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Foreign Relations - China

China is Australias biggest trading partner, and its future prosperity depends, in large part, on a smooth relationship with Beijing. Australia, however, must balance its commercial ties with China with its longstanding military alliance with the United States.

Due to escalating tensions between the two countries on multiple fronts - such as the Hong Kong affair, a US-led inquiry into the origin of the coronavirus origins, and a travel and study warning - China-Australia relations have been rapidly sliding to near freezing point. A new Cold War may only further jeopardize the already fragile relations between the two sides.

China enacted a punishing array of protectionist measures on Australia after Canberra called for an investigation into the origin of COVID-19. "China is sending a message to Australia: 'We are a big country; you are a small country.' China is more assertive because it feels it is under attack. They are bullies," Fraser Howie, a China market analyst and co-author of the book Red Capitalism, told DW 24 November 2020. China, Australia's most important trading partner, has introduced a host of protectionist measures such as trade sanctions, investment restrictions, tourism bans and boycotts. Beijing has imposed embargoes in seven key sectors, including wine, barley, timber, coal, cotton and rock lobsters. A whopping $6 billion in goods has been targeted. Around one-third of Australia's total exports go to China and the market is estimated to be worth 94 billion ($105 billion) in the 2018-2019 financial year. Tensions between Canberra and Beijing have risen because of allegations of cyber attacks by China, and that it has meddled in Australia's domestic politics. There's also been friction over the detention of a Chinese-Australian writer in Beijing, and differences over Chinese territorial claims in the South China Sea. Australia also has concerns about Chinese interference in its universities, including allegations that students who have supported democracy protests in Hong Kong have been harassed or monitored by Chinese agents on campus.

In 2015, China and Australia signed a free trade agreement. Back then, Australia also treated the free trade agreement as an important strategic direction. It was indeed a huge economic breakthrough for Australia. The relationship between Australia and China got even closer since then. The two countries have moved from a strategic partnership to a comprehensive strategic partnership, and economic and trade cooperation has been on the rise. As a resource-based economy to a large extent, Australia must look for export markets. Asia, especially East Asia, is a locomotive for economic development in the world. It needs such resources and has a huge market. Therefore, trade and investment between Australia and Asian countries are surging, and this is a great opportunity for Australia.

Problems go back to 2016, when Sam Dastyari, an Australian politician with links to Chinese donors, gave a speech backing China's claims to disputed territories, contradicting his party's stance. The incident raised concerns about Chinese meddling in Australia's politics and prompted Canberra to introduce legislation banning foreign interference in domestic affairs. But that law has been less than successful. In November of 2019, media reports claimed that a Chinese-Australian man, Bo Zhao, had been approached by Chinese spies to run for federal parliament. He reported the overture to Australia's security services and was later found dead under mysterious circumstances.

One of Australia's most senior government ministers, Home Affairs Minister Peter Dutton warned 12 October 2019 Canberra would work to counter foreign interference in Australian universities, as well as cyber espionage. Peter Dutton's comments are some of the most uncompromising language yet from an Australian government minister on the perceived threat posed by China.

"My issue is with the Communist Party of China and their policies to the extent that they are inconsistent with our own values, and in a democracy like ours we encourage freedom of speech, freedom of the expression of thought, and if that is being impinged, if people are operating outside of the law then whether they are from China or from any other country we are right to call that out," he said.

The comments prompted a stinging response from the Chinese government. A Foreign Ministry spokesman, Geng Shuang, told a press conference that he hoped "Australia will reject the Cold War mentality and bias, and work to advance bilateral relations and mutual trust." The Chinese Embassy in Canberra said it rejected "Mr Dutton's irrational accusations which are shocking and baseless."

The United States expressed concern about China's influence in Australias domestic politics and wanted reforms to eliminate Beijings ability to use financial donations to influence Australian politicians. In an exclusive interview 15 September 2016 with the daily newspaper The Australian, departing U.S. Ambassador John Berry said he was worried about China's influence in Australias domestic politics. Berry said the United States objected to Beijing's ability to advance its interests by funding Australian politicians during an election campaign and said Washington was "surprised" at the extent of the involvement of the Chinese government in Australian politics. He said the United States hoped Canberra will protect Australia's "core responsibilities against undue influence from governments that do not share our values."

