The deterioration in Australia China relations

The Chinese embassy has termned cancelling of MOUs as “another unreasonable and provocative move taken by the Australian side against China”

By Anil Wadhwa

Under a new Legislation, which gives powers to the Federal Government to review agreements reached by the Australian states and universities, Foreign Minister Marise Payne on 21 April cancelled two MOUs signed by the state of Victoria under the labor government of Dan Andrews in 2018 and 2019 with China’s national Development and Reform Commission on Chinese participation in infrastructure projects under China’s Belt and Road initiatives. Two similar arrangements signed by the Victoria education department with Syria in 1999 and Iran in 2004 were also cancelled. The Australian Foreign Minister stated that she found these four arrangements inconsistent with Australia’s foreign policy or adverse to Australia’s Foreign Relations (State and territory Arrangement) Act 2020. Liberal Prime Ministers Scott Morrison and his predecessor Malcolm Turnbull had not agreed to an MoU with China on the Belt and Road initiative.

The Australian Federal Parliament had passed legislation in December 2020, which allowed veto powers over foreign arrangements by States, local bodies and universities in a broad range of sectors such as infrastructure, trade cooperation, tourism, cultural collaboration, science, health and education, including university research partnerships after China subverted the system by going through the state labor government of Dan Andrews. This legislation came on the back of National Security laws passed in 2018 by Australia to stop overt foreign interference into domestic affairs of Australia – when China had protested saying it was China specific. State governments and publicly funded universities, have notified more than 1000 foreign arrangements since the legislation was passed. Theoretically, the legislation can allow the Federal government to review and overturn MOUs between China and the state government of Western Australia, South Australia and Tasmania in sectors ranging from investment, science cooperation and access to the Antarctic. Foreign Minister Marise Payne has stated that she will continue to consider and review foreign arrangements, and she expected an overwhelming majority of them to remain unaffected.

The move also comes amid a deep deterioration of relations with China, which has applied a number of trade sanctions on Australian exports to China. These came about after Australia banned Huawei from its 5G network in 2018 and called for an independent probe into the origins of the coronavirus outbreak in 2020.  The Belt and Road Initiative is increasingly seen as a double-edged sword around the world. The Chinese government has used the Belt and Road initiatives in the Pacific Island States extensively, and this has led to fears in Australia due to the unsustainable debt levels reached in these countries in Australia’s backyard which would allow them to come under the political sway of China creating new threats to Australian and US security.

Another area of contention involves high profile Australian citizens detained by China – writer Yang Jun and journalist Cheng lei. Cheng, an anchor for China’s English language state broadcaster, has been held since August 14, 2021. She was formally arrested in February 2021, accused of “supplying state secrets overseas” – although China has revealed few other details of the allegations against her. Two Australian journalists were rushed out of China in September 2020 after police sought to question them. Australia is also among the “Five Eyes” group which has accused China of violating its legally binding international commitments on Hongkong after imposing a tough security law of the city. The United States, UK, Australia, Canada and New Zealand criticized China for ousting the pro-democracy legislators from Hongkong’s Parliament and raised fears over the intentions of Chinese tech companies overseas. In response, the Chinese foreign ministry spokesman warned “no matter if they have five or ten eyes, if they dare to damage china’s sovereignty, security and development interests, they should beware of being blinded”.

The Chinese embassy in Canberra has expressed its “strong displeasure and resolute opposition”, terming the action as “another unreasonable and provocative move taken by the Australian side against China”; warning that the move “is bound to bring further damage to bilateral relations”, and Australia “will only end up hurting itself”. The Global Times, quoting Chen Hong, the Director of the Australian Studies Center at East China Normal University in Shanghai said that “Australia basically fired the first major shot against China in trade and investment” conflicts, and that “China will surely respond accordingly”.  Wang Wen Bing, the spokesman of the Chinese foreign Ministry, has said that the move “has poisoned mutual trust and seriously harms China-Australia relations”, and “China reserves the right to take further action in response to this”.

