Fortnight of 1 to 14 May 2023

Trade likely to follow Farrell’s flight north

Minister for Trade and Tourism Don Farrell’s media release following his meeting with Minister of Commerce Wang Wentao on 12 May:

“Minister Wang confirmed that China’s expedited review of barley duties is on track. I reaffirmed that we expect a similar process to be followed to remove trade barriers for Australian wine.”

“I achieved what I came here for – to find a pathway to resolve the remaining trade impediments.”

…

“I invited Minister Wang to visit Australia, and I am pleased to confirm he accepted my invitation to visit at the next suitable opportunity.”

Quick take:

Capping off a dramatically stepped up 12-month period of political engagements, this visit was at least the sixteenth meeting between Australia and China at the level of assistant minister or above since the Albanese government came to power in May 2022. It was also the first time that an Australian trade minister visited China in more than three years—the last trip being when Minister for Trade, Tourism and Investment Simon Birmingham went to Shanghai in November 2019. And the pace of high-level engagement looks set to continue. Not only did Minister Wang accept Minister Farrell’s invitation to visit Australia, but a trip by China’s Minister of Foreign Affairs Qin Gang looks likely in July. Although China’s Ministry of Foreign Affairs shied away from corroborating the story, it was subsequently confirmed by Prime Minister Albanese for the “coming months”. On top of this, and as I’ve previously predicted, the Prime Minister is still widely expected to visit China in late 2023, despite no official announcement of the plan.

Yet for all the positive political atmospherics and diplomatic pomp and circumstance surrounding Minister Farrell’s visit, the biggest story was, unsurprisingly, the trade implications. Although the Minister was clear that he wanted real progress on trade blockages and didn’t “want to go to China just for the sake of going to China,” he was also at pains to stress that his expectations were a “pathway to resolving all of those outstanding [trade] issues” rather than a big and immediate breakthrough. The Opposition sought to set a much higher bar for the meeting, with Shadow Minister for Foreign Affairs Birmingham reiterating the message that “[w]e need to see outcomes from this visit to China.” The Opposition’s sceptical assessment was followed by press reporting portraying Minister Farrell as returning from China “empty-handed” and “without securing any major concessions on a raft of trade bans on Australian exports.”

With a similar timeline to those that I’ve previously floated, Minister Farrell said prior to his departure that he hoped “we will have resolved all of the major outstanding impediments to our trading relationship or at least be well on the way to resolving them” before the end of the year. Not only are such trade impediments not immediately tumbling en masse now that Minister Farrell has been to Beijing, but it’s still not certain that all will be removed by the end of 2023. Still, the visit’s buoyant mood and Beijing’s broadly positive response presumably put Minister Farrell’s hopes on more solid ground. So, while Minister Farrell might not have come home with big Chinese government concessions to celebrate, it seems more likely in the wake of the trip that we’ll continue to see the progressive removal of China’s trade restrictions. (Update: Less than a week after his visit, there are already signs of this, with China announcing that it “will resume import of Australian timbers.”)

On top of news of more coal, cotton, and copper ores and concentrates getting back into China, the visit makes the removal of anti-dumping and countervailing duties on barley and wine in the coming months look more likely as well. Speaking immediately after the meeting, Minister Farrell said: “I was very pleased to get reassurance, that our agreement reached recently on barley is on track. I also reiterated that we expect a similar process to be followed with the [World Trade Organization] dispute in respect to Australian wine.” Minister Farrell wouldn’t be drawn on a precise timeline, but the implication of comments upon his return to Australia was that a “decision by the Chinese government” to remove anti-dumping and countervailing duties on barley was expected soon. To be sure, that doesn’t mean that the removal of barley or wine duties are a lock. Yet the Australian government is creating the strong expectation that these duties will go in the coming months and, crucially, the Chinese government isn’t giving indications to the contrary.

Although it’s far from definitive evidence, the symbolism also augurs well for wine. In addition to a recent senior Chinese representative’s upbeat visit to a Canberra region winery, Minister Wang was apparently “beaming” when Minister Farrell presented him with a bottle of the Godfather Too shiraz from Farrell Wines. The images in the press reporting certainly conveyed a big dose of bonhomie. Add to that Minister Wang’s possible trip to South Australia to visit the winery sharing Minister Farrell’s name, and it starts to look more and more likely that the anti-dumping and countervailing duties on wine will be removed in the second half of this year.

Addendum: Beyond the apparent path forward for removing anti-dumping and countervailing duties on barley and wine and the positive political signals, it’s also possible that the visit will yield a concrete deliverable on copper ores and concentrates. Prior to the visit, a Chinese official went on the record suggesting that China would likely resume its imports of copper ores and concentrates if the “talks go well”. Given the seemingly positive tone of the tête-à-tête, the warmth with which the Chinese government feted Minister Farrell’s trip, and Minister Wang’s acceptance of an invitation for a reciprocal visit, the signs suggest that the rendezvous was a roaring success. So, on the back of reports of small amounts of Australian copper ores and concentrates getting into China earlier this year, it’s entirely possible that the gates will now open and much more will follow.

Of course, we shouldn’t over interpret the significance of this possible development regarding copper ores and concentrate. (Indeed, I’m not even sure that the market has moved in the wake of the visit and would welcome any industry pointers on that.) Copper ores and concentrates were just one of the nine exports targeted by China’s trade restrictions. And as a fungible commodity, they found alternative buyers much more easily than, for example, wine or lobsters. So, restarting imports of copper ores and concentrates is less economically significant for Australia than a shift on wine or lobsters would be. Still, after coal, copper ores and concentrates were the most lucrative Australian export hit by Beijing’s trade restrictions, so the resumption of large-scale purchases from China (if they occur) would be a significant trade signal of ongoing relationship repair.

Stubborn sticking points

Minister for Trade and Tourism Farrell responding to a journalist after his meeting with Minister of Commerce Wang on 12 May:

“Like all countries, we reserve the right to make strategic decisions about foreign investment, particularly where it involves state owned companies. So, yes, the Minister raised those issues, and I countered with an explanation of Australia’s policy in these areas.”

Quick take:

There might be, as Minister Farrell has described it, a “pathway to resolve the remaining trade impediments.” But to extend the metaphor a bit, it remains unclear what that pathway’s terrain might be and whether Canberra and Beijing can walk it. Minister Wang raised China’s goal of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and expressed “hopes that the Australian side can provide a good business environment and treat Chinese companies and products fairly and justly”. But on both these issues, there’s considerable space between Canberra’s and Beijing’s positions. Beijing is seemingly committed to joining the CPTPP and gain other capitals’ support, while Canberra refuses to be drawn on China’s bid and reiterates its priority of maintaining the “high standards of the CPTPP”. Meanwhile, Australia insists that it won’t shift its approach to assessing foreign investments, despite China’s longstanding concerns on this front.

Is it possible that Beijing will make the dismantling of its trade restrictions contingent on some level of support from Canberra for China’s CPTPP bid and/or a more laissez-faire treatment of Chinese companies? Certainly. But on balance, I don’t think Beijing is likely to insist on either. First, China’s low-key public expression after the meeting of its hopes on both CPTPP membership and the environment in Australia for its business points to cautious expectations. Beijing’s position might have been more pointedly conveyed in private, but China’s public messaging suggests modest determination to move the Australian government’s dial on these issues. Second, China has form for repairing relations with Australia without extracting significant policy changes. There’s no guarantee that we’ll see a repeat of this, but China’s willingness to rev up diplomatic and political engagement without a major policy shift from Australia makes the removal of trade restrictions without Canberra coming to the table on CPTPP or Chinese investments look more likely.

Third, and perhaps most importantly, China can make a tactical decision to further unwind trade restrictions in 2023 without in any way forgoing its freedom to either withhold the removal of some trade restrictions or once again throw down the hammer on other Australian exports. In other words, predicting a progressive removal of China’s trade restrictions without Canberra falling in behind Beijing on the CPTPP or Chinese investments doesn’t mean all these trade restrictions will be removed or that the spectre of economic coercion will dissipate entirely. China can also remove its trade restrictions while simultaneously stepping up its efforts to persuade Australia to back its CPTPP bid and liberalise its approach to Chinese investments via economic and diplomatic inducements. (Indeed, I’d expect China to both wind back its trade restrictions in 2023 just as it amps up pressure via other means in relation to both its CPTPP bid and Chinese investments.) So, although I’m (tentatively) assessing that China is unlikely to hold the progressive removal of trade restrictions hostage to Australia shifting position on Beijing’s CPTPP bid or Chinese investments, we shouldn’t necessarily expect trade restrictions to be removed entirely and we shouldn’t be surprised if more threats of economic coercion or actual economic coercion come Canberra’s way.

Economic coercion by any other name

Shadow Minister for Foreign Affairs Birmingham speaking to Sky News on 11 May:

“China … should be backing down on the type of economic coercion they tried to apply.”

Quick take:

Amidst the broad and bipartisan Australian policy consensus on China, rhetorical tweaks are one of the most conspicuous contrasts between the current Labor government and its Coalition predecessor. As I’ve written previously, the Albanese government hasn’t been as rhetorically cautious or disciplined on China as one might imagine, including in recent months. But use of the term “economic coercion” is one point on which Prime Minister Albanese and his ministers have followed a decidedly more mild path than the previous government. Whereas Prime Minister Scott Morrison and his ministers regularly raised concerns about economic coercion in speeches and when talking to the media, their successors seem to prefer using labels like trade “sanctions” or “impediments”. (One for the real wonks: I was surprised to learn when looking at past government messaging that the term “economic coercion” featured in significant Turnbull government speeches [e.g., here, here, and here] well before Australia was subjected to large-scale trade restrictions by China. So, perhaps the rhetorical distinction between Labor and the Coalition also speaks to deeper political/ideological divisions instead of being a function largely/purely of changes in Australia’s experiences with economic coercion? But I digress.)

This partisan contrast is far from clear cut though. Albanese government ministers periodically raise “[c]oercive trade measures” in speeches and at least 10 different joint statements have used “economic coercion” or similar terms since the change of government in May 2022. But even by the metric of joint statements, a rhetorical shift appears to be taking place. No joint statement to which Australia has been a party (at least that I’ve seen) has featured the term “economic coercion” or similar since the end of January this year. More tellingly still, this includes a series of joint statements that used “economic coercion” and related terms in previous iterations. In particular, the leader-level meeting with India, ministerial meetings with Vietnam (NB not a like-for-like comparison) and Malaysia, and the Quad foreign ministerial meeting didn’t feature “economic coercion”/related terms despite similar formats doing so in 2021-22 before the Albanese government was elected.

Of course, this doesn’t mean that the term “economic coercion” won’t once again rise to prominence in Australia’s diplomacy. Moreover, these linguistic tweaks might not be exclusively the doing of the Australian government. All the above bilateral/minilateral post-meeting messages were worked out with the other countries involved, meaning that other capitals might have instigated cutting references to “economic coercion”. Finally, the above is not necessarily to argue that the shift in language isn’t warranted given what appears to be a progressive unwinding of China’s trade restrictions. (For what it’s worth though, I’m still inclined to stand by my previous but tentative defence of the use of the term “economic coercion”.) Those caveats notwithstanding, it’s still striking to see just how much the Australian government’s language has (seemingly) shifted, especially considering the Coalition’s willingness to continue calling out economic coercion by name.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 17 to 30 April 2023

Australia should prepare for mounting CPTPP pressure from China

The Department of Foreign Affairs and Trade spokesperson providing comment to BCB on 17 April in response to a question about Australia’s position on Taiwan’s bid for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

“The focus of the CPTPP members remains the ongoing accession negotiations with the United Kingdom. No decisions have been taken by the CPTPP membership on applications beyond the UK accession process.”

Quick take:

Even in the wake of the substantial conclusion of negotiations for the United Kingdom’s CPTPP accession, Australia and other members won’t be drawn on future candidatures. As with Taiwan’s application, not publicly taking an individual position on China’s CPTPP bid is understandable and probably just good diplomacy. This is especially so given: the awkward combination of the possible trade rewards of China’s membership and its sustained economic coercion of Australia; the trade grouping’s consensus-based decision-making; and big outstanding questions about China’s ability to meet CPTPP standards. An equivocal approach to Beijing’s bid might make even more sense considering that taking a clear position risks inviting questions about Taipei’s concurrent bid, which is arguably more plausible than China’s yet also opposed by the Chinese government. But although a considered non-position (publicly, at least) might make the most diplomatic sense, it’s likely to come under growing pressure from China.

The optimistic assessment might be that countries like Australia will be able to publicly sidestep the ticklish issue of China’s CPTPP bid. The CPTPP’s rules on issues like labour, state-owned enterprises, and e-commerce, among others, mean that China’s CPTPP membership might be a nonstarter. If at least some CPTPP countries can’t be swayed to seriously consider China as a prospective member, then Australia might never need to publicly reveal its cards. Yet even if this scenario remains a live possibility, at least three factors suggest that Beijing will pile up the pressure on Canberra to back its CPTPP bid:

1. Beijing appears determined to join. As I’ve previously noted, Beijing’s CPTPP bid was included in the Chinese government’s 2023 Work Report. Although this doesn’t necessarily mean that China will devote adequate energy to the task of getting into the CPTPP, it nevertheless looks like a serious signal of intent. This is further underscored by recent high-level messaging. As Vice Minister of Commerce Wang Shouwen put it: “We hope that all 11 [CPTPP] member countries can support our joining.” This follows speeches from President Xi Jinping himself in recent years (e.g., here and here) making clear Beijing’s commitment to joining the CPTPP. Closer to home, China’s Consul General in Perth, Long Dingbin, also emphasised that the CPTPP is part of Beijing’s plans for “high level opening up,” writing on 17 April in The West Australian that “China will … actively promote accession to the [CPTPP] and other high-standard economic and trade agreements.” Is it possible that China is simply flying trial balloons and isn’t determined to get in? Absolutely. But if that was the case, I’d expect to see references to CPTPP accession restricted to quasi-authoritative Chinese media reporting or the odd comment in a press conference. A strong Work Report reference, declared determination from President Xi, and aspirational comments from a Vice Minister and Chinese diplomats suggest that China is serious about joining the CPTPP.
2. Quite aside from China’s intent, CPTPP entry would also serve some of Beijing’s overarching national objectives. China both touts itself as a leading global champion of rules- and institutions-based trade liberalisation and lambasts the United States as a bad faith trade actor. CPTPP membership would aid China’s efforts to burnish its credentials and tar the United States. Entry would allow China to more convincingly present itself as an international trade rule maker and liberaliser, while also underscoring the patchy US record on international trade liberalisation in recent years, which includes hasty US withdrawal from the CPTPP’s predecessor agreement in January 2017. Moreover, CPTPP accession would expand China’s trade connections with a range of close US allies and partners in the Indo-Pacific, including Japan, Australia, Singapore, and New Zealand. Although such increased trade connectivity might not proportionally increase China’s influence and reduce US influence, it could incrementally advance Beijing’s apparent objective of drawing regional countries, including US allies and partners, away from the United States and closer to China. The history of the CPTPP would also make accession especially useful from the point of view of Chinese diplomacy. What better way to undermine the United States’ reputation and boost China’s credentials than joining a reborn version of a trade agreement that Washington once championed and then abandoned? With the chances of US CPTPP accession somewhere between low and non-existent regardless of whether President Joe Biden holds the White House after 2024, China has an opportunity to simultaneously enhance its own reputation and outflank the United States. Of course, none of this is to say that China’s bid is necessarily likely to succeed or that we should uncritically accept China’s characterisation of the significance of its CPTPP accession if it’s successful. But given that CPTPP membership could be a multidimensional win for China’s statecraft, there are strong grounds for thinking that Beijing will make great efforts to get in.
3. On top of Beijing’s intent and reasons for wanting entry, China has a compelling value proposition that it can dangle as part of its bid. Regardless of China’s economic coercion of Australia and its uncertain ability to meet CPTPP standards, any prospect of greater access to the gargantuan Chinese market is likely to turn many heads. To be clear, I’m not saying that China’s economic weight should matter to CPTPP members when considering whether to support China’s bid. (As an Australian analyst, I can, unsurprisingly, think of a few reasons why one ought to at least be cautious about deepening export dependence on China.) Yet regardless of the questionable quality of China’s record of abiding by trade rules, quantity has a quality all of its own, as the (likely) apocryphal Joseph Stalin quote goes. For some CPTPP capitals, the economic gains of additional access to the huge Chinese market might be enough to overlook China’s economic coercion and difficulty meeting some CPTPP standards. Canberra, Tokyo, and Ottawa have experienced the sting of China’s coercive trade practices, and so might maintain that China’s trade malfeasance alone is grounds enough to rule out Beijing ever joining to the CPTPP. But not all CPTPP capitals will necessarily think this way. And even in Australia—the biggest target for Beijing’s economic coercion in recent years—the allure of greater access to the Chinese market and the prospect of enmeshing China in more trade rules might be enough to convince at least some stakeholders to swing behind its CPTPP bid. China’s Perth Consul General Long was certainly pushing in that direction in the op-ed mentioned above when he wrote: “It is forecast that in the coming decade China will import over USD 22 trillion of goods, which means huge opportunities for Australia and other countries around the world.” This is not to predict how Australia or other members will assess China’s CPTPP bid, much less to recommend that they approach it in a certain manner. But it is to suggest that China has realistic reasons for thinking that it could win support among CPTPP states.

Of course, it’s entirely possible that Beijing’s bid will quickly flounder because of China’s recent track record of economic coercion against a founding CPTPP member and compliance difficulties with various aspects of this free trade agreement. For now, however, an alternative looks more likely: China will prosecute a sustained and determined campaign to convince CPTPP members to back its bid and many capitals will give Beijing a serious hearing. This CPTPP campaign is by no means poised to succeed. But even if Beijing’s bid is slow, halting, and ultimately unsuccessful, we should expect the pressure to mount on even the most sceptical of CPTPP capitals. And Beijing is almost certainly eying Canberra off as a prime target for such a campaign for CPTPP entry.

Addendum: If I’m right, and China doubles down on its CPTPP bid, should we reinterpret the recent warming of the Australia-China relationship? In other words, is it possible that Beijing has pursued relationship repair with Canberra to, among other goals, remove one of the biggest hurdles to its CPTPP accession? We’re admittedly entering the speculative realm. There’s no concrete evidence on the public record (that I’ve seen) clearly suggesting that Beijing’s rehabilitation of ties with Canberra is part of a calculated strategy to join the CPTPP. And I’m certainly not privy to any private information to that effect. But while there’s no hard data confirming this hypothesis, it’s at least consistent with the available evidence. Beijing’s pursuit of relationship repair with Canberra is precisely the kind of course correction that one would expect if China was intent on getting into the CPTPP. The timelines even (roughly) match: China formally launched its bid for CPTPP membership in September 2021 and it was only three months later in December that year that the first signs of Beijing’s change of diplomatic tact towards Canberra appeared. To be sure, any open-source assessment that Beijing sought to repair ties with Canberra to improve its CPTPP chances would need to be at best low-confidence, especially considering the many plausible alternative explanations for China’s changed approach. I simply (very tentatively) float this as a possible additional explanation for Beijing’s changed behaviour.

Sommeliers and smiles

Minister for Agriculture, Fisheries and Forestry Senator Murray Watt speaking to The Australian after his 17 April meeting in Canberra with Ministry of Agriculture and Rural Affairs Vice Minister Ma Youxiangn:

“I definitely felt there was a sincere desire for co-operation and to move forward and deal with some of those trade impediments that have been in place for a while.”

Quick take:

Repair of the Australia-China relationship continues apace with yet another seemingly chummy meeting. Both the Australian and Chinese principals put on warm smiles for the cameras and hopes were expressed about the promising prospects of additional trade between Australia and China. The official Australian readout and press reporting didn’t indicate any immediate and specific breakthroughs regarding China’s trade restrictions. Yet the atmospherics and messaging of this latest high-level meeting are consistent with what I’ve previously argued is likely to be a progressive, albeit potentially incomplete, dismantling of China’s trade restrictions in 2023, including anti-dumping and countervailing duties on barley and wine.

