Paul Bongiorno
Can Australia’s relationship with China be healed?

China’s “Wolf Warrior diplomacy” is proving more than a menacing howl for Australia, and what to do about it seems beyond the gumption of the Morrison government.

It is one thing for the prime minister to dismiss a list of grievances from the Chinese embassy in Canberra as “unofficial”, but it is an entirely painful reality when they are accompanied by unofficial trade bans and restrictions on about $6 billion of Australia’s yearly exports.

Not even record iron ore sales to China this week can calm the nerves of other business sectors, which fear Beijing has only begun to turn the screws. The list is already long: wine, lobsters, sugar, coal, copper, barley and timber. The prospects of one million Chinese tourists a year returning to Australia are bleak, as are the numbers of Chinese students in our universities and colleges.

Hindering Scott Morrison’s ability to repair the relationship is the uncompromising antagonism of the anti-China hawks in his government. With a majority of just two in the house of representatives, and no strong faction backing him, the prime minister can’t afford to pick fights – even with the members of the Coalition who’ve missed the fact China’s economy is now 15 times bigger than when John Howard came to power in 1996. China is a major world power and the biggest trading partner of not only Australia but also 50 other nations.

Not to be missed is the stance that Home Affairs Minister Peter Dutton took earlier in the year in calling for China to come clean on the origins of the coronavirus pandemic. Dutton’s hard line is music to the ears of the “Wolverines” – a nickname given to a group of MPs formed to speak out against China’s expansion. While there are a few Labor Wolverines, most are Liberals or Nationals. Leading conservative backbencher Andrew Hastie is a foundation member.

A former Special Air Service commander in Afghanistan, Hastie is chair of the powerful joint parliamentary committee on intelligence and security. Last year, he was condemned by Beijing for comparing China’s growing influence to the rise of Nazi Germany. It was a sentiment repeated by Liberal veteran and former Abbott government minister Eric Abetz.

Abetz told the NCA NewsWire service last week that Australia should boycott the 2022 Winter Olympics in China because of the treatment of the Uygur population and Beijing’s crackdown on protests in Hong Kong. He said the similarities with the 1936 Berlin Olympics are “too big” to ignore. How such a boycott would advance Australia’s interests, let alone those of the Uygurs, is not easily apparent. It would have as much impact as China condemning our government’s incarceration of innocent people on Manus Island and Nauru without trial, in defiance of international law and our obligations under the Refugee Convention.

Abetz, in an eerie return to the Cold War era of McCarthyism, last month called on three Chinese Australians to “unconditionally condemn the Chinese Communist Party dictatorship” during their appearances before senate estimates. His racial profiling, his use of rhetoric that drew into question the loyalty of Australia’s 1.3 million people of Chinese heritage, drew no rebuke from the prime minister. Labor’s Foreign Affairs spokeswoman, Penny Wong, says Morrison has failed to deliver leadership on the China relationship and “has failed to admonish inflammatory behaviour by his backbenchers that has made a bad situation worse”. Morrison, Wong says, isn’t even leading his own party.

Words are one thing; actions are another. Canberra has given China plenty of evidence to conclude we treat it more as an enemy than a friend. Despite disavowals, the operations of the secretive Foreign Investment Review Board (FIRB) under its chair, the former security chief David Irvine, are widely seen in the Chinese-diaspora community as being anti-China. This manifests in the extreme length of time required for property transactions to be approved, even before new Covid-19 rules on foreign investment. One federal MP says a Chinese–Australian constituent, who had a multimillion-dollar house sale stalled for almost a year by the FIRB, asked him, “Why are they picking on us?”

The Australian Financial Review reported in August that Treasurer Josh Frydenberg had secretly shunned advice from the FIRB and Treasury that Australia should approve the $600 million sale of Lion Dairy & Drinks to the China Mengniu Dairy Company.

The treasurer’s decision to ignore the FIRB’s advice is all the more curious because Irvine’s appointment was precisely to add a “security” dimension to the board’s decisions. The government’s own security expert saw no security risk in this sale.

Another of our most experienced security experts, Dennis Richardson, says blocking the Lion sale was a mistake. A former ambassador to Washington and former intelligence chief, Richardson has long held the view it isn’t necessary to make Australia and China’s economic relationship a security issue.

