Things haven’t been this bad between Australia and China in 30 years (Crikey, 14 August 2019)

Aug 19, 2019

The Morrison government’s increasing ties to the Trump administration is, by consequence, achieving quite the opposite of its previous goal of “resetting” Australia’s relationship with China.

This has only been exacerbated over the past week by a string of Liberal Party figures including Parliamentary Joint Committee on Intelligence and Security chair Andrew Hastie and, tellingly, still-influential former prime minister John Howard speaking out against China’s authoritarian regime in the wake of ongoing and increasingly violent anti-Beijing protests in Hong Kong.

But it is now clear that the government is split on China. It is stuck between Canberra’s hardline and increasingly powerful security departments, and the firm middle-way rest led by the Department of Foreign Affairs.

Beijing will be more than aware of this and the concomitant rise of security hawks in Canberra with Defence Signals chief Mike Burgess named as the next chief of the Australian Secret Intelligence Organisation (ASIO) and Tony Abbott’s former foreign affairs adviser and China hawk Andrew Shearer, dumped by Malcolm Turnbull, returning to favour as cabinet secretary.

What no one is saying out loud is the cold hard truth that the Australian government — and increasingly Australian businesses — are personae non gratae in China.

There has been no contact beyond polite handshaking at multi-lateral conferences between senior leaders from the two countries, with just occasional contact at foreign minister level, for more than two and a half years, effectively ending Julia Gillard’s landmark foreign policy achievement of having a leader’s summit every year.

Things are so bad — and this is pre-Hong Kong, remember — that Xi Jinping recently refused to meet Scott Morrison for a bilateral meeting at the recent Osaka G20 meeting, Crikey has learned. Trade Minister Simon Birmingham attended a multi-lateral meeting in Beijing earlier in August and was also refused an official bilateral meeting.

Indeed, old China watchers in and out of government in Australia believe the state of things hasn’t been this bad since Bob Hawke let Chinese students stay in Australia after the Tiananmen Square massacre, creating a diplomatic freeze that lasted almost three years. But that was when China made up only a fraction of Australia’s two-way trade. Now, it accounts for 24%.

The G20 slap in the face sent shockwaves through DFAT, which was already acutely aware of the dire state of affairs. After meeting with Payne in Beijing during the trade meeting, China’s top diplomat Wang Yi described any progress on repairing bilateral ties ass “unsatisfactory”.

Scott Morrison is obviously receiving that message, as he has twice tried to hose down China’s parliamentary critics in the past week — all the while not quite putting them to bed.

The recent meeting between the PM, Foreign Minister Marise Payne, Defence Minister Linda Reynolds — whose impressive Army Reserve background marks her out as a potential hardliner as she finds her feet — and US Secretary of State Mike Pompeo only worsened “optics” in the eyes of Beijing. This perceived closeness to the US will only make already poor relations worse.

At least three major Australian businesses are stuck waiting to see regulators in China for major deals, and coal freighters full of Australian coal continue to sit off China’s coast. Critically, there is little prospect now of the minimalist China-Australia free trade agreement — a deal consistently promoted as a major Coalition achievement despite China getting by far the best side of the deal — being regularly upgraded, as originally planned.

Canberra, at least at the political level, has long coasted along the Pollyanna theory that security and trade can be compartmentalised. That is not at all how Beijing sees the world and it is driving this bus. As one senior diplomat noted, “It will get to the stage where China does not see any point trying to restore its relationship with Australia. Why talk to the monkey when you can talk to the organ-grinder?”

As this publication has consistently noted in recent years, and my colleague Guy Rundle has reiterated this week, Australia’s China policy is a mess. At least, as Peter Hartcher in the Nine papers has noted, we are now talking about it.

As if all of this were not urgent enough, all considerations about where to go next are on hold as the protests in Hong Kong continue apace as the level of violence by the authorities — including against journalists — is ratcheted up. Where things in Hong Kong will end remains uncertain but some sort of drastic action by security forces increasingly looks inevitable.

Troublingly for Australia, the Hong Kong protests have spilled into the country’s vast international student cohort — about 30% of whom are Chinese — with pro-Beijing elements launching violent attacks in a growing number of campuses against peaceful pro-Hong Kong protesters.

Back in Hong Kong, the protests are posing a real threat to the special administrative region’s economy. Tycoons are driving capital flight, and Hong Kong’s importance as a money funnel for China into the rest of the world should not be underestimated. All bets are off in a city where 100,000 Australians live and at least 6000 Australian businesses operate. Whatever fallout eventuates, it will be felt here and more broadly across the region.

At that point, Canberra will still be stuck with the far thornier issue of how to envision the bigger picture with Beijing.

Michael Sainsbury is a freelance correspondent in South-East Asia who writes for Crikey

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