The optics of the meeting seemed especially promising for Australian wine exporters hoping to get back into the Chinese market. Beyond the formalities of a ministerial meeting at Parliament House, Vice Minister Ma also went on a little jaunt to Murrumbateman. (For international readers, Murrumbateman is one of the Canberra wine region’s prime locales. And one that I can’t resist recommending if you visit Canberra.) The Vice Minister reportedly toured the Clonakilla winery and even managed to have a tipple of its product. To be clear, none of these program details massively increase the strength of my standing assessment that China’s anti-dumping and countervailing duties against Australian wine will be removed later this year. But at the very least, the optics of a Chinese vice minister sampling Australian wine would be jarring and arguably ill-advised if there weren’t already plans afoot to get those same drinks in the hands of Chinese consumers in the coming months. So, if I was an Australian wine exporter looking to get back into the Chinese market unburdened by anti-dumping and countervailing duties, I’d be feeling pretty optimistic right now.

The state of senior Albanese government engagement (so far)

Bilateral meetings between Australia and China at the assistant minister level and above since May 2022:

• 11 June 2022: Minister for Defence Richard Marles meets Minister of National Defense Wei Fenghe on the sidelines of the Shangri-La Dialogue in Singapore.
• 8 July 2022: Minister for Foreign Affairs Penny Wong meets Minister of Foreign Affairs Wang Yi at the conclusion of the G20 Foreign Ministers’ Meeting in Bali. (The Chinese government’s readout of this meeting is available in Chinese and English.)
• 22 September 2022: Minister for Foreign Affairs Penny Wong meets Minister of Foreign Affairs Wang Yi on the margins of the 77th session of the United Nations General Assembly in New York. (The Chinese government’s readout of this meeting is available in Chinese and English.)
• 8 November 2022: Minister for Foreign Affairs Penny Wong and Minister of Foreign Affairs Wang Yi speak via telephone. (The Chinese government’s readout of this meeting is also available in Chinese. The Australian government did not release a formal readout of this meeting.)
• 12 November 2022: Prime Minister Anthony Albanese meets Premier Li Keqiang on the sidelines of the East Asia Summit in Phnom Penh. (The Chinese government’s readout of this meeting is available in Chinese and English. The Australian government did not release a formal readout of this meeting.)
• 15 November 2022: Prime Minister Anthony Albanese meets President Xi Jinping on the sidelines of the G20 in Bali. (The Chinese government’s readout of this meeting is available in Chinese and English.)
• 22 November 2022: Minister for Defence Richard Marles meets Minister of National Defense Wei Fenghe ahead of the ASEAN Defence Ministers’ Meeting Plus in Siem Reap.
• November 2022: Minister for Climate Change and Energy Chris Bowen meets Special Envoy for Climate Change Xie Zhenhua in Sharm El Sheikh on the sidelines of COP27.
• 17 December 2022: Minister for the Environment and Water Tanya Plibersek meets Minister of Ecology and the Environment Huang Runqiu at the UN Biodiversity Conference (COP15) in Montreal.
• 21 December 2022: Minister for Foreign Affairs Penny Wong meets Minister of Foreign Affairs Wang Yi in Beijing for the Sixth Australia-China Foreign and Strategic Dialogue. (The Chinese government’s readout of this meeting is available in Chinese and English.)
• 20 January 2023: Assistant Minister for Trade Tim Ayres meets Vice-Minister for Commerce Wang Shouwen in Davos. (Meeting also referenced by Prime Minister Anthony Albanese.)
• 6 February 2023: Minister for Trade and Tourism Don Farrell has a video call with Minister of Commerce Wang Wentao. (The Chinese government’s readout of this meeting is available in English and Chinese.)
• 2 March 2023: Minister for Foreign Affairs Penny Wong meets Minister of Foreign Affairs Qin Gang in New Delhi on the sidelines of the G20 Foreign Ministers Meeting. (The Chinese government’s readout of this meeting is available in Chinese and English.)
• 30 March 2023: Assistant Minister for Trade Tim Ayres meets Vice-Minister for Commerce Wang Shouwen at the Bo’ao Forum. (Minster Ayres’ press release from his Bo’ao Forum visit is available here.)
• 17 April 2023: Minister for Agriculture, Fisheries and Forestry Senator Murray Watt meets Vice Minister for Agriculture and Rural Affairs Ma Youxiang in Canberra. (Minister Watt also tweeted about the meeting.)

Quick take:

In less than a year, the prime minister and his ministers and assistant ministers have met at least 15 times with their Chinese counterparts. Coming from a standing start of no political engagement at all since the January 2020 foreign ministerial phone call, this is a dramatic revival of contact. To note, the above includes both in-person, online, and phone engagements, but does not include indirect contact in the form of congratulatory letters and the like. The above also doesn’t include meetings below the assistant minister level or multilateral meetings at which Australian and Chinese principals were seated at the same table but didn’t have a dedicated bilateral meeting. I’m relatively confident that the above captures all the publicly recorded ministerial meetings in the foreign affairs, trade, and defence portfolios, but please correct me if I’ve missed anything, including meetings from other portfolios.

Notably absent from the above list is a leader-level visit to either Australia or China and an in-person meeting at the full ministerial level in the trade portfolio. But given recent comments from Minister for Trade and Tourism Don Farrell, it seems likely that he’ll visit China shortly (possibly in the next week) and that Prime Minister Anthony Albanese will make the trip before the end of the year. Of course, this massive spurt of high-level engagement hasn’t dissolved the bulk of the most severe disputes between Canberra and Beijing. Still, as well as the likely resumption of a range of formalised dialogue mechanisms and the progressive, albeit tentative, removal of trade restrictions, political engagement in the Australia-China relationship is returning to something approximating its pre-2020 rhythm.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 3 to 16 April 2023

Trade disputes dissipate

Communication on 13 April from the Chairperson of the World Trade Organization (WTO) Panel on dispute settlement case 598 (“China — Anti-dumping and countervailing duty measures on barley from Australia”):

“On 11 April 2023, the parties requested the Panel to suspend its work, in accordance with Article 12.12 of the DSU [Dispute Settlement Understanding], until 11 July 2023. The Panel has agreed to this request.”

Quick take:

This development opens up what Minister for Foreign Affairs Penny Wong has described as a “pathway” for a resolution of the dispute over China’s anti-dumping and countervailing duty measures against Australian barley. Although these trade measures have not yet been removed and Canberra reserves the right to resume the dispute via the WTO if they are not lifted, it seems likely that the apparently “expedited review” by the Chinese government will result in their removal in the coming months. And assuming this removal goes to plan, it also seems probable that China’s anti-dumping and countervailing duty measures against Australian wine will be similarly dismantled later this year. As Minister for Foreign Affairs Wong put it on 11 April: “[T]he Australian Government would expect a similar process to be followed in relation to the trade barriers which exist on Australian wine.”

What does all this mean for the slowly loosening grip of China’s economic coercion against Australia? As I’ve previously argued, a continued progressive dismantling of China’s trade restrictions in the coming months looks most likely. Informal restrictions on coal and cotton appear to be subsiding, while technical barriers on beef, timber, and crustaceans also look set to fall away. Given the face-saving offramp that Australia is offering China in relation to what would possibly/probably have been adverse findings on anti-dumping and countervailing duties against barley and wine, Beijing will presumably be willing to remove these measures in the coming months as well. Such a dismantling of the full suite (or close to) of China’s trade restrictions seems especially likely considering the combination of the still remarkably upbeat tenor of China’s Australia diplomacy and the positive Chinese government signals for Australian wine and barley exporters.

I’ll leave it to the trade lawyers and economists to debate the rights and wrongs of these potentially directly negotiated settlements of the disputes over China’s barley and wine measures. Are these the kinds of direct and efficient negotiated resolutions that one would expect (or at least hope) WTO structures and procedures to facilitate? Or should Australia have proceeded with these disputes to impose additional reputational costs on China for its economic coercion? (For what it’s worth, I tend to think this direct negotiation route was the right call given that Canberra’s regularly repeated concerns about economic coercion had already imposed significant reputational costs on Beijing. Moreover, it seems entirely possible that China would have made direct negotiations a precondition for the removal of the measures against barley and wine, meaning that these measures could have been in place for much longer/potentially indefinitely if Australia hadn’t been willing to suspend WTO dispute settlement proceedings. Of course, these are speculative points, and I fully accept that others will legitimately see the potentially directly negotiated settlements as strategically questionable.) In any case, and regardless of one’s view of the wisdom/lack thereof of Canberra’s decision, it seems that Australia’s barley and wine exports have a good chance of more freely flowing into China again later this year.

Yet even if unblocked trade flows eventuate, it doesn’t mean that barley, wine, and other previously restricted Australian exports will be getting back into China at the same value and volume as before Beijing’s campaign of economic coercion kicked off in May 2020. The market disruptions endured these past few years will take time to unwind, and some of Australia’s redirected exports might not return (or at least not at past levels) to the Chinese market for commercial and risk-management reasons. But even if the value and volume of previously restricted Australian exports don’t return to their pre-2020 levels, I’d expect that most, if not all, of China’s trade restrictions will have been removed by the second half of 2023. Perhaps just in time for Prime Minster Anthony Albanese’s long-mooted and recently rumoured trip to Beijing sometime around October?

Canberra’s tactical caution and the (positive) Australia-China trade outlook

Ministry of Foreign Affairs Spokesperson Wang Wenbin responding on 11 April to a question about the agreement between Canberra and Beijing on the WTO barley dispute:

“By following the principles of mutual respect, mutual benefit and seeking common ground while shelving differences, we aim to reestablish trust between the two countries and bring bilateral relations to the right track and, in this process, resolve our respective concerns on trade and economic issues in a balanced way through constructive consultation to the benefit of both peoples.”

Quick take:

My above prediction of a progressive relaxing of China’s trade restrictions could, of course, prove wrong. Notwithstanding all the positive bilateral signals from both Canberra and Beijing, there’s always the possibility of flareups in Australia-China ties or at least roadblocks to ongoing relationship repair. Although China’s reaction to Australia’s ban on TikTok on government-issued devices was fairly boilerplate and understated, other possible sources of tension remain. If Australia definitively tears up Chinese company Landbridge Group’s 99-year lease of Darwin Port or slaps sanctions on Chinese officials and entities implicated in severe human rights abuses in Xinjiang, then China might reconsider its progressive unwinding of trade restrictions. Meanwhile, if China decides to not remove its anti-dumping and countervailing duties on barley and wine, then Australia is likely to resume its WTO dispute settlement proceedings. (I hope it goes without saying that I’m not suggesting that there’s a moral equivalence between these possible actions and/or reactions. The point is just to highlight the range of developments that might again destabilise relations between Canberra and Beijing.)

But given what we’ve observed in the nearly 11 months of the Albanese government, Canberra seems unlikely to take the kinds of decisions that would significantly disrupt ongoing relationship repair. Prime Minister Albanese is seemingly committed to stabilising and repairing the Australia-China relationship as part of his first-term legacy. Accordingly, his government has made a series to tactical manoeuvres to tamp down the likelihood of bilateral relationship fallout from Canberra’s hard China policy dilemmas. The Albanese government has, among other things: eschewed the use of targeted sanctions against Chinese officials and entities implicated in severe human rights abuses; decided not to veto Confucius Institutes at Australian universities and instead continue scrutinising them; and seemingly sought to time the rejection of one Chinese investment to coincide with the approval of another Chinese investment. Meanwhile, the Albanese government has (largely) stuck to its warmer talking points for describing the Australia-China relationship.

To be sure, Canberra still takes positions that can plausibly be construed as broadly “tough on China.” These include, among others, steaming ahead with the acquisition of nuclear-powered AUKUS submarines, removing Chinese-manufactured intercoms and surveillance equipment from government buildings, and restricting the Chinese-owned app TikTok from government-issued devices. But these positions were either substantively taken by the previous government and largely baked into bilateral ties (e.g., AUKUS submarines) or unlikely to seriously upset Beijing because of their limited scope (e.g., the TikTok and intercoms/surveillance equipment decisions, which only impacted a comparatively small number of government devices and buildings). So, overall, I don’t see any strong data points suggesting a deviation from the Albanese government’s tactical caution on China.

Of course, this isn’t to say that the Albanese government is now free of any hard China policy dilemmas. But I’d also expect Canberra to generally take a tactically cautious approach to issues like the ongoing Darwin Port review, future Chinese investment decisions, and the competing Chinese and Taiwanese bids for entry into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This tactically cautious approach will likely be aimed at threading the needle of maintaining tough-ish positions on China while also minimising the upset caused in Beijing. What does such tactical caution look like in practice, you might fairly ask? Here’s my take on how it has played out in relation to Confucius Institutes and Chinese investments, together with how it might be operationalised in the case of the Darwin Port review. As ever, please don’t hesitate to object and/or correct if you think I’m off the money in any of these cases. And I freely admit that my account of the Albanese government’s tactical caution on China is a working assessment that’s very much liable to revision.

Yet even if, as I’m predicting, Canberra exercises tactical caution on China, it’s still possible that Beijing will play a spoiler role. Beijing might decide to keep its anti-dumping and countervailing duties on Australian barley and wine in place regardless of Canberra finessing its China policy choices to avoid aggravating the Chinese government. Beijing might also decide to slow roll or even stall the removal of other trade restrictions even if Canberra cleaves to a tactically cautious China policy path. Such scenarios are certainly possible. But all the exceedingly positive signals emanating from the Chinese government make them unlikely in my view. And given that Beijing seems to have taken a decision at a high political level to repair the Australia-China relationship, it’d likely complicate the Chinese government’s own objective to not take advantage of the opportunity to continue to unwind measures against Australian barley, wine, and other targeted exports.

Updated leader-level meetings since 1972

The number of face-to-face meetings between Australian prime ministers and governor-generals and Chinese leaders and senior officials, December 1972 to December 2022:

Quick take:

Here are a couple of observations based on this updated version of a graph that I’ve previously published:

• The recent period without face-to-face meetings at the leader level between November 2019 and November 2022 was the longest absence of in-person contact between Australian prime ministers and governor-generals and Chinese leaders and senior officials since 1989-91. In particular, it was the most sustained such hiatus since the more than three-year gap between Premier Li Peng’s Australia visit in November 1988 and Vice Premier Zhu Rongji’s visit in February 1992. (Unless I’m missing something?) The recent hiatus is especially striking considering that Australian prime ministers and governor-generals met in person with Chinese leaders and senior officials on average more than six times each year in the ten-year period 2006-15.
• Even in the 1970s and 1980s—when face-to-face meetings between Australian leaders and their Chinese counterparts were much less frequent—the longest period without such an engagement was the period April 1973 to June 1976. Leaving aside the post-Tiananmen Square Massacre collapse in leader-level meetings, this means that one would need to go back to the very earliest years of the Australia-China diplomatic relationship to find a longer gap in face-to-face meetings at the leader level. This also means that there have only been two gaps in face-to-face leader-level engagement longer than the recent curtailment: 1973-76 and 1989-91.

For reference, the database on which the above graph is based might still be missing some face-to-face meetings between Australian prime ministers and governor-generals and Chinese leaders and senior officials. As I’ve written previously, this is especially likely to be true of the first decade or so of the diplomatic relationship. The absence of any in-person meetings in the year 2000 also appears odd in the context of at minimum one meeting per annum every other year from 1992 onwards. The year 2000 is all the more conspicuous considering that on average three such meetings occurred each year in the five years before 2000 and on average five such meetings occurred each year in the five years after 2000. Please send through any corrections or additions that you might have on this or any other years.

As a final caveat, it’s worth noting that the vast majority of the Chinese leaders and senior officials captured in the above dataset are Chinese Communist Party (CCP) officials at the level of Politburo or above or Chinese government officials at the level of Minister or above. In a small number of cases, the data includes meetings with senior Chinese representatives who did not hold CCP or Chinese government positions at those ranks (e.g., former Vice Premier Gu Mu’s meetings in 1987 with Prime Minister Bob Hawke and Governor-General Ninian Stephen). Although the inclusion of these meetings can certainly be debated given that they might not carry the same import as a true leader-level meeting, I err on the side of adding them given the participation of the Australian Prime Minister/Governor-General.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 20 March to 2 April 2023

The Easter long weekend and teaching commitments delayed the publication of this edition. The edition covering the period 3-16 April will still be published early next week (all going well).

China’s CPTPP disinformation

China’s Ministry of Foreign Affairs (MFA) Spokesperson Mao Ning answering a question on 31 March about Taiwan’s potential accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

“As to the Taiwan region’s accession to the CPTPP, our position is very clear. There is only one China in the world, and the Taiwan region is an inalienable part of China. The one-China principle is a universally recognized norm in international relations and a prevailing consensus among the international community. We firmly oppose any official interaction between countries and the Taiwan region and firmly oppose the Taiwan region’s accession to any agreement or organization of official nature.”

Quick take:

This is another sign of a looming battle over whether CPTPP members should back Beijing’s or Taipei’s bids. With the UK entry into the trade agreement now confirmed, both China and Taiwan will almost certainly ramp up their efforts to join. As well as the CPTTP’s elevation in the Chinese government’s 2023 Work Report last month, the Taiwanese government has apparently already renewed its push for support with New Zealand. Although I haven’t seen any indications of similar approaches to Australia, presumably it’s just a matter of time before both Taipei and Beijing start lobbying Canberra publicly. Considering that Beijing wants to both prosecute its bid and block Taipei’s accession, these competing CPTPP campaigns are likely to lead to an especially hard choice for Canberra. (For more on the messy cost-benefit equation for Australia as it weighs China’s and Taiwan’s bids, see the last edition.)

But beyond the difficult decision point, this CPTPP competition is especially consequential considering the way in which the Chinese government is using disinformation about one-China policies to keep Taiwan out. Beijing claims that the Taiwanese government isn’t entitled to join groupings like the CPTPP because the world shares China’s view that Taiwan is simply part of the People’s Republic of China (PRC). These kinds of Chinese government arguments are part of a global and concerted push to convince governments and publics that they are committed to Beijing’s preferred one-China principle. Among other consequences, this means that foreign governments should curtail their engagement with Taiwan, including by not welcoming Taipei into groupings like the CPTPP. Of course, these claims misrepresent the supposed international support for China’s preferred one-China principle, gloss over the diversity of one-China policies, and ignore how commonplace it is for free trade agreements and other groupings to include entities that aren’t recognised as de jure sovereign states. But regardless, Beijing seems intent on keeping Taipei out of the CPTPP by marshalling disinformation about the limited legitimate scope that countries have to engage with Taiwan.

More narrowly from an Australian perspective, China’s disinformation effort vis-à-vis Taiwan’s CPTPP membership is yet another example of the Chinese government’s attempt to recast Canberra’s one-China policy as a version of Beijing’s one-China principle. On top of an extensive record of misleading MFA messaging, China has used op-eds in the Australian press to suggest that Canberra is committed to Beijing’s view that Taiwan is simply a province of the PRC. In The Australian Financial Review last year and The Sydney Morning Herald last month, the Chinese Ambassador Xiao Qian laundered versions of the false claim that the Australian government is “obliged to stick to its commitment to the one-China principle, both in words and in deeds, in name and in essence, with sincerity, without discount.” (For those interested, I responded to both of these op-eds in the respective newspapers here and here.) So, not only is Beijing trying to keep Taipei out of the CPTPP, but it’s trying to execute that exclusion by convincing Australia that it is committed to the view that Taiwan is simply a province of the PRC and thereby circumscribe Canberra’s right to deepen its formal trade ties with the island.

Addendum: At the risk of labouring the point, the Chinese government’s characterisations of the CPTPP and Australia’s one-China policy are misleading. Per Article 5 of the CPTPP agreement, there is nothing to prohibit a customs territory like Taiwan (or specifically the separate customs territory of Taiwan, Penghu, Kinmen, and Matsu) form joining. Meanwhile, Australia maintains a one-China policy and has never endorsed the view that Taiwan is a province of the PRC. It is therefore patently false to claim that the one-China principle, according to which Taiwan is part of the PRC, is the foundation of Australia-China relations. Per the 1972 joint communique establishing diplomatic relations between Australia and the PRC, Canberra acknowledged without ever endorsing Beijing’s view.

Deceptions in diaspora media

The English-language version of an article by Sydney Consul General Zhou Limin published in Australian Chinese Daily (澳洲新聞) on 3 April (available in Chinese on the Consulate-General and 澳洲新聞 websites):

“The One China principle is the consensus of the international community and the political foundation of China-Australia relations. China has no room for compromise or concession on the Taiwan question.”

Quick take:

Beijing is also seeking to inject its disinformation directly into the Chinese-language media environment in Australia. I’ll leave it to others to draw out the full implications of this and determine how commonplace these kinds of cases might be in the Chinese-language media. But as examples of Chinese government disinformation roaming Australia’s media landscape more broadly proliferate, I’m increasingly gravitating to the view that it warrants a stronger Australian government response.

