White Metal Tigers


Just what does the Year of the Tiger have in store for Australia China relations asks Rowan Callick.

While the dragon is the emperor of the horoscope creatures, the tiger is the king of the jungle. What might this mean for us, as we scan the year ahead? The tiger is the symbol of authority and power, so that may seem to indicate a strong year for rulers. But a popular Chinese horoscope forecasts instead that because this is a white metal tiger year, “decisive and fresh politicians will come to power.”
The last year, 2009, proved an extraordinarily difficult one for Australia-China relations, as the global economic downturn drove the two closer, which in turn led to the dramatisation of disagreements and differences. But by year’s end these had largely been patched up and sensibly placed in the context of learning experiences, with speeches by Australian Foreign Minister Stephen Smith and Chinese Vice-Premier Li Keqiang, on a visit to Australia, drawing a line under that recent awkwardness.
Of course much unfinished business remains. That includes the fates of Australian citizen Stern Hu and Chinese citizens Liu Caikui, Ge Minqiang and Wang Yong, all executives working for Rio Tinto in Shanghai, who were arrested on July 5, 2009. Hu is charged with commercial bribery and violating trade secrets.
At an institutional level, the unfinished business also includes most importantly the free trade agreement – on which talks remained stymied through 2009 despite several visits to China by energetic and optimistic Australian Trade Minister Simon Crean. The first round of negotiations was held in May 2005, and the most recent – the 13th round – took place in December 2008.
The World Expo in Shanghai, where Canberra is spending $83 million on its site, will provide a first class opportunity for Australia to showcase itself to the Chinese public in that great metropolis. And Foreign Minister Smith has foreshadowed the establishment of “an informal one and a half track forum, like those we have with other important partners like the United States and New Zealand, which would bring together key people from both sides to forge deeper connections for the future.”
A prime test of such a forum will be whether it contains voices from business – and especially, from the broader business world beyond the resources sector and its financing and legal supports which has proven a cornerstone in the relationship, but from which it is now important to build.


We enter 2010 with a slightly clearer view of how some Chinese people view Australia, following a Sydney-based Lowy Institute poll conducted by telephone of 1,200 urban Chinese aged over 18. 14 percent of respondents rated Australia as the best place to be educated, below the US (36 percent), Britain (19 percent) and Singapore (15 percent) – even though in 2009 China sent almost 130,000 students to Australia, the largest number in the world.
Of the respondents, 47 percent opposed Australian state enterprises trying to buy controlling stakes in major Chinese companies, compared with 41 percent in favour. Australia was slots still perceived as a good place to visit by 84 percent, as a country with attractive values by 68 percent, as a reliable supplier of natural resources by 64 percent, and as a country with a good political system by 57 percent.
The respondents were asked if they would be in favour of companies controlled by governments from five other countries taking control of a major Chinese firm – 79 percent were against such Japanese corporations’ intervention in China, 70 percent against the US, 47 percent Australia, 43 percent Canada and 34 percent Singapore. The intention of framing the question in this manner was to permit comparability with a question asked of Australians in July. But the question the institute asked its Chinese respondents, does not match the Australian investment situation on the ground in China. It is not Australian state enterprises that seek to invest there, but privately owned companies. And few wish – unless they operate in areas, like banking, where the Chinese rules insist on entry via joint ventures – to buy stakes in Chinese corporations, preferring to enter the market as wholly foreign owned entities.
The poll found that 65 percent of the respondents believe that Australia “should be a member of Asian regional organisations,” with just 18 percent disagreeing. But 48 per cent think Australia is “a country suspicious of China.” Almost half – 48 per cent – believe that “Australia’s alliance with the  United States has more of a negative influence in relations between China and Australia.”
Whatever the perceptions, the data on the ground point to a relationship growing closer, especially economically. Westpac’s chief currency strategist Robert Rennie has pointed to “an incredible surge” of investment from China, which by the end of 2009 was funding almost half of Australia’s yawning current account deficit, which has been widening as Australian governments, companies and individuals spend and invest more than they produce and save.
“China has historically played a limited role due to capital account controls,” Dr Rennie said. But its hunger for Australian resources, and the green light given by Beijing – and for the most part in Canberra – for investment in Australia, changed all that, setting up 2010 as a promisingly tigerish year for the relationship.     


*Rowan Callick is the Asia-Pacific editor of the Australian


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