Australian Government Needs to Set China Policy or It Will Lose Control

November 8, 2018 Updated: November 8, 2018

Three big recent developments threaten the federal government’s control over its most difficult strategic policy challenge: the direction of Australia’s China policy. While Canberra worries about how its statements play in Beijing, the states and territories, bus­inesses and universities are ­quickly driving their own engagement with China.

Unless our federal government better explains the national security risks, Australia’s relations with China will be driven by groups interested in economic engagement, not national security.

Consider recent examples of this trend. First, on Oct. 25 Victoria signed a memorandum of understanding with Beijing’s ­ambassador in Canberra, supporting President Xi Jinping’s so-called Belt and Road Initiative

Second, we saw the arrival in China on Oct. 26 of a large Australian business delegation headed by Malcolm Broomhead, the chairman of explosives manufacturing company Orica and member of the board of advisers of the Australia-China Belt & Road Initiative—a private entity supporting more BRI business ties, which assisted Victorian Premier Daniel Andrews on the MOU.

Finally, on Oct. 16 a group known as the Australian Technology Network of Universities signed an Australia-Sino Engineering Partnership with nine Chinese technology universities, the better to facilitate more and ­deeper exchanges of science, technology, engineering and maths students, and encouraging “industry-focused research collaboration between the two countries.”

Business delegations and university agreements involving China are nothing new but the Victorian MOU is in a class of its own for state governments rushing into international agreements without understanding or being constitutionally empowered to handle the national security ­implications.

According to Andrews, the MOU will make “Victoria the first and only Australian state to reach an agreement on the Belt and Road Initiative with the Chinese government.” The MOU itself ­appears not to have been released, so it’s unclear what Victoria has really signed up to beyond the claim that it “will ensure we are best placed to capitalise on the ­investment opportunities possible through the Belt and Road initiative, meaning more trade, jobs and investment for Victoria.”

The rhetoric is overblown and inaccurate. In 2015 the then North­ern Territory government made the guileless claim that the 99-year lease of the Port of ­Darwin to a Chinese company was aimed at positioning the ­territory to be part of the BRI money flow. Never get ­between a state or territory and Chinese money.

Frankly, the Victorian MOU is a disturbing development. How is it that Victoria has a published China strategy while Canberra lacks one? The answer, of course, is that the states and territories have no responsibility for national security and little or no access to the intelligence information that informs national judgments about Beijing’s strategic aims.

In the past few years federal governments have started to push back against the Chinese Communist Party’s covert and overt influence in Australian public life. It’s hardly surprising that Beijing has concluded that state governments are softer targets.

Opportunities for what, on the surface, seems easy Chinese money are being grabbed by state governments with breathless ­enthusiasm. But it’s the federal, not the state, government that has to manage the risks of Chinese espionage, cyber-hacking, subversion and undue domestic influencing. And it’s only the federal Defence, Home Affairs and intelligence agencies that track the negative impact of China’s actions domestically, on our alliances and on Asia-Pacific security.

Something has to give between federal and state views of the balance of risks and opportunities presented by China. Right now, the China aspirations of some state and territory governments, and of many universities and businesses, either ignore, dismiss or just don’t register the national worries about Beijing’s trajectory to disrupt regional ­security.

The national position on the BRI, with broad bipartisan support, is that Australia will consider investment proposals on a case-by-case basis but will not provide blanket endorsement to the scheme. Federal governments are hesitant to provide blanket support because it’s increasingly clear that initiatives aren’t purely economic—and why should a sovereign country be told to sign up to another country’s political agenda? The BRI advances China’s strategic aim to make weaker countries more dependent on Beijing, to lock out competitors and weaken US alliances in the Asia-Pacific.

In the last months of his government, Malcolm Turnbull promoted a plan to provide Aust­ralian, Japanese, and US invest­ment finance for Asia-Pacific infrastructure development as an alternative to the BRI, while then foreign minister Julie Bishop ­expressed public concern that BRI funding risked locking small ­Pacific and Indian Ocean economies into debt-trap financing that, as in Sri Lanka, could see state ­infrastructure handed to Beijing to cover construction debts.

Many Australian businesses are also keen to hitch their wagons to the BRI. Broomhead was highly critical of Canberra’s handling of China relations at a business forum on Oct. 8, ­reportedly saying: “I think the ­relationship (with China) in the past 18 months has been terrible, it’s been perplexing and it’s been deliberate on our part … For some reason the recent government chose to go out of its way in rhetoric to almost insult the Chinese.”

On Oct. 26, Broomhead led a large business delegation to Beijing, involving BHP Billiton, Rio Tinto, the Downer Group, Orica, Metro Mining, KPMG, McKinsey, Elders, Wesfarmers, ANZ, Minter Ellison, Resource Capital Funds, the Minerals Council of Australia and the Victorian and West Australian governments, discussing how to quickly facilitate business agreements. Broomhead is reported to have said: “It’s much easier to progress a project … which comes under the BRI umbrella, because it is then part of an officially sanctioned process.”

According to exclusive reporting by Rowan Callick in The Australian, Orica’s business partner in China is the state-owned Poly Group, an opaque conglomerate originating in the defence industry and described by the Beijing media outlet Caixin Global as a “military giant.” In 2013 the US sanctioned the group’s Poly Technologies firm for violations of the US’s “Iran, North Korea, and Syria Nonproliferation Act”—a claim Poly disputed. The sanctions ­expired in February 2015.

Whether collaboration with Poly Group represents a fantastic opportunity for Australian business remains to be seen. But it’s surely important to understand the connection in the broader context of Beijing’s defence and security agenda. For example, last week President Xi toured China’s southern military region, which is responsible for the People’s Liberation Army planning and military activities on the South China Sea and Taiwan. According to Hong Kong’s South China Morning Post, Xi told his military commanders it was necessary to strengthen their mission and to “concentrate preparation for fighting a war.”

That’s a noteworthy and new use of ­language by Xi, given high inter­national tension in the South China Sea.

China’s more offensive military posture in the Asia-Pacific, rapid growth of hi-tech weapons and continuous cyber spying on Australia’s private and public sector should surely be a reason not to get too close to PRC state-owned entities.

States and territories, bus­inesses and universities would be somewhat justified to demand that the federal government must set the right framework for engaging with China. As the keeper of the intelligence and security keys, it’s only the federal government that is able to explain why there should be limits to building economic dependence on an authoritarian state focused on being a dominant military power.

Pragmatic ministers sensibly avoid unnecessary diplomatic ­arguments with the People’s ­Republic. But emphasising the prospects for co-operation simply masks the strategic trends working against Australia’s interests. The risks must be articulated.

Scott Morrison’s address this week to the Asia Briefing Live conference in Sydney points to some encouraging change in government messaging about China, as well as to Canberra’s agonising about what to say publicly.

Morrison’s speech makes a powerful claim to locate his foreign policy as drawn from “our character, our values”: “We are more than the sum of our deals. We are better than that.” He sets out essential Australian objectives: free and open markets, freedom of speech and thought, ­association and religion, and peaceful liberal democracy.

If these values mean anything, they will quickly run up against the reality of PRC authoritarianism. On China, Morrison is wary: there “must remain room for dialogue and co-operation” but he worries that Beijing “is ­exercising unprecedented influence.”

Now, Morrison should articulate sensible curbs on state, territory, business and university open-slather engagement with China. A failure to do so takes China policy out of the hands of federal government and into the control of those with priorities not driven by national security.

Peter Jennings is the executive director of the Australian Strategic Policy Institute and a former deputy secretary for strategy in the Department of Defence.

This article was first published in The Weekend Australian.

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Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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