PETER VARGHESE. Australian Universities and China. Part 2 of 2

Oct 20, 2018

 My remarks today are very much a personal perspective, drawing on my past engagement with China as a foreign policy practitioner and informed by my current role, but it is not an official University of Queensland position.

Today I wish to talk about what China means to Australian universities: what are the issues we face, how best to think about the relationship with China and, importantly, how do we manage risks while expanding opportunities.

The second risk to demand from China is much harder to assess.  It turns on whether China may choose for broader, essentially political reasons, to reduce the flow of students to Australia.  To address this question we need to go from budgets to geopolitics.

It is the conceit of every generation that it is poised on the threshold of something new and different.  But when we look out at our international environment it is hard to avoid the sense that the ground is shifting beneath our feet.  To adapt a title from the late Tom Wolfe we seem to be facing a “bonfire of certainties”.

So many of the supporting pillars of the post Cold War world seem less secure: US strategic predominance is narrowing even fading.  Protectionism is on the rise.  The liberal international order is under stress.  In many developed democracies, identity politics is overshadowing older ideological fault lines. And illiberal democracy and authoritarian approaches are attracting more support than they deserve.

For decades we have spoken about the fluidity of our strategic environment as shifts in economic weight rearrange strategic relativities and economic integration jostles with strategic competition.  Today it seems that rather than reach a settling point this fluidity may be leading us towards a tipping point.

At the heart of this churn is the US-China relationship.  Where is it heading, how will it be managed and where does it leave Australia?  Universities do not have to have a position on these issues but they do need to understand how they may impinge on and indeed disrupt their business models.

The last four decades have been good for the Australia China relationship.  We have benefited enormously from China’s remarkable economic growth.  It has boosted our trade, lifted our living standards and been a significant contributor to an unprecedented twenty seven years of uninterrupted economic growth.  And geopolitically we have been able to have our cake and eat it.  We have built a strong relationship with China while holding fast to our strategic alliance with the US and all the benefits that flow to Australia from US strategic predominance in Asia.

But now those four decades are beginning to look like our salad days. What lies ahead looks more complicated at best and gloomy at worst.

China’s future behaviour is likely to be a mix of many elements.  It will be a responsible stakeholder where its interests are served.  It will not be a classic revisionist power because China has been too much a beneficiary of the existing system to want to completely overturn it.  But there are elements of the system that China will want to see replaced.  it will also look to have a greater say in existing institutions and to craft new institutions and arrangements which place it at the centre in a pattern reminiscent of the Middle Kingdom. What is clear is that China will not accept a regional and global order cast in the image of the US.

China will ultimately define its own strategic settling point.  It will not be forced into someone else’s view of what it should do or become. But it is now also clear that what it wants to become is the predominant power in Asia.

China’s aspiration to strategic predominance does not make it an enemy and it would be unwise to treat it as one.  Nor does it negate the importance of engaging with China and working with it wherever we can.  It is very much in Australia’s interests to have a close relationship with China in as many areas and at as many levels as possible.  Such a relationship, anchored in mutual interest and mutual respect, serves both our strategic and economic interests.  It also makes it easier to work with China on broader regional issues.

There is no sensible alternative to engaging China.  Containing China, in the way the West sought to contain the Soviet Union, is a policy dead end.  China is too enmeshed in the international system and too important to our region to be contained.

Nor is China an expansionist power, although it has an expansive view of what is historical Chinese territory.  It is not in search of an empire.  For China, strategic predominance means a return to the Middle Kingdom where regional states conceded priority to China’s interests and were careful not to act in any way which displeased China.

For Australia the strategic rub with China reaching for strategic predominance is the character of its political system .  Strategic predominance, by definition, would make China the single most important shaper of the strategic culture of the region.  The political character of a state and its strategic behaviour are linked.  That is why passing the baton of strategic predominance from the US to China, from a liberal democracy to a one party system, is problematic for Australia.

So what does all this mean for Australian universities?

First, we must understand that the Australia China relationship has entered a new phase.  Australia’s China policy has been largely constructed around the China of Deng: the China of hide and bide. Now we must deal with the China of Xi: a China which seeks to become the predominant power in Asia and whose economic reach gives it considerable leverage.

Will reducing the flow of Chinese students to Australia be part of that leverage? 

I do not know the answer to that question.  But universities should understand that leaving the question hanging can be a useful tactic for China.  It makes universities nervous.  And that leads some of them to urge the Australian Government not to do anything which might annoy China.  In this universities find themselves in a similar position to many in the Australian business community who fret about any tensions or disagreements in the Australia China relationship.

It would however be unrealistic to think that the Australia China relationship can be devoid of tensions.  Indeed those tensions are likely to increase as navigating between China and the US becomes more complicated for Australia.