The reason for the sharp Chinese reaction is that Australia’s move could set a global precedence and other countries may think of going back on similar agreements which China has signed under its Belt and Road Initiative with other countries, which was the case with the Huawei decision. Defense minister Peter Dutton said that Australia was “worried” about local governments entering into such agreements with China and was quoted as saying” We can’t allow these sorts of compacts to pop up because they are used for propaganda reasons and we are just not going to allow that to happen”, blaming “the values or virtues or the outlook of the Chinese Communist party”.  Dutton also added that he would be “very disappointed “if China retaliated but retorted that Australia “won’t be bullied by anyone’. Australia could have followed the European or New Zealand models who have told their telecommunications operators that they should not use Huawei, but did not explicitly ban the Chinese company. They are taking a similar tack in their approaches to the BRI. However, Australia has chosen not to take that path, and it seems to be a considered decision due to worries that the agreements were a cover for China to create geopolitical and financial leverage. The cancellation of these agreements would have minimal commercial impact because no projects had begun. However, this move is an indicator of how fraying foreign relations or political instability can affect China’s global infrastructure push.

Over the past year, without linking it to the call for an inquiry into the origin of the Coronavirus, China has targeted at least a dozen Australian exports – including cotton, Coal, Barley, beef, Wine, Lobster, Sugar, Copper and Log timber; amounting to roughly $ 25 billion but overall exports of Australia to China are down by just $2 billion over the past year.  Australia has approached WTO on barley and wine, and there have been informal talks in January 2021 between the two countries which did not resolve the issue. Analysts have said China could now expand the target list with education and iron ore being included, but given the dependence of China on Australian iron ore, it is unlikely to be a target sector.

Australia said last month that it would ask the WTO to establish a dispute settlement mechanism on Chinese targeting of its exports. Australian politicians are pushing for trade diversification away from China, and last month an Australian parliamentary inquiry called on the government to consider reversing the 99-year lease for the port of Darwin from a Chinese company under the new Foreign Relations Law. Defense officials are checking if the Land bridge group, owned by Chinese billionaire Ye Cheng, should be forced to give up its ownership of the port of Darwin on national security grounds. Land bridge has close ties to the Chinese military and won a bidding process in 2015 to operate the port in a deal worth $390 million. The decision had raised eyebrows in the United States. Australia could yet target the presence of Chinese government backed Confucius institutes at Australia’s public universities. There is a wide spread feeling in Australia that these institutes are the subject of controversy in some campuses, because they promote the self-serving version of Chinese culture and history.

The relationship seems to be going further South. Last week, Defense Minister Peter Dutton warned a conflict over Taiwan could not be discounted, as China had been “very clear” about its long-held goal of reunification and the “animosity” between the two sides and Home Secretary Mike Pezzullo claimed the “drums of war” were beating in the region. Chinese spokesperson Zhao Li Jian responded by commenting that “some individual politicians in Australia ” were making “extremely irresponsible” statements “that incite confrontation and hype up the threat of war”. Chinese media has also seized on an article, published by fringe political group the Australians Citizen Party, criticizing local politicians’ support for the East Turkistan Australian Association (ETAA), an Uighur advocacy group. The article claimed that ETAA supported terror groups in Xinjiang. China has accused Australian politicians of colluding with “terrorists” in Xinxiang and warned Australia it will get “burned” if it continues to back Uighur activists. Chinese foreign ministry spokesperson Wang Wen Bin said “it exposed the separatist, terrorist and extremist nature of the Xinjiang independence organization in Australia and the despicable collusion of anti- China Australian politicians with terrorist organizations for selfish gains”.

Former Prime Minister Kevin Rudd, who has consistently advocated accommodation with China, said speculating about a war over Taiwan “throws fuel on the fire unnecessarily”. Prime Minister Scott Morrison visited Darwin a few days ago where he said Australia “needs to build up Australian military capability” and promoted a $747 million upgrade of defense training bases in the Northern Territory. The upgrade is for simulated military training and for remaining ‘battle ready”. The Australian government defense strategic update last year has warned that a “prospect of high intensity conflict in the Indo – Pacific, while still unlikely, is less remote than in the past”. It was followed up by the defense department Secretary, Greg Moriaty, saying it was “very legitimate” for Australians to be concerned about how Beijing was asserting its interests, including “disturbing” militarization in disputed parts of the South China Sea.

(The author is a former Secretary (East) in the Ministry of External Affairs and a former Ambassador to Italy, Thailand, Oman and Poland. He is currently a Distinguished Fellow with the Vivekananda International Foundation, New Delhi. Views expressed are personal.)