The ambassador's comments followed the resignation of opposition Labor senator Sam Dastyari, who had asked a company connected to the Chinese government to pay part of a travel bill. The affair prompted a widespread discussion about the influence that foreign financial donors are having on Australian lawmakers. Both major parties in Australia have received hundreds of thousands of dollars from donors with overseas interests. Members of the opposition Labor party and the Australian Greens believe it was time to ban such practices.

The Spokesperson of the Chinese Embassy in Australia responded to Reports in The Australian about an Interview with a Senior US Diplomat 15 September 2016: "We have noted reports in The Australian on 14 September about an interview with a senior US diplomat. We are surprised by his irresponsible allegations against China, which is regrettable. China follows the principle of non-interference in the internal affairs of other countries. Allegations regarding the Chinese government's involvement in political donations in Australia are totally made up out of thin air and politically motivated. There are always some people in this world who seem to have a habit of lecturing other countries on their domestic or foreign policies. Such an approach obviously runs counter to the historical trend in today's world. We are committed to developing constructive relations characterized by mutual respect, mutual benefit and win-win cooperation with Australia, the United States and countries throughout the world."

Australia attributes the reason for China's military modernization to its determination to deter Taiwan from becoming independent, including by developing the capability to deter or delay the United States from coming to Taiwan's aid militarily. It also concludes that China's longer-term agenda is to develop "comprehensive national power," including a strong military, that is in keeping with its view of itself as a great power.

Australia underscored the potential for misconceptions that might lead to a crisis, citing such factors as China's antipathy towards tranparency, the possibility it could overestimate its military capability, and the confluence of China's rising nationalism, prediliction for strategic deception, and difficulties with Japan and Taiwan.

In 2009 state-owned company China Non-Ferrous Metal Mining Corporation (CNMC) sought to buy a controlling stake in Australian rare earth company Lynas, which manages one of only two globally significant projects outside of China. The Foreign Investment Review Board extended its review of the proposal, given that China already controls 97% of global rare earths. Lynas was positioning itself as an alternative supplier to Chinese companies before the global financial crisis. But financing difficulties forced the company to turn to foreign investors for funding in order to complete construction of the Mount Weld project. The collection of elements called rare earths -- essential ingredients in advanced weaponry, fighter jets and radar equipment -- takes place in China. Chinese control of the global supply of rare earths means that the Chinese government could influence access to supply. Concerns in the US over security for the supply of these minerals prompted the filing of a WTO case against China in June 2009 for imposing export quotas on rare earths.

When Australia ran into economic difficulties in 2008, it was China's robust demand that had ushered in a mining boom for the country. Australia was among the lucky few that had gone through the global financial crisis unscathed. When the global economy was confronted with yet another challenge in 2013, it was negotiations on free trade agreements like ChAFTA that had lent fresh impetus to the Australian economy.

Australias relations with China, as diverse as they have become, rely on strong political foundations. This was a key motivation in seeking to establish a regular dialogue between leaders. This ambition was realised in 2013 when China and Australia agreed to establish an annual Leaders Meeting Mechanism as well as annual dialogues between Foreign Ministers and between economic ministers. Since then there were successful high-level visits in 2014 with two Prime Ministerial visits to China and the visit to Australia by President Xi. This momentum continued into 2015 with the Governor-Generals visit in March.

President Xi Jinping's state visit to Australia was broadly recognized as a very successful historic visit that had helped the two countries establish a comprehensive strategic partnership, marking a new high in relations. On 19 November 2014, when President Xi was about to leave Sydney concluding his state visit, he said that China-Australia relations had never been better.

China is carrying out the "One Belt, One Road" initiative in partnership with Australia. China-Australia relationship is well beyond business. This relationship is growing on a solid basis of people-to-people links. By May 2015, there has been over one million Chinese tourist visiting Australia. More than 240,000 Chinese students are studying in Australia. Under the New Colombo Plan, more than 500 Australian students are sent to study in China.

The Australian government engaged in the development of the AIIB as a prospective founding member with the objective of ensuring that the new Bank had appropriate governance arrangements, including an active and empowered Board of Directors and the ability to protect the interests of minority shareholders.

China-Australia mil-to-mil exchanges are also growing rapidly. The Chinese and Australian soldiers who finished the "Panderoo" joint exercise could share the story on how military engagement could help build mutual trust.

Regionally, Australia had a shared interest with China in preserving the peace and stability that allowed the Asia Pacific to benefit from decades of development and growing prosperity. As this growth continues, the region found itself experiencing a period of profound transition. Transitions of economic power led to shifting strategic weight, with Chinas extraordinary economic growth very much at the center of this.

