China: Corporate Australia pushing back against the US and its local agents

Nov 16, 2020

As an increasing number of Australian firms have become more resistant to US coercion, the Labor Party has tentatively become a little less enthusiastic in supporting the government’s anti-China push.

In August 2019 the US Secretary of State ­Michael Pompeo told the Morrison government that Canberra should respond to the growing tension between China and the USA by falling into line behind the US, even though China is Australia’s primary trade partner and a source of the profits many Australian companies need to remain viable. Three weeks later, this message was echoed in a report issued by the US Studies Centre at Sydney University that detailed why the US expects Australia to contribute to its defence. The message was also supported by John Mearsheimer of the University of Chicago who characteristically was blunt in making it clear that if Australia did not fall into line Washington would ensure that its people and firms paid a heavy economic cost.

That the US has the capacity to coerce Australia economically tends to be avoided by many commentators who note that Australia has a net trade deficit with America and a large trade surplus with China. This avoidance is commonly engaged to support the notion that we prioritise military security and ‘mateship’ over profits. But while it is true Australia has a trade surplus with China emphasising this point can shroud the fact that Australia–US two-way foreign direct investment is worth $1.47 trillion while the similar figure for Australia–China investment is $90 billion. Consequently, Australian prosperity is decidedly vulnerable to US economic coercion and Australia’s government and corporate executives are presumably aware that this is the case. In brief, to bury Mearsheimer’s point that the US would exploit its economic relationship to coerce Australian interests if we do not fall into line can miss the point that we must view the USA through the prism of both military and economic security.

Confronted by this situation, Australian corporate executives, such as Twiggy Forrest,  have had great difficulty convincing their corporate peers to join them in pushing back against US demands that we fall into line. This reluctance has been bolstered by the charge that is immoral for firms to prioritise profits over the democratic principles that it is claimed underpin Canberra’s foreign policy. In short, it is deemed iniquitous to strive to dampen the Australian government’s willingness to once again go all the way with  USA, to racially vilify Chinese heritage Australians and if necessary join the US in a war against China if this is what avoiding US coercion requires.

Despite corporate concern that the US will use its power to coerce Australia to confront China there is growing corporate resistance to the xenophobes and to the opportunists who serve US interests by charging Australia is being subjected to a ‘Silent Invasion’ by China.. This is manifest in the latest Australian Institute of Company Directors (AICD) survey of corporate sentiment, which reports that the proportion of executives calling on the Morrison government to improve  engagement with China has doubled over the past six months. In brief, Australian senior business leaders have become increasingly concerned at Australia’s strained political and commercial relationship with its biggest trading partner. Rightly, the AICD does not suggest executives’ concern reflects any personal reconsideration of questions relating to democratic values. Rather, it suggests executives are aware that China has become the only game in town given it is the only large state that will have a positive rate of growth in 2020.  As Michael Corleone, of Godfather fame, would have observed of this response, ‘It’s not personal. It’s purely business.’

As is to be expected, the diminishing capacity of the US and those of its local agents who remain true to the tradition that led hundreds of Australians to die in Vietnam and Iraq, has induced a ratcheting up of the anti-China rhetoric and the issuance of declarations designed to encourage firms to stay with the US by reassuring them that the backlash from Beijing will soon blow over. This is despite the ready availability of data that shows there has been a marked decrease in Australia–China trade and investment; data that is freely available to any halfway competent director.

Australian executives’ increased willingness to resist US coercion may perhaps have been emboldened by Angus Houston’s insistence that China is not an enemy of Australia and Dennis Richardson’s advice that business leaders should dismiss the charge they are too focussed on their profits:

I think they should come back and say ‘too damn right I’m talking about my profits’, because profits means jobs. The business community should be far more robust in articulating publicly its own interest in this in a more coherent way in what they do at the moment (Richardson).

It is reasonable to assume that such statements bolster the fortitude of corporate resisters. This is not least because accusations that one is an agent of foreign influence, a Communist Party apologist and a threat to national security are  less effective when those being criticized are echoing the sentiments of Australia’s former military chief and the former head of the Department of Foreign Affairs and Trade.

As an increasing number of Australian firms have become more resistant to US coercion, the Labor Party has tentatively become a little less enthusiastic in supporting the government’s anti-China push. This is presumably because it hopes a more balanced position will win it support from these executives.  If this hope is fulfilled and if an increasing number of Australian firms conclude their profits will be substantially enhanced if Canberra embraces a less subservient position in response to US coercion and joins the nations of East Asia that have taken a more nuanced position, we may see an interesting debate unfold.

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