This online event saw our speakers, Professor John Fitzgerald and Rowan Callick discuss the changing context of Australia’s political and trade relations with China, including the impacts of Australia-US ties.
Since taking office in 2017, US President Donald Trump’s policy direction has largely influenced the diplomatic relationship between Australia and China. Seen as a “pale reflection of US government intentions in the Pacific”, China has opposed the Australian federal government’s stance on multiple fronts. The great US-China rivalry – growing in escalation over the last four years – has put Australia in a unique position as questions around national security and economic prosperity come to the forefront of our national discussion.
John Fitzgerald – Key Points
- It is difficult for Australia to see any kind of future that doesn’t involve China in a very big way.
- There is a growing recognition that China has changed and not Australia. Through this change, cracks have formed. So, Australia needs to be rethinking the way it conducts its relations with China.
- “The coronavirus has exposed the fragility of just-in-time supply and the folly of relying on a single country for critical goods and infrastructure. Some economic separation is of unavoidable and necessary”.
- For the past 4 years, the Trump factor has been a largely impacting factor in the Australia-China relations.
- For Australia, we are partly dependent on China for our prosperity; largely dependent on the USA for military security. However, neither China nor the USA is committed to upholding the old order which we rather value.
- During President Trump’s term, the USA and China have turned from being great power competition, to great power rivalry. This reflects a long-term shift in the balance of power.
- There is a new held consensus in Washington that the days of partnership and engagement with China are now over.
- Trump signed a document, the United States Strategic Approach to the People’s Republic of China, which signalled that all out strategic competition. It was highlighted through this that the US sees China as a strategic and an ideological rival.
- Canberra has been slowly distancing from Trump’s government.
- The diplomatic issues that exist between Australia and the USA have come about through systemic issues to do with Australia’s standing as a middle power dependent on international trade and a predictable rules-based order. Middle powers fear disruption. Australia is the middle power, and Donald Trump is the great disrupter.
- Trump’s goal is to make America great again – however this has meant a lack of commitment to long term trade partners, such as Australia.
- We first need to look at where it was that the relationship between Australia and China went sour. Was it before Donald Trump took office in 2017?
- In 2020, people are claiming that the relationship between Australia and China deteriorated significantly due to Australia’s attempt to call for an international inquiry into the origins of COVID-19.
- In 2019, it was claimed that Australia’s decision to ban Huawei from its national 5G infrastructure was another deteriorating factor.
- In 2018, a problem stemmed from legislation introduced to underpin the Foreign Influence Transparency Scheme.
- In 2015 and 2016, deteriorating relationships tended to be attributed to what was called a ‘China Panic’ in the media over political donations and other issues involving the NSW labour rights.
- In 2014, it was attributed to the Abbott government’s expression of concern over China’s declaration of an Air Defence Identification Zone (ADIZ) in the East China Sea.
- Prior to Trump’s entrance into office in 2017, Australia and China were well into experiencing issues surrounding the South China Sea.
- Each of the discussed issues that has triggered a deterioration in the relationship between Australia and China has involved the Australian government acting without external prompting in defence of international order, social cohesion within Australia and national sovereignty. They were all created in Australia, by Australians, to address a domestic or regional issue.
Where to from here?
- Australia has been able to retain close defence and security ties with the US while distancing itself from important issues, ranging from multilateral trade, to climate change and the role of international institutions (WTO, WHO, etc).
- There is a need to focus on the similarities that bind us, as opposed to the differences that separate us.
- “Australia is a pale reflection of US government intentions”.
- Two proposals have been put forward by Australians to develop better relations:
- Bounded engagement – in this model, the challenges that China presents are recognised as real and pressing. But Australia is still seen to be engaging with China on as many fronts as possible.
- In September 2019, a model was put forward for broader application among liberal democracies. It suggests that China should be approached not in Cold War fashion, but through a combination of approaches as adversary, as competitor and as partner across discrete areas of engagement.
Rowan Callick – Key Points
- Rowan focussed on how businesspeople should respond to the changed relationships.
- DFAT presents very positive statistics regarding Australia’s trade with China. In 2019, Merchandise exports increased by 26% from 2018, and accounts for 36% of Australia’s total merchandise exports.
- China can’t be expected to repeat their high performance because China’s economy is in trouble, China is not getting help from its global engagement, politics is getting in the way of good policy both inside and outside of China, and because of the COVID-19 pandemic.
