtly pro-Beijing it should be.

And the laws have sobered some non-Chinese Australians. Labor’s former foreign affairs minister Bob Carr has left the Australia-China Relations Institute, which was set up at the University of Technology Sydney (UTS) in 2014 with a $1.8 million gift from billionaire Chinese businessman Huang Xiangmo, a man ASIO accused of being a covert agent of Chinese government influence.

Huang personally recruited Carr for the post. Carr said the institute presented “a positive and optimistic” view of Australia’s relationship with China. Carr remains at UTS, now as an authority on climate change. Australia’s Foreign Influence Transparency Scheme requires that anyone doing the work of a foreign state must put their name on a public register. Huang was the benefactor to Sam Dastyari before the former Labor senator’s fall from grace over their relationship.

The public scrutiny of the purported affiliations of the new Liberal MP, Gladys Liu, who was elected at the May federal poll, also shows a new level of intensity. The media and the Labor opposition demanded to know about the various Chinese community associations listing her as a patron or member. She disavowed them, saying she wasn’t aware that they’d claimed her support. As uncomfortable as this was for Liu, it was an illustration of the heightened vigilance about potential covert foreign interference in Australian politics. Liu’s extraordinary success as a fundraiser – more than $1 million by her own account, before she’d even been elected to parliament – remains to be probed.

Prime Minister Scott Morrison, in a desperate effort to protect his new MP, accused the opposition of racism. This is a favoured tactic of Beijing. Any scrutiny of Chinese activity is “racist”. Morrison should have resisted the urge to do Beijing’s work for it. Australia’s former race discrimination commissioner, Tim Soutphommasane, didn’t think it was racist to scrutinise Gladys Liu. “Questioning by Labor and the crossbench members of Parliament on this is legitimate and reasonable,” he said.

At the same time, the NSW Independent Commission Against Corruption (ICAC) inquired into NSW Labor MP Ernest Wong, discovering uncomfortable allegations that he broke the law to conceal illegal donations from Huang Xiangmo. Morrison did not accuse the ICAC of racism in pursuing a Labor MP. The PM was wrong to put the exigency of a partisan urge to protect his MP ahead of the higher need to protect his country.

“With these new laws, a democratic pushback has started,” says Feng Chongyi, an associate professor of China Studies at UTS. “It starts to change the incentive structure in Australian society, and in particular in the Chinese community in Australia.”

How so? “Before, Communist patriots were taking benefit from both sides,” Feng explains. “They engaged with the United Front to carry out political tasks, and they not only reaped benefit from the Chinese government from doing that, they could also continue reaping benefit from Australian society and Australian government.

“Simply because they are backed by Chinese authorities, and by extension the Chinese community, they develop great capacity for fundraising and can raise tens of thousands of dollars at lunches and dinners,” Feng says. “Their enhanced ability to raise funds then makes them valued by Australian
political parties. They command a lot of followers. They then enjoy high profiles and they enjoy the privilege of meeting leaders in Australian politics, on both sides.

“The majority of Chinese-Australians have been wavering politically. They want to carry on their normal lives in Australia, but in the meantime they are very, very nationalistic. They are Australian citizens but they have never shown that to the Australian public. But hundreds of thousands of them will come out to wave the red flag to welcome Chinese government visitors.”

Modern Australian multiculturalism has no difficulty with the international attachments of immigrants. A Hawke government immigration minister, Robert Ray, liked to quip with various ethnic communities that while he fully expected the first-generation immigrants to cheer for the sports teams from their country of origin, their Australian-born kids should be screaming for the Aussie teams. In other words, we understand that you have ties of sentiment and bonds of kinship to other countries, and we’re unconcerned. We know it takes time to put down roots in new social soil. This is a part of democratic pluralism and it’s an enrichment of a society. But it cannot tolerate acts to advance a foreign political movement with hostile intentions.

The new laws have also helped increase scrutiny of the Confucius Institutes in Australia. Australia’s ready embrace of these language and culture institutions, funded by the Chinese government, is another case of Australia thinking itself close to China when in fact it’s been simply uncomprehending. The NSW Education Department commissioned an independent review of its 13 Confucius Classroom agreements. It found “this arrangement places Chinese government appointees inside a NSW government department” and thus that the program had “appointees of a one-party state that exercises censorship in its own country working in a government department in a democratic system”.