To be sure, the Albanese government might understandably want to avoid getting into the business of directly responding to every instance of Beijing’s disinformation about Australia’s one-China policy. Given the regularity of Beijing’s efforts to foist its one-China principle on Canberra, such a whack-a-mole approach might mean taking issue with Chinese government messaging on a weekly basis. Directly responding to every instance of disinformation might also complicate the Australian government’s efforts to stabilise Australia-China relations. At a certain point, Beijing is likely to take serious issue with Canberra if the latter is issuing frequent public corrections in response to the Chinese government’s falsehoods.

But given the prominence of Chinese government disinformation, there is equally a danger in Canberra not saying more to correct the record. With Beijing utilising Australia’s free press to propagate falsehoods, Canberra risks letting the Chinese government define (at least for some readers) the contours of Australia’s one-China policy. Sure, researchers and commentators will write op-eds critiquing the Chinese government’s deceptions. But given that Australia’s one-China policy is the basis for Canberra’s engagement with both Beijing and Taipei, it’d be helpful if the Australian government took a more proactive approach to combatting the Chinese government’s disinformation.

Assuming that I’m not way off target with the above, what exactly might the Australian government do? Previously (e.g., here and here), I’ve sketched some options. Here’s an updated menu of responses that the Australian government might adopt:

1. Use both ministerial speeches and talking points to more regularly reassert the latitude that Australia enjoys to engage with Taiwan and, where necessary, rebut the claim that Canberra shares Beijing’s preferred one-China principle.
2. Update the Taiwan page on the Department of Foreign Affairs and Trade (DFAT) website to directly debunk the claim that Australia is committed to the view that Taiwan is a province of the PRC. This page could also more fully and explicitly articulate the scope that Australia’s one-China policy allows for mutually beneficial engagement with Taiwan.
3. Have ministers directly but calmly correct especially egregious and/or high-profile examples of Chinese government disinformation about Australia’s one-China policy.
4. Given the complexities and subtleties of diplomatic communiques, publish and disseminate to the media and other stakeholders an official factsheet that unpacks the historical reasons for and contemporary relevance of Australia’s one-China policy.
5. Reinforce to state, territory, and local governments and the private sector the freedom to engage with Taiwan that they continue to enjoy under Australia’s one-China policy.

Readers in the Australian government might think I’m overegging the seriousness of this issue. Sure, the response might go, the Chinese government spreads disinformation vis-à-vis Australia’s one-China policy, but it’s so clunky and uncompelling that it won’t win anyone over. I certainly don’t have comprehensive data pointing to the effectiveness of this Chinese government disinformation. (I’d welcome advice from any readers who have a more detail on this.) But for what it’s worth, the anecdotal evidence I come across in conversations with the private sector, the media, students, and the public suggests that Beijing’s disinformation is much more persuasive than one might imagine. It might not have seriously penetrated the Canberra bubble, but it seems to be shaping attitudes in the broader Australian community. For that reason, I tend to think that there’s a prima facie case for considering some of the above options.

Australian ministerial visits to Taiwan

Australian ministerial visits to Taiwan at the level of Assistant Minister/Parliamentary Secretary and above in the years 1993-2022:

• Minister for Trade and Competitiveness, Craig Emerson, Sep-12
• Minister for Resources and Energy, Martin Ferguson, Jun/Jul-11
• Parliamentary Secretary to the Minister for Transport and Regional Services, Ronald Boswell, Oct-03
• Parliamentary Secretary to the Minister for Transport and Regional Services, Ronald Boswell, Nov-01
• Minister for Trade, Mark Vaile, Feb-01
• Parliamentary Secretary to the Minister for Transport and Regional Services, Ronald Boswell, Nov-99
• Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, Judith Troeth, Jun-99
• Minister for Industry, Science and Resources, Nick Minchin, Apr-99
• Minister for Resources and Energy, Warwick Parer, Sep-97
• Minister for Primary Industries and Energy, John Anderson, Sep-96
• Minister for Trade, Bob McMullan, Nov-95
• Parliamentary Secretary to the Minister for Transport, Neil O’Keefe, May-95
• Minister for Tourism, Michael Lee, Jul-94
• Minister for Trade, Peter Cook, Oct/Nov-93
• Parliamentary Secretary to the Minister for Primary Industries and Energy, Nick Sherry, TBC-93

Quick take:

Before offering any analysis of the above, let me concede at the outset that this little database is very much a work in progress. It relies on the records of Australian ministerial visits to Taiwan available on the profile pages of former Australian parliamentarians, which are listed on the Australian Parliament House (APH) website. The above is unlikely to be complete and probably misses, for example, ministerial visits that were conducted discreetly and not publicised. I’d welcome any suggestions/tipoffs from readers of visits that I might have missed. Once it’s been more fully checked for accuracy, I’ll update this working tally and publish it again (likely here or as part of a different article or paper).

That caveat aside, the above tabulation highlights at least two key points. First, the decade between 2013 and 2022 has seen a dramatic collapse in the number of serving Australian ministers visiting Taiwan. Since the then Minister for Trade and Competitiveness Craig Emerson visited in September 2012, not one serving Australian minister appears to have visited Taiwan. This total lack of ministerial visits in the ten years up to 2022 contrasts dramatically with previous decades. In the ten years from 1993 to 2002, twelve visits took place—seven at the ministerial level and five at the level of Assistant Minister/Parliamentary Secretary. Then in the ten years from 2003 to 2012, three visits took place—two at the ministerial level and one at the level of Assistant Minister/Parliamentary Secretary.

The second noteworthy feature of this historical record is the significant shift in the terminology used to describe Australian ministerial visits to Taiwan. All the above visits up to and including Minister Ferguson’s June-July 2011 trip are described as “official visits/delegations to Taiwan.” Minister Emerson’s September 2012 visit is then described as an “unofficial visit” before ministerial visits cease entirely. The description on the APH website of pre-2012 ministerial visits to Taiwan as “official” is striking considering that Albanese government ministers and the DFAT website emphasise that Australia has an “unofficial relationship” with Taiwan.

These APH website descriptions of official ministerial visits are all the more conspicuous considering comments from the then First Assistant Secretary of DFAT’s North Asia Division and now Australia’s Ambassador to China, Graham Fletcher, during Senate Estimates in 2010: “We do not have official relations with Taiwan and we do not have official visits to Taiwan. … There are never official visits by Australian ministers to Taiwan.” What explains this discrepancy between the APH website and the language used by ministers, senior officials, and the DFAT website? Has the APH website simply mislabelled past ministerial visits to Taiwan as “official”? Or has Australia’s nomenclature for describing its ties with Taiwan changed? Or am I simply misreading and/or misinterpreting something? I’m genuinely not sure and would welcome any suggestions.

One final quick thought bubble: The current preferred language of an “unofficial relationship” with Taiwan can be plausibly read as shorthand for ties that don’t imply recognition of de jure sovereignty. But using the dictionary definition of “official,” Australian public servants posted to Taiwan are indisputably there on official business on behalf of the Australian government and people. And many other forms of engagement between the Australian and Taiwanese governments are also official by the common usage of the term. The distinguishing feature of these kinds of interactions is arguably not that they are unofficial, but that they occur without the Australian government having formal state-to-state relations with Taiwan. Given how out of step the Australian government’s talk of an “unofficial relationship” is with common parlance, perhaps there’s a case for following the lead of the APH website pre-2012 and once again referring to Australia’s official engagement with Taiwan. But maybe to reassure China, it could be described using the modified formulation of an “official non-state relationship.” This would arguably both better reflect the breadth and depth of the official engagement between Australia and Taiwan, while also making plain that none of this entails that Australia recognises the Taiwanese government as a representative of a de jure sovereign state. As with the above questions about the changing terminology, I float this last point very, very, very tentatively. I’ll also write something in the coming months that hopefully unpacks and clarifies further some of these points. In the meantime, please send me your corrections and/or howls of objection.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Weeks of 27 February to 19 March 2023

Mea culpa for the delay getting this edition out. I’ve been waylaid by AUKUS and related developments. BCB will get back to its normal fortnightly programming with the next edition.

Australia’s tough trade pact decision

From former Chinese Premier Li Keqiang’s Report on the Work of the Government delivered on 5 March:

“We should take active steps to see China join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”.

Quick take:

This is a conspicuous elevation of CPTPP accession as a policy priority for Beijing. It’s especially noteworthy considering that the CPTPP wasn’t mentioned in the 2022 Work Report that followed China’s formal application for membership. Although the CPTPP was mentioned in the 2021 Work Report, the reference was more cautious: “China will actively consider joining the [CPTPP].” (For reference, the CPTPP wasn’t mentioned [so far as I can see] in any other Work Report since that trade agreement was signed and came into force in 2018.) This latest high-level signal suggests the Chinese government will ramp up its efforts to gain CPTPP entry in 2023. This probably also means that Canberra will come under increasing pressure from Beijing to back its bid.

China’s push for Australian support might be especially forceful given the growing signs of a resumption of normal diplomatic exchange and an incremental dismantling of Beijing’s trade restrictions. In the last couple of years, Australian support for China’s CPTPP accession looked wildly implausible. How could Canberra have seriously considered supporting Beijing’s bid in the midst of a total diplomatic freeze at the ministerial level and above combined with extensive politically motivated trade restrictions? As the then Minister for Trade, Tourism and Investment Dan Tehan made plain back in November 2021, China’s CPTPP accession would be a nonstarter until Australian ministers could at least talk to their Chinese counterparts. And the point regarding economic coercion was elegantly made (albeit without mentioning China by name) in the joint statement from the Japan-Australia Ministerial Economic Dialogue in October 2022: “Ministers … committed to the continued expansion of the CPTPP to those new economies … with a demonstrated pattern of complying with trade commitments. Ministers noted that economic coercion and unjustified restrictive trade practices are contrary to the objectives and high standards of the Agreement.”

But bilateral diplomatic and trade repair might now dilute the most obvious reasons for Canberra to immediately rebuff Beijing’s requests for support with CPTPP membership. China might therefore decide that now is the right time to relitigate its CPTPP accession with Australia and other countries. Although there’s no concrete evidence that I’ve seen in the open source material, one can easily imagine Chinese ministers and diplomats privately renewing their push for Australian support. With the bilateral relationship stabilising and heading “back on the right track,” the Chinese government might argue that Australia no longer has any obvious grounds for not supporting China’s plans for CPTPP membership.

Regardless of whether one thinks Canberra should swing behind Beijing’s CPTPP push (I won’t try to parse and adjudicate all the complex economic and strategic calculations in this edition), China’s CPTPP goal poses yet another tough policy choice for the Australian government. Bringing China into the CPTPP would, ceteris paribus, produce economic gains for Australia and other countries. Australian support for China’s membership would also be welcomed by Beijing and so would probably assist the Albanese government with its goal of further stabilising the Australia-China relationship. CPTPP membership might (though it’s a very questionable might) also encourage China towards better standards of trade behaviour by enmeshing it in more trade rules.

But such support would also be deeply politically unpalatable in many quarters given China’s more-than-two-year-long economic and diplomatic punishment campaign against Australia. Moreover, China’s trade measures against Australia in recent years provide a prima facie reason for approaching with caution initiatives that would foster deeper trade connectivity with China. This case for caution is likely to be especially strong considering the (very patchy) record that trade agreements have at restraining China from economically coercing other countries, including Australia.

Then there’s the Taiwan factor. Just as Beijing might be planning to pile more pressure on Canberra to support its CPTPP bid, Taipei has an as-yet-unrealised trade agenda with Australia. Taiwan seeks CPTPP accession and is on the record looking for Australia’s support. Taiwan’s role as a reliable economic partner for Australia in recent years stands in stark contrast to China’s extensive use of economic coercion. (Not only has Taipei not pursued those kinds of adversarial trade policies against Canberra, but like Australia, Taiwan has actually been the victim of China’s economic coercion.) Taiwan is also (depending on the year of trade data one uses) the only one of the top ten Australian export markets with which Canberra doesn’t have a bilateral free trade agreement (FTA). With plans for an Australia-Taiwan FTA dropped in 2016-17 due to pressure from China, bringing Taiwan into the CPTPP would (to some extent) make up for Australia’s lack of bilateral FTA with one of its largest export destinations. (I’d add to this list of reasons for supporting Taipei’s CPTPP bid the broader strategic goal of engaging with Taiwan in the trade arena to keep international space for open for one of the region’s leading liberal democracies, but that’s an argument for another edition.)

Yet for all the reasons for Australia to support Taiwan’s CPTPP accession, China is likely to strongly oppose such a decision. And Beijing might be especially aggrieved if Canberra jumps on board with Taipei’s CPTPP plans while at the same time rebuffing China’s request for support. Given Beijing’s efforts to undermine a wide range of forms of political, diplomatic, economic, and institutional engagement with Taipei, China is likely to also view support for Taiwan’s CPTPP bid as a challenge to its goal of internationally isolating the Taiwanese government. The Australian government might therefore be loathe to support Taiwan’s CPTPP accession for fear of upsetting China. This might be especially so considering the way in which Prime Minister Anthony Albanese himself and some of his ministers have trumpeted relationship repair with China as one of their signature foreign policy achievements in office.

Of course, the ongoing process of getting the United Kingdom into the CPTPP might make Australia’s position on China’s and Taiwan’s competing membership bids moot for now. But eventually the UK accession will (presumably) conclude, and both Beijing and Taipei will likely come knocking on Canberra’s door with renewed vim and vigour. At that point, Australia is likely to face a tough policy choice that pits a complex set of powerful economic and strategic considerations against each other.

A revised list of Canberra’s contentious China policy choices

Prime Minister Albanese responding on 16 March to a question about the Darwin Port review:

“We’ll announce it when it’s announced. Rather than putting a timeframe on it. I’ve got the relevant agencies have been [sic] asked to examine that. They’ll come back to me and then I will release it and make it in a transparent way.”

Quick take:

In previous editions, I’ve written about tough China policy choices for Canberra as it seeks to stabilise ties with Beijing and prosecute Australian interests. The four key decision points that I’ve previously nominated are:

• The use of Foreign Relations Act powers to veto Confucius Institutes at Australian universities;
• The imposition of targeted sanctions on Chinese officials and entities implicated in severe human rights abuses in Xinjiang;
• The review of the 99-year lease of Darwin Port to the Chinese company Landbridge Group; and
• Periodic decisions on foreign investments from China.

The last few months have pushed at least a couple of these tough choices out of the Albanese government’s in-tray. On the Confucius Institutes decision, Canberra appears to have so-far successfully threaded the needle of putting these institutions on notice without aggravating Beijing with a veto. Meanwhile, despite the Albanese government’s prolific use of targeted sanctions against Russia, Iran, and Myanmar (e.g., here, here, here, and here), Canberra has opted (at least for now) for the cautious and morally ambiguous approach of not imposing targeted sanctions against Chinese officials and entities implicated in severe human rights abuses.

Regardless of the rights and wrongs of these decisions (as regular readers will know, I have misgivings about the sanctions decision in particular), Canberra has for now largely neutralised these first two issues as live dilemmas. To be sure, the Albanese government will periodically be criticised for not sanctioning Chinese officials and entities and for taking what some will see as too soft a touch on Confucius Institutes. But in both cases, Canberra has (politically at least, if not morally and in security terms) resolved the dilemma by taking a policy path that neither angers Beijing nor prompts widespread and strong domestic opposition. That’s not to say that these issues won’t once again become live issues for the Albanese government, much less that they shouldn’t still be points of public debate. But for now, at least, they don’t pose tough decision points for the Australian government.

But just as some hard China policy choices might have been (largely) neutralised, others remain and still others are being added to the in-tray. The review of the Darwin Port lease is ongoing, and, as I’ve previously written, still poses a dilemma for the Albanese government. Meanwhile, despite the fortuitous timing last month of the Baowu Steel approval that overshadowed the Yuxiao Fund rejection, Canberra will face the ongoing dilemma of how to combine bilateral relationship repair with the periodic rejection of Chinese investments. With China still concerned about what it perceives to be the unfair Australian environment for its businesses, investment reviews will remain a sensitive area of bilateral ties.

On top of these enduring tough China policy choices, I’d add one likely and two possible decision points that could challenge Canberra in the months ahead. Per the above, Beijing’s and Taipei’s competing CPTPP bids are likely to pose a tough China policy choice for Australia. Projecting froward, I’d also expect difficult decisions for Canberra stemming from the deepening China-Russia relationship and the handling of TikTok and other Chinese-owned apps in the broader Australian market. These decisions are not here and now like the Darwin Port review and foreign investment determinations, and they are more uncertain than the likely choice over Beijing’s and Taipei’s competing CPTPP bids. But the overarching trendlines of deepening security concerns surrounding Chinese consumer-facing apps and Beijing’s tighter strategic embrace of Moscow mean there’s a growing chance that Canberra will need to grapple with yet more tough China policy decisions.

Although Canberra is expected to soon ban TikTok on federal government devices (on which, more below), the direction of travel on the app in the United States may further spur a debate in Australia about much broader restrictions on market access for TikTok (and potentially other Chinese-owned apps). Calls (e.g., here and here) have already emerged for broader market restrictions on TikTok, while influential parliamentarians remain deeply sceptical of the app. The issue of mitigating the potential national security risks of Chinese-owned apps like TikTok while also not unduly restricting the rights of individuals and diaspora communities is politically and morally fraught. This is especially so in the case of WeChat, which provides communication and a range of other services for millions of Australians. I don’t presume to have answers on the right balance between mitigating security risks and safeguarding individual freedoms. But without getting into those kinds of normative questions of what the Australian government should do, it seems at the very least that there’s a growing chance Canberra will have to grapple with a complex set of questions about the kinds of broader security and/or market restrictions that should be placed on Chinese-owned apps like TikTok.

Meanwhile, depending on how much support China is willing to offer Russia during its war of aggression in Ukraine, Australia might also have to decide whether to extend its sanctions of Russia’s supporters to Chinese individuals and entities. As the state visit to Russia by China’s leader Xi Jinping underlines, Beijing seemingly has no compunctions about deepening its economic engagement and diplomatic support for Moscow as it wages a brutal war against Ukraine and its people. Meanwhile, evidence has emerged suggesting that Chinese entities are exporting equipment and weapons that could aid the Russian war effort, while US Secretary of State Anthony Blinken said in February that information suggests China is “considering providing lethal support” to Russia. It remains to be seen whether China’s support for Russia will evolve into the kind of technological and military assistance that prompts the United States to impose fresh sanctions against China. But if Beijing’s assistance crosses that threshold (of course, not necessarily guaranteed), Canberra is likely to be very quickly confronted with the question of whether to sanction Chinese individuals and entities. In such a scenario, Australia would likely find it extremely hard (both morally and diplomatically) to not throw down the sanctions hammer on China, as it has done in the case of Iranian individuals and entities who’ve materially assisted the Russian war effort.

Taking all the above together, here’s how I’d characterise Canberra’s toughest China policy decisions for 2023:

Current China policy dilemmas

• The ongoing review of the 99-year lease of Darwin Port to the Chinese company Landbridge Group; and
• Periodic decisions on foreign investments from China.

Likely China policy dilemmas

• Beijing’s and Taipei’s competing CPTPP bids.

Possible China policy dilemmas

• Broader security and/or market access restrictions for Chinese-owned apps, including TikTok; and
• Sanctions on Chinese individuals and entities that materially assist the Russian war effort in Ukraine.

I certainly wouldn’t claim that the above is an exhaustive account of all the tough China policy choices confronting Australia. With Canberra and Beijing still at loggerheads on a long list of policy questions—everything from China’s security role in the Pacific to Australia’s acquisition of nuclear-powered submarines—other tough China policy choices could easily emerge. But the above are some of the key choices that are liable to most severely strain the relationship in the near-term and therefore most warrant a watching brief. As usual, I’d welcome any reader suggestions on other significant near-term China policy dilemmas that I’ve missed.

TikTok turbulence

Senator James Paterson, Shadow Minister for Cyber Security and Countering Foreign Interference, writing on Twitter on 17 March:

“Australia led the Five Eyes and the world banning Huawei from our 5G network in 2018. Sadly we are lagging our allies and friends when it comes to protecting government users from the national security threats posed by TikTok.”

