Category Archives: China-Australia

A Setback But Not A Reverse For Beijing In The South Pacific

Map showing the principal island nations of the South Pacific

THE FAILURE TO push through a regional security and trade agreement with eight Pacific Island governments is an embarrassing setback for Beijing.

It was intended as the capstone of long-laid plans to cement China’s strategic interest in the region. However, Australia, which considers the South Pacific its ‘backyard’, and the United States have become increasingly concerned by that. With Foreign Minister Wang Yi and his new Australian counterpart, Penny Wong, both in the region in recent days, it is Wang who will return home the less satisfied.

While he signed five bilateral agreements, covering, variously, infrastructure, fisheries, trade and police equipment, the centrepiece, a proposed regional security and trade agreement, was left unsigned. The communique Beijing had drafted was left unissued.

The reaction of Australia to a bilateral security cooperation agreement last month between China and the Solomon Islands underlined how the Pacific Islands have become another area of geopolitical competition as the West has hardened its attitudes towards China’s growing willingness to express its regional ambition and promote its new Global Security Initiative to developing nations as an alternative architecture to the US-led international order.

As in Southeast Asia, South Pacific Islands’ governments do not want to become unequivocally part of the West’s ‘Indo-Pacific’ alliance but are wary about becoming solely dependent on China’s money and markets. Beijing will have to reflect that when it returns to South Pacific with a revised regional agreement, as it surely will.

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China And Russia Fly Too Close For The Quad’s Comfort

A Russian TU-95 bomber and Chinese H-6 bombers fly over East China Sea in this handout picture taken by Japan Air Self-Defence Force and released by the Joint Staff Office of the Defense Ministry of Japan March 24, 2020.

CHINESE AND RUSSIAN nuclear bombers conducting a joint exercise over the Sea of Japan while in Tokyo the leaders of Japan, the United States, India and Australia are discussing regional security sends a particular message of togetherness on the part of Beijing and Moscow.

The aircraft (seen above in a Defence Ministry of Japan photograph) did not breach territorial airspace. However, Japan’s defence minister, Nobuo Kishi said it was the fourth time since November that long-distance joint Russian and Chinese air force flights have passed near Japan. Such flights date back to at least 2019

Beijing has been ambivalent about Russia’s invasion of Ukraine, despite the effusiveness of Presidents Xi Jinping and Vladimir Putin when they met during the Beijing Winter Olympics in February over their relationship ‘without limits’. It adds another headwind to those buffeting China that Xi could do without.

Nonetheless, the invasion has connected the security situations at Asia’s eastern and western extremes. The meeting of the four leaders in Tokyo under the auspice of the Quadrilateral Security Dialogue (‘the Quad’) was plain on that point. However, they were as explicit in saying the Quad is not an embryonic ‘Asian NATO’ as Beijing has been about claiming its relationship with Moscow is not an alliance.

Neither assertion cuts much ice with the other. Nor is there much getting around that an alternative international governance model for the region just sounds like another way of describing challenging China’s regional expansion.

The Quad has no formal institutions (unlike NATO). It has conducted joint naval exercises, but it is also looking to advance its soft power by promoting intra-regional cooperation in areas like ‘green’ transport, climate change and cybersecurity.

This modular approach to regional security aligns closely with the Biden administration’s preference for building coalitions of countries and institutions around specific mutual needs — and defining security extremely broadly — rather than traditional security alliances and trade agreements. The newly announced Indo-Pacific Economic Framework fits that mould, too.

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AUKUS Subs Will Stir Waters Already Ruffled

WHEN US OFFICIALS say that a particular policy move is not aimed at countering China’s growing influence, it is a good rule of thumb to assume that it is. Thus, with the security pact newly announced between the United States, the United Kingdom, and Australia, the awkwardly named AUKUS.

AUKUS seeks to provide Australia’s navy with the technology and advice to build at least eight nuclear-powered submarines, which will make it the seventh navy to deploy them. They will replace a dozen conventionally powered subs ordered from France but never delivered because of unresolved disagreements over local sourcing, among other issues.