Chinas was been, and would continue to be, of tremendous benefit to the region and the world. But Chinas rise was also affecting how people in the region viewed the strategic environment. Chinas size, economic weight, and geographical proximity meant people naturally wanted to know what kind of power China will become.

For decades, the US provided the security which has allowed governments in the region to focus their efforts on economic growth and improving the opportunities and standard of living their citizens can enjoy. How China and the US relate to each other, pursue their shared interests, and manage their differences, will be consequential for all in the region.

China's ongoing efforts to reinforce a vital bilateral relationship continued amid growing diplomatic uncertainty in the region. Beijing's move to maintain strong ties with Canberra came as the international community attempted to contend with Donald Trump's erratic presence on the global stage. Australia was only one of the few countries to have officially established a prime-ministerial level dialogue with China, beginning in 2013. Chinese Premier Li Keqiang arrives in Canberra in March 2017. Li was the most senior Chinese official to visit Australia since 2014, when President Xi Jinping finalized a major bilateral trade deal.

China is Australia's largest trading partner, with bilateral trade exceeding $107 billion (99.5 billion euros) and bilateral investment over $100 billion, while Australia is also an important source of resources for a developing China. China is already Australia's biggest overseas customer, buying double the value of goods and services than Japan does in second place. China also delivers Australia its biggest trade surplus. For a whole range of sectors, from tourism, education, beef to wine, the rise of China's middle class is the best news on Australia's economic horizon.

It was clear that China viewed Trump's isolationist tendencies as an opportunity to consolidate its centrality to economic relationships in the region through its own initiatives like the Asian Infrastructure Investment Bank (AIIB), 'One Belt One Road' (OBOR) and the Regional Comprehensive Economic Partnership (RCEP). Australia had signaled its interest in each of these initiatives and it would perhaps become more important with Trump's withdrawal from the TPP.

The Australian government supported the June 2016 South China Sea arbitration decision, much to the annoyance of China. But it also joined the Asian Infrastructure Investment Ban and sold an important maritime port in Northern Australia to a Chinese company, much to the annoyance of the US.

China's ability this far to challenge international law and US hegemony through its island building and naval operation in the South China Sea is seen in Australia as damaging to the 'rules based' international order that Australia sees as critical to its national security and prosperity.

The Chinese Ministry of Culture and Tourism released on 05 June 2020 a statement warning its citizens not to travel to Australia due to a "significant increase" in racism against Chinese and Asian people. Aside from verbal insults, a Chinese student from Hong Kong was punched in the face and injured for wearing a face mask in March, and a pair of Chinese students were attacked and injured by local gang members in broad daylight in April.

However, Australian politicians disagreed with the travel alert warning issued by China. Australian Deputy Prime Minister Michael McCormack claimed that, "There hasn't been a wave of outbreaks of violence against Chinese people." Or, as the Tourism Minister Simon Birmingham put it, the warning has "no basis in fact."

Australia's nervousness about the travel warning is understandable, as it may deliver another major blow to its economy. China has been the largest source of international travelers to Australia. According to data from Tourism Research Australia, Chinese mainland travelers went up 1.2 percent year-on-year to 1.3 million in the year ended September 2019, with their expenditures up 6.8 percent to A$12.3 billion ($8.28 billion), representing over 27 percent of all spending by foreign travelers during the period.

Yet, it is Australia's attitude that may really scare away Chinese tourists and students. Australia was also one of the earliest countries to follow the US to announce a travel ban on people from the Chinese mainland effective on 01 February 2020. From its push for a US-led inquiry into COVID-19 to its interference in the Hong Kong affair and the upcoming overhaul of its foreign investment rules that are expected to tighten scrutiny over foreign investment, Australian politicians are demonstrating their antipathy toward China.

After Australian foreign minister Marise Payne and defense minister Linda Reynolds visited the United States for talks with their counterparts, the two countries declared they would work together to confront China and "reassert the rule of law" in the South China Sea. China responded with measures aimed at Australia's economy. In May, Beijing halted imports of some Australian meat products, citing violations of customs requirements. Soon after, it imposed extra tariffs on Australian barley, saying the grain was being imported at significantly low prices.

