Natasha Kassam and the AFR have it wrong on China-Australia tensions

Dec 1, 2020

Australia is fast becoming a sad joke, an object lesson in how not to behave towards China. If we are becoming an example, it is an example of what to avoid.

‘According to lore, or perhaps mythology, a newspaper editor in the Antipodes warned the Kaiser in circa 1914 not to do something or other – which, needless to say, he did. Or perhaps it was the Tsar at the time of the Crimean War. In any event, the phrase ‘We Warn the Kaiser’ has come to illustrate gratuitous warnings by self-important types which have no effect whatsoever.’ (Gerard Henderson’s Media Watchdog, Issue no 457 26 June 2019).

Ms Natasha Kassam, a research fellow in the diplomacy and public opinion program at Lowy Institute, may have hoped that the Chinese Government would take her opinion essay ‘China cannot have it both ways’ (AFR 28-29 p 42 Nov 2020) more seriously than Kaiser Wilhelm took the warning from an obscure Australian country newspaper. At any rate, the Australian Financial Review gave Kassam’s essay prime position on its editorial page and followed it up with a similar editorial the next day. So let us consider her arguments seriously.

She claims in summary that Beijing has badly underestimated Australian resistance to what she terms its threats; and that the Australian example of courage and national unity in the face of such Chinese Communist Party bullying is inspiring or will inspire other countries around the world to stand up to Beijing.

It is interesting that a research fellow was tasked to carry the argument on a matter of such national importance. One might have expected the Executive Director of the Lowy Institute, Dr Michael Fullilove AM, to sign his name to this. But maybe it was a trial balloon, sent up to test which way the wind is blowing? Or maybe it was meant as a not-so-subtle putdown to Beijing?

In any event, the Australian Financial Review upped the ante against China in its strongly worded editorial the next day, 30 November: ‘Beijing’s freezer brings Australia out of the cold’ which amplified the case put by Kassam.

Omissions from the Kassam article are telling. There was no mention of the key trigger that most provoked China’s anger: Australia’s aggressively worded demand to WHO to investigate the coronavirus that allegedly originated in Wuhan, China, and which in true Trumpian style pointed the finger of blame firmly at China.

Australian allegations of human rights abuses in Hong Kong and Xinjiang were not mentioned: nor was the McCarthyist mistreatment by Australian parliamentary committees and mainstream media of prominent Chinese Australians. There was a cursory reference to the ‘14 grievances’:

‘The Chinese embassy’s list of irritations is lengthy, spanning concerns from foreign investment decisions to unfriendly media reporting’.

Kassam dismissively noted ‘the familiar litany of complaints that Canberra is out of line in the South China Sea or on Huawei’s exclusion from our 5G network’. She concluded the first part of her essay:

‘But now it seems that Beijing is openly demanding political compliance from not just the Australian government, but the free press and academia too. All of this comes from a country that claims to be a defender of the international order, on the basis of “mutual respect”.’

There was no discussion of the merits of the Chinese grievances, despite their ample exposition in Chinese official statements and in Chinese media close to the state. There was no mention of advocacy by various prominent Australians urging that the Chinese grievances be taken more seriously: e.g., by Geoff Raby, Bob Carr, Gareth Evans, Gregory Clark, Peter Drysdale, Andrew Forrest, and other leading business figures.

Kassam’s real purpose was to convey a story of resolute Australian national circling of the wagons around the principled positions that the Morrison Government is taking: and to claim that the Australian strategy is fast attracting international support. In important respects, I believe, this is a false narrative, full of assertion but almost devoid of evidence. I would similarly criticise the AFR editorial of 30 November.

Kassam notes:

‘Almost all Australians want to diversify away from the Chinese market, and trust in China has plummeted, according to the latest Lowy Institute Poll.’

She says:

“Businesses in both countries look for alternatives and prepare for what now seems inevitable: politically motivated trade disruption’.

She offers no data to support the claimed alternative markets for Australia. She is silent on the massive economic costs Australia now faces, as predicted on a worst-case scenario by a leading global bank CITI, reported in Australian Financial Review, page 6, 28-29 November, ‘China tensions could lead to a $76B hit: Citi’.

The CITI figures are indeed scary, under its downside scenario which given Australia’s continued truculence towards China now looks the most likely scenario. A 50% drop in our exports to China, including iron ore, would cause Australia’s total merchandise exports to decline by 20% over the coming year, leading to a $76 billion loss in our export earnings, causing a sizeable 3.8% hit to nominal GDP. (And this is apparently without taking into account any estimate of Keynesian multiplier effects). CITI suggests that in this scenario the Australian dollar would be around 16 cents lower compared to baseline over the next 12 months.

Kassam, and the subsequent AFR editorial on 30 November, claim that the Australian example of courage in the face of Chinese bullying could lead to world mobilisation of support for WTO rules under Biden’s new internationalist engagement. With great respect to her and the AFR editorialist, this is optimistic nonsense.

No country other than Australia has gone out of its way to thumb its nose gratuitously – and over several years now – at Beijing. In true Monty Python Black Knight fashion, we prance about with increasing aggressiveness as our limbs are lopped off. Our friends and allies do not know whether to laugh or cry at our vainglorious diplomatic incompetence.

Ironically, American and European exporters will pick up the formerly secure markets that Australia is abandoning. There will be honeyed words of support and sympathy for us, dutifully reported by our embassies: but the truth is that we are out on a limb, a limb that we are busily sawing off. We are becoming a sad joke, an object lesson in how not to behave towards China. If we are an example to others, it is an example of what to avoid.

There is, I regret to say, an element of truth in the Kassam and AFR assertions that the Australian nation is swinging behind the Government’s position. It is a measure of how far Australia has fallen under the influence of jingoistic false narratives promoted by the Murdoch press and its many imitators in mainstream media. Our elites are abandoning critical thinking. (See for example ‘Patience with Beijing finally runs out’, Philip Coorey, p 6 AFR 28-29 November )

Repeat anti-China propaganda often enough, from enough diverse sources, and it becomes embedded in the public mind. It may already be too late to stem the tide: economic decoupling from China may continue, and a significantly poorer Australia may finish up more firmly entrenched in the US-led Five Eyes Anglo-American strategic alliance.

Like King Canute defying the incoming tide, Australia is making a perfect fool of itself. Our producers, farmers, traders, and university educators – all of us in the end – are the losers. China has many other good options: it will be harder for us to find any.

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