Business Council of Australia chief executive Jennifer Westacott puts it another way – she argues that attracting investment and protecting national security and sovereignty are “not mutually exclusive”.

Some in the government say the dairy sale ban was another example of Morrison focusing on domestic politics without an informed understanding of the foreign policy consequences. Even though the decision on the Lion sale ultimately rested with Frydenberg, no one thinks he wouldn’t have discussed it with the prime minister, given the fetid climate induced by the “China panic” of the past three years.

The AFR quoted a commercial source saying diplomatic issues were at play in the rebuff, as they are in other foreign takeover deals, with the “China issue playing into it in a big way”.

For all the virtue signalling from the anti-Communist brigade in the parliament, there is an irony that cannot be lost on the prime minister. After being “dazzled and duchessed” by Donald Trump, according to Malcolm Turnbull, the Australian leader was played off a break. His eager buying in to Trump’s Covid-19 China blame game drew heavy retaliation from Beijing that was not visited on the United States.

Instead, Trump in January signed the Phase One trade deal with China, in which Beijing undertook to buy $US200 billion of American farm produce and other goods. Already American agriculture exports have risen 70 per cent – at the expense of Australian farmers. One former senior diplomat says we may well see wine from California or lobsters from Maine or grains from the American Midwest replace Australian exports in China’s supermarkets. While Trump may have spent many of his campaign rallies demonising China, the US president – as the diplomat noted – never walked away from the trade deal.

The fact is the economies of China and the US are mutually dependent – far more so than China and Australia. As former Foreign minister Gareth Evans told the South China Morning Post, America and China are “joined at the wallet”. The two countries’ rivalry over global pre-eminence will not end with the incoming Biden administration, but the next US president will certainly lower the temperature and tone down the rhetoric. We are sure to see Joe Biden, as President Obama before him, seek to encourage and work with China to tackle global crises such as catastrophic climate change, pandemics and underdevelopment.

Former prime minister Kevin Rudd, now president of the Asia Society Policy Institute think tank in New York, says China is pursuing a “highly systematic strategy” to close the gap with the US economically, militarily and technologically. But under Biden’s re-engagement policies of global leadership, Rudd says, any talk of Washington’s decline is premature. Still, he believes Xi Jinping plans to consolidate his position as paramount leader in China and to be around for at least another decade.

And that will be a challenge requiring a better performance from the Morrison government than we have seen so far. The prime minister’s pandemic-defying trip to Japan last week – to cement a reciprocal access agreement for our military – antagonised Beijing, despite naive assurances from Morrison that it would not.

Former prime minister John Howard, in an Asialink podcast, had a reality check for Morrison. The only way to manage the Australia–China relationship is to have a good leader-to-leader relationship, Howard said in the episode, released just before the much-hyped Japan trip. While Morrison is now on pet name terms with that country’s new PM, Yoshihide Suga – “Call me Yoshi,” Morrison says Suga urged him to do – the visit could prove a major setback for the Australian leader’s relationship with Xi Jinping.

Howard told interviewer Don Greenlees his early advice to Julia Gillard soon after she became PM was “to get to Beijing as soon as possible”. Because, he says, a “head-to-head meeting with the Chinese leadership … [is] what matters”. The way things are going, though, Morrison will be the first Australian PM since Billy McMahon in the early ’70s not to wrangle an invitation to visit Beijing.

On his return from Tokyo, Morrison had a virtual appearance at the Business Council’s annual general meeting. He told business leaders who are worried about their continuing prospects in China that he’s always willing “to pick up the phone”. But he said he’s “not prepared to agree to a meeting” with China that would “trade away” any of Australia’s interests.

“Being Australia is something we should never apologise for,” Morrison said. No doubt, but signalling a meeting can happen only on your terms is hardly conducive to good relations with our biggest trading partner.

John Howard and Bob Hawke, to name two examples since Whitlam first went to Beijing in the 1970s, managed to trade Australia’s commodities, goods and services with China, while not sacrificing “our values”. China expects Australia to respect its achievement as a major world player and, while Morrison made a start this week at the G20, the prime minister has a long way to go to mute the howling wolves.

This article was first published in the print edition of The Saturday Paper on November 28, 2020 as "Can Australia’s relationship with China be healed?".

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