China accounted for more than a quarter of Australia's foreign trade in the 12 months through June 2018. It had been a key factor in Australia's nearly 30-year run of economic vibrancya run that came to an abrupt end when the coronavirus pandemic hit. A report by the Australian National University in September said Chinese investments have declined sharply from A$4.8 billion ($3.49 billion) in 2018 to A$2.5 billion in 2019.

China's '14 grievances'

Beijing issued an extraordinary attack on the Australian government in a deliberately leaked document that threatened to escalate tensions between the two countries. In mid-November 2020 a dossier of 14 disputes was provided by the Chinese embassy in Canberra to Nine News, The Sydney Morning Herald and The Age in an effort to pressure the Morrison government to reverse Australias position on key policies. The items identified by the Chinese embassy document are seen by the Department of Foreign Affairs as key to Australias national interest and non-negotiable, leaving the two countries facing the prospect of an extended diplomatic and economic dispute.

The government document went further than any public statements made by the Chinese Communist Party, "China is angry. If you make China the enemy, China will be the enemy," a Chinese government official said in a briefing with a reporter in Canberra on 17 November 2020. The dossier of 14 disputes was handed over by the Chinese embassy in Canberra to Nine News, The Sydney Morning Herald and The Age in a diplomatic play that appeared aimed at pressuring the Morrison government to reverse Australia's position on key policies. In a targeted threat to Australia's foreign policy position, the Chinese official said if Australia backed away from policies on the list, it "would be conducive to a better atmosphere".

  1. foreign investment decisions, with acqusitions blocked on opaque national security grounds in contravention of ChAFTA / since 2018, more than 10 Chinese investment projects have been rejected by Australia citing ambiguous and unfounded "national security concerns" and putting restrictions in areas like infrastructure, agriculture and anhimal hundbandry.
  2. the decision banning Huawei Technologies and ZTE from the 5G network, over unfounded national security concerns, doign the biddy of theUS by lobbying other countries.
  3. foreign interference legislation,viewed as targeting China and in the absence of any evidence.
  4. politicisation and stigmatisation of the normal exchanges and coorperation between China and Australia.
  5. Calls for an independent inquiry into Covid-19 virus, acted as a political manipulation echoing the US attack on China.
  6. the incessant wanton interference in China's Xinjiang, Hong Kong and Taiwan affairs; spearheading the crusad against China in certain multilateral forums.
  7. the first non-litoral to make a statement on the South China Sea to the United Nations
  8. siding with the US' anti-China campaign and spreading disinformation imported from the US around China's efforts of vonatining COVID-19.
  9. the latest legislation to scrutinise agreements with a foreign government targeting towards China and aiming to torpedo the Victorian participation in B&R.
  10. Providing funding to anti-China think tank for spreading untrue reports, peddling lies around Xinjiang and so-called infiltration aimed at mnipulating public opinion against China.
  11. The early dawn search and reckless seizure of Chinese journalists' homes and properties.
  12. Thinly veiled allegations against China on cyber attacks without any evidence.
  13. Outrageous condemnation of the governing party of China by MPs and racist attacks against Chinese or Asian people.
  14. an unfriendly or antagonistic report on China by media, poisoning the atmosphere of bilateral relations

China is firmly opposed to Australia's action to undermine the interests of other countries under the pretext of safeguarding its national interests, Chinese Foreign Minister spokesperson Zhao Lijian warned 19 November 2020, following Australian Prime Minister Scott Morrison's statement that Australia will not change its policies. Australia acting out of turn on issues concerning China's core interests and its provocative and confrontational actions are the root cause of the current China-Australia tensions, Zhao noted.

Chinese consumers' confidence in Australian products could significantly drop if Australia continued bilateral relations which would cost Australia its best and biggest market, jobs and an opportunity to quickly recover from the pandemic. Australia has been releasing messages urging its business community and international education community to "diversify" its market, which encourages and promotes the so-called "decoupling" from China.

Kevin Carrico, a senior lecturer in Chinese Studies at Monash University in Melbourne, saw the trade tensions as almost inevitable, part and parcel of the conflict that arises when open societies become economically intertwined with a powerful but politically closed society. "There will be many people who will argue that Australia needs to be 'practical' and yield to China's demands in order to rescue the economy. This is not, however, as 'practical' as they portray it to be. Yielding to the demands of a dictatorship only invites ever more pressure for ever more concessions," Carrico told DW. "The only practical thing to do is to clearly refuse to negotiate with a dictatorship attempting to take the Australian economy hostage," he added.

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Page last modified: 16-01-2021 12:46:12 ZULU