Quick take:

As a I write, a ban on TikTok on Australian federal government devices looks increasingly likely. Coming on the back of similar TikTok bans on a range of government-issued devices by the United States, Canada, the European Commission, the United Kingdom, New Zealand, and others, an Australian ban seems unlikely to spark much heat in the Australia-China relationship. If Australia announces a comparable ban now, the international early movers mean China won’t be surprised by the decision, and Canberra equally won’t be setting a precedent. The Chinese government has publicly criticised these other limited bans (e.g., here, here, and here). But none of these bans seem to have prompted more than a negative rhetorical response (at least that I’ve seen). Like last month’s decision to remove Chinese-manufactured surveillance equipment and intercoms from Australian government buildings, I wouldn’t expect the impending limited TikTok ban to significantly stall, much less reverse, the incremental repair of the Australia-China relationship. As was the case in other jurisdictions, China is likely to criticise Australia if the issue comes up in Ministry of Foreign Affairs press conferences. And presumably Chinese ministers and diplomats will also privately raise concerns with their Australian counterparts.

But as with the removal of Chinese-manufactured surveillance equipment and intercoms, the limited nature of the TikTok ban is likely to moderate China’s reaction. As I’ve argued previously, Beijing is probably much more concerned about restrictions on Chinese companies in the Australian market overall rather than about having their companies excluded from what would be a relatively small segment of that market (in this particular case, a comparably small number of federal government-issued devices). And yet even though this targeted TikTok ban might not adversely impact bilateral ties overall, Beijing will be watching with concern for any broader security and/or market moves against TikTok and other Chinese-owned apps. Without in any way prejudging how Canberra should approach those bigger questions, I’d expect bilateral ties to experience a serious bruising if the Australian government pursues a more far-reaching set of security and/or market restrictions on Chinese-owned apps like TikTok. That said, if the US government can force ByteDance’s divestment from TikTok, the Australian government might be able to avoid these kinds of difficult decisions entirely (at least as regards TikTok). TBD.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 13 to 26 February 2023

Pricing Chinese investment rejections into bilateral ties

From the 15 February Foreign Acquisitions and Takeovers (Prohibition of Proposed Action) Order:

“Yuxiao Fund Pte. Ltd. is directed not to increase the proportion of interests in issued securities in Northern Minerals Limited beyond the 9.98 per cent interest it held as of 17 August 2022.”

Quick take:

Beijing presumably won’t welcome this decision. Especially considering that China has continued in recent months to object to what it sees as a discriminatory environment in Australia for its businesses. These complaints are longstanding. But they are especially conspicuous in the context of China’s much warmer rhetoric about Australia. So much so that the environment for Chinese businesses in Australia has been the only point of clear public discontent in the Chinese government’s readouts of major bilateral meetings in the last few months. These complaints have also featured prominently in recent Ministry of Foreign Affairs messaging and were reiterated in the readout of the Australia-China foreign minister meeting on 2 March (in English and Chinese).

But despite Beijing’s frustrations with Canberra’s approach to Chinese businesses, there are strong reasons to expect that relatively small-scale foreign investment rejections like Yuxiao won’t sour the diplomatic mood or derail the current push towards relationship repair. For one thing, Beijing presumably decided to pursue relationship repair knowing full well that the Australian government would end up rejecting at least some Chinese investments. Given that Australia has for years taken a more risk-averse approach to foreign investments on a range of national interest grounds, Beijing surely would have expected outcomes akin to the Yuxiao rejection. China’s awareness of the near inevitability of some rejections would also have presumably been especially acute in the critical minerals and rare earths sectors of the mining industry.

The likelihood/near certainty of these kinds of Chinese foreign investment rejections means it’s plausible that developments like the Yuxiao decision were already priced into the relationship. In other words, Beijing’s decision to embrace a warmer approach to Canberra already factored in a certain number of such foreign investment rejections. After all, it would have been pretty strategically inept for China to orchestrate a significant tactical diplomatic shift on Australia only to be forced to reverse course over some foreign investment rejections that were all but inevitable. How many more such rejections might Beijing be willing to accept before it decides to stall or even reverse bilateral relationship repair? Of that, I’m not sure. (It’s neither clear that the Chinese government necessarily has such an upper limit, nor what kind of rejections would most quickly lead to that threshold being reached if it existed.) But at the very least, it seems reasonable to conclude that China was always willing to continue relationship repair on the assumption that this and other similar rejections might be in the pipeline.

Other factors also probably minimised the fallout from the Yuxiao decision. First, the size and structure of the proposed investment likely took some of the heat out of the rejection. Yuxiao already had a 9.98% interest in Northern Minerals and the deal would have increased their interest by 9.92% to 19.9%. All things being equal, I’d imagine that Beijing would be more inclined to take umbrage when a Chinese company is blocked from taking any stake in an Australian company at all rather than when a Chinese company is blocked from increasing an established stake. (Admittedly, that’s just my instinct. If readers have any hard hard data on this issue, I’d love to see it.)

Furthermore, the company in question is relatively small compared to many of the gargantuan miners in the Western Australian resources industry. The last time I checked, Northern Mineral’s stock was trading at around $0.04 a share and its market cap was only about $240 million. Of course, these are just two metrics, and I’m by no means a business analyst. But these numbers at least suggest to me that the Yuxiao rejection wasn’t on the scale of the kinds of large and high-profile rejections that previously caused turbulence in the Australia-China relationship. None of this is to say that a roughly doubling of Yuxiao’s share to circa 20% of Northern Minerals wouldn’t have entailed national interest implications for Australia. But Yuxiao’s pre-existing stake, the (relatively) modest increase, and the size of the company overall make the rejection less likely to touch on Beijing’s sensitivities.

Timing and (oblique) messaging probably matter too

Zhou Fangyin, from the Guangdong Institute for International Strategies, commenting on the Australian approval of the Rio Tinto-Baowu joint venture (as paraphrased by the Global Times):

“Australia has previously been sensitive to Chinese investment in its key iron ore sector, but the approval indicates that there is no security concern about cooperating with Chinese companies and China is an indispensable economic and trading partner for Australia.”

Quick take:

Then there’s the timing of the decision. I’m certainly not privy to any information suggesting that the Albanese government deliberately sought to have the Yuxiao rejection coincide with news that the Rio Tinto-Baowu joint venture had been approved. These decisions are presumably taken according to schedules determined by a range of commercial and statutory considerations. But regardless of whether the timing was planned, it could hardly have been better for Canberra’s management of ties with Beijing. The approval of Baowu’s $1 billion circa 46% stake in the Western Range iron ore project was being publicly reported just a couple of days after the Yuxiao rejection was quietly put up on a relatively obscure Australian government website. This meant that the positive news for Beijing of the Baowu approval had been floating around for nearly two weeks by the time the Yuxiao rejection was picked up by the press. That’s precisely the kind of order of events that one would expect to reduce blowback from Beijing.

If the above is right, it seems entirely plausible that the Albanese government was both seeking to reduce the chances of anger from Beijing with the timing, while also sending an oblique message. Given the chronology of the Baowu approval and the Yuxiao rejection, Canberra might have been able to indirectly say to Beijing: “Yes, we’re going to reject some Chinese investments. But there’ll be approvals too, which will give you some good news to trumpet.” Of course, it’s also possible that I’ve become way too conspiratorial. Maybe the timing is just happenstance and there’s been no tactical effort to massage ties with China? Not inconceivable. But I doubt that such a face-value interpretation gives the Albanese government enough credit for their so-far seemingly shrewd China strategy.

I’ll write more about the broad topic of the possible contours of an overarching Albanese government China strategy in future issues. But for now, it’s worth briefly going back to a speech that Minister for Foreign Affairs Penny Wong delivered in 2017 at the Australian Institute of International Affairs’ National Conference. In it, she said about engaging with China:

“The fifth principle underpinning Labor’s policy approach is to take a much more integrated and connected approach to the various strands that make up the bilateral relationship. This requires better synthesis of our security imperatives and economic opportunities. The counterpart to that analytical integration is a better institutional integration, particularly across government. We need to ensure that our economic, education, trade and diplomatic engagement with China is consistent, disciplined and co-ordinated. That demands both clear objectives and fit-for-purpose institutional arrangements. … Our national interests are realised, not through trade-offs, but through policy integration.”

To be clear, there’s obviously not a straight line between that general approach and what might have been a savvy play by the Albanese government on the Baowu approval and the Yuxiao rejection. A lot of water has gone under the bridge since 2017, not least of which is a change in Labor leader. But if one was taking the kind of “integrated” approach to managing the Australia-China relationship described by Minister Wong in 2017, one would be tempted to orchestrate something akin to what the Albanese government might have done on the Baowu and Yuxiao decisions. Namely, reduce the downside risks of broader relationship fallout from the Yuxiao rejection by concurrently approving a large Chinese investment in a less strategically contested sector. And there might be an especially strong reason to do that if one’s “Government ha[d] worked hard to stabilise Australia’s relationship with China,” as Prime Minister Albanese recently put it. Alright, I’ll stop there before I get caught in ever-tightening circles of speculation.

Darwin Port permutations

ABC News reporting on 21 February on the Albanese government’s additional review of the 99-year lease of Darwin Port to the Chinese company Landbridge Group:

“The federal government has refused to release advice given to the prime minister’s office about possible ‘paths forward’ for the Darwin Port on the grounds it could ‘cause damage to the defence of the Commonwealth’.”

Quick take:

It’s tempting to think about the Albanese government’s Darwin Port decision in binary terms. Either the government ends Landbridge Group’s 99-year lease or leaves the current arrangement in place. Tearing up the lease would be more consistent with Prime Minister Albanese’s past comments but would risk a backlash from Beijing, while not touching the lease would somewhat mollify China’s concerns but leave the Albanese government vulnerable to accusations of inconsistency and softness on national security. Given the costs of each of these options, the reference in the above recent reporting to “paths forward” (plural) makes it seem more likely that the Albanese government will try and avoid both horns of this dilemma by opting for a third path.

As I’ve written previously, forms of corporate restructuring and additional security oversight might be available to both mitigate the perceived and/or real national security risks of Landbridge Group’s lease while also avoiding the negative impact on bilateral ties of cancelling the lease. Such a third-way approach might involve one or more measures like scrutinising Landbridge Group’s operations with ongoing or regular security reviews, appointing an Australian government or corporate sector administrator to oversee certain more sensitive parts of Darwin Port, and/or reducing the length/modifying elements of the Landbridge Group’s lease. Such measures might even be so cumbersome that Landbridge Group decides to extricate itself from Darwin Port entirely without the Albanese government having to terminate the lease.

The above configurations might not be the most efficient commercial outcomes or the even the preferred security options. But these kinds of measures might offer the Albanese government the optimal balance between its goal of minimising the security risks (perceived and/or real) of Landbridge Group’s lease, while also reducing the chances that Canberra’s decision on Darwin Port will endanger the ongoing stabilisation/repair of the Australia-China relationship. Regardless of the precise form of such a third-way option, the Albanese government would likely be criticised in some quarters for not taking a strong enough stance on national security. But such domestic heat is likely to be manageable, especially considering the bipartisan support for ongoing relationship repair on both the diplomatic and trade fronts. A third-way option is also only likely to mean modest political vulnerability for the Albanese government. Darwin Port was initially leased by the Northern Territory government in 2015 when the Coalition was in power and the lease was left in place in the wake of a subsequent review during the Morrison government’s tenure.

Notwithstanding all the above, it’s entirely possible that the Albanese government will either decide to end the lease or leave it in place. But beyond the reference to “paths forward,” the Albanese government’s handling of Confucius Institutes also makes me think Canberra might chart a third way on Darwin Port. Under the Foreign Relations Act legislated in 2020 by the Morrison government, Minister for Foreign Affairs Wong could have vetoed Confucius Institutes. However, such a move entailed significant risk of hampering and perhaps even derailing the improvement in bilateral ties with Beijing. Rather than either leaving Confucius Institutes in place unchecked or jeopardising relationship repair with a veto, the Albanese government sought to achieve its security objectives by scrutinising Confucius Institutes on an ongoing basis, while also not aggravating China with use of a ministerial veto.

The Confucius Institutes and Darwin Port decisions are obviously vastly different in a range of ways. But they both on paper present the Albanese government with an invidious choice between responding to (perceived and/or real) security threats with veto power and earning China’s ire or keeping Beijing on side but inviting (perceived and/or real) security threats and risking domestic political blowback. The Confucius Institutes decision seems to have threaded the needle of pursuing Canberra’s broad security objectives, while also keeping relations with Beijing on an even keel. To my mind, it makes sense that the Albanese government would be looking to pull off something similar on Darwin Port. As always, I could be (very) wrong. But looking at it from a broad national interest perspective, the prospect of both subjecting Landbridge Group to more scrutiny and not aggrieving Beijing might look particularly appealing. TBD.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 30 January to 12 February 2023

Relationship repair continues

China’s Minister for Commerce, Wang Wentao, making opening remarks during his video call on 6 February with Australia’s Minister for Trade and Tourism, Don Farrell:

“Like you have just said, I’m also looking forward to meeting with you in person at the earliest time. I am also very happy to extend an invitation to you to visit China at a time convenient to you. And I believe that your next trip to China will give you a different impression.”

Quick take:

The warm tone of the publicly released portions of the Farrell-Wang meeting was followed by a series of promising trade signals. Per comments from Minister Farrell to the media on 12 February, there are concrete indicators that coal, rock lobsters, and timber products that were previously blocked from the Chinese market are poised to re-enter. Minister Farrell even said that Australian wine producers “might be expecting some orders in the near future,” notwithstanding China’s anti-dumping and countervailing duties. Then a day later, industry sources and press reporting suggested that trade restrictions on beef would be lifted as well. This doesn’t mean that all the previously restricted Australian exports will necessarily get back into the Chinese market, much less at the same volume and value as before. But it does again point to a progressive unwinding of many (if not all) of China’s trade restrictions in the coming months.

The Farrell-Wang meeting is also yet another indicator that high-level diplomatic ties are in the process of normalising. (I say process because a few ministerial meetings don’t a diplomatic normalisation make.) Unsurprisingly, Minister Farrell has accepted Minister Wang’s invitation to visit Beijing in the “near future,” and both ministers agreed to “enhance dialogue at all levels, including between officials.” Minister Farrell’s impending in-person meeting with Minister Wang will be the twelfth meeting at the ministerial-level or above since the Albanese government came to power in May 2022 and the first time an Australian trade minister has visited China since Senator Simon Birmingham’s Shanghai trip in November 2019.

Despite all these indicators of ongoing relationship repair on both the diplomatic and trade fronts, the Chinese government is still sending out some concerned signals. Following the news that surveillance equipment and intercoms manufactured by Chinese companies would be removed from a range of Australian government buildings, the Ministry of Foreign Affairs (MFA) reiterated the Chinese government’s concerns about Australia remaining welcoming towards Chinese companies. On 9 February, MFA Spokesperson Mao Ning said: “We hope the Australian side will provide a fair, just and non-discriminatory environment for the normal operation of Chinese companies and do more things that could contribute to mutual trust and cooperation between our two countries.” These talking points were then republished on the website of the Chinese Embassy in Canberra, suggesting that it’s a message Beijing is especially keen for Canberra to hear.

Given the baseline of MFA invective about Australia these past few years, these words were pretty measured. But as I’ve pointed out previously (e.g., here), it is noteworthy that concerns about the environment for Chinese businesses in Australia are still openly raised despite China dramatically dialling down its public criticisms of Australia overall. These concerns are especially conspicuous given that they also featured in the Chinese government’s readout of the Farrell-Wang meeting (available in English and Chinese). Despite the meeting’s generally soft tone, there was at least one pointed message: “China is highly concerned about Australia’s tightened security review of Chinese companies’ investment and operations in Australia and hopes it will properly handle related cases and provide Chinese firms with a fair, open and non-discriminatory business environment.”

The impact on bilateral ties of China’s enduring concerns about the environment in Australia for Chinese businesses remains unclear. But at the very least, it seems that Beijing will be scrutinising intently any cases where it looks like the Albanese government might be edging towards rejecting a large Chinese investment or substantially curtailing the activities of Chinese businesses. Perhaps such a development would be enough to stall or even reverse incremental relationship repair. Meanwhile, it’s hard to imagine that Prime Minister Albanese and his ministers won’t be weighing the possible impact on bilateral ties when mulling over whether to reject Chinese investments or restrict the operations of Chinese businesses. These kinds of decisions may yet prove to be the pointiest bilateral developments of 2023.

Is it possible that concerned messaging about the environment in Australia for Chinese businesses mostly relates to the recent story of the removal of Chinese-manufactured equipment from a range of Australian government buildings? Perhaps. But I suspect Beijing’s concerns are broader. For one thing, these concerns were raised long before this most recent case, including in the wake of the leader-level meetings in November last year. And China has for years strongly objected to the treatment of Chinese investments. Moreover, the decision to remove Chinese-manufactured surveillance equipment and intercoms was limited to a relatively small number of government buildings (at least small in the context of the Australian market overall). My impression is that China is much less concerned about targeted restrictions like that or, for example, not allowing TikTok on government phones. Instead, I suspect that Beijing is much more worried about decisions like knocking back a substantial Chinese investment or excluding Chinese companies from the consumer market more broadly. Given the ban on TikTok in India, a possible ejection from the US market, and murmurings along those lines in some quarters in Australia, China is likely to be concerned about much more dramatic and far-reaching developments than the removal of some Chinese-manufactured surveillance equipment and intercoms from government buildings.

Is Albanese off to Beijing in October?

Prime Minister Anthony Albanese speaking to the Guardian Australia’s Katherine Murphy on 4 February:

Murphy: … Will you either go to Washington or Beijing this year, do you think?

Albanese: I fully expect to. Well, I will be going to the United States this year.

Murphy: Interesting, okay. And Beijing?

Albanese: I don’t have a scheduled meeting there.

Quick take:

Assuming the progressive dismantling of China’s trade restrictions continues, one of the major milestones of relationship repair to follow (though not necessarily the first one) would be a leader-level meeting in either Canberra or Beijing. With Prime Minister Albanese having met Premier Li Keqiang and President Xi Jinping on the sidelines of multilateral meetings in November last year, questions are now being asked about the prospects of such a full-blown bilateral visit. Given Prime Minister Albanese’s much more regular international travel and the relative historical rarity Chinese leaders visiting Australia (by my count, it’s only happened twice in the last 15 years), it seems that a bilateral visit is much more likely to involve Prime Minister Albanese going Beijing. I’m certainly not the first to flag this timeline, but I wouldn’t at all be surprised if Prime Minister Albanese heads to Beijing in October/November this year.

Although these factors are hardly definitive, together they make an October/November visit to Beijing appealing for both the Australian and Chinese governments:

1. As with Minister for Foreign Affairs Penny Wong’s visit to Beijing in December 2022 to (among many other agenda items) mark 50 years since the establishment of official ties between Australia and the People’s Republic of China (PRC), an October/November visit would be heavy with symbolism. It would coincide with the 50^th anniversary of Prime Minister Gough Whitlam’s trip to Beijing and the first ever trip to the PRC by an Australian Prime Minister. (For those interested in historical vignettes, Prime Minister Whitlam wasn’t the first Australian leader to visit China, depending on how one interprets that contested name. I only recently came across these fascinating records [here and here] of Prime Minister Harold Holt’s visit to Taiwan in 1967.) Historical factoids aside, the anniversary of the first prime ministerial visit to the PRC is an important milestone in the history of Australian foreign policy irrespective of one’s political orientation. But it’s presumably especially significant for the Albanese government given Prime Minister Whitlam’s elevated status in the pantheon of Australian Labor leaders. So, in the wake of speeches and statements lionising Prime Minister Whitlam’s “bold decision” to establish official ties between Australia and the PRC, it’d be unsurprising if Prime Minister Albanese wanted to claim the mantle of “Gough’s legacy” with a trip to Beijing.
2. Beyond the formal anniversary, Prime Minister Whitlam’s foreign policy legacy also appears to have a deeper resonance for the Albanese government. Although the specifics are obviously vastly different, the broad contours of the Albanese government’s diplomatic positioning have echoes of Whitlam. Prime Minister Albanese, like Whitlam, has sought to prioritise regional engagement and closer ties with Australia’s partners in the Pacific and Asia. Of course, this parallel can only be pushed so far given colossal datapoints like the Albanese government’s embrace of AUKUS (certainly not something that recalls Whitlamesque foreign policy). But I was nevertheless recently struck by the similarities between some of the sentiments expressed by Whitlam while in Beijing in 1973 and Albanese government ministers today: “Australia is moving in a new direction, in its relationships with the world and specifically with the region in which Australia inevitably belongs.” Those much better versed in the history of Labor foreign policy can school me on this, but I don’t think I’m mistaken in sensing a concerted Albanese government effort to draw parallels between their efforts today and elements of Prime Minister Whitlam’s foreign policy posture. Following Prime Minister Whitlam’s footsteps exactly 50 years later would likely help Prime Minister Albanese advance that agenda.
3. Beyond historical legacies, a visit to Beijing would also likely serve the Albanese government’s retail political priorities. Per recent partisan politicking about Australia-China ties, Prime Minister Albanese seems invested in relationship repair as one of the signature achievements of his first term. He has criticised the previous Coalition government for the breakdown of communication with China and explicitly presented himself as the leader who was able to reengage with Beijing. To be sure, Prime Minister Albanese has been exceedingly loose with the historical record in claiming that the previous “government … chose to not have a single conversation with China” and that there was “no talk” between Canberra and Beijing in the last term of government (e.g., here and here). These falsehoods aside, few moves would more powerfully play into Prime Minister Albanese’s narrative of being the leader who repaired the Australia-China relationship than being the first Australian prime minister to visit China since Malcolm Turnbull made the trip in 2016.
4. Assuming that relationship repair hasn’t been derailed by a dramatic uptick in tensions between Canberra and Beijing, the Chinese government is also likely to welcome a visit by Prime Minister Albanese in October/November. Per the (I think) pointed detail in Minister for Foreign Affairs Wong’s press release about the December 2022 visit, the meeting occurred “at the invitation of” China, suggesting that Beijing did the asking. And the Chinese government certainly feted the trip and the 50^th anniversary of official relations with what looked like a hefty dose of pomp and circumstance. I wouldn’t be surprised if the Chinese government also wanted to mark the 50^th anniversary of Prime Minister Whitlam’s visit with some pageantry. And what better way to do that than with a visit by Prime Minister Albanese himself?

