Commentary | 17 March 2017

China wants what we have, so it won’t risk a spat

Originally published in the Australian on 30 August 2016. 

Originally published in the Australian on 30 August 2016. 

China’s hosting of the premier international forum for co-operation on global economic governance in picturesque Hangzhou this weekend is testimony to China’s newly acquired economic weight and influence.

The G20 member states, which include Australia, account for 86 per cent of the world economy, 78 per cent of global trade and two-thirds of the world’s population. Chinese leaders have learned from the demise of the ­Soviet Union, the last authoritarian state to contest global leadership with the US, that aspiring superpowers need to demonstrate economic strength commensurate with their global political and military reach.

But the abrasive nationalism that drives China’s use of its economic and military power is becoming increasingly disconcerting even for the most enthusiastic supporters of China’s rise. This is beginning to manifest itself in ambivalence and diminishing levels of trust across almost all aspects of Australia’s relations with China, from real estate, agriculture and migration to investment, defence and foreign policy.

It is not confined to national security hawks or a few anti-Chinese racists, as the fully paid-up members of the pro-China lobby contend. Concerns about Chinese behaviour and intentions are wider and more deep-seated than this caricature allows.

Critics include Chinese-born Australians unhappy about the way Beijing aggressively promotes its nationalist agenda through sympathetic Chinese print media and radio by encouraging displays of obeisance towards the leadership’s latest doctrinal whim. The controversy over concerts in Sydney and Melbourne to honour the memory of former dictator Mao Zedong, who many Australians would regard as a mass murderer, is a case in point.

Last year, 77 per cent of respondents polled by the Australia-China Relations Institute expressed the view that if China became the region’s dominant power, this would have a damaging impact on Australia’s security.

Ambivalence and anxiety about China has infected the government, too. The Abbott cabinet was split over the issue of Australia’s membership of the Chinese-led Asian Infrastructure Investment Bank, and the Turnbull cabinet is divided over the extent to which Australia should oppose China’s militarisation of disputed islands in the South China Sea. Although the government has paid lip service to defending freedom of navigation on the high seas, it has been reluctant to authorise the navy and air force to demonstrate that right through freedom of navigation operations.

Turnbull seems conflicted on China. As communications minister, he argued strongly for overturning the ban on involvement of Chinese telecommunications giant Huawei in the National Broadband Network.

As Prime Minister, he seems more comfortable in extolling the benefits of Chinese investment and trade than in taking China to task for its willingness to breach accepted international norms in the South China Sea.

Such hesitancy, which borders on timidity, mitigates against the development of a proactive and coherent China policy based on a careful consideration of the costs and benefits of the overall relationship. Obviously, it’s in our interest to have a healthy, growing and mutually beneficial economic partnership of the kind proposed in the recently released Partnership for Change joint economic report. But that promise will not be fulfilled if China continues to ride roughshod over Australia’s political and strategic interests.

Those who argue that national security hawks are needlessly and irresponsibly jeopardising ties with China ought to understand that inaction on the South China Sea, and reflexive compliance with China’s wishes, merely ­reinforces Beijing’s perception that we are nothing more than a “paper cat” — all talk and no ­action — and that we will not risk the economic relationship by pushing back against its aggressive strategic agenda in Asia.

A timid, compliant, Australia, decoupled from a diminished US alliance, which seems to be China’s long-term aim, will lessen our influence in Asia when the alliance is becoming more, not less, important as a bulwark against Chinese expansionism, and the ultimate guarantee of our independence and the rules-based order that we support and China is challenging.

The US is already worried about the level of economic influence China has established in Australia and the political and strategic leverage this provides Beijing. There is no doubt that a subtle process of conditioning is taking place in which Australian business and political elites are becoming more receptive and sensitive to Beijing’s concerns. Any lessening of resolve on the South China Sea will confirm Washington’s worst fears that a Turnbull government lacks the stomach to stand firm against Chinese pressure and coercion.

Turnbull needs to rethink China policy by making it clear to the Chinese leadership at the G20 that it is in China’s long-term interests, as well as ours, not to further militarise the islands it has occupied in the South China Sea and that we are prepared to support our words with action, including freedom of navigation exercises.

More robust action will be required if China breaches two red lines — dredging Scarborough Shoal off the Philippines coast and declaring an air defence identification zone based on its spurious claims to ownership of occupied coral reefs in the Spratly Islands.

Turnbull also should make the point that it will be difficult for the government to advance the economic relationship if trust is further ­undermined by China’s actions in other domains. That includes cyberattacks against Australian companies, interference in Australian domestic politics, intrusive surveillance and intelligence collection operations against the Chinese diaspora community and intemperate criticism of Australian policy in the state-run media.

Rethinking China policy requires a new mindset. We must learn to be more thick-skinned about Chinese criticism and not regard every verbal barb as a relationship-threatening event. And we need to find a sensible middle road between China-bashing and the arguments of appeasers who don’t like what China is doing but assert we can’t do anything about it. This is dangerously defeatist and patently untrue.

Australia has significant leverage over China. Trade is a two-way street and China needs what we supply. So the threat of Chinese economic sanctions against us, or serious military action should we conduct a freedom of navigation operation, is likely to be more bark than bite. Given its increasingly fraught relations with Asian neighbours and tensions with the US, the last thing China needs is a serious and entirely avoidable falling out with Australia.