We may well see Australian and US views on China beginning to diverge.  There seems to be a growing constituency in the US to thwart China’s rise. This is a dangerous course.  A country which already looks to redeem itself from a century of humiliation does not need its worst fears confirmed. 

China’s rise needs to be managed not frustrated.  It needs to be balanced not contained.  Constructing that balance and anchoring it in a new strategic equilibrium in the Indo Pacific is the big challenge of our time.

For Australia this also means having a deeper national conversation about how we balance our economic and strategic interests with China because those two elements will increasingly diverge as China presses ahead with its ambition to become the predominant power in Asia.  As a country we need a much clearer sense of what our red lines are and, importantly, how much economic pain we are prepared to bear if we take positions which protect our national interests but which China sees as cutting across its interests.

Universities need to understand this broader context, not least because some of the pain may be borne by them.  This means understanding the risks and putting in place strategies to deal with them including diversifying the sources of international students and not baking into their operating budgets the revenues which come from international students.  India and Indonesia will be particularly important in any diversification strategy.

While demand remains high it makes little sense for Australian universities to turn their back on the revenue stream offered by students from China and elsewhere.  But it would be wise to invest the profit margin for the longer term not use it for current expenditure.  Put it into a future fund or endowment which would give universities a measure of resilience in the event that the market abruptly shifts for reasons beyond the control of universities.

There are other issues for universities to consider beyond the trajectory and potential disrupters of supply and demand from China.  How to react to students who object to teaching which may be contrary to the policies of the Chinese government?  Should we worry about students being “dobbed in” to Chinese authorities? Are Confucius Institutes a front for Chinese propaganda?

These are legitimate questions to ask although some of the coverage of these issues paint a picture of a free speech crisis on our campuses which is far removed from the daily reality.  If there are indeed threats raised by these questions then they are entirely within the power of universities to manage.  A university which is committed to the principles of academic freedom, freedom of expression and institutional autonomy, and with robust systems to give effect to these principles, should have no trouble dealing with students who insist on teaching politically correct lines or who want to stop others from expressing their view or to use the perch of a university position to promulgate propaganda.

If any of these principles are breached the responsibility lies squarely with the university leadership, not with students who may act in ways inconsistent with the idea of a university.  Any university worth its salt would simply not allow them to get away with it.

We can only hope that all our students accept the foundation principles of a university.  But we can insist that all university leaders give full effect to these principles.  I accept there may have been some lapses and when this happens it should be called out and corrected.  But the lapses are, in my experience, isolated incidents.  For the most part university leaders stand up for the freedoms of inquiry and speech which are so fundamental to the idea of a university.  They believe in that idea and understand the need to be vigilant.

At UQ we have a Confucius Institute.  These institutes can be seen as part of China’s soft power, just as Goethe Institutes and the British Council advance the soft power of Germany and the UK.  All governments engage in varying degrees in promoting soft power.  The Australian government has in the past funded chairs in Australian studies at prestigious universities abroad.  The key point about the Confucius Institutes is that they are subject to the rules, processes and principles of the university.  They make available services which are valued by a large number of students.  To the best of my knowledge, the teaching of the Confucius Institute at UQ has not crossed any lines.  If it did the university would deal with it as it would any actions that cut across the principles of academic freedom, the independence of universities and freedom of expression.

Let me conclude with these observations.

Australian Governments from both sides like to say that they have never spent more on universities.  But this ignores the huge expansion in the number of Australians who today attend universities, the expansion of research which strangely in Australia is not fully funded and the undeniable reality that the proportion of government funding in university budgets has been dramatically cut. 

Australia has a world class university system:  to have six out of 37 public universities consistently in the top 100 globally is a remarkable achievement.  But to keep it world class it requires investment and that includes from government.  Today too much of that investment is off the back of international students.

China has consequently become an important partner of Australian universities:  the largest source of international students and now also a key research partner.  Much like the broader Australia-China relationship, this is good for Australian universities, good for China to whom well over eighty per cent of Chinese students return on completion of their Australian studies and good for our broader national strategy of regional engagement.

But also like the broader bilateral relationship there are risks, most significantly the risk of over reliance.  We are heading into a more uncertain future, geopolitically and economically, and uncertain times put a premium on spreading risk. 

China is already a crucial part of Australia’s future.  That is unlikely to change.  But navigating the relationship will inevitably get more complex for all the reasons I have mentioned.  Universities cannot expect to stay aloof from those challenges of navigation. 

Peter Varghese is Chancellor of The University of Queensland, to the 2018 National Conference on University Governance, 4 October 2018, Adelaide.  He was formerly Secretary of DFAT

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