Of course, none of this means that a prime ministerial visit to Beijing will necessarily take place in October/November. If bilateral ties continue on their upward trajectory, Prime Minister Albanese might be packing his bags for Beijing in just a couple of months once General Secretary Xi locks in another five years as president. Or he might never make the trip if the relationship tanks again thanks to any number of permutations. Maybe news will break that the Foreign Investment Review Board has rejected a large Chinese investment just as a People’s Liberation Army Air Force J-16 accidentally collides with an Australian P-8 in the South China Sea? Still, leaving aside severe turbulence in the Australia-China relationship, a range of factors make an October/November trip to Beijing plausible. Perhaps even with Western Australian rock lobsters on the banquet menu and toasts with a Barossa shiraz. OK, maybe I’ve now transitioned from the plausibly speculative to the purely fanciful.

The possible policy implications of relationship repair and a Beijing visit

Prime Minister Albanese speaking to journalists on 11 January:

“No one can argue that the the [sic] mood in the relationship has not been enhanced substantially since I’ve been Prime Minister. I’ve been busy making sure that that occurs.”

Quick take:

Assuming that the above analysis/speculation is roughly right (as ever, no guarantees), what might be the policy implications of ongoing relationship repair and a Beijing visit? One possibility is that the prospect of ever-improving ties and a trip to Beijing will make it more likely that the Albanese government will hold back from making tough China policy decisions. Given China’s track record of punishing Australia with diplomatic freezes and trade restrictions in response to actions that Beijing judges are adversarial to its interests, Canberra may make the tactical choice of stalling or not taking decisions that are liable to upset the Chinese government.

This might mean slow rolling the review of the 99-year lease of Darwin Port to the Chinese company Landbridge Group or finding that the lease can remain, despite Prime Minister Albanese’s previously strong opposition. It might mean holding off on sanctions against Chinese officials implicated in severe human rights abuses in Xinjiang, despite Minister for Foreign Affairs Wong’s cautious support for such sanctions in the past. Or it might mean delaying decisions on contentious foreign investments from Chinese companies. (Addendum: The Albanese government’s provisional decision on 14 February to not veto Confucius Institutes and instead place them under ongoing review seems to fit this pattern of calibrating China policy decisions to maintain a relatively strong security posture while also, crucially, seeking to not aggravate Beijing.)

This is an admittedly more speculative point, but it’s also entirely possible that the prospect of these kinds of more cautious choices from Canberra was part of Beijing’s calculus when it decided to pursue relationship repair. The Chinese government may have understood that reengaging with Australia at the political level and progressively removing trade restrictions would encourage the Australian government to not take what China considers to be adversarial positions. In addition to the economic and other grounds that China might have had for progressively normalising ties with Australia, Beijing may have also assessed that bilateral relationship repair would reduce Canberra’s appetite for risk on policy questions deemed highly sensitive by the Chinese government, including its human rights record and the Australian investment environment for Chinese businesses. In other words, by turning the diplomatic and trade taps back on, Beijing may have sought to incentivise Canberra to take China policy decisions more conducive to the Chinese government’s interests.

Of course, the prospect of a progressive normalisation of high-level diplomatic ties and the removal of trade restrictions doesn’t necessarily mean that the Australian government will avoid tough China policy decisions in 2023. And if my analysis last edition is broadly correct, then Australia might actually have much more leeway to take hard-edged China policy decisions. With China inviting Australian minsters to visit and unilaterally dismantling trade restrictions (seemingly) without winning any concessions from Canberra, Beijing looks especially eager to repair the relationship. So much so that perhaps Australia could actually push the envelope on tough China policy decisions without jeopardising relationship repair. Maybe China is so keen to repair the Australia-China relationship that it wouldn’t once again freeze out Australian ministers and exports even if Canberra, for example, imposed targeted sanctions on Chinese officials implicated in severe human rights abuses in Xinjiang?

Yet one could just as easily draw the opposite conclusion. Sure, Beijing appears to want relationship repair without Australia having reversed course on its past decisions. But that doesn’t necessarily mean that China would be willing to continue down the path of improving ties irrespective of what Australia does now. Perhaps China can live with the Australian bipartisan consensus on what it considers to be a range of past adversarial decisions. But that’s not the same as being willing to let relationship repair continue apace if Canberra takes tough China policy decisions in the future. Moreover, it’s entirely possible that Beijing is allowing relationship repair to occur now because Canberra has already held off on some tough China policy decisions. There’s no evidence (at least that I’m aware of) to suggest an explicit quid pro quo between Canberra and Beijing whereby the Australian government doesn’t take tough China policy decisions in exchange for relationship repair. But with Canberra, for example, deciding to not impose targeted sanctions (at least for now), Beijing probably likes what it sees and therefore may feel vindicated in its decision to repair the relationship.

So, what are we likely to see from Australia’s China policy in the coming months? Will Canberra hold back on tough China policy decisions for fear of upsetting Beijing and jeopardising relationship repair and a mooted China visit? Or does Beijing’s apparent keenness to progressively normalise ties without winning any policy reversals from Canberra suggest that the Australian government will be able to simultaneously take tough China policy decisions while rehabilitating both diplomatic and trade ties and scoring a leader-level invitation? For now, I can’t confidently bet either way. But if I was pressed, I’d say that Prime Minister Albanese’s political investment in relationship repair points to an aversion to tough China policy decisions from Canberra for most of 2023.

Addendum: Fear of upsetting the Chinese government and thereby jeopardising relationship repair and a potential invitation to Beijing are, of course, not the only reasons that Canberra might avoid tough China policy decisions. For example, the decision to not veto Confucius Institutes could well have been driven as much by concerns about the potential overreach of government power (and other considerations) as the likely negative reaction from China. Similarly, the Albanese government might have so far not sanctioned Chinese officials primarily because of doubts about the ability of such tools to improve human rights conditions on the ground. Regardless of these and other factors at play, Beijing’s track record of punishing Australia for perceived infractions means that Australian officials and ministers are presumably also considering potential retribution from the Chinese government when deciding whether to pull the trigger on tough China policy decisions.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Weeks of 11 December 2022 to 29 January 2023

Welcomed back to BCB for 2023!

After an extended break for the Australian summer, BCB is returning to its regular fortnightly programming. The format and schedule will likely remain largely the same this year. But given recent shifts in China’s approach to Australia (and perhaps some of its other key foreign relations), BCB will probably be more focussed in 2023 on unpicking what’s motivating developments in China’s statecraft. Though, rest assured, there’ll still be regular doses of speculation about politics in Canberra and unsolicited policy advice for the Australian government.

In this first edition for 2023, I won’t try and canvass the granular details of each and every development in Australia-China relations from the last two months. Instead, what follows is an effort to unpick what might have prompted recent shifts in China’s approach to Australia. What caused China to ease its campaign of diplomatic and trade coercion? What role (if any) did the Albanese government’s shift in tone on China play? And what explains China’s public downplaying of its expectations of Australia?

Enjoy! And, as ever, hate mail and encouragement are equally welcome.

Beijing’s about-face

China’s Ambassador to Australia, Xiao Qian, speaking at a media reception on 10 January:

“2022 was an extraordinary year for China-Australia relations. Thanks to the efforts from both sides, China-Australia relations have gone through difficulties and regained positive momentum.”

Quick take:

The last two months have seen a rapid (though certainly not complete) recovery in the Australia-China relationship. In December 2022, Canberra and Beijing agreed to what effectively amounts to the planned (though, of course, not yet fully realised) reopening of a wide range of previously closed high-level diplomatic channels. Per the readout from the foreign ministerial meeting in Beijing on 21 December, the “two sides agreed to maintain high-level engagement, and to commence or restart dialogue in areas including: bilateral relations, trade and economic issues, consular affairs, climate change, defence, and regional and international issues.” The only conspicuous absences from this list were the Annual Leaders’ Meeting and the Australia-China Human Rights Dialogue. And there are signs that both of those mechanisms could be revitalised in 2023 per recent press reporting and Prime Minister Anthony Albanese’s mooted visit to Beijing later this year.

Meanwhile, this month has seen a flurry of indicators that China’s trade restrictions against a range of Australian exports could be dismantled in the coming months. Commercial (e.g., here and here) and political signals suggest that at least some Australian coal and lobsters will be moving into China again. Meanwhile, Minister for Trade and Tourism, Don Farrell, continues to emphasise that on barley and wine, Australia “would much prefer to sort out our disagreements with China through discussion and not having to take this arbitration through the World Trade Organization.” Ambassador Xiao has reportedly said such a move would be a “good idea” and that talks to that effect are underway between Australian and Chinese officials.

Minister Farrell also stressed in December last year that the “signs are good … [t]he signs are very positive” that these and other trade blockages can be dismantled. In the latest in a series of high-level Australia-China meetings and calls since June 2022 (at least ten at the ministerial level and above by my count), Minister Farrell is slated to connect next week via video link with China’s Commerce Minister Wang Wentao. Given the array of substantive policy disagreements that still beset bilateral ties, the relationship is likely to remain fractious for the foreseeable future. But at the very least, it appears that we are in the early stages of diplomatic contact resuming its regular rhythm and we’ll potentially even see some trade restrictions falling away.

The speed at which China has been willing to restart diplomatic dialogue with Australia and publicly signal the easing of trade restrictions is on its own striking. But it’s especially conspicuous considering that it was only a few months ago that Beijing was issuing lists of expectations that apparently needed to be met before bilateral relations would get “back on the right track.” The rapidity of Beijing’s backflip is made all the more startling considering that the Albanese government hasn’t reversed any of its predecessor’s policies, which so deeply aggravated China. (Though, to be fair, there’s reason to suspect that Canberra has compromised in Beijing’s favour by holding off on targeted sanctions against Chinese officials implicated in severe human rights abuses in Xinjiang.)

All of this makes the last two months of Australia-China relations as confusing as they are warm. Canberra hasn’t reversed China policy positions that Beijing apparently previously saw as a prerequisite for relationship repair. Yet diplomatic ties are on the road to normalisation and there are signs that trade relations could follow a similar trajectory (though this is far from guaranteed). This begs an obvious question: How do we explain this significant course correction in China’s approach to Australia?

Tone matters (but maybe not in the way one would imagine)

Prime Minister Albanese responding to a question from a journalist on 23 December 2022:

“We’ll continue to engage diplomatically, without a loudhailer.”

Quick take:

The simplest and neatest explanation for China’s willingness to start repairing the relationship might simply be that the Albanese government’s changed tone was enough to appeal to the Chinese government’s diplomatic sensitivities and persuade Beijing that Canberra was now a partner with which it could reliably reengage. As I’ve previously suggested, elements of the Albanese government’s changed messaging on China likely appealed to Beijing. But I’m not convinced that Canberra’s changed tone prompted the current relationship repair. To be sure, these two developments (i.e., Canberra’s changed tone and the relationship repair) are pretty neatly correlated. But that’s not necessarily reason to imagine that they’re causally connected.

Although the Albanese government has consciously and consistently sought to “act diplomatically” and engage with China in a “respectful way,” the last two months are still puzzling to my mind. For one thing, Canberra’s changed tone can’t obviously explain why as late as September 2022 (well after the Albanese government started using softer language to talk about China), Beijing was still issuing substantial lists of expectations. Of course, it’s possible that Beijing was waiting for Canberra’s less adversarial rhetoric to become an established pattern before deciding to normalise diplomatic ties and start talking about removing trade restrictions. But if the Albanese government’s softer China language had such a big impact on the Chinese government’s approach to Australia, it still seems odd that Beijing would be issuing long lists of expectations in September 2022 after Canberra had been going (at least relatively speaking) softly-softly on China rhetoric for months.

On top of that, the Albanese government’s softer China messaging has been neither consistent nor that far-reaching. After seemingly deciding to drop the emotive term “economic coercion” shortly after the May 2022 federal election, the term was subsequently revived by Albanese government ministers from September 2022 onwards. Similarly, while the Albanese government has stopped making comparisons between China today and Nazi Germany in the 1930s, Minister for Defence Richard Marles regularly makes his own critical World War II comparison by couching concerns about China’s military build-up in terms of it being unprecedented in the post-war era. Moreover, other ministers have used language that would likely rankle Beijing. For example, Minister Farrell offered this invidious comparison between Australia and China on 18 January: “I mean we have different political systems; they’re an autocracy, we’re a democracy.” Regardless of whether one thinks this is a fair assessment, it is starkly at odds with how the Chinese Communist Party thinks about its own system of government. Although the arrival of the Albanese government ushered in a change in tone on China, the break with the Morrison government’s rhetoric isn’t as great as one might expect.

Most importantly though, the idea that the Albanese government’s changed tone on China prompted relationship repair is hard to square with Beijing issuing diplomatic overtures as early as December 2021. China’s positive messaging towards Australia began subtly at the end of 2021 but quickly became much louder and more conspicuous with the arrival of the new Chinese ambassador in January 2022. This sunnier signalling began during the Morrison government’s tenure and preceded the Albanese government’s tonal shift on China by nearly six months. If the Albanese government’s changed tone on China was such an important factor in shaping Beijing’s approach to Australia, then why did the Chinese government start taking a noticeably gentler tone on Canberra almost half a year before Labor won the 2022 federal election? (Of course, it’s possible that Beijing was confident that Labor would win the election and that the Chinese government was laying the groundwork for relationship repair under a new Labor government with its diplomatic overtures starting in December 2021. Although that hypothesis is worth considering, this line of thinking takes us into pretty speculative territory that we probably can’t easily traverse here in the open source.) In short, the idea that Canberra’s softer China messaging prompted relationship repair sits oddly with Beijing’s repeated and public expression of expectations in mid-2022, the Albanese government’s overall modest shift in tone, and the timing of the Chinese government’s original diplomatic overtures to Australia.

Does this mean that the Albanese government’s disciplined and cautious messaging on China has been unimportant in the tentative rehabilitation of the Australia-China relationship? In a word, no. Rather than being the development that caused China to shift its approach to Australia, my working assessment is that Canberra’s changed tone made it more politically and diplomatically tenable for Beijing to pursue its desired relationship repair with Australia. In other words, the Albanese government’s softer rhetoric on China may have provided part of the political and diplomatic cover that Beijing wanted to justify its planned easing of diplomatic and trade restrictions.

Given Beijing’s diplomatic overtures from December 2021 onwards, it’s reasonable to speculate that China wanted to rehabilitate ties with Australia long before the May 2022 federal election. But Beijing might have equally judged that it couldn’t allow the relationship to repair without getting something in return from Canberra. With the Albanese government rallying around the policy positions of its predecessor, Beijing realised that it wouldn’t be able to extract substantive policy concessions from Canberra regardless of who won the 2022 federal election. So, to pursue relationship repair, Beijing needed to look for other less tangible wins. Enter the Albanese government’s disciplined and cautious messaging on China. Or, in the words of Minister Farrell, the Albanese government’s concerted effort to have “a much more responsible relationship with China.” Combined with the political demise of Beijing’s bitter sparring partners in the Morrison government at the May election and the positive symbolism of the 50^th anniversary of the establishment of diplomatic relations between China and Australia, Beijing had the grounds it needed to start thawing its diplomatic and trade freezes.

If correct (as always, a big if), the above account doesn’t mean that the Albanese government’s disciplined and cautious messaging on China had no influence on the development of Australia-China relations in the last eight months. But it does mean that Canberra’s changed tone probably didn’t prompt China’s decisions to ease its campaigns of diplomatic and trade punishment. Rather, the Albanese government’s China messaging might have made it more diplomatically and politically palatable for Beijing to pursue its preferred policy of restarting diplomatic and trade ties. Drawing solely on the open-source record, we may never know what really motivated Beijing to change its approach to Canberra. But this issue can’t be ignored given its implications for both our understanding of China’s statecraft under President Xi Jinping and how Australia and other countries should manage China’s future campaigns of diplomatic and trade denial.

Explaining away China’s expectations of Australia

China’s Consul-General in Sydney, Zhou Limin, speaking in December 2022 about the 50^th anniversary of the establishment of diplomatic relations between China and Australia:

“China is ready to work with Australia to translate the leaders’ consensus into concrete actions to promote the bilateral relations and create favourable conditions and atmosphere for their sustained, sound, and steady growth.”

Quick take:

But what of China’s list of expectations? If at the end of 2021 Beijing was already aiming to pursue relationship repair, then why did China repeatedly issue lists of expectations to the Albanese government in mid-2022? Among other pithier expressions, these expectations were enumerated in July, August, and September 2022. The public non-expression of these expectations in recent months is made all the more noticeable by recent Chinese government messaging. Lists of expectations have been replaced with nothing less than a list of reasons for being bullish on the future of Australia-China relations, as well as positive statements about all the complementarities between Australia and China (e.g., here, here, here, here, here, and here). One possibility for why these expectations are no longer publicly expressed is that Beijing was previously just taking a punt that the Albanese government might actually reverse elements of Australia’s China policies in a bid to repair ties. And when Beijing realised that this wasn’t going to happen, it pivoted and dropped its public expression of expectations and continued with its planned relationship repair regardless.

Another explanation might come from the vague nature of Beijing’s expectations. Although China publicly articulated a list of first four and then five expectations, they were never precisely detailed. They were typically vague: along the lines of creating “a favourable atmosphere” and consolidating “collaborative relations of mutual benefit.” Perhaps Beijing purposely kept its expectations of Canberra ambiguous so as to allow for precisely the kind of scenario in which Australia didn’t reverse its China policies, but Beijing still wanted to repair the relationship? In other words, China foresaw that Australia might not bow to pressure and so kept its expectations unspecified so that Beijing wouldn’t be boxed into waiting for Canberra to reverse specific policies before relationship repair could begin.

As I’ve previously written, the recent non-expression of these expectations publicly doesn’t mean that they’ve disappeared. Beijing may yet revive them depending on how Australia-China relations develop. Indeed, recent hopes vis-à-vis Australia’s “business environment for Chinese enterprises” and Canberra adhering to a “correct understanding” of China suggest that the Chinese government’s expectations may not have been abandoned entirely. But the typically vague manner in which they were articulated in 2022 has at least allowed Beijing to let them fall mostly by the wayside (for now) and continue relationship repair despite Canberra not having reversed any of the policy positions that so frustrated the Chinese government.

The above certainly isn’t the only plausible account of Beijing’s shifting approach to Australia and the role of Canberra’s changed tone in recent developments in bilateral ties. But it’s my attempt to tentatively (and hopefully in a not totally unpersuasive way) knit together a number of incongruous datapoints. Everything I’ve suggested here is based purely on open-source material. For any readers who might have other sources of information, please feel free to tell me how wrong I am, preferably with a wink and a nudge. As usual, I’d welcome any suggestions of evidence that doesn’t fit with the story I’ve told or counterarguments to what I’ve written.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 28 November to 11 December 2022

Did Canberra compromise on targeted sanctions?

