Commentary | 29 June 2016

More than fear and greed for China

Originally published in The Age.

  • Tristram Sainsbury

Originally published in The Age.

  • Tristram Sainsbury

Executive Summary

Most Australians would probably class our relationship status with China as "it's complicated".

Given Tony Abbott's famous comment to Angela Merkel in November 2014 that our China policy is driven by a mixture of "fear and greed", this answer would not come as much of a surprise.

The 2016 Lowy Institute poll results show that our thinking is much more complicated than a three-word slogan.

The results also bear out the clearest indication yet that Australians recognise the constructive middle economic power role that their country needs to embrace. In particular, it reveals a sophisticated appreciation of our relationship with the biggest global players - China and the US.

Overall, the US - a strategic ally and an important economic and trading partner - and China - our largest trading partner and source of demand for key Australian sectors - are now deadlocked in Australians' eyes in terms of the importance of the relationship.

The demographics are striking, too, with more than half of those surveyed under 45 years believing China is more important and more than half of those over 45 years leaning towards the US as more important.

Part of the story is a more receptive opinion of China, and the other part is a cooling of views towards the US.

I will start with China, which is having an increasingly positive influence on Australian popular views thanks to its economic size, people-to-people links and the Australian-China bilateral relationship.

In terms of cultural attitudes, for the first time, China is seen as our "best friend in Asia", a response that is sure to have a few ripples in Tokyo. Thirty per cent of those surveyed said China is our best friend, which is a clear lead over Japan (25 per cent), with Indonesia, Singapore, India and South Korea further down the list.

When the question was last asked two years ago, China and Japan were statistically equivalent in our reckoning.

This should not be interpreted as greater ill-feeling towards Japan, either, which recorded an 11-year high of 70 degrees in the poll's annual "feelings thermometer".

Instead, what makes the China results noteworthy is the depth of feelings on an issue-by-issue basis. Positive associations come from China's economic growth, yes, but also from when Australians meet Chinese people and from Chinese culture and history.

This is not to suggest that Australians take a simplistic approach to the relationship, either. Chinese policymakers would be well served by appreciating the strong reticence expressed about China's human rights record, military activities, system of government and environmental policies. These go beyond a simplistic assessment of "fear" as driving our views.

Chinese investment comes in for particular attention, too. Overall, Chinese investment is seen as a negative - which must come at the dismay of economists, given the macro-economic merits of greater investment flows - with 60 per cent of Australians having a negative association to Chinese investment in Australia.

Once again, though, it is not a cut-and-dry outcome.

The nature of investment matters to us. The 2014 poll uncovered that Australian are more suspicious of investment in agriculture, ports and airports and national infrastructure projects, and more sanguine about investment in manufacturing and the financial sector. To underline this result, an emphatic five out of six Australians indicated this year that they are personally opposed to the Australian government allowing foreign companies to buy Australian farmland.

The source of investment also matters. Last year's poll highlighted concerns that the Australian government allows too much investment from our new "best friend in Asia" into the housing market, a concern that is not as prevalent for investment from the Middle East, Japan, Russia, the US or Europe.

It would ignore the elephant in the room to focus just on China, though, and not discuss the move away from the US. In the feelings thermometer, the US experienced a 5 degree decline, although overall attitudes to the US are very warm. While it is important to avoid placing too much weight on a single data point, it is noteworthy in that it is the only country to experience such a decline this year.

Alex Oliver, Lowy's polling director, has attributed this cooling to reduced support for the US alliance coinciding with the US presidential election season.

Last year, I also argued that the US is struggling to accommodate China's desire for a greater say in the way that the global economy is run, as reflected in high-profile issues like the Asian Infrastructure Investment Bank, Trans-Pacific Partnership and governance reform of the International Monetary Fund.

All of this points to a greater public awareness of Australia's positive overall relationship with both China and the US.

Australian views are valued in Beijing and Washington, and it is in Australia's interests to promote US-China economic co-operation, where possible and practicable. We should not be afraid to embrace our position in the middle.

 

Tristram Sainsbury is a research fellow and project director in the G20 Studies Centre at the Lowy Institute and a non-resident visiting fellow at Renmin University.