The NSW government is shutting down the scheme. It intends to continue the Chinese learning programs, but fund them itself. The 13 Australian universities that host Confucius Institutes have started to re-examine their arrangements. Four turn out to have given Beijing explicit power to control “teaching quality” – a surrender of academic freedom in return for foreign government funding.

Probably the single most important act of deterrence was the federal government’s decision earlier this year to reject Huang’s application for citizenship and cancel his permanent residency on character grounds. The Australian Tax Office is now claiming $140 million in unpaid taxes. He was a central figure in the Chinese community in Sydney. After he bought his $12.8 million property in Sydney’s upmarket Mosman, local real estate agents were surprised by a flurry of other Chinese buyers asking for similar properties nearby “and their houses, as we understood it, couldn’t be higher than his on the hillside or better than his”, a mark of deference to the “King of the Mountain”. The particular locale, Beauty Point, was renamed “Beijing Point” by local wags.

But two big questions remain. Are there covert agents of Chinese government influence working in Australia? And why are the foreign influence laws not being enforced?

The public register, maintained by the Attorney-General’s Department, is a desultory affair. The presidents, patrons, directors and donors of foreign citizenship associations need to put their names on the register if they are representing a foreign government. That’s all they need to do – operate openly. There are no costs, no penalties, no stigma. One official likened it to a customs declaration form. At the time of writing, the register contained a scant 181 entries. Most are known, reputable firms and individuals: lobbying businesses; a few foreign companies; only one former Australian minister, Brendan Nelson, on the advisory board of a French firm; and one former official. In an odd misstep, the Attorney-General’s department made headlines by asking Tony Abbott to show cause why he shouldn’t have to register as a foreign agent. It’s not that former PMs should be exempt but that the evidence was that he’d taken a speaking fee from a British conservative group. Accepting a one-off speaking fee doesn’t seem to pass the commonsense test as a compromising act.

More troubling are the thousands of other companies and agencies and the tens of thousands of individuals who should register. What about the Confucius Institutes, for instance? People or entities suspected of doing the work of a foreign power are supposed to be issued a “show cause” notice to explain why they haven’t registered. Failure to register is a crime punishable by up to five years in jail. None had been issued by the time of writing. If they are found to be representing a foreign power covertly, they should be prosecuted and penalised according to the law, and jailed as the law provides, for up to five years, in serious cases of subversion and espionage. Will this cause diplomatic ructions? Almost certainly. That is not an argument for inaction.

The best defence for the apparent neglect is that the law took effect recently, in December 2018. But if an Australian PM announces in parliament, “we will unleash the full force of powerful new laws and defend our values and democratic institutions”, then nothing happens, why would any foreign government take it seriously?

One official said that the enforcement budget was inadequate, and for the same reason ASIO has had to concede publicly that it is being “overwhelmed” by the sheer number of foreign espionage and influence activities under way against Australia. Another said the government was in consultations to clarify details. (The Act has already been amended several times for clarity.) A third said the problems of enforcing the scheme were being “sorted out”. A fourth stated the government was too busy “chasing terrorists around the desert in Syria” – a vital activity but not one that excuses allowing foreign government agents to run amok in Australia.

Australia now needs to work harder for its growth and get active to protect its democracy. Otherwise both are in danger.

Australia has many fine laws that are being flouted through lack of political will. As we’ve learnt in the past few years, major businesses and famous chefs have for years been systematically underpaying their workers and getting away with it because the Fair Work Commission wasn’t enforcing the law. Misconduct by the major banks was rampant because federal agencies lacked the staff and the will to investigate. Newly built apartment blocks are uninhabitable because state governments have failed to enforce their building codes.

It is a characteristic of Australia today that governments, state and federal, are failing as functional entities. They have allowed vital laws to lapse through inexcusable neglect. They snap into action only when the media expose a vacuum where there is supposed to be an operational core.

The state, as an entity charged with conducting the rule of law, has been hollowed out. The people live under the assumption that their taxes, their elected representatives and their public servants are protecting them as the law guarantees. But in industry after industry, this has been exposed as a hoax.