Minister for Foreign Affairs Penny Wong writing in The Sydney Morning Herald on 10 December:

“Australia has consistently condemned human rights violations against Uyghurs and other ethnic minorities in Xinjiang and across China. We will continue to advocate in multilateral institutions – at the UN Human Rights Council, at the International Labour Organisation, at the UN General Assembly. And we will continue to advocate directly with China, at the highest levels. Restarting high-level dialogue with China does not mean our differences will disappear. It does mean we have the opportunity to speak directly and candidly about the issues that are important to our values and interests.”

Quick take:

Minister Wong’s op-ed doesn’t mean that Canberra has definitively decided to not impose targeted sanctions on Chinese officials implicated in systematic and severe human rights abuses in Xinjiang. But the announcement of new targeted sanctions against a number of Iranians and Russians puts into stark relief the absence of such sanctions against Chinese officials. This contrast is all the more conspicuous considering that the announcement came just after the first anniversary of Australia’s Magnitsky powers. Indeed, the subtext of the Minister’s messaging seems to be that Canberra will hold off sanctioning Chinese officials (for now, at least) so as to take advantage of reopened lines of high-level communication to press Australian interests, including its human rights priorities.

Even if one strongly supports the moral principle of punishing those responsible for egregious human rights abuses, the Albanese government’s apparent decision to hold off on targeted sanctions against China is understandable. Pulling the trigger on targeted sanctions would entail significant risks for Australia and Australians. These include, among others, risks that:

• China calls off the recently resuscitated ministerial- and leader-level contact between Beijing and Canberra;
• China prolongs and perhaps even expands its trade restrictions against Australian exporters;
• China fires back with counter-sanctions against Australian individuals and organisations;
• China retaliates by arbitrarily detaining Australians in China or lengthening the detainment of Australians already held by Chinese authorities, including Cheng Lei and Yang Hengjun; and
• China takes retributive measures against Uyghur Australians, either through stepped up interference efforts in Australia or more pressure on their family members still in China.

Although the Albanese government hasn’t publicly offered any indications to this effect (at least that I’ve seen), it’s entirely possible that some of these threats have been delivered privately by Chinese government officials. Added to these (and possibly other) risks associated with imposing targeted sanctions, Canberra’s decision was probably also shaped by the uncertain practical payoff from such sanctions. Australian sanctions seem unlikely to change China’s repressive policies towards Uyghurs, especially considering that the targeted individuals are presumably already unlikely to travel to or have significant financial exposure in Australia. Meanwhile, at least some of the individuals that Canberra likely would have sanctioned (who’ve previously been sanctioned by a range of likeminded countries) have moved to other jobs outside Xinjiang. (That said, a number of the individuals who’ve been sanctioned by other countries and who’ve been implicated in what “may constitute … crimes against humanity” are still overseeing policies in Xinjiang.) Of course, these pragmatic considerations in no way detract from the powerful in-principle moral case for such sanctions or the potent message they’d send about Australia’s prioritisation of human rights. But Canberra likely couldn’t ignore the aforementioned practical matters either.

The above notwithstanding, the sanctions decision undermines the credibility of the Albanese government’s “never compromise” approach to China, as the Prime Minster himself has put it. Or, as Minister for Defence Richard Marles described the approach: “We are working to stabilise our relationship with China, without compromising our interests or sovereignty.” (Emphasis added.) Regardless of the rights and wrongs of the decision itself, it’s hard not to see the withholding of sanctions as a concession to Beijing’s concerns. To be clear, in making this claim, I’m not necessarily endorsing the view that Australia’s China policy should revolve around a strict “never compromise” standard. There’s a strong argument to be made that diplomacy and foreign policy often involve compromise and that statecraft is not the right arena in which to adhere to rigid rules and pursue moral purity. Irrespective, having set for itself a “never compromise” standard, the Albanese government’s apparent willingness to forgo sanctions to keep dialogue open with China is hard to reconcile with its own guiding principle.

To be fair, the non-imposition of targeted sanctions doesn’t amount to rolling back existing policy to please China (i.e., these sanctions have never been imposed against Chinese officials). And it’s worth remembering that just as the Albanese government hasn’t imposed targeted sanctions in the six-ish months that it’s been in power, the previous Morrison government didn’t impose such sanctions after the legislation of Australia’s Magnitsky powers in December 2021. Still, the Albanese government’s decision to not impose sanctions does look all the more like a concession considering past messaging on the issue. In an April 2021 address to the Tasmanian branch of the Australian Institute of International Affairs, Minister Wong said: “The Morrison Government should also consider targeted sanctions on foreign companies, officials and other entities known to be directly profiting from Uyghur forced labour and other human rights abuses.” In a bitter twist of irony, Minister Wong in that address criticised the Morrison government’s “slowness to act” on Magnitsky sanctions, a point not lost on Shadow Minister for Foreign Affairs, Simon Birmingham (e.g., here and here).

None of this is to say that the Albanese government has necessarily made the wrong call by not imposing targeted sanctions on Chinese officials. (For the record, I support such sanctions while accepting that imposing them is a morally fraught calculation.) But longer-term, I can’t see how the Albanese government’s “never compromise” China policy can survive a refusal to impose targeted sanctions. The Albanese government confronts a choice: Either it persists with a “never compromise” China policy and imposes targeted sanctions on Chinese officials or it avoids such sanctions and embraces a China policy of perhaps rare but nonetheless very real compromises. As I read things, the Albanese government can’t have its cake and eat it too when it comes to this clash between the imperatives of statecraft and fundamental moral principles. Am I being too gloomy?

AUSMIN, Taiwan, and the status quo problem

The Joint Statement on Australia-U.S. Ministerial Consultations (AUSMIN) 2022 issued on 7 December:

“The principals reiterated Taiwan’s role as a leading democracy in the Indo-Pacific region, an important regional economy, and a key contributor to critical supply chains. They also reaffirmed their commitment to maintaining peace and stability across the Taiwan Strait and shared opposition to unilateral changes to the status quo. They further committed to working together to support Taiwan’s meaningful participation in international organizations and enhancing economic, social, and people-to-people ties with Taiwan, and affirmed that they would continue working with Taiwan to enhance development coordination in the Pacific.”

Quick take:

Compared to the language on Taiwan in 2021, this year’s AUSMIN was a mixed bag. Elements of the paragraph seemed to have been finessed to reassure China, while others seemed to tone down the rhetorical support for Taiwan. Still other parts seemed to signal slightly stronger advocacy for Taipei. On the apparently positive side of the ledger from Taiwan’s point of view, the 2022 AUSMIN dropped the caveat from 2021 that “support for Taiwan’s meaningful participation in international organizations” applied for Taiwan “as a member where statehood is not a prerequisite and as an observer or guest where statehood is a prerequisite for membership”. (The 2020 AUSMIN also had a similar, though less precise, caveat.) The 2022 AUSMIN instead offered seemingly unqualified support for Taiwan’s role in international organisations.

Although this looks like less hedged support, I’m not convinced it signals a stronger position on Taiwan. Whether the 2021 caveat is explicit or not, it seems highly unlikely that Australia will do anything inconsistent with it (e.g., start advocating for Taiwan’s membership of international organisations for which statehood is a prerequisite). This would seem to apply to the United States as well, though I’m much less confident on that front given the evolution of US Taiwan policy and the possible injection of cross-Strait issues into the heated rhetoric of the 2024 US presidential race. Regardless, it still seems to me that dropping the longwinded caveat in AUSMIN 2022 is more likely an exercise in cutting cumbersome verbiage than strengthening support for Taiwan. Especially considering that abandoning in practice the previously included caveat would likely be inconsistent with the respective Australian and US one-China policies as they currently stand.

Regarding the reassurance offered to China, “intent to strengthen ties with Taiwan” from 2021 is replaced with being “committed to … enhancing economic, social, and people-to-people ties with Taiwan” in the 2022 version. Lack of specifics in the 2021 language on the substance of “ties” could have easily been (mis)interpreted by China as erosion of the respective Australian and US one-China policies. The 2022 language makes plain that the enhancing of ties with Taiwan is unofficial in nature and so consistent with their respective one-China policies. Beyond offering an extra reassurance to China, the 2022 AUSMIN also uses softer language to signal support for Taiwan. Although Taiwan is still referred to as a “leading democracy,” the description of Taiwan as a “critical partner” in 2021 has been dropped. To be sure, 2022 (unlike 2021) refers to Taiwan as “an important regional economy, and key contributor to critical supply chains.” But this detail about the importance of the Taiwanese economy doesn’t, at least as I read it, signal the same level of emphasis on ties with Taiwan as the designation of “critical partner”.

Am I overanalysing these linguistic shifts between 2021 and this year? As always, very possibly. And it’s especially important to inject caution into the above analysis given that AUSMIN language is declarative policy and not necessarily indicative of what Canberra and Washington are doing on the ground in Taipei or in the Taiwan Strait. Still, given the change in government in Canberra and the much more positive atmosphere for Australia-China ties, it’s easy to imagine that these rhetorical changes aren’t just a product of happenstance and do in fact signal a shift in thinking of some sort (though the precise contours of this shift, if any, remain unclear). Regardless of the Australian/US intent or lack thereof behind these shifting words, both China and Taiwan presumably noticed these changes. And based on what one hears regularly from Chinese and Taiwanese officials, it stands to reason that Taipei would have seen these changes as net negatives, while Beijing would have taken some solace from the slightly softening Australian and US language on Taiwan.

But beyond these rhetorical tweaks, perhaps the most consequential element of the 2022 AUSMIN language on Taiwan relates to what might prima facie seem like one of the most unremarkable parts of the paragraph. Consistent with a slew of other Australian and US government messages, AUSMIN 2022 reaffirmed “shared opposition to unilateral changes to the status quo.” As I’ve argued previously, support for the status is shaping up as one of the core elements of the Albanese government’s Taiwan policy. It’s a position that ministers regularly reiterate and which the Prime Minister himself emphasised in response to a question on 3 December in relation to the bipartisan Australian parliamentary visit to Taiwan.

On one level, support for the status quo is a convenient shorthand for Australia, the United States, and other likemindeds. It allows them to express their opposition to China’s escalation, including economic coercion, military intimidation, and international isolation efforts. It also sends a signal to Taipei that it shouldn’t seek to change the status quo by declaring de jure independence. But as I’ve suggested previously, the problem with the status quo is that it’s inherently rubbery. The status quo is constantly changing because of actions and developments on all sides. China is changing the status quo via a wide range of grey zone tactics, while shifting public opinion in Taiwan is also arguably an organic evolution of the status quo. At the same time, the United States and its allies and partners are changing the status quo through their more active diplomacy in aide of Taiwan, among other measures.

As a result of the dynamism of the status quo, support for it might not send strong signals of either deterrence or reassurance to either Beijing or Taipei. As China shifts the cross-Strait military, diplomatic, and economic environment in its favour, status quo language could plausibly be interpretated as support for circumstances that are by many metrics increasingly advantageous for Beijing, thereby doing the opposite of reassuring Taipei. But equally, as Taiwanese identity and politics evolve, support for the status quo could fail to reassure Beijing. It could plausibly be interpreted by the Chinese government as support for increasingly independence-inclined Taiwanese political movements. Just as it might not reassure, support for the status quo might also fail to deter both revisionist plans in Beijing and any possible push for de jure independence in Taipei. Because the status quo is changing month-to-month and year-to-year, support for it doesn’t give either Beijing or Taipei a clear sense what Canberra, Washington, and other capitals won’t accept.

So, what should Canberra (and Washington and other capitals) say? To more clearly signal their opposition to both China’s escalatory actions and any move towards de jure independence for Taiwan, there’s a case for being clearer about the kinds of cross-Strait developments to which Australia and the United States (and others) are opposed. AUSMIN 2021’s opposition to “threats or coercion” points in the right direction. Rather than the vague notion of “unilateral changes to the status quo,” the 2021 language provides a much clearer sense of what won’t be accepted. But to reassure and deter both Beijing and Taipei, there’s a case for an even clear articulation. I might be overly earnest, and what follows might be overegged, but it strikes me there’d be benefit in messaging along these lines:

“The Secretaries and Ministers reaffirmed their steadfast support for peace and stability in the Taiwan Strait. They remain strongly opposed to any threats or coercion, whether via military intimidation, diplomatic pressure, trade restrictions, disinformation, or other measures. Consistent with their respective one-China policies, they equally do not support any changes to Taiwan’s current legal status.”

This formulation is, I’m sure, far form perfect. But it’s tentatively offered as an example of an option that avoids the ambiguity of support for the status quo and (hopefully) simultaneously deters and reassures both China and Taiwan.

Thanks, and talk again in 2023

Before the end of the final newsletter for 2022, I thought I’d offer a few thanks. It’s less analysis and more personal indulgence. But if you’ve made it to the end of the last newsletter for the year, I figure you’ll allow it. First, thank you to all the Australian and overseas officials, academics, think-tankers, businesspeople, journalists, and others who’ve debated Australia-China relations and China’s statecraft with me over the years. Although any and all errors in this newsletter are my own responsibility alone, the analysis here would be much poorer without the discussions that I’ve had with countless sharp minds and savvy observers. No researcher ever really works alone. Even if, like me, many of us spend countless hours locked away in home offices, we’re constantly reacting and responding to and learning from the work of others. So, thank you to all the analysts of Australia-China relations out there.

Thanks especially to my colleagues and collaborators at the Australian National University. Your wise counsel, regular shoutouts, shrewd suggestions, and encouragement have played a big part in keeping this newsletter going. Public debates about China are often bruising, but I’m fortunate to work among a great group of considered and considerate scholars. More than anyone else though, I owe a massive debt of gratitude to my brilliant boss and colleague, Professor Anthea Roberts. She really is the sine qua non of this newsletter. Without the absolute academic freedom and professional and personal support she’s given me, BCB wouldn’t exist. So, it’s no exaggeration to say that if you’ve ever derived any benefit at all from this newsletter, it’s as much thanks to Anthea as it is to me.

Last, but certainly not least, thank you for reading. As much as I love Australian foreign policy wonkery and analysis of Australia-China relations, I wouldn’t be writing this newsletter without an audience. BCB is still a technologically minimalist and analytically niche publication. And let’s be honest, it’ll probably always be both of those things. Still, it’s been humbling and heartening to see it grow. I started writing BCB in May 2021 with next-to-zero expectations of what it might become. Some 50 editions and 83,000 words later, it’s read by parliamentarians, diplomats, military officers, intelligence professionals, investment bankers, hedge fund managers, entrepreneurs, academics, and journalists around the globe. Thank you for following along for the ride. I wouldn’t be doing this without you. Please keep your thoughts and suggestions coming, and don’t hesitate to reach out if you ever think I’ve missed the mark on anything. Enjoy the final few weeks of 2022, and I look forward to reconnecting sometime in the 2nd half of January next year. In the meantime, stay safe, and look after each other.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 14 to 27 November 2022

The Landbridge lease and Australia’s investment environment

From the Chinese Ministry of Foreign Affairs’ (MFA) readout of the meeting between Prime Minister Anthony Albanese and President Xi Jinping on 15 November:

“China hopes that Australia will provide an enabling business environment for Chinese enterprises to invest and operate in Australia.”

Quick take:

As discussed last edition, there was a flurry of positive bilateral messaging during and after the Albanese-Xi meeting on 15 November. This included another ministerial meeting in the defence portfolio the following week. But while Beijing appears to have dramatically deemphasised its expectations of Canberra, the above line about the “business environment for Chinese enterprises” was a conspicuous exception. Although expressed cautiously as a “hope”/“希望,” it’s nonetheless notable that this particular Chinese government wish was the only even vaguely concrete request that made it into what was for the most part an expectations-free (and exceedingly warm) readout of the first leader-level meeting since 2019.

On one level, a desire for a more welcoming/permissive approach to Chinese investments in Australia is hardly revelatory. Beijing’s perception that Chinese investments are unfairly treated in Australia has long been a bone of contention. Australia’s approach to foreign investment was a significant point of discussion at the leader level between Canberra and Beijing at least as far back as 2008 (e.g., here, here, and here). Meanwhile, Beijing’s concerns about the environment for Chinese companies was the first and longest of China’s list of 14 grievances/concerns from 2020.

On another level though, the expression of hope about the “business environment for Chinese enterprises” is more pointed considering the promised Albanese government review of the 99-year lease of Darwin Port by the Chinese company Landbridge. Details of the status of this review are scant. But given Prime Minister Albanese’s past position on the Landbridge lease, it’d be politically hard for his government to either let the review fall by the wayside or allow it to run its course and quietly result in a positive finding. Here’s what Prime Minister Albanese said in November 2015:

“Darwin Port is an incredibly important strategic asset for our nation and because of our arrangement with the United States for joint training in northern Australia, it is important for the US as well. … [T]o give up a strategic asset to a company that has links with the People’s Liberation Army in China is, I think, a grave error of judgement.”

If the new review of Langdridge’s lease finds that there aren’t national security/strategic grounds for terminating the lease, then Prime Minister Albanese’s past comments are likely to be seized upon by the Opposition to criticise the Government. With public opinion favouring terminating the lease, this may be an especially potent line of attack for the Opposition. Of course, the lease was originally awarded when a Coalition government was in power. But the time elapsed since 2015 and the widespread judgement that China has changed since then is likely to weaken any possible Albanese government counterattack that centres on the Opposition’s record on the Landbridge lease. (To be clear, the Landbridge lease wasn’t terminated in the wake of the subsequent review concluded in December 2021 during the Morrison government’s tenure. But this record might not matter that much politically given that the crucial question isn’t what the previous government did/didn’t do, but rather what the Albanese government will do now.)

Regardless, where does all this leave the Australia-China relationship? The Albanese government might be willing to take political flak by either slow walking the Landbridge lease review or determining that the lease should be left alone. Such outcomes are likely to avoid disappointing China. But assuming the Albanese government doesn’t pick one of these politically fraught options, it seems possible that Canberra is heading towards a decision that dashes one of Beijing’s highest hopes. It’s hard to imagine that Beijing would think the early end of Langdridge’s 99-year lease of Darwin Port is consistent with, to quote the Chinese MFA readout again, an “enabling business environment for Chinese enterprises to invest and operate in Australia.”

This begs the question: What options might exist to mitigate the fallout from an adverse finding in the Landbridge lease review? Corporate structures are well beyond my area of expertise, but I imagine that options are available. The Australian government might, for example, propose workarounds such as not ending the lease but forcing Landbridge’s Darwin Port operations to be spun off into a fully independent Australian subsidiary. Other forms of corporate restructuring and additional security oversight might also be available to both mitigate the perceived national security/strategic risks, while also leaving Langdridge’s lease substantively in situ.

Of course, the viability of the above options depends on uncertain political calculations. Would such compromise measures be enough to alleviate perceived national security/strategic risks? Would these configurations still leave the Albanese government vulnerable to Opposition attacks? And would this approach be enough to convince Beijing that Canberra offered an “enabling business environment for Chinese enterprises to invest and operate in Australia”? Regardless of the answers to these thorny questions, the Albanese government seemingly has a long and winding path to walk on the Landbridge lease that could easily leave one of China’s key hopes for the relationship trodden underfoot.

Addendum: Quite aside from the question of Landbridge’s Darwin Port lease, China will presumably not have its hopes met on the broader question of Australia’s approach to Chinese investments. Heightened political and public scrutiny of Chinese investments is unlikely to dissipate and the Albanese government presumably won’t modify Foreign Investment Review Board decision-making to mollify China’s concerns. Although the Treasurer has much discretion regarding foreign investments, the risks of attacks from the Opposition probably make it politically untenable for Jim Chalmers to take a significantly more welcoming approach to Chinese investments. In short, Beijing’s hopes notwithstanding, the Chinese government should probably expect a broadly unchanged approach to the “business environment for Chinese enterprises” in Australia.

A break in the bipartisan consensus (and why Beijing should show Canberra some strategic empathy)

Shadow Minister for Foreign Affairs Simon Birmingham speaking to David Speers on the ABC’s Insiders on 20 November:

“Following the release of that UN report back in September, I wrote to Penny Wong offering bipartisan support in that regard. She had previously criticised the previous government for not acting in concert with other nations. And so I wanted to make sure that given those new sanctions laws were passed late in the term of the previous government, that we would give that bipartisan support if the new government chose to use those sanctions.”