- The IMF is forecasting 1% growth for China this year, followed by 5.4% for 2021.
- China has shifted away from Deng Xiao Ping’s Kai Fang (opening up), and now is more concerned with Xi’s focus on creating socialism with Chinese characteristics for a new era.
- China’s continual investment in education and infrastructure ensured that China kept advancing after the GFC.
- China’s chief drivers of growth over the last dozen years are credit, internal migration and exports.
- China’s debt has already surpassed three times GDP.
- China is very heavily investing in infrastructure to combat the financial strains of COVID-19.
- China is currently beginning 105 new projects for an average cost of 1 billion USD each. The China Development Bank is being required to provide a 60 billion USD loan to cover 24 projects.
- Internal migration has slowed due to the slowdown of exports.
- The manufacturers that brought workers from countryside to cities, making China the world’s factory, are facing tougher times.
- Birth rates have not recovered since the abolition of the one child policy five years ago.
- The working population has been falling since 2014.
- Xi has introduced a food waste campaign, thought to be due to domestic food shortages.
- The pandemic will accelerate the diversification of global supply chains and move it away from China.
- The aim of Xi’s new policy, ‘double circulation’, is to fully bring out the advantage of China’s super large market scale and the potential of domestic demand to establish a new development pattern featuring domestic and international dual circulations that complement each other.
- “Rose coloured glasses are required to think that China will overtake the US at the world’s largest economy in the next decade.”
- Although it is expected that China’s economy will grow, the rate of China’s growth will likely converge towards the global mean over time.
- We are seeing record trade figure between Australia and China. Are we properly balancing being strong on security and being mindful of embarrassment?
- Tricky to answer as we don’t have the mind of Xi Jin Ping.
- President Xi believes that “we are a big country and all the other countries are small countries”. He believes that if other countries behave in a way that is acceptable to China, they will make sure the relationship is steady and life can go on as it was before.
- If we step outside the bounds of what we think is acceptable behaviour, we can change the relationship.
- We can’t predict how China is going to respond, eg. We didn’t know how China would react to Australia trying to find out the origins of COVID. – it is in public interests and China’s interests to know.
- The key element of improving ties with China is breaking the current cycle of negative public commentary and perception that each country is taking negative actions against the other. What steps can be taken to break the negative cycle and lay framework for more constructive engagement?
- Negative comments come about as there are substantive issues.
- We should have more Chinese-Australians involved in conversations.
- We need to suggest areas to work together on, e.g. Climate change and the pandemic.
- Australia’s diplomatic spending in the Asia specific region is at an all-time low, should it be bigger?
- China has put a massive amount more into diplomacy
- However, the Australian government is shifting resources around the Pacific Island area.
- It is now being said that we need to stand up for our values instead of laying low. Why do we not turn the same critical eye on Washington’s behaviour that undermines our interests?
- United States does not get offended when media and government criticise them, whereas China does.
- By laying low, it isn’t saying that we should ignore our values and put them to one side. It means to not stand there in the open and say that Australia should prioritise economic interests over values. Laying low means spending our time working on our relationships.
- Can Australia go back to John Howard’s way of separating trade from politics and human rights?
- John Howard has said that China now is not the same as China back then
- The Australian government doesn’t comment on China’s internal politics.
- In John Howard’s day, China didn’t have the same international presence.
- What is your view to have the business community involved with conversations at government level?
- Businesses are regularly discussing with government leaders.
- Say what you have to say publically and there will be an audience listening.
- What are your views on the treatment of international students and researchers in Australia?
- This is a serious concern for Australia’s engagement with China, South East Asia etc.
- Australian universities do not actively involve students in everyday life.
- Many students in the big cities really don’t know how to get a hold of the basics, particularly during covid-19 (including students not being sure if they’re allowed to leave their dorm rooms to get food). Universities need to take more responsibility for addressing the pastoral care needs for these students.
- The Australian community more broadly needs to help international students feel more welcomed into Australian communities.
- We need to particularly help these students, students will likely stick with those that speak their own language, but the university needs to focus on engagement.
- Is the only realistic circle breaker a meeting between Xi and Morrison?
- A meeting like this would likely not be very useful.
- There needs to be several small things combined which allow for a change in the relationship between Australia and China.
Takeaways compiled by Annabel Pittendrigh