UTS associate professor Feng is puzzled by the lack of enforcement of the new laws. “In Chinatown, in the Chinese community, there are lots of guys who behave like Huang Xiangmo. Backed by the Chinese authorities, enjoying the support of the Chinese community by extension, they develop great fundraising capacity and become highly valued by Australian political parties. They should be required to explain their activities, too.” And, as the scandals that continue to spill out of NSW and Victorian state politics demonstrate, there are quite a few people circulating in state Labor parties who need to explain what they were doing, too.

It is worse than pointless for parliaments to pass fine laws, for politicians to make grand speeches, if the laws are not enforced. The foreign interference laws, themselves partly the result of a media exposé by the The Sydney Morning Herald and The Age in conjunction with the ABC, appear to be in danger of falling prey to exactly this national lacuna. The four people stalking John Garnaut and Tara Wilkinson in Melbourne, and whoever had tasked them with their assignment, seemed to think so.

In the Chinese community, there are lots of guys who … develop great fundraising capacity and become highly valued by Australian political parties.

Feng Chongyi, an associate professor of China Studies at UTS.

Australia and China have got rich together. For Australia, that is quite enough. But China’s government wants more. As much power and influence over Australia as it can possibly get, using fair means or foul. But what Beijing can get is limited not only by China’s abilities, but also by Australia’s will. For all its power, China is neither all-powerful nor irresistible. Australia can shape its engagement with Beijing. There has been considerable co-operation between the two countries. But, as Xi warned, there would be aspects of both “long-term co-operation and struggle”. To foreign audiences, however, Xi, and all Chinese government officials and spokespeople, only ever mention one half of the equation: the co-operation, never the struggle. The key to Australia’s future with China, if it is to retain its sovereign independence and the liberties of its people as well as the comforts of prosperity, is to find a way to manage both.

The comfortable set-up where an undemanding China supplied ready growth while a benign America kept the world safe for democracy is gone. Australia now needs to work harder for its growth and get active to protect its democracy. Otherwise both are in danger. The world has now entered a low-growth economic reality in a democratic recession. The vital global goods that have sustained our prosperity and our liberty are in dwindling supply. Beijing wants greater control over our country as the price of its business. America’s president flirts with dictators, disdains democracies and tests the resilience of the democratic norms of his own country.

But Xi Jinping’s China Dream has hit some unsettling interruptions. Xi suddenly finds himself confronting multiple, urgent problems. He has a pork supply crisis across China, a political crisis in Hong Kong, a foreign policy and trade crisis with the US and, overshadowing everything, an economic slowdown. China’s private sector, its growth dynamo, shrank last year for the first time in two decades. Many powerful people in China, their interests damaged by Xi’s anti-corruption purge, are looking for an opportunity to hurt him. The Australian foreign-policy analyst Allan Gyngell reminds us that, “The Chinese political system may be authoritarian, but individuals, institutions and interest groups contend within it.”

Australia often sees itself through the lens of its vulnerabilities to China, and they are real, but it also needs to remember its strengths. The principal one is mindset, a determination to be proudly ourselves, a distinctive country with our own values and views, our own potential and our own priorities, our own history and our own future, neither Chinese nor American. No country is perfect and Australia has much work to do, but it has achieved for its people the best living conditions available on planet Earth. And, according to the US thinktank Freedom House, Australians today also enjoy more freedom than even the citizens of the self-styled land of the free and home of the brave itself.

Many of the richest Chinese, who can command every luxury and privilege at home, nonetheless prefer to live in Australia. We are the number one choice for rich Chinese looking to migrate, ahead of the US, Canada and Switzerland. This is a more telling indicator than any amount of nationalist chest-puffing and official propaganda.

Australia needs to concentrate on strengthening itself, making itself armour-plated, metaphorically speaking, against foreign subversion, so that it can engage confidently with China and the world, because it cannot count on anyone else. Australia is best served when democracy is thriving everywhere, but with a global democratic recession now entering its 14th year, we have to be prepared to face a world where it is in retreat everywhere. Australia has to be prepared to go it alone if necessary. History is forcing us out of our complacency. Whenever Australia is asked to choose between China and the US, the ultimate answer must be that we choose Australia.

This is an edited extract from Quarterly Essay 76, Red Flag: Waking Up to China’s Challenge (Black Inc; $23), by Peter Hartcher, which is out on Monday.

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