Quick take:

The Albanese government and Opposition might be in furious agreement on a no compromises approach to China when it comes to established Australian policy positions. But already key future China policy decisions are emerging as points of political division. As well as criticising Minister for Foreign Affairs Penny Wong for not meeting members of the World Uyghur Congress and survivors of Xinjiang internment camps, Shadow Foreign Minister Birmingham has carved out a more forward-leaning position on sanctions against Chinese officials implicated in human rights abuses in Xinjiang. This comes as the Opposition floats the prospect of an Australian ministerial visit to Taipei and chides Prime Minister Albanese for his apparent misspeaking on Taiwan’s prospective accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). (As an aside, it’s worth noting that regardless of the rights and wrongs of Minister for Foreign Affairs Wong’s decision to not meet the Uyghur delegation, such a meeting would have been a break with precedent given that, so far as I’m aware, previous Australian foreign ministers haven’t met with the leadership of the World Uyghur Congress.)

I won’t relitigate here the questions of whether Australia should, for example, impose targeted sanctions against Chinese officials implicated in human rights abuses in Xinjiang or expand its engagement with Taiwan. As I’ve previously argued in this newsletter and The Sydney Morning Herald, I think that both targeted Xinjiang sanctions and more political contact with Taiwan are, on balance, justified and beneficial for Australia. But regardless of how right or wrong I might be on these prescriptive questions of what Australia should do, there’s little doubt that this partisan political debate on future China policy decisions will make life increasingly tough for the Albanese government.

If the Albanese government doesn’t move on targeted Xinjiang sanctions, then it’ll likely be attacked by the Opposition and questions (rightly or wrongly) will be raised as to whether stalling the sanctions is a concession to China. The way in which Prime Minister Albanese’s error and slow correction (e.g., here and here) on Taiwan’s possible CPTPP accession prompted worries that Canberra had compromised on Taipei to please Beijing offers a taste of the intense suspicions that are likely to be raised if Australia doesn’t follow through with targeted Xinjiang sanctions. These kinds of political criticisms and questioning will probably also entail public opinion downsides—and perhaps eventually electoral costs—considering the broad-based popular support for such targeted Xinjiang sanctions. Then there’s the international and domestic awkwardness of having the necessary legal mechanism in place to impose targeted sanctions, expressing strong and regular concern about human rights abuses in Xinjiang, and yet not using an available tool to punish officials implicated in such abuses.

None of the above is to say that the case for targeted sanctions is clear cut or that such sanctions would be free of downsides for Australia. Despite on balance supporting such targeted sanctions on moral grounds, I readily admit that the Albanese government is saddled with the unenviable and devilishly complex task of weighing such ethical imperatives against a range of economic, diplomatic, security, and other interests that impact the Australian nation (see here for some examples). Rather than a comment on what ought to be done, the point of the above considerations is to highlight that the Albanese government is likely to have limited political room to manoeuvre on the issue. Regardless of the costs and benefits of such targeted Xinjiang sanctions, the political forces pushing for them may be nigh on irresistible.

Quite aside from how Beijing would react to such targeted sanctions (a question that I’ve previously tried to unpack), the above considerations brought me back to the issue of strategic empathy. If I’m right (it’s always an if) about the factors constraining the Albanese government on targeted Xinjiang sanctions, then there’s a strong case for political leaders and policy planners in Beijing to try and empathise with the predicament faced by their counterparts in Canberra. Regardless of how much China would chafe at targeted sanctions, there will be benefits for the bilateral relationship if Chinese officials think through the domestic and international forces that limit the Australian government’s room to manoeuvre on this issue.

In writing this newsletter, I’ve often tried to unpack for Australian and international audiences how I think China is likely to view and react to Australia’s decisions. But fostering strategic empathy should be a two-way street. Just as Canberra and other capitals should seek to better understand the constraints and concerns shaping China’s policy outputs, so, too, should Beijing seek to better understand the constraints and concerns shaping Australia’s policy outputs. This call for strategic empathy doesn’t mean that China must accept and endorse Australian decisions on, for example, targeted Xinjiang sanctions.

But strategic empathy does at least mean that Beijing should consider the range of forces that are pushing Canberra towards such targeted sanctions. It also means, by extension, that Beijing should have a realistic appraisal of the prospects for bilateral relations and a suitably calibrated approach. If China wants, as it says it does, the relationship to recover, then it may need to persevere with efforts to improve bilateral ties even in the event that Australia imposes targeted Xinjiang sanctions. Given the constraints facing Canberra, holding relationship repair hostage to Australia doing what China wants vis-à-vis targeted Xinjiang sanctions may foreclose the possibility of substantive future improvements in bilateral ties.

To quote the late Jiang Zemin, the response to the above analysis might simply be: “Too simple, sometimes naïve.” How much of a novice must I be to imagine that Beijing will calibrate its responses to Canberra’s targeted Xinjiang sanctions simply because of the domestic and international constraints faced by the Australian government? This is a fair question. But I think it largely misses the point. A call for more strategic empathy from Beijing isn’t a call to do what is commonplace, easy, and natural. If anything, it’s a plea to do something extraordinary. I readily acknowledge that I’m not in any position to make that request of the Chinese government. But if my analysis of the constraints facing the Albanese government is roughly right, then continuing down the path of relationship repair will require that the Chinese government exhibit something akin to the strategic empathy that I’m recommending. Over to you, Beijing.

Policy initiatives and diplomatic messaging to stabilise relations with China

From the Chinese MFA readout of Prime Minister Albanese’s 12 November meeting with Premier Li Keqiang in Phnom Penh:

“China is … ready to meet Australia halfway.”

Minister for Foreign Affairs Wong speaking to the ABC’s David Lipson:

“You used the phrase ‘meet halfway.’ The way I’ve described it is that we should work together.”

Quick take:

The consistent message from Australian ministers after the Albanese-Xi meeting was that they wanted to “stabilise” the bilateral relationship (e.g., here, here, here, here, and here). But even such a modest desire looks relatively ambitious. Not only are decisions on Darwin Port and targeted Xinjiang sanctions looming over bilateral ties, but Canberra and Beijing seemingly can’t even agree on the approach from here. The Chinese government’s language of meeting halfway seems to suggest mutual compromise, whereas Minister for Foreign Affairs Wong’s rejection of that framing presumably implies joint efforts without any compromises. Although both approaches were expressed in abstract terms, they give the impression of significantly different implications for the next steps in bilateral ties.

To be fair, it’s entirely possible that I’m overanalysing this linguistic gap. After all, the idea that both sides should “meet halfway” didn’t appear in the readout of the Albanese-Xi meeting and recent MFA press conferences. Still, prompted by this (apparent) gap between Canberra and Beijing, I thought I’d finally release something that I flagged a few editions ago. I’ve made available a rough draft of a working paper that canvasses a range of policy initiatives and forms of diplomatic messaging that might allow Australia and China to find some more common ground and build trust without Canberra having to make any compromises. These initiatives and forms of messaging are certainly not aimed at doing anything as grand as “resetting” bilateral ties. The goal is rather to offer tools to the Australian government that might contribute to a stabilisation of relations and mitigate the fallout of future tough China policy decisions, such as targeted Xinjiang sanctions or the Darwin Port lease. The options detailed in this paper are by no means exhaustive. But they are nevertheless (very) tentatively offered up here as a starting point for further debate and policy development.

NB Nothing in this working paper should be construed as a recommendation that the Australian government compromise to please the Chinese government. The paper’s suggestions are designed precisely to allow Canberra to simultaneously avoid making any compromises while also (hopefully) stabilising the relationship with Beijing and blunting the impact of decisions like levelling targeted sanctions against Chinese officials. Relatedly, this working paper should not be read in any way as an implicit legitimisation of China’s coercion of Australia. I hope it goes without saying that the Australian government shouldn’t need to develop new policy initiatives and forms of diplomatic messaging to reduce the likelihood of being subjected to China’s coercive statecraft. But taking as its starting point the reality of China’s external policies, this paper offers the Australian government options to respond to the Chinese government as we find it rather than as it should be.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 31 October to 13-ish November 2022

Although Tuesday’s leader-level meeting falls outside the fortnight that I would have normally covered in this edition of the newsletter, I hope you’ll forgive me for being a bit flexible with the date range. Starting with that meeting, this edition is an extended analysis of what the restart in high-level contact and associated messaging might tell us about China’s strategy towards Australia. Next edition will revert to the regular programming of canvasing a broader suite of bilateral issues.

When Albanese met Xi (and Li)

From China’s Ministry of Foreign Affairs’ (MFA) readout of the meeting between Prime Minister Anthony Albanese and President Xi Jinping on 15 November:

“A mature and stable bilateral relationship should first and foremost be reflected in putting the differences and disagreements between the two countries in the right perspective. It is imperative to rise above disagreements, respect each other and seek mutual benefit and win-win results, which holds the key to the steady growth of the relationship.”

Quick take:

Consistent with predictions made tentatively in May and more confidently in September in this newsletter, there’s finally been a long-awaited leader-level meeting between Australia and China. To be precise, there have been two such meetings in the space of just a few days. On 12 November, Prime Minister Albanese met briefly with Premier Li Keqiang on the sidelines of the East Asia Summit (EAS) in Phnom Penh (MFA readouts in English and Mandarin). This was quickly followed by the longer formal meeting with President Xi three days later on the sidelines of the G20 in Bali (Mandarin version of the MFA readout here).

As I wrote for The Age on Wednesday, the simple fact that these meetings occurred at all is a massive milestone for Australia-China relations. Understandably, much of the questioning from journalists after the Albanese-Xi meeting centred on the next steps for bilateral ties. Will China’s trade restrictions be slowly unwound? And is Minister for Foreign Affairs Penny Wong now planning a trip to Beijing? Although these are critical questions for Australia, the publicly available information doesn’t give much away on either of these points. However, for what it’s worth, I wouldn’t at all be surprised if we had answers in the affirmative to both of these questions in the coming months.

But before we delve into what these meetings might mean for the future trajectory of the Australia-China relationship, it’s worth pausing briefly to consider their historical significance. This is the first time that an Australian prime minister has met face-to-face with China’s President Xi since the brief conversation between Scott Morrison and the Chinese leader in June 2019 on the sidelines of the G20 in Osaka. (And the break in contact with President Xi goes as far back as 2016 if one only counts more formal bilateral meetings.) Meanwhile, it’s the first prime ministerial meeting with Premier Li since the 7th Annual Leaders’ Meeting in November 2019 on the sidelines of the EAS in Bangkok. These meetings bring to an end the longest gap in leader-level engagement since the break in such contact following the Tiananmen Square massacre in June 1989.

Whither China’s expectations of Australia?

From the Chinese MFA readout of Foreign Minister Wang Yi’s 8 November phone call with Minister for Foreign Affairs Wong:

“[T]he two sides need to gradually address respective legitimate concerns, and work jointly to make positive contributions to tackling current global challenges.”

Quick take:

Like Prime Minister Albanese’s recent meetings with Chinese leaders, this readout (in Mandarin here) is striking for how much it downplays China’s expectations of Australia. In the two previous in-person engagements between ministers Wong and Wang in July and September, the MFA readouts made plain that Beijing expected Canberra to take significant remedial action to get the relationship “back on the right track.” The Chinese government might have started sending out more positive messages in late 2021 and ramped up the warm(er) outreach after the Australian federal election in May 2022. But Beijing never resiled from a long, albeit ambiguously couched, list of expectations.

The MFA readout of Minister for Foreign Affairs Wong’s first meeting with Foreign Minister Wang in July provided a four-point list of things that China expected from Australia. These included “regarding China as a partner rather than a rival” and “building positive and pragmatic social foundations and public support.” Then in a major address at the National Press Club in August, China’s Ambassador to Australia, Xiao Qian, spoke more voluminously about these points with a list of five similar expectations. In the second foreign minister’s meeting in September, Foreign Minister Wang made the case for “uphold[ing] a more positive mindset, send[ing] more positive signals, [and] tell[ing] more stories of win-win cooperation.” In recent months, MFA spokespeople have similarly stressed a range of actions that Australia should be taking to improve the bilateral relationship. Recent leader- and ministerial-level engagements are striking for their deemphasis of these long-expressed Chinese government expectations of Australia.

To be sure, some of the exhortations in the recent Wong-Wang discussion could still be interpretated as vague and general references to these past Chinese government expectations. These include calls to “seek common ground while shelving differences,” “strive for mutual benefit and win-win results,” and “gradually address respective legitimate concerns” But even if these are still oblique references to China’s expectations, the increasingly vague expression of them is itself a noteworthy shift in the Chinese government’s messaging. More importantly, this recent and vaguer expression of expectations is also much more reciprocal (i.e., what Beijing and Canberra should do together rather than what Australia alone should do).

This increasingly vague and reciprocal expression of expectations is consistent with the readouts of Prime Minister Albanese’s meetings with Premier Li and President Xi. The readout from the Albanese-Li meeting only flagged general expectations in the form of reciprocal actions and noted that “China is … ready to meet Australia halfway.” Meanwhile, the readout from the Albanese-Xi meeting further downplayed any specific expectations, stating that: “The two sides need to take stock of experience and lessons, explore ways to steer the relationship back onto the right track, and move it forward in a sustainable manner.” Exploring options to improve the relationship presumably implies that Australia should consider what changes it should make. But even so, this is much softer and more reciprocal an expression of expectations than in past months.

Of course, China’s decision to not clearly and publicly articulate expectations of Australia doesn’t necessarily mean that Beijing doesn’t harbour them. Absence of evidence isn’t evidence of absence. Moreover, China’s public deemphasis of such expectations could also be explained by circumstantial factors. For one thing, it may not have been feasible for Premier Li to list all of China’s expectations to Prime Minster Albanese in the few minutes they reportedly spent chatting. And Beijing might have decided for tactical reasons to not weigh down the mood of the first meeting between President Xi and an Australian prime minister in years by (re)enumerating all the things that it thinks Canberra is doing wrong. It’s also entirely possible that a full account of China’s expectations wasn’t publicly flagged after the Wong-Wang ministerial call because of its timing in the lead up to the Albanese-Xi meeting. Finally, it’s equally plausible that the Chinese government judged that regardless of what was said privately in all these engagements, it was simply best to not detail any expectations of Australia in publicly available readouts.

All these possible permutations notwithstanding, it’s at least clear that China is dialling down the public expression of its expectations of Australia. Does that mean these expectations have disappeared and that the Australia-China diplomatic and trade relationships will normalise without Beijing waiting for substantive policy compromises from Canberra? It’s far too early to say. But the deemphasis of previously publicly expressed expectations does raise the tantalising prospect that the Chinese government has blinked. Perhaps it has abandoned the public expression of such expectations because it wants to slowly and quietly back out of a situation in which the normalisation of elements of the bilateral relationship was dependent on the Australian government making substantive policy compromises that Canberra wasn’t going to make?

This interpretation is all the more plausible considering that the recent ministerial- and leader-level meetings are precisely the kinds of engagements that China apparently previously said could only occur if Australia made amends. In other words, Beijing is not publicly proffering its expectations of Canberra in precisely the kinds of bilateral engagements that China had previously said (albeit to the previous Australian government) would only restart if Australia met certain conditions. By this account, Beijing has blinked twice. First, China is offering up (without its expectations having been met) the kinds of engagements that were seemingly previously contingent on Canberra doing what Beijing wanted. And second, in recent high-level meetings, China has (seemingly) not expressed strong and clear expectations for further relationship repair.

Are alternative explanations possible? Absolutely (on which, more below). And am I overanalysing these recent ministerial- and leader-level readouts? Certainly possible. But the combination of Beijing tamping down its public expectations of Canberra combined with recent leader-level engagements is prima facie grounds for thinking that the Chinese government is in the midst of a consequential walk back of its strongarm efforts to push the Australian government to make substantive policy compromises.

What might explain China’s (apparent) walk back?

Ambassador Xiao speaking in Sydney on 5 November:

“Since the new Australian Government came to power this May, a possible opportunity to reset the China-Australia relations has emerged. Leaders of our two countries made effected communication and contacting, resulting in important consensus. This created a good opening for the well developing of mutual relations in the future. We hope that both sides can take concrete actions and work in the same direction based on the principle of mutual respect and mutual benefit to bring China-Australia relations back on the right track in near future.”

Quick take:

Considering the wide range of severe substantive policy disputes between the Chinese and Australian governments, the public deemphasis of China’s expectations combined with the resumption of leader-level engagement is puzzling. It’s especially odd considering that the areas of disagreement between Australia and China have arguably expanded and intensified this year. On issues like China’s security role in the Pacific and military intimidation of Taiwan, Canberra and Beijing have found themselves even more firmly at loggerheads. So, what explains Beijing’s about-face despite Canberra not having compromised on substantive policy points?

Although the following by no means exhaust all the possible explanations, there are five plausible reasons that China might be publicly downplaying its expectations of Australia:

1. Beijing has been (to some degree) mollified by Canberra’s abandonment of especially strident rhetoric on China, meaning that substantive policy compromises are no longer such a strong expectation for improvements in bilateral ties.
2. Beijing held the previous Morrison government and some of its ministers in especially low esteem, which meant that the simple fact of a shift to the Albanese government was enough of a reason for China to allow its relationship with Australia to slowly improve without its expectations being met.
3. Beijing has (accurately) determined that Canberra ultimately won’t meet its expectations and so has decided to allow the relationship to recover (somewhat) without any substantive policy compromises from Canberra.
4. Beijing’s public deemphasising of its expectations is a temporary tactical manoeuvre aimed at fostering some goodwill in Canberra. Although these expectations are dormant for now, they aren’t gone and will again be expressed publicly.
5. Beijing judges that regardless of its expectations, keeping the Australia-China relationship in the freezer is now counterproductive to its interests. This might be especially so given that Beijing’s previous approach likely contributed to hardening views on a range of China-related policy questions in Canberra and encouraged even deeper engagement between the Australian government and broadly likeminded democracies, including the United States, Japan, and India.

These explanations are not mutually exclusive. For example, Beijing being somewhat placated by more conciliary diplomatic rhetoric on China from the Albanese government is perfectly consistent with the Chinese government being relieved that the Morrison government is no longer in power. It’s also entirely possible that all the above points are correct, and ultimately, it’s their combination that explains why China has decided to publicly downplay its expectations.

That said, some of these explanations are by their nature harder to prove and more speculative. Reasons 3-5 especially fall into this category given that these reasons rest on either predictions about the future or assessments of the Chinese government’s private positions and confidential strategies. By contrast, there’s evidence in the public arena providing some (albeit not definitive) justifications for reasons 1 and 2. It seems clear, for example, that Beijing harboured enmity towards elements of the Morrison government, welcomed the change in government in May, and appreciated some of the Albanese government’s shift in tone and style. Overall, we can probably be moderately confident that 1 and 2 are correct, while 3-5 are plausible but hard/impossible to confirm.

Regardless of their accuracy, all the above explanations should probably be treated as fairly low-confidence accounts of why China might be publicly downplaying its expectations of Australia. And it’s possible that something else entirely has motivated China’s (seemingly) shifting approach to Australia. But despite all the uncertainty surrounding the best explanation(s) for Beijing’s (apparently) changing stance, the question of what is motivating China can’t be ignored. The answer to this question will shape:

• analysis of not just the Australia-China relationship, but also China’s statecraft more broadly;
• our understanding of the next steps in the evolution of the Australia-China relationship; and
• the lessons that should be derived for not just the Albanese government, but also other governments that are now or might soon be forced to manage fraught ties with China.

If, for example, one accepts explanation 3 above (that Beijing is relenting because Canberra didn’t compromise), then one might derive the lesson that neither Australia nor other countries should compromise in the face of China’s threats or moves to deny them high-level diplomatic access. On this reading, holding the line on all substantive areas of China-related policy allowed Australia to demonstrate that threats and pressure weren’t going to get the Chinese government its desired result. By contrast, if one accepts 1 (that Canberra’s softer diplomatic rhetoric induced change in Beijing’s approach), then one might derive the lesson that deft and sometimes less direct diplomacy is the best way to manage China. Regardless of the breadth and depth of Australia’s disputes with China, Canberra was able to calibrate its language to manage Beijing’s sensitivities and other capitals can potentially do the same.

