Comment: Eyes Wide Shut


Australia is squandering mulitple opportunities to be a global leader in managing a sustainable relationship with China, writes Rowan Callick.

Anxiety has been building in Australia over its economic situation, in part because of the gap between perceptions and the reality. Many Australians, with personal connections with Europe and North America, are convinced that their stagnation must surely in time strike down Australia too. The reality, of course, is that Australia’s economy is enmeshed more with east Asia, which is continuing to grow healthily, than is any other substantial country – even Asian countries.

Inevitably, this anxiety has produced fall-out for the relationship with Australia’s biggest trading partner, China, because of the range of connections.
Australian growth hit 4.3 percent in the March quarter, an extraordinary pace given the stagnation in most of the rest of the developed world.
But most people aren’t convinced. They are worrying nevertheless about the “two-speed” or “patchwork” economy, with the mining industry – and even more powerfully, the construction industry that is driven by resource and energy projects – still booming, while much of the rest, chiefly services, but also including manufacturing, stutters, handicapped by the high Australian dollar.
This is triggering some re-thinking, not all of it especially deep, on every aspect of the economy. That includes: Are we over-dependent on mining? Should we sell our farmland to Chinese companies? Should we bring Chinese construction workers in to build big projects like Gina Rinehart’s A$9 billion Roy Hill iron ore mine, which might prove the last large, comparatively easily accessible, high quality such mine to be developed in Australia.
Rinehart and the Gillard government agreed a deal through which 1,700 workers could be given temporary visas to work on the project, to ensure it gets built on time, given the shortage of skilled Australian workers in the West.
In the circumstances – in which Rinehart, the world’s richest woman, has become the lightning rod for a wide range of critics in Australia – this was always bound to attract controversy, and so it proved, with some comments verging on the xenophobic.
Such issues won’t of course derail the complementarities that have driven the two economies together. More than $100 billion trade is a pretty solid foundation to shift.
But the concerns have indicated the vulnerability of the economic relationship, when it isn’t supported by sound political, strategic and cultural links.
Linda Jakobson, the Lowy Institute’s China expert, produced in early July a stimulating paper on Australia-China ties, which she labelled “In search of political trust.”
She urges annual, high-level summit meetings – comparing the adverse effect on the relationship of the Stern Hu and other jailings of Australians, with the comparatively calm way in which the dramatic visit of Wang Lijun to the US consulate in Chengdu and the flight of Chen Guangcheng, seeking shelter at the US embassy, were handled. The US and China hold top-level summits every six months.
She also suggests an annual, comprehensive exchange program between leaders from the two countries, the inclusion of China in disaster relief and humanitarian assistance exercises also involving Indonesia and the US, upgrading Australia’s diplomatic presence beyond the new consulate in Chengdu, an annual security dialogue involving mid-level officials and think tanks, and more Australian students funded to study in China.
Opposition foreign affairs spokeswoman Julie Bishop – who must be odds-on to become Foreign Minister in about a year – delivered a speech in late June on China relations which urged finalising the free trade agreement that has been under negotiation for seven years, increasing Australia’s attractiveness as a target for Chinese investment, supporting moves to strengthen Australia’s soft power in China including getting the Australia Network TV station widely available, and like Jakobson, funding a reverse-Colombo Plan that pushes Australia’s own students into the region, including to China.
These contributions mark a contrast with much of the preparation for the 40th anniversary in December of Australia’s establishing diplomatic relations with the People’s Republic – which has tended to involve books, conferences and learned papers chiefly reviewing the past.
Griffith and Beijing universities recently ran a joint conference instead looking ahead to 2020. Deakin-based He Baogang, one of the leading China experts in Australia, noted that despite the strong backing from Chinese ambassadors Fu Ying and then Zhang Junsai for Australia to become a testing ground for Chinese relations with the wider world, the suggestion hasn’t gone far.
The US hosts more than 60 high level dialogues every year with China, he said – Australia, very few. The “Canberra policy circle” mostly doesn’t know China. “Every nation is facing the challenge of a rising China,” he said. Australia says it doesn’t want to contain China – but that doesn’t matter because it has no capacity to do so anyway.
“My view is that we should not seek to contain but to tame the dragon,” said He.

“Persuade it not to go wild. Persuade it to enter a regional box, which then constrains everyone’s behaviour, and we can all talk together. And if the dragon is not happy, there’s no hope.

“Looking at it from the Chinese perspective – if China can’t win over Australia, it can’t win over Europe or other western countries.”
China’s grand strategy is a function of its economy, He said. This makes life both easier and more complex for Australia, since Washington wants to slow down China’s economy, while Canberra certainly doesn’t.
As Rudd envisaged, China might be best “socialised” via regional architecture, he said. But this in turn requires a big investment in time and travel by leaders. Bob Hawke achieved a lot with China – including helping open up its iron ore market through clinching its first big overseas investment for Rio Tinto in the Pilbara, and persuading Beijing to let Taiwan in to APEC from the start. He did this through his personal relations with Chinese leaders.
Migrants from China – now Australia’s biggest source – have the strong potential to play a vital role in bridging the nations, as numbers climb and as Australia sees increased benefit from its revamped business migration program. At present, 62 percent of business migrants come from China.
Australia is also guilty of failing to seize and run with suggestions that come from China.
For instance, Xi Jinping, who will in October become for ten years party general secretary and thus China’s top leader, said in Canberra that the two countries should “deepen strategic cooperation in energy resources,” expand technical cooperation in newly emerging industries, cut an FTA deal, and work together internationally to oppose protectionism.
He said it in Canberra’s Great Hall. But because he said it on June 21, 2010, it was lost in the debris surrounding the fall of Kevin Rudd a couple of days later.
Xi’s proposals make a good start. We can also work together in third countries in fields like aid. We can beef up cultural exchanges that aim at “the masses” as well as the elite. We can do what it takes to get the FTA over the line. We can do much that we aren’t doing today. 
*Rowan Callick is the Asia-Pacific editor of The Australian and has had numerous postings in the Asia-Pacific region over the past 20 years. His previous post was The Australian’s China correspondent, where he was based in Beijing until 2009.


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