Closing Australia’s China policy gaps, while contrasting with New Zealand
23 Apr 2021|

The big positive from the federal government cancelling Beijing’s two Belt and Road Initiative agreements with the Victorian government is that Australia is getting coherent policy nationally. That national policy is centred on not wanting to help the Chinese Communist Party create a China-centred global economy, whether through the BRI or Xi Jinping’s ‘dual circulation’ economic strategy.

Handing the Chinese government more power to coerce us economically is clearly not in our interests. If we don’t know that now, with wheat, coal, wine, barley and lobsters, we’re slow learners.

The BRI is about much more than soft loans to build infrastructure—as the cancelled BRI framework agreement Victorian Premier Daniel Andrews signed shows. Its ambitions reach into advanced manufacturing, biotechnology, agricultural tech, research and technological innovation. And deep engagement with Chinese state-owned and other corporations in these areas comes with the involvement and attention of the Chinese state baked in.

So, this decision will create international interest from other leaders looking at the BRI, by making them think beyond promises of free jobs and growth without consequences. That’s exactly what Australia’s 5G decision from August 2018 has done.

If Beijing takes further steps to coerce Australia through trade, that will highlight to Australians and to many other governments and companies globally why the decision is the right one.

It will also reinforce corporate Australia’s new understanding of the sheer business risk in corporate plans that place big bets on growing their China market.

A further effect of the federal government’s decision is that it ends a fracture on China policy, in which there was unity of direction and purpose between the federal government and the federal parliament, including the opposition Labor Party, but an explicit and important policy conflict with a large state government.

That matters, because a line of effort for China’s government is to fracture other governments, notably those that are part of the US alliance network, because doing so diminishes the power of that alliance network to Beijing’s advantage. That’s why Chinese officials from Xi down rail about alliances and ‘Cold War mentalities’. Pushing forward with implementing Australia’s new laws on countering foreign interference in our domestic policy and debates while leaving this federal–state fracture in place would simply make no sense.

I doubt Foreign Minister Marise Payne took any joy in making these decisions. And it’s a concern that the Victorian government persisted for so long in running an independent foreign policy in such a key relationship. Being so obviously out of step with public opinion on China and with the federal parliament and government means it’s quite possible that the Victorian government can see the end to its connection to Xi’s BRI as a relief—even more so because it didn’t have to cancel it itself.

Payne’s announcement of these decisions right before she met with her New Zealand counterpart, Nanaia Mahuta, is useful, even if the timing may not have been done through deep design.

That’s because the cohesive national policy Australia is building is suitable for dealing with the assertive China we see under Xi, and is a major shift from the decades-long Australian policy of seeking mutual economic engagement with China while putting security and strategic differences in the background.

The policy shift that has been underway since 2015 recognises that Australia’s previous policy can’t work in a world where China is asserting its power so overtly in ways that bring security and strategic differences into the foreground.

New Zealand, by contrast, is continuing with this mutual engagement approach and seeking to manage differences through ‘quiet diplomacy’. We saw this with Mahuta’s recent speech on China and the way that speech was consistent with NZ Trade Minister Damien O’Connor’s comments earlier this year about Australia needing to show China more respect.

New Zealand will find that its policy framework collides with NZ values and interests, even if its purpose is to protect NZ’s China trade. There are also likely to be growing problems in NZ seeking to maintain a very close partnership in the Five Eyes while taking the approach outlined in its foreign minister’s speech.

Quietly assuring Five Eyes partners that everything is fine, while also assuring Beijing of the same thing, is not sustainable unless China radically changes direction under Xi. As the long-term Queensland premier Joh Bjelke-Petersen said, ‘You can’t sit on the fence and keep your ear to the ground without horrible things happening.’