Given all the uncertainty surrounding the best explanation(s) for why China might be publicly downplaying its expectations, I won’t presume to derive hard and fast policy lessons from this episode. But there is perhaps a relevant epistemological point that bears emphasising: multiple plausible explanations exist for China’s (apparent) change in approach. Although (as I note above) there’s probably a stronger evidentiary basis for some of these reasons, none of them are explanatory slam dunks, so to speak. At minimum, this means that there’s a compelling case for analytical caution and policy humility when reaching conclusions about the causes of China’s conduct and making recommendations about how to handle Beijing.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 17 to 30 October 2022

Confucius Institutes, Darwin Port, and targeted sanctions

The United Kingdom’s Minister of State (Minister for Security), Tom Tugendhat, in the UK Parliament recalling:

“The Prime Minister’s pledge during the leadership race only a few months ago that Confucius Institutes pose a threat to civil liberties in many universities in the United Kingdom and he will be looking to close them.”

Quick take:

These comments bring into stark relief a dramatic decision point facing the Australian government. Since the introduction of Australia’s Foreign Relations Act 2020 (FRA), the Minister for Foreign Affairs has had the power to render “invalid and unenforceable” agreements establishing Confucius Institutes at Australian universities. The fact that the UK government looks set to close Confucius Institutes at its universities doesn’t mean Australia will follow suit. But as with the Autonomous Sanctions Amendment (Magnitsky-style and Other Thematic Sanctions) Bill 2021, there’s likely to be more political pressure on the Albanese government to use the powers at its disposal to punish human rights abusers in China and reduce the role of the Chinese state in Australian universities. In addition to the ever-present possibility of a rejection of a large investment from China by the Treasurer or the Foreign Investment Review Board, there are by my count three key looming decisions that could dramatically further strain the Australia-China relationship:

1. The use of FRA powers to veto agreements establishing Confucius Institutes at Australian universities.
2. An adverse finding in the new review of the 99-year lease by the Chinese company Landbridge of Darwin Port.
3. The imposition of targeted sanctions against Chinese officials in response to human rights abuses in Xinjiang.

It’s still unclear how each of these matters will play out. But it nevertheless seems highly likely that at least one of these issues—and possibly all three—won’t go China’s way. First, the domestic party politics of these issues make it likely there’ll be one or more outcomes to which China will object strongly. Regardless of the rights and wrongs and moral ambiguities of these issues, all three provide the Opposition with political leverage. If Canberra doesn’t veto Confucius Institutes/end the Darwin Port lease/sanction Chinese officials, then the Opposition will have an easy option for implying that the Albanese government is “soft on foreign interference”/“weak on national security”/“unprincipled on human rights.”

Of course, the previous Morrison government could have, but didn’t, avail itself of the FRA and Magnitsky powers to veto Confucius Institutes and sanction Chinese officials. Moreover, they could have initiated their own additional Darwin Port review after the Department of Defence review found in December 2021 that there weren’t adequate national security grounds for ending Landbridge’s 99-year lease. Perhaps these factors partially explain why Coalition figures in the Opposition have to date been relatively cautious on, for example, sanctions against Chinese officials over human rights abuses. Still, and this brings us to the second reason I’m expecting decisions that China won’t like: Australian public opinion seems to be broadly in favour of such moves.

Lowy Institute polling paints a clear picture of overwhelming popular support for sanctioning “Chinese officials associated with human rights abuses,” while Australia-China Relations Institute (ACRI) polling returned similar results, with nearly 80% of Australians in favour of such financial and travel restrictions. ACRI polling also indicates that nearly 60% of Australians are supportive of Landbridge being forced to “sell the port back to the government,” with just shy of 30% remaining neutral on the issue. Only roughly 13% of Australians oppose ending the lease. I haven’t seen polling data on Australian attitudes to Confucius Institutes at Australian universities. (Please flag such polling if it’s something I’ve missed.) But given the nature of media coverage of the activities of Confucius Institutes in Australia, it’s hard to imagine that a large constituency of Australians would strongly oppose the Minister for Foreign Affairs vetoing their operations.

Third, the diplomacy of all three issues points, to varying degrees, in the direction of decisions that will displease China. When many of Australia’s closest Allies and partners imposed targeted sanctions over human rights abuses in Xinjiang in March 2021, Australia had a ready reason for not doing the same. It didn’t have the appropriate legal mechanisms in place and was left, somewhat limply, welcoming these measures. With Magnitsky powers in place, such a reason for not imposing targeted sanctions is no longer available. So, if there’s now a coordinated push to introduce more targeted sanctions in response to the Chinese government’s human rights abuses in Xinjiang, it’d be conspicuous, and perhaps even diplomatically untenable among likemindeds, for Australia to not do the same. In fact, even if other liberal democracies don’t impose a fresh round of sanctions, it might still appear unseemly for Australia to have the ability to impose targeted sanctions and to not play catchup with the measures its Allies and partners already have in place. Especially considering the large body of research detailing the severe and systematic nature of human rights abuses in Xinjiang.

The international diplomatic factor is probably less significant regarding Confucius Institutes and Darwin Port. But even in those cases, overseas dynamics may push Canberra towards decisions that will upset Beijing. Assuming the United Kingdom follows through with its plans to close Confucius Institutes at its universities, more questions are likely to be asked about what the Albanese government is doing on the issue. And these questions may become increasingly pointed if other liberal democracies take similar decisions.

Meanwhile, there’s every chance that the Darwin Port lease will be subjected to more scrutiny and scepticism in Canberra and Washington given the growing operational and training importance of Northern Australia for US defence forces. Although US B-52 bombers might be refuelling and receiving repair more than 300km by road from Darwin Port, a 99-year lease for a Chinese company at a port that serves a territory hosting expanding US military force posture is likely to raise at least some influential eyebrows. Of course, this is not to say that this and the other reasons above are necessarily persuasive or the complete picture of factors at play. But it’s nevertheless easy to see how these considerations might push the Albanese government in the direction of decisions that China won’t at all like.

None of these factors mean Canberra is on the cusp of vetoing Confucius Institutes, scuttling the Darwin Port lease, and imposing targeted sanctions on Chinese officials over human rights abuses in Xinjiang. It (almost) goes without saying that the Australian government won’t take any of these decisions in the next two weeks. Any one of these actions could torpedo the chance of an Anthony Albanese-Xi Jinping meeting on the sidelines of the G20 in Indonesia on 15-16 November. Such a meeting looks increasingly likely in the absence of a dramatic deterioration in bilateral relations, so it would seem diplomatically prudent for Canberra to save these decisions for later this year or early 2023. Canberra won’t compromise on any points of policy substance to please Beijing. Yet as Albanese government ministers have been at pains to stress, they want to give diplomacy a chance and talk to their Chinese government counterparts. But such talk notwithstanding, it’s easy to see how the bilateral relationship could face even more turbulent times ahead.

Moderating great expectations

China’s Consul-General in Brisbane, Dr Ruan Zongze, writing in The Courier Mail on 27 October:

“Improving China-Australia relations and enhancing mutually beneficial co-operation must be the common aspiration of both peoples.”

Quick take:

Despite the above thorny decision points facing the Albanese government, Chinese diplomats in Australia continue offering generally sunny side up visions of the future of bilateral ties. For their own sake and the broader bilateral relationship, I hope they’re carefully managing Beijing’s expectations. Although the Albanese government has committed to “engage with China in a professional, in a sober, [and] in a diplomatic way,” the Chinese government needs to understand that Australia won’t (and, in fact, simply can’t) indefinitely skirt around a series of tough policy decisions piling up in the in tray. Not only are these decisions bearing down on Canberra, but Australia and China are divided by vastly different views on the associated issues.

From Beijing’s perspective, adverse decisions on the above issues will unsurprisingly be seen as, among other things, “hyping the so-called China threat” (Confucius Institutes veto), “undermining China’s economic interests” (ending Darwin Port lease), and “interfering in China’s internal affairs” (targeted Xinjiang sanctions). Yet at the same time, Canberra likely sees these same decisions as, among other things, a matter of “protecting Australia from foreign interference” (Confucius Institutes veto), “reducing strategic vulnerabilities” (ending Darwin Port lease), and “defending fundamental human rights” (targeted Xinjiang sanctions). There are, no doubt, other dimensions of how Canberra and Beijing view these issues. And one could, I’m sure, contest how I’ve briefly summarised each government’s view. But those caveats aside, the broad brushstrokes of these contrasting characterisations (once again) point to some of the indissoluble difficulties besetting the Australia-China relationship.

Despite the generally positive diplomatic messaging from both sides in the last few months, Canberra and Beijing have deeply held but also deeply divergent interpretations of fundamental features of international and political reality, national security, and morality. These disagreements make dialogue between the Australian and Chinese governments all the more important. But they probably also make the fruits of such discussions modest. So, assuming Prime Minister Albanese and President Xi end up meeting in a week and a bit, we should all keep our expectations firmly in check.

Canberra, Tokyo, and Wellington together against economic coercion

From the Australia-Japan Leaders’ Meeting Joint Statement issued on 22 October:

“The leaders committed to work together and with other interested countries to address and respond to economic coercion which undermines the international order based on international law and the rules-based multilateral trading system. Both countries will increase information sharing, and explore ways to respond to the challenges.”

Quick take:

This bilateral messaging marks an unambiguous reversion to the Morrison government’s norm of regularly raising concerns about economic coercion. For a brief moment after the May federal election, it appeared that economic coercion would be dropped from Canberra’s diplomatic lexicon. As I’ve flagged previously, this was a potentially diplomatically astute move given China’s likely discomfort with the language of economic coercion. But equally, as I’ve also suggested before, there are, on balance, persuasive diplomatic and political reasons for rehabilitating concerns about economic coercion. Regardless, expressing these concerns is clearly back on Canberra’s agenda.

So, how strongly is the Albanese government hitting the economic coercion note? In a word, hard. In less than two weeks, economic coercion was flagged in three separate joint messages with Japan and one with New Zealand. This includes the Joint Statement (quoted above) and the Joint Declaration at the leader level with Japan, along with the Joint Statement from the Japan-Australia Ministerial Economic Dialogue issued early last month and the Australia-New Zealand trade and tourism Joint Statement on closer economic relations. By my count, “economic coercion” and “coercive economic practices” were mentioned seven times in four separate authoritative joint statements/declarations with two different countries.

Looking back over the last circa 1.5 years of Australian diplomacy on the issue, this is among the most intense and sharpest spikes in mentions of economic coercion in bilateral and minilateral messaging. The only other comparable case was a pair of statements in March this year from the Minister for Trade, Tourism and Investment at the time, Dan Tehan, and the US Secretary of Commerce, Gina Raimondo, and Trade Representative, Katherine Tai. But although those two statements included seven mentions of “economic coercion” (counting subheadings as well), those communiques were issued at a lower level (ministers rather than leaders), were spread over two documents rather than four, and only involved one other country. Obviously, we’re deep into the minutiae now, but it nevertheless speaks to the relative importance of this rapid-fire messaging from Australia, Japan, and New Zealand on economic coercion.

Perhaps most significantly, economic coercion made it into the Australia-Japan Joint Declaration on Security Cooperation. As authoritative as joint statements from leaders and ministers might be, the Joint Declaration is likely to be much more enduring and was almost certainly the product of much more careful negotiation and finessing by both Canberra and Tokyo. Unlike this year’s leader-level Joint Statement, the Joint Declaration presumably won’t be superseded by a new iteration in 2023. Indeed, this Joint Declaration might undergird Australia-Japan security ties for years, and perhaps even decades, to come. So, these recent joint statements and declaration really do elevate and ultimately nail concerns about economic coercion to the Australian government’s diplomatic mast. For reference, the full list of past uses of economic coercion in Australian bilateral and minilateral diplomacy is available here.

Notwithstanding these recent messages, the leader-level Australia-Singapore Annual Leaders’ Meeting Joint Statement didn’t mention economic coercion. The closest it came was a reference to respecting “the rights of countries to lead their national existence free from external interference, subversion and coercion.” But this doesn’t point to an inconsistency with Australia’s shared messaging with Japan and New Zealand on economic coercion or a deemphasis of the issue in general. The Joint Communique of the 12th Meeting of the Singapore-Australia Joint Ministerial Committee in August 2021 also only made a general reference to coercion, while the previous leader-level Australia-Singapore Joint Statement in June 2021 didn’t even mention coercion at all. So, the messaging with Singapore notwithstanding, Australia’s recent statements and declaration with Japan and New Zealand place enduring concerns about economic coercion centre stage in Canberra’s diplomacy.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 3 to 16 October 2022

A smorgasbord of disagreements

China’s ambassador to Australia Xiao Qian quoted in The Sydney Morning Herald on 13 October:

“Even if we have differences or disputes, we should meet to talk and discuss and try to narrow down the differences and try to find a solution to those problems.”

Quick take:

As I’ve regularly emphasised, bilateral ties are beset by a broad range of deep-seated and longstanding substantive policy disputes. Notwithstanding Beijing’s shifting tone on Canberra since circa December 2021, the two are still at loggerheads on a wide range of issues from China’s legally untenable maritime claims in the South China Sea to the role of security considerations in Australia’s investment review procedures. Not only is the list of disagreements long, but it’s getting longer. The Albanese government might have started using less invective to talk about China, but disputes over the AUKUS security partnership and China’s security role in the Pacific (among others) continue to intensify.

Perhaps unsurprisingly, Ambassador Xiao sounded some frustrated notes in his recent interview, saying that “[i]t seems we’re not moving fast enough, not as fast as China would expect.” But he and his government really shouldn’t be shocked. Considering the many longstanding points of deep disagreement and the new areas of dispute, any plans for a relationship reset—much less a quick and easy one—were always unrealistic. This is especially true considering that Ambassador Xiao cited tensions over Taiwan and the treatment of Muslims in Xinjiang as barriers to an improved relationship. Given that these issues relate to fundamental moral and political considerations, including respect for human rights, the preservation of regional security, and the protection of liberal democracy, Australia and China were never going to “move towards each other,” to use the Ambassador’s words.

In a bid to empirically baseline gloomy bilateral analysis like the above, I thought it might be useful to start building a record of all the key areas of substantive policy disagreement between Australia and China. In what follows, I’ve separated the areas of dispute by thematic/policy arenas and tried to make a qualitative assessment of whether the disagreement is intensifying or subsiding. (It’ll come as no surprise that very few contentious issues are in the latter category.) I’ve also added some warnings and indicators of the kinds of developments that could cause tensions to significantly intensify.

Of course, these qualitative assessments (along with the framing of some of the disputes) are by their nature debatable, and I don’t for a moment claim that what I’ve suggested below is definitive. Although the below hopefully captures the most significant bilateral disputes, it’s equally not necessarily a complete list. If you think anything major is missing from the below or if any of the qualitative assessments really miss the mark, please flick me a note. I’ll aim to update what follows on a rolling basis depending on bilateral developments. I’ll also post a version of the below here on BCB’s companion website.

Human rights and Hong Kong

• Intensity of disputes generally high but steady
• Possible triggers for an increase in intensity:
  • Australia levelling targeted sanctions against Chinese officials in response to human rights abuses in Xinjiang
  • A further deterioration of human rights conditions in China and/or Hong Kong or new revelations of past human rights abuses
• Key points of dispute:
  • China’s human rights abuses against ethnic and religious minorities and Australia’s public criticisms of the Chinese government’s policies (e.g., this)
  • China’s abrogation of Hong Kong’s rights and freedoms and the heavy-handed use of martial force in the Special Administrative Region and Australia’s public criticisms of these Chinese and Hong Kong government policies (e.g., this)
  • China’s suppression of freedom of speech and other fundamental human rights and Australia’s public criticisms of these policies (e.g., this and this)

Longstanding regional security disputes

• Intensity of disputes generally high but steady
• Possible triggers for an increase in intensity:
  • An Australian Defence Force (ADF) aircraft or vessel transiting within 12 nautical miles of a Chinese-claimed feature in the South China Sea
  • The evolution of the Quad to include branded joint military exercises
• Key points of dispute:
  • Australia’s strong opposition to China’s legally untenable maritime claims in the South China Sea (e.g., this and this)
  • Deepening exchange and cooperation among Quad countries on a range of political, diplomatic, economic, cyber, infrastructure, and maritime fronts (e.g., this)
  • China’s growing military, diplomatic, economic, and related efforts to isolate and intimidate Taiwan and Australia’s support for the cross-Strait status quo (e.g., this)

New regional security disputes

• Intensity of disputes generally high and increasing
• Possible triggers for a further increase in intensity:
  • The operationalisation of the China-Solomon Islands security agreement to facilitate a People’s Liberation Army Navy port visit to Solomon Islands
  • Increasingly explicit statements from the Australian government that AUKUS submarines are intended to deliver a deterrent effect in North Asia, including in the Taiwan Strait
• Key points of dispute:
  • Cooperation between Australia, the United Kingdom, and the United States to provide the Royal Australian Navy with nuclear-powered submarines as part of the AUKUS security partnership (e.g., this and this)
  • The China-Solomon Islands security agreement and deepening security cooperation between Honiara and Beijing (e.g., this)
  • China’s ambition to play an active security role in the Pacific and Australia’s view that Pacific security is a matter for the region (e.g., this)

National security

• Intensity of disputes generally high but steady
• Possible triggers for an increase in intensity:
  • The Minister for Foreign Affairs using Foreign Relations Act 2020 (FRA) powers to render invalid and unenforceable agreements establishing Confucius Institutes at Australian universities
  • Additional large-scale Chinese state or state-affiliated cyberattacks against significant Australian institutions and a formal and public Australian government attribution in response
• Key points of dispute:
  • Australian legislation and policies to combat foreign interference in its politics and society, including counterintelligence and transparency measures (e.g., this and this)
  • The introduction of Australia’s FRA and the associated Foreign Arrangements Scheme combined with the Australian federal government’s subsequent use of FRA powers to render invalid and unenforceable Victoria’s Belt and Road Initiative agreements (e.g., this, this, and this)
  • Chinese state and state-affiliated cyberattacks against Australian companies, universities, and government institutions and the Australian government’s growing willingness to attribute these attacks to China and its proxies (e.g., this)

Consular cases and border control

• Intensity of disputes generally moderate and steady
• Possible triggers for an increase in intensity:
  • China detaining additional Australian citizens
  • New Australian investigations of and visa restrictions against Chinese nationals on espionage or foreign interference grounds
• Key points of dispute:
  • The ongoing detention of Cheng Lei, Yang Hengjun, and other Australians (e.g., this and this)
  • The questioning of Chinese journalists in Australia and the intimidation of Australian journalists in China in 2020 (e.g., this and this)
  • The cancelation of Chinese scholars’ visas on security grounds in 2020 (e.g., this)

Economic statecraft

• Intensity of disputes generally high but steady
• Possible triggers for an increase in intensity:
  • Rejection of a large Chinese investment by the Australian Treasurer or Foreign Investment Review Board (FIRB)
  • An adverse finding in the review of the 99-year lease by the Chinese company Landbridge of Darwin Port
• Key points of dispute:
  • Adverse ministerial and FIRB decisions regarding investments from Chinese companies (e.g., this)
  • The growing role of national security considerations in Australia’s evaluation of foreign investments (e.g., this)
  • The exclusion of Chinese companies Huawei and ZTE as vendors for the construction of Australia’s 5G network in 2018 and the earlier exclusion of Huawei from National Broadband Network tenders (e.g., this)

COVID-19

• Intensity of disputes generally moderate and slowly declining
• Possible triggers for an increase in intensity:
  • Currently seems unlikely given the time elapsed since the global COVID-19 outbreak
• Key points of dispute:
  • The Australian government publicly and unilaterally calling for an inquiry into the origins of the COVID-19 pandemic in April 2020 (e.g., this)
  • The Australian government’s subsequent efforts to generate international support for an inquiry in the origins of the COVID-19 pandemic (e.g., this)

Pointed Pacific messaging

Minister for Foreign Affairs Penny Wong speaking at a press conference in New York on 24 September:

“We have simply made the point, and as have other members of the Pacific Islands Forum, that we believe security is the responsibility of the Pacific family. And that is Australia’s position.”

Quick take:

Among the long list of disputes between Canberra and Beijing, China’s security role in the Pacific is among the newest points of intense contention. Driven by the news earlier this year of a security agreement between Solomon Islands and China, Australia has taken to regularly reiterating that it thinks the Pacific should take care of its own security. To be sure, Minister Wong hasn’t repeated this point every time China’s security role in the Pacific has come up (e.g., here). But both the Minister for Foreign Affairs and her junior portfolio colleagues (e.g., here and here) have repeatedly stressed the same general point. