Is Australia discriminating against China? Does it really want Chinese investment? Is Australia building closer military links with the USA because both wish to contain China?

 

These are the same questions that were being asked in 2009.

 

Are Australia’s massive resources exports to China not so much the saviour of the Australian economy as a millstone, dragging the rest of the economy down through the high Australian dollar and the sucking of jobs and prospects? Why is China continuing to expand its military spending by more than 10 percent per year?

 

Why has it proven impossible in almost seven years of negotiations to make any significant progress towards a free trade agreement with China? Does China really want Australian investment in services and agriculture?

 

Australia in the Asian Century

 

Australia’s former Treasury Secretary Ken Henry is leading the drafting of a white paper on Australia in the Asian Century, which Prime Minister Julia Gillard will present in the second half of the year.

 

This provides the opportunity to recast Australia’s relationship with China – as for the rest of the region, which is the focal point for Australia’s future – in a positive and realistic light, and more importantly, to draft the appropriate policies. It is especially important, too, that the Australian opposition, the coalition, is dealt in to this white paper drafting, because responsibility for implementing it is very likely to rest with it. The odds are strongly against the Labor government being returned at next year’s federal election.

 

So it was encouraging to see the coalition’s foreign affairs spokeswoman, and the deputy opposition leader, Julie Bishop, attend the Boao forum on Hainan island in early April, especially when no government representative was able to turn up. The Chinese government may, in its pragmatic manner, be prepared to wait out a change of government before committing much more resources to the relationship.

 

New Foreign Minister

 

It’s hard to know what to expect from the new Foreign Minister, Bob Carr, who has replaced Kevin Rudd – who had been viewed with consistent mistrust by Beijing since the early days of his prime ministership – following the latter’s disastrous tilt at regaining the party leadership.

 

*Pictured right: Former NSW Premier, and new Australian Foreign Minister, Bob Carr, with Prime Minister Julia Gillard. (AAP Image/Alan Porritt)

 

Carr’s personal blogs following his retirement after 10 years as NSW premier were viewed as encouraging, from the perspective of the Chinese government – including his denigration of the Dalai Lama – “behind the self-effacing shuffle and the grins he has a mischievous agenda in pursuit of theocratic power” – his lambasting of President Barack Obama’s speech to Australia’s parliament commending closer military relations, and his remarkable depiction of Taiwan as “an island universally recognised as Chinese territory.”

 

A spokeswoman for the Chinese embassy in Canberra told me after Carr was appointed:
“We congratulate Mr Bob Carr on his appointment. China-Australia relations have maintained a good momentum of development.”

 

“Taking the 40th anniversary of China-Australia diplomatic relations as an opportunity, we are ready to work with the Australian side to enhance dialogue, deepen cooperation and push for the sound and stable development of China-Australia relations, on the basis of mutual respect, equality and mutual benefit.”

 

Since then, the picture has been more mixed. In his maiden speech as Foreign Minister, Carr’s theme was: “Let us avert the clash of civilisations, and help the overlap of cultures.” About China, he only spoke about its surprising level of international engagement during the Tang and Song dynasties. He said: “Running foreign policy is not just about protecting our national interest… It is also being an exemplary global citizen when it comes to protecting human rights and the world’s oceans.”

 

A few clues there. He went on to ask publicly, ambassador to China Frances Adamson to seek to visit Tibet in the light of a wave of recent immolations – though these were taking place primarily in Tibetan communities in adjoining provinces and regions, rather than in Tibet itself. This attracted a predictable critical response in China’s nationalistic Global Times.

 

 

And soon after Carr began work as foreign minister, his government leaked to an Australian newspaper that it had decided to bar Chinese telecommunications equipment giant Huawei from participating in the multibillion dollar roll-out of the NBN cable network, for reasons described only as related to security.

 

Something of a chill then descended, with strong statements coming out of China.

 

Carr chose Cambodia, Laos and Vietnam as the countries he visited first as foreign minister. He also announced he was consulting former prime and foreign ministers – who would all be expected to urge him to pay close attention to China, and
make it more of a focus.

 

The China Conundrum

 

The Australia China Business Council joined in the growing debate in early April, when Trade Minister Craig Emerson launched the update of research it has been funding from Allen Consulting Group, which showed that the value of trade with China for the average Australian household soared by 30 percent in the financial year to June 30 2011, to just over A$13,400.

 

Frank Tudor, ACBC’s national chairman, said that without the booming China trade, “…it’s likely Australians would all be paying higher interest rates. It’s important we don’t get bogged down in an ugly partisan debate about Chinese investment. This debate is being heard in China – where there is a perception they are being discriminated against – and we must do our utmost to ensure it remains first and foremost about the national interest and good public policy rather than popular protectionism and political opportunism.”

 

 

Lawyer Robin Chambers, one of the leading figures in bringing Chinese and Australian firms together, agreed, saying that at almost every meeting he has with Chinese business leaders, they raise the issues of the mining tax, the carbon tax, and the Foreign Investment Review Board – though there is a feeling that the latter has become more flexible and pragmatic over the last year.

 

Tudor said that the report “reminds us of the fundamental trade principle of comparative advantage.” He appealed to the Australian government to take a more pragmatic position on the FTA negotiations, urging the finalisation of  a deal that might not be fully comprehensive but would boost Australian access to China’s burgeoning middle class market, especially in services – and which can over time become more inclusive. He said: “We are betraying our grandchildren if we think we can wine and dine in Beijing off the proceeds of the resources boom forever.”

 

 

The extent to which the countries make the most of the 40th anniversary, in 2012, of their establishment of diplomatic relations, will be an important gauge of the state of the relationship at the official level. So far, not too promising on this front.
We are yet to learn of major initiatives or visits. But there is still time. ■

 

*Rowan Callick is the Asia Pacific Editor of the Australian newspaper.