Questions mount over the direction Malcolm Turnbull is taking with China, as clues emerge from a former adviser’s report with ASIO and an ex-ambassador’s turning on the government. By Hamish McDonald.

China, spies and the PM’s new fight

The encounter still makes Richard Rigby wonder. The veteran scholar was at the Australian National University discussing with colleagues their review of how the university might reshape its research and teaching about China.

They were addressed by John Garnaut, the former journalist who had joined Prime Minister Malcolm Turnbull’s staff as policy adviser and speechwriter, who is the son of a former ANU colleague, the development economist Ross Garnaut.

What he said stunned the old China hand, who had spent a career in the diplomatic service and intelligence assessment, including a term as consul-general in Shanghai before returning to his ANU alma mater as professor to run its China Institute.

“It was to the effect there’s been a fundamental change in the approach we are taking to China and people needed to realise this,” Rigby recalled this week. “The sort of line we’d been taking was no longer going to be the guiding one.”

It reflected the building turmoil in Australia’s community of China specialists about the correct approach to the rising power of the People’s Republic − turmoil spilling now into wider politics and society.

The shift to a more adversarial stance towards China, if it is sustained, is strongly questioned by many such as Rigby, who see no reason to abandon the constructive engagement pursued since China’s opening to the West in 1978, which saw the senior Garnaut sent as ambassador to Beijing in the 1980s, where he advised on how to introduce market-based policies.

In recent weeks the uproar has led to one prominent China specialist, James Laurenceson of the University of Technology Sydney, single out Turnbull himself as a “stumbling block” to normal relations with China, and former Beijing ambassador Geoff Raby call for the replacement of Foreign Minister Julie Bishop.

In addition, Raby slammed what he said was a takeover of China policy leadership from the Department of Foreign Affairs and Trade by the Defence and intelligence establishment.

There is deep unease, too, about new foreign influence and espionage bills, which Turnbull introduced to parliament last December, that draw on a study the prime minister commissioned in August 2016 into Chinese activities, following extensive reporting by Fairfax and the ABC – some by Garnaut himself while still with Fairfax – about a stepped-up campaign of political influence and manipulation by the Chinese Communist Party’s United Front Work Department, as well as conventional and cyber spying by other agencies.

Garnaut worked on the study in close liaison with the Australian Security Intelligence Organisation and other agencies, before becoming a private consultant late last year. “I can’t go there,” Garnaut told The Saturday Paper by phone from Taipei this week when asked about this security work, but added: “You can be sure that I’ve taken a very close interest in the subject.”

Labor Senator Kristina Keneally put questions on notice to the prime minister this week about Garnaut’s advisory role, reportedly at the behest of the former foreign minister and head of the Australia–China Relations Institute at UTS, Bob Carr. This week it was also reported by Fairfax that when Chongyi Feng, an associate professor in Chinese studies at UTS, was detained for questioning in China in March last year, security officials were particularly interested in what he could tell them about John Garnaut.

Asked about his encounter with the ANU academics, Garnaut preferred to discuss his views about China’s activity here. “We have failed to take account of how hyperactive China has been in interfering with other political systems,” he told The Saturday Paper. “If we add it all up, it adds up to a lot.”

“Once we straighten that out,” he said, “once we’re able to reassure ourselves about the integrity of our own democratic processes, broadly defined, then we are better equipped to work out what our objectives are and how to sustain our engagement with China, while mitigating the risks that are involved. It’s the internal risks that my focus has been on. It’s not really a foreign relations stance, it’s an internal resilience stance.”

Garnaut made sharp reference to China’s “world of influence and interference” in March, in testimony to the United States House of Representatives armed services committee. “This is the domain in which the Chinese Communist Party manipulates incentives inside our countries in order to shape the conversation, manage perceptions and tilt the political and strategic landscape to its advantage,” he said. “…Under the uncompromising leadership of President Xi Jinping, China’s activities have become too brazen and aggressive to continue to ignore.”

Ordinary diplomacy, transparent public diplomacy and economic activity should be welcomed, Garnaut said, and covert, coercive or corrupting activity countered, primarily by security agencies. But a “large grey area of ambiguity and plausible deniability” needed transparency. “In Australia, the Turnbull government is developing a counter-interference strategy that is built upon the principles of sunlight, enforcement, deterrence and capability.”

The initiative is being eagerly followed in Washington. But here, outside the government, this proposed new regime is deeply contentious where it moves beyond clear dangers, such as cyber break-ins and sabotage, and seeks to apply penalties of up to seven years’ jail for those trying to influence any government policy without disclosing foreign links.

Charges of appeasement, capitulationism, racism, subversion, “unprecedented” levels of espionage and “a new McCarthyism” surround debate over the government’s foreign influence bills.