That $90 billion order has been cancelled, to Paris’s displeasure. To add to European annoyance, the AUKUS agreement was announced the day before the EU was due to outline its Indo-Pacific strategy. The EU is increasingly being pushed into an uncomfortable no man’s land between Beijing and Washington.

It is unimaginable that Australia will deploy the subs anywhere but under the waters of the region. Equally, it is inconceivable to regard the announcement as anything other than a tighter drawing together of the three countries in a common ‘Indo-Pacific’ security alliance, which has China as its threat nation.

While the subs are the headline-catching element, the agreement also involves the trio sharing information and technology on intelligence and quantum technology. This will complement, not replace, existing arrangements such as the Five Eyes intelligence-sharing partnership between New Zealand, Canada and the AUKUS countries.

As such, it adds another layer to a growing set of overlapping security cooperation initiatives being advanced in response to China’s growing military power.

Australia will also buy cruise missiles from the United States for the Royal Australian Air Force as well as Tomahawk cruise missiles for its navy, which presumably the subs will carry.

Cruise missiles are the weapon of choice to attack, or at the least deter, naval aircraft carrier battle groups at sea. They also give Australia, and by proxy the West, the capability to strike targets inside China such as airfields and command and control facilities for the PLA’s integrated air and missile defence systems.

Beijing’s criticism of the deal has been swift, if somewhat pro-forma, perhaps because the military threat is some years out; the subs are unlikely to be deployed until 2040. By then, the PLA-Navy will have more of its own nuclear-powered subs in the water.

Foreign ministry spokesman Zhao Lijian said:

The nuclear submarine cooperation between the US, the UK and Australia has seriously undermined regional peace and stability, intensified the arms race and undermined international non-proliferation efforts. The export of highly sensitive nuclear submarine technology to Australia by the US and the UK proves once again that they are using nuclear exports as a tool for geopolitical game and adopting double standards.

He added that:

Seeking closed and exclusive clique runs counter to the trend of the times and the aspirations of countries in the region, which finds no support and leads nowhere. Relevant countries should abandon the outdated Cold War zero-sum mentality and narrow-minded geopolitical perception, respect the will of the people of regional countries and do more to contribute to regional peace, stability and development. Otherwise, they will only end up shooting themselves in the foot.

The time frame for building Australia’s subs will be lengthy. According to US President Joe Biden, the first 18 months of the agreement will be spent working out how to build the subs under these conditions without violating non-proliferation commitments.

Australia is a party to two regional non-proliferation agreements. Its prime minister, Scott Morrison, says that his country seeks to become neither a military nor civil nuclear power.

That the United States and the United Kingdom are ready to take the rare step of exporting sensitive nuclear technology to a non-nuclear nation underlines the serious intent of AUKUS. It may also spur Beijing to accelerate the build-out of its blue-water navy.

Australia’s nuclear submarines, when they do eventually launch, will provide another means of deterrence.

The AUKUS agreement has been welcomed in Tokyo and Taipei, and will be, if not so openly, in countries such as South Korea, Vietnam, Thailand, the Philippines and India, also concerned about China’s growing demonstrations of military power in the region.

However, other ASEAN members will be warier in pubic and private. Indonesia has expressed its concern ‘over the continuing arms race and power projection in the region’.

If the agreement does not worsen Australia-China relations, it will only be because they are already at such a low ebb. Canberra is arguably now the Western government that is most openly confrontational towards China save for Washington.


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Australia Faces Down China Again

RELATIONS BETWEEN AUSTRALIA and China, already at a low ebb, sank lower with the federal government in Canberra’s nixing of two agreements reached by the state government of Victoria with China in 2018 and 2019 to join the Belt and Road Initiative, albeit in an unspecified way.

This was the first use of legislation that Canberra passed in December to increase federal government oversight of subnational deals with foreign governments. The law was primarily framed to counter China’s activities in Australian universities, for which China is their largest source of international students, but reflected the federal government’s broader concerns with Beijing’s growing economic and political influence in the country.

The Morrison government is casting the decision on the Victorian deals in national security terms rather than the latest move in its current disputes with Beijing, saying it has also vetoed agreements with Iran and Syria, though those dated to 2004 and 1999, respectively.

Nevertheless, the Chinese ambassador in Canberra said the decision would cause further damage to bilateral relations. These have been strained for some years, particularly over trade, but soured noticeably after Australia fronted Western calls for an independent investigation into the origins of the Covid-19 pandemic.

Australia is showing a willingness to stand up to Beijing, which appears to target it as a proxy for more powerful Western allies. Earlier this week, Australian Defence Minister Peter Dutton said that his country would not surrender to threats of retaliation. drawing a testy reaction from Foreign Ministry spokesman Zhao Lijian about it being preposterous that Australia was playing the victim.

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Trading With The Enemy

NOVEMBER’S EXPORT GROWTH, at 21.1% year-on-year, was its strongest in almost three years.

As ever, one month’s numbers should not be taken in isolation; China’s exporters are benefiting from the continued interruptions to industrial output in Europe and the United States. However, there is a certain curiosity in the fact that trade in the month was most robust with two countries with which China’s bilateral relations are strained, the United States and Australia.

Exports to the United States were up by nearly 50% year-on-year in the month, with Covid-19 driven purchases of medical and electronic equipment notably healthy, and proving again that the two sectors are decoupling-resistant. In the opposite direction, imports were up by about one-third year-on-year for the second month, driven by agricultural produce, mostly feed for hogs as China’s devastated herds recover from African swine fever faster than expected.

However, China’s surplus with the United States hit its highest level during US President Donald Trump’s time in office, despite him having made eliminating it such a high-profile objective at the start of his term.

Exports to Australia rose by 20.6% year-on-year, and imports from there rose by 8.3% year-on-year, although both were down on October’s level. December’s numbers should look much worse as tariffs of up to 212% on Australian wine, and other punitive anti-Australian trade measures against barley, beef, coal, copper, cotton, lobsters, sugar, timber, wheat and wool were introduced late in November.

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China Faces Down Australia By Being In Its Face

RELATIONS BETWEEN AUSTRALIA and China have turned from frosty to nasty.

After Ministry of Foreign Affairs spokesman Zhao Lijian tweeted an artwork of an Australian soldier threatening to slit a child’s throat with a knife — a graphic image Australia’s Prime Minister Scott Morrison called repugnant and for whose posting he demanded an apology — Beijing doubled down with Zhao’s colleague, Hua Chunying, saying that it was Australia that should be showing shame in the wake of a damning war crimes investigation.

The original post was in response to the findings of Australia’s Brereton inquiry that 19 of the country’s special forces should face criminal investigation for the murder of at least 39 Afghan civilians and prisoners.

When releasing the inquiry’s findings earlier this month, the head of the Australian Defence Force, Angus Campbell, ‘sincerely and unreservedly’ apologised to the Afghan people for the ‘wrongdoing’ of special forces, which suggests that Hua intended to rub salt into a wound.

The Australian side is reacting so strongly to my colleague’s Twitter — does that mean that they think the cold-blooded murder of Afghan innocent civilians is justified?

Beijing has been claiming the fault for deteriorating relations lies on Canberra’s side ever since Morrison called in April for an international inquiry into the origins of the Covid-19 pandemic.

Relations had been on the down for several years before that, but Morrison’s call hit a nerve in Beijing. So, too, did Australia’s crackdown on foreign interference in its domestic politics, a campaign Beijing takes to be aimed at itself, and Canberra’s repeated criticism of human rights abuses in Xinjiang and Hong Kong, and Chinese military exercises around Taiwan.

In April, Australia’s exports of wine, barley, beef and coal started to be subjected to new tariffs, anti-subsidy investigations and hold-ups at customs posts. The latest trade punishment is the imposition from November 28 of anti-dumping duties of 107.1% (taking the total tariff to 212.1%) on wine imported from Australia. Nearly two-fifths of Australia’s wine exports go to China, which buys around one-third of Australia’s merchandise exports overall.

In September, the last two reporters from Australian news organisations in China were pulled out of the country following their questioning by authorities in connecting with the detention in August of CGTN anchor, Cheng Lei, who is a Chinese-born Australian. The month before, Australia had cautioned its citizens about the risk of arbitrary detention in China, a warning dismissed by China at the time as disinformation.

On November 18, Australian media published a list of 14 ‘grievances’ the Chinese embassy had given them. They include blocking Chinese investments in Australia on national security grounds, criticising the Party over Hong Kong and Xinjiang and allowing negative coverage of China in the media.

That same list could have been handed to US and European media. What makes Beijing more unhappy about Australia is the deepening security ties between it and the three other members of the Quadrilateral Security Dialogue, ‘the Quad’, India, Japan and the United States.

One recent example is the landmark defence treaty agreed in principle by Morrison and Japan’s new prime minister, Yoshihide Suga. Another is Australia’s participation for the second time in this month’s Malabar 2020 naval exercises with India, Japan and the United States.

This coming month’s annual Indonesia-Australia-India senior officials’ meeting is likely to consider creating trilateral naval exercises among those three countries, too.

This context and the continuing stinging attacks on Canberra suggests to this Bystander that Beijing sees it as the emerging leader of the region’s ‘middle powers’ — nations that share strategic concerns over China’s growing assertiveness in their neighbourhood and the staying power of the United States. As such, Morrison’s government has to be taken down a peg, not least as a deterrence to successor Australian governments and other countries in the region from confronting China,


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Transparency Matters Less To Beijing Than Control

BEIJING’S FIERCE RESPONSE to the call by Australia’s prime minister, Scott Morrison, for an independent international inquiry into the origins of the coronavirus pandemic was both predictable and along predictable lines.

It has threatened an economic boycott of Australian products by Chinese consumers and accused Canberra of being Washington’s pawn. Beijing sees foreign demands for transparency as hostile and subversive. To it, transparency matters less than maintaining domestically the Party’s reputation for competence, one of the underpinnings of its claim on monopoly power. It will not countenance for one minute any risk to that. Political considerations are paramount, as they were in the early stages of the outbreak in Wuhan when local officials suppressed early warnings.

A second-order to this is Beijing’s strategic rivalry with Washington. Beijing is attempting to grasp an opportunity to project its diplomatic influence by presenting itself both as having handled the pandemic the better of the two and as being the international leader of the global response, dispatching medics and supplies to the rest of the world. It will not risk an inquiry that could draw conclusions that China had failed to contain the disease early on or had allowed its spread by not curtailing international travel soon enough.

The sensitivities and willingness to strong-arm support were evident in the run-up to the publication of the European External Action Service report that explicitly accused China and Russia of sowing disinformation and distrust over Western nations’ handling of the pandemic and implicitly accused them of deflecting attention from shortcomings in their own responses. The final report was watered down following at least three interventions by Beijing.

However, it was still a sign of how Beijing is finding it more difficult to manage its image internationally than domestically, and how Western perceptions of China’s emergence as a global power are changing. Beijing’s proven formula of a mix of bribes and threats is less effective where it cannot control the flow of information. Hence its new infowars strategy taking a leaf out of Russia’s propaganda book mixed with a dash of US President Donald Trump’s combat tweeting.


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Xue Feng, Stern Hu, State Secrets And China’s Rule Of Law

When is publicly available information a state secret? When it is business information held by China’s state-owned firms. The sentencing of Xue Feng, a 44-year old Chinese-born American geologist, to eight years in jail in China for stealing state secrets, which in his case involved an attempting to buy data about the oil industry for the U.S. energy consultancy he worked for, follows the 10-year sentence given in March to Stern Hu, formerly of the Australian mining firm Rio Tinto, for accepting bribes and dealing in state secrets.

It doesn’t take much to draw comparisons between Xue and Hu’s cases. Both involved men who had gone abroad, gained a second nationality and then returned to work in the country of their birth as executives for a foreign company. Both have received exemplary sentences in comparison with those handed down to the Chinese nationals tried alongside them (three in both cases). Both were working in what are regarded as strategic natural resources industries (oil and steel respectively).  Both cases strained relations between Beijing and a foreign government (the U.S. and Australia) that had raised the cases at the highest levels; handing down the sentencing of Xue on the same day that the U.S. was celebrating its own Independence Day holiday was a particularly pointed rebuff, especially as Washington had not publicized Xue’s case previously in the way that Canberra had done with Hu’s.

The lessons to be drawn from all this, for foreign businesses at least, is that those competing in any of the 20 industries that China has designated as strategic and in which it is grooming national champions need to remember that the line dividing market intelligence from industrial espionage is a fine one and that the one dividing market intelligence from a state secret finer still. And while it might appear to foreign companies that the distinction is vague, it is not to Chinese law makers: draft regulations released earlier this year defined business information held by state firms as state secrets.

Second, that Chinese-born foreign nationals who return to work in China for foreign companies are seen as a special kind of threat; those operating in sensitive industries doubly so (Reuters has a list of a dozen or so examples of ethnic Chinese punished for stealing secrets and spying here). Third, that the due process of law in China — which has been applied in both these cases (more or less) — is still the application of a rule of law in which law is regarded as an agency of the state.

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Rio 4 Trial Ends

The trial of the Rio 4 is over. No verdict or sentence has been handed down yet by the Shanghai court. That could take weeks. Three of the four Rio employees pleaded guilty to taking bribes; it is not known how the four pleaded to the industrial espionage charges. Those were heard in secret, though Australian diplomats were allowed to attend the part of the trial dealing with the bribery charges. Justice is blind, or at least blinded.


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China and Rio Tinto: Coinhabiting Parallel Universes

While gathering our thoughts for a preview of Monday’s start of the Rio 4 industrial espionage trial, we received word of Rio Tinto’s $1.35 billion iron ore joint venture with Chinalco in Guinea. Having slept on it for more than 24 hours, this Bystander still can’t make anything out of it that isn’t surreal. Perhaps it is just another example of China’s remarkable ability to operate in parallel universes.

We had assumed that the trial of Australian Stern Hu and his three Chinese colleagues at Rio would proceed to its predetermined conclusion, with a routine sentence to follow. The main point the court proceedings are meant to be making is that China follows the administration of its law–not the same thing as following the rule of law, of course–and that nobody is above the process. With a host of domestic corruption cases in train, no foreigner, especially an ethnic Chinese one like Hu, can expect much by way of favors. Foreigners routinely underestimate how signals they assume are directed at them are really more for domestic consumption.

The case has strained though not severed relations between Beijing and Canberra. Those were further frayed last June when Rio Tinto pulled the plug at the eleventh hour on a $19.5 billion cash injection from Chinaclo that would have increased the state-owned aluminum giant’s 9% stake in the Anglo-Australian miner. A revisionist view of the causes of Rio’s change of heart more favorable to the company has taken hold in Beijing. Last year Rio’s sales to China accounted for a quarter of the company’s revenue.

The new joint venture between the two in Guinea gives Chinalco a 47% stake in Rio’s Simandou project which involves infrastructure work Chinese firms are well practiced at in Africa, building a mine, a port and a railway to connect the two. Last October, China signed a $7 billion mining and energy deal with Guinea’s military rulers, so it makes a well-connected partner for Rio in a project that has run into local political problems. The joint venture also gives China a voice on the sellers’ side of the table at the iron ore price negotiations where it is already sits on the other side as the buyer. More parallel worlds.

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