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Victoria’s participation in China’s $US1 trillion Belt and Road Initiative has attracted widespread criticism and created conflict between the state and the Department of Foreign Affairs and Trade. By Rick Morton.

Daniel Andrews and China’s Belt and Road Initiative

By the start of 2017, China was increasingly desperate to sign Australia to its $US1 trillion infrastructure development project, the Belt and Road Initiative (BRI), designed to revive the glory of the Silk Road. But Malcolm Turnbull, the then prime minister, wasn’t having a bar of it.

“They wanted Australia to sign and announce during Premier Li Keqiang’s visit to Australia at the start of the year [2017], but that didn’t happen,” a government source told The Saturday Paper. “It was something they always wanted to happen. They were very keen.”

Saying a firm “no” to the nation’s largest trade partner was tricky business. To keep an open mind, then Trade minister Steven Ciobo was sent to a One Belt One Road investment forum in Beijing in May 2017. The national security committee of Turnbull’s cabinet had twice debated the merits of signing up to the BRI, and twice decided they could find no benefit beyond existing trade relations. Indeed, they could not really find any detail.

This rejection didn’t stop China from claiming a major Australian project under the BRI the next year. In late February 2018 China’s Ministry of Culture listed a $400 million Gold Coast theme park as a “key cultural trade and investment project” under the BRI. The attraction, to be developed by Chinese theme park giant Songcheng and to be called Australian Legends World, was originally planned to feature giant fibreglass replicas of Uluru and Captain Cook’s HMS Endeavour, but these were later dumped.

“We started getting media questions about this park and I had no fucking idea what was happening,” the government source says.

“The Department of Foreign Affairs and Trade [DFAT] were also blindsided. We were asking them, ‘What the hell is going on?’ and they had never heard of it.

“It was almost like China just wanted to slap the BRI label or sticker on any project it could. It doesn’t give them any power; it doesn’t mean anything. It just gives them a signal they can put out into the world.”

As of last year, Australian Legends World was still waiting to go to the City of Gold Coast planning committee for approval.

 

In the 1960s, China’s then Defence minister, Lin Piao, articulated a strategic shift in the nation’s foreign policy. He saw the world figuratively divided between city and country, with most people living in the latter category and more open to influence. In more modern times, this strategy has transformed again. In short: if you can’t get the leaders of a nation onside, go for the lower levels of government.

This is where the state of Victoria comes into the picture, with Premier Daniel Andrews’ decision to sign on to the BRI.

“United Front tactics is the name,” says Michael Shoebridge, the director of defence, strategy and national security at the Australian Strategic Policy Institute.

“The way the Chinese state is implementing the BRI and working to split off sources of critical analysis or even resistance is an example of well-worn United Front tactics that the CCP [Chinese Communist Party] developed during China’s civil war and then has applied since.”

Andrews has endured sustained criticism for signing the memorandum of understanding with China in October 2018, including from the federal government and the United States secretary of state, Mike Pompeo. The terms of the four-page document, released during the state election a month later, are nebulous.

It says the parties “will work together within the Belt and Road Initiative, with the aim of promoting connectivity of policy, infrastructure, trade, finance and people, so as to seek new opportunities in cooperation and inject new momentum to achieve common development; strive to develop an open global economy, jointly combat global challenges and promote the building of a common future”.

In October last year the parties signed a more elaborate framework, although specific projects and actual dollar amounts are not included in the deal. Which poses the question: what on earth is it for?

“I don’t think we can simply say Daniel Andrews was naive,” Shoebridge says. “He did not come to his China policy out of the blue, but was engaged by pro-Beijing advocates and has spent a lot of personal time cultivating Chinese contacts, including through visits to China, where he has met political leaders …

“It would be very surprising if his Premier’s Department had not provided advice to him about the Australian government’s position and highlighted the broader national issues relating to the geostrategic nature of [Chinese President Xi Jinping]’s BRI and to the national security issues wrapped up in it.”

Shoebridge says it is a mistake to read the BRI as a simple marketing exercise. “It is surprising to me how many people seem to either not read Xi’s words or to discount what he says, even when you see follow-through in implementation.”

 

In the past three years, a string of Chinese companies have announced Australia–New Zealand headquarters in Victoria, including tech company Alibaba, train manufacturer CRRC, rideshare service DiDi and the China-owned Bubs Australia Limited.

Two-way merchandise trade between China and Victoria was worth more than $30 billion last year. Chinese tourists spent more than any other group in the same period, with 675,600 visitors spending $3.4 billion on trips to the state. International students from China contributed about $4.17 billion to the state in 2018-19.

“To be brutally honest, DFAT have always had this realm to themselves and when the states want to enter they’re not happy with it,” a senior Victorian government source tells The Saturday Paper.

“One of the challenges with DFAT is that they are very clear on the foreign affairs element of their portfolio and not that clear on the trade side. So we end up playing these parlour games.”

The concerns around BRI in foreign policy circles is that, at its worst, it is a style of “debt trap diplomacy” that hooks poorer nations on dazzling investments and then leverages their international support when the loans are due.

But the Victorian government official who spoke to The Saturday Paper said that’s not an issue for the state.

“Some of the BRI projects are delivered in third-party nations that are either impoverished or do not have access to capital, and they may default on those loans,” he says. “That is not going to happen to us. Some of the more hysterical commentary out there is suggesting that we are going to be in debt to China for a gazillion dollars and that is just not the case.”

Nor, he says, should trade be confused with foreign policy: “Take our values. You know, the rule of law, democratic institutions, an exemplary human rights record. If we insisted on that with every partner, well, for a start, you probably wouldn’t be trading with the United States.”

Few people realise that, despite its criticism of the Andrews government, the Turnbull government also signed a concession agreement with China in September 2017. That agreement set out a framework for co-operating with the major power on BRI projects in third-party countries.

Unlike Victoria’s agreements, this document has never been released by the Commonwealth.

 

Progress on Victoria’s BRI deal was pushed back by the coronavirus pandemic. A road map with key areas for investment and focus has yet to be completed.

The parliamentary secretary to the premier, Danny Pearson, was due to be in Beijing in March for the first six-monthly meeting of the joint working group. This was cancelled, too, as the world grappled with more existential threats.

In a statement, Premier Daniel Andrews told The Saturday Paper that trade is not the sole domain of the Commonwealth or DFAT.

“Trade policy is jobs policy, and every state in the country has a role to play in that – to say otherwise is simply wrong,” he said. “The premier of WA works hard to sell iron ore to China and I work hard to sell milk, beef, student places, skills and a thousand other products from Victorian businesses.

“I have visited China at least once every year I’ve been premier and every member of my cabinet has visited China because it’s good for Victorian businesses and good for Victorian jobs.”

This article was first published in the print edition of The Saturday Paper on Jun 6, 2020 as "Under the belt".

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Rick Morton
is The Saturday Paper’s senior reporter.

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