There are those who point to Xi’s declaration at the latest party congress that the Chinese political model is for export, and that the diaspora is exhorted to help fulfil the president’s “China dream”.

But in a joint letter to parliament, more than 80 of Australia’s most eminent China scholars said they saw no evidence China was seeking to export its political system to Australia or compromise its sovereignty. The media narrative here was singling out activities of individuals and bodies, without putting them in the context of comparable activity by other parties, “among them our allies”.

“We are witnessing the creation of a racialised narrative of a vast official Chinese conspiracy,” the letter said. “In the eyes of some, the objective of this conspiracy is no less than to reduce Australia to the status of a ‘tribute state’ or ‘vassal’. The discourse is couched in such a way as to encourage suspicion and stigmatisation of Chinese Australians in general.”

Former consul-general in Hong Kong and Western Sydney University professor Jocelyn Chey, a signatory to the letter, said the “Chinese interference” scare is hitting community morale. “There’s a feeling that if you say anything positive about China it’s discounted, or you’re suspected.”

Richard Rigby, also a signatory, says proponents of the subversion threat don’t credit the 1.2 million Australians of Chinese descent with enough ability to see through and resist attempted manipulation, much of it happening in plain sight, not covertly. “We mustn’t fall into the trap of stereotyping Australian Chinese,” he said. “They too have agency, and many of them understand United Front tactics better than most white Australians.”

A counter letter to parliament, signed by some 48 academics with a lesser assembly of China specialists and more defence-security types, said some Chinese Communist Party activities did constitute unacceptable interference with personal freedoms, democratic processes and national security. It said ASIO warnings had to be taken seriously.

The government fed the China scare when Turnbull declared media reports about interference as “disturbing” and needing to be taken “very seriously”. The chill deepened earlier this year when Minister for International Development and the Pacific Concetta Fierravanti-Wells said China was burdening small South Pacific nations with debt for white-elephant projects. Then Defence Minister Marise Payne endorsed a new US defence doctrine naming China as a threat.

Turnbull took remedial action, saying China did not have the “intent” to make its military “capability” a threat. He and Bishop read the riot act to ministers against making unapproved comments. But soon the prime minister was at it again, saying reports of a planned Chinese naval base in Vanuatu were a “great concern” and taking several days to hose them down.

The response from Beijing so far has been a freeze on ministerial contacts and suspension of a human rights dialogue, which won’t worry many people outside Canberra. There is also some slowdown in follow-up to market openings for the “dining boom” supposed to take off as the mining boom settles. Access for chilled beef has not yet happened, 15 months after being promised, and Chinese customs officials are delaying some imports of Australian wine.

Compared with punishments dealt out to South Korea and Taiwan, it’s seen in Canberra as a “warning light” rather than hitting the brakes. Tourist arrivals and enrolments of Chinese students have continued to rise.

Geoff Raby’s assertion of Defence-intelligence circles in the ascendancy seemed to be borne out on May 22, when Liberal MP Andrew Hastie used parliamentary privilege to name Chinese–Australian tycoon Chau Chak Wing as an unindicted “co-conspirator” in a bribery case mounted by US federal authorities in New York, as well as being a collaborator in United Front work. Hastie said he’d learnt this from US authorities. Chau is suing Fairfax and the ABC over earlier reports making the same allegations.

Hastie could hardly have been unaware of efforts just made by Bishop and Trade Minister Steve Ciobo to warm up contacts with China. He also made it clear he was trying to help the Fairfax and ABC defence against Chau’s defamation suit over their earlier reports saying the same things.

Hastie did not warn Turnbull, but according to ASIO chief Duncan Lewis at a Senate hearing two days later, he did have “a discussion” with an ASIO officer beforehand, and Lewis himself was made aware about 90 minutes before Hastie spoke of “some prospect” of what he would say. Lewis, like Hastie an SAS veteran, did not alert Turnbull either.

John Menadue, a former head of the prime minister’s and immigration departments and former ambassador to Japan, said he could not see how Lewis could remain as ASIO chief, or Hastie as chair of the parliamentary joint committee on intelligence and security. “We have known for months about Duncan Lewis’s public role,” Menadue wrote in his Pearls and Irritations blog. “But now we learn, at least in part, how he has been acting behind the scenes. Hastie apparently reports to him.”

The mainstream media, including the ABC, were meanwhile “in thrall of the spy narrative” fed by ASIO while dismissing experts of long standing on China as either China lobbyists or stooges, Menadue said. “But the real tragedy of all this is that whilst there is no doubt that China, like other nations including Australia, is involved in covert operations in other countries, we are diverted from the key overt issue of how we deal with China and its growing influence.”

This article was first published in the print edition of The Saturday Paper on June 2, 2018 as "China, spies and the PM’s new fight".

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Hamish McDonald is a Walkley Award-winning foreign correspondent.

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