Where is Australia heading in its relationship with China?

Steve Howard is Secretary General of the Global Foundation and an International Advisor to the Asian Infrastructure Investment Bank. This article was published on 17 January 2018.

Recent domestic discourse in Australia about its relationship with China has become increasingly polarised.

The Australian Government appears to be moving towards an openly frostier position towards China and away from what had previously been a more careful and calibrated approach by whichever major party happened to be in power in Canberra. If this is true, are we ready to live with the implications?

Context:

For the past 20 years, the Global Foundation has made a considerable effort to encourage China in going global, mindful of Australia’s national interests and, at the same time, of the changing international landscape, in which China, the most powerful of emerging states, would have a greater global impact.

In the 2000’s, successive prime ministers, including John Howard and then Kevin Rudd, personally participated in and directly supported Foundation programs in China, Washington and other parts of the world that focused on and encouraged China’s global emergence and integration.

Outcomes included Australia winning the first international contract to supply China with liquid national gas and China taking leadership, rather than following, for action on climate change.

These were effective expressions of the private sector and civil society working in partnership with governments, in an international context. For the Chinese, they were practically useful and enduring, allowing for possible changes of government in Australia. In other words, consistency and continuity were hallmarks of Australia’s China policy and they served both nations well.

In recent times though, a markedly different pattern has begun to emerge in Australia, just as China has fully embraced economic globalisation and stepped up its global profile and influence, commensurate with its economic weight.

Escalating resistance to Chinese entities investing in Australian assets has been followed by an early reluctance (later overcome) by the Abbott Government for Australia to join the Asian Infrastructure Investment Bank, the China-led, multilateral development bank, that now has 84 member nations. This initiative was a signal moment for China, the first time that it had committed to lead in the international institutional order.

More recently, we’ve seen the unwillingness of the Turnbull Government to endorse China’s plans for the Belt and Road initiative, a literal and metaphorical plan to renew and expand, with ambitious impact, the connectivity of the ancient Silk Road, stretching from China to Europe and beyond, also intended to include Australia and the Pacific.

The notion of growing Chinese political and financial ‘interference’ in Australian domestic politics came to a head late in 2017, following accusations aimed at both major Australian political parties and China-friendly supporters and the forced resignation of a senior Opposition Senator. At the same time, the rhetoric of some sections of the Australian commentariat has become increasingly shrill about China.

And now, in the past week, the Australian Government’s rhetoric about China’s negative influence in the Pacific with its development assistance has been met with puzzlement in the region by some and disdain by the Opposition.

Economic impacts: who cares?

China is Australia’s most important and growing economic partner, purchasing huge volumes and values of raw materials and, in parallel, Australian services, including education and tourism. In short, Australia depends on China for its economic viability.

Does the rising friction in the bilateral relationship imply that a positive economic relationship between Australia and China cannot be taken for granted in the future? Will China turn elsewhere for its resources or offshore services growth?

What is the trade-off, or the economic dis-benefit that Australia is willing to bear, for ‘standing up’ to China? What is the political and strategic upside of taking such a stance?

Why is it that Australia now finds itself in such a situation, having for decades built a carefully calibrated relationship with this major trading partner that is not its strategic ally, at a time when other significant powers have chosen to continue and deepen their strategic engagement with China?

On one hand, Australia has long sought and profited immensely from China’s rise and economic strength, while remaining clear-eyed about its national interests. On the other hand, however, the story now seems to be that Australia resists, or worse, resents, China’s new-found global influence, as a consequence of this rise.

The story of a horse: instructive lessons from the French President’s recent visit to China.

Elected rather unexpectedly in May 2017, French President Emmanuel Macron has quickly remade the image and impact of France in Europe and on the world stage. France is, after all, still the 5th biggest economy in the world and one of 5 permanent members of the UN Security Council.

Last week, President Macron made his first visit to Asia, to China. He chose to commence his visit in Xian, the ancient Chinese capital and Eastern hub of the original Silk Road. Why did he do this? He was sending a message about France’s intention to support and work with China and others, for the Chinese President’s Belt and Road initiative. He didn’t offer China carte blanche though, for it to operate unilaterally abroad, rather he offered to work with it in partnership, as a mature and confident leader would do.

President Macron also made a clever gesture with his gift to President Xi Jinping. He gave Xi a horse, not just any horse, but one of the finest from the stables of French state. Why did he do this? It was an act of flattery, but one rich with historic resonance. The horse was pivotal to the success of the ancient Silk Road; it made possible the idea of communication and exchange between the West and the East.

And the thinking behind the French President’s gift of a horse was a conjunction of Gallic flair and Chinese imperial symbolism. Which illustrates the point that, in dealing with China (and with any Asian nation for that matter), it is pivotal to understand and relate to the culture and context of your interlocutor, whether in gift-giving or through diplomatic exchange, results often best achieved quietly rather than via a megaphone.

…and, the Brits too!

It is worth recalling that the first major Western nation to endorse China in forming the Asian Infrastructure Investment Bank, was Britain. Then, in May last year, at the launch of the Belt and Road initiative in Beijing, the Chancellor of the Exchequer (Treasurer), was there on the stage, lending Britain’s total support.

Whether pre- or post-Brexit, the British have concluded that it is their priority to engage with China as it goes global. They, as with the French, appear to have achieved this without too much external friction and political polarisation at home.

The British and the French are surely seeking commercial advantage in their dealings with China. They are also savvy enough to recognize that China’s global rise is profound and that the strategic, as well as commercial, benefits of working closely with China, at this moment, to help shape the emerging global order, is an overarching imperative.

So, what does this mean for Australia?

Consider this: Australia has so much of that which China needs for its economic prosperity. Yet, unlike Britain and France, Australia was never a colonising power in China, or anywhere in Asia, for that matter.

Beyond economics, Australia has much to offer as a model of a good society and as a helpful interlocutor to China as it learns how better to integrate and contribute to the international order. However, increasingly in our public and political discourse, you would think the opposite is the case.

The Global Foundation proposes the idea of an Australian national conversation, to consider Australia’s preferred relationship with China, in a global context.

Given the scale and impact of China’s global rise, and the importance of China to Australia’s economic prosperity, this ought to be a national priority.

Such a national conversation necessarily needs to take a long-term view, beyond immediate political and media cycles and preferably, it should aim to land on a bipartisan and enduring policy position. It should include a wide cross-section of Australian society, from society, business, universities and the media, along with politicians and policy elites.

Yes, it would take a considerable effort to mobilise and implement such a complex national conversation. However, it might be wise to embark on such a course, rather than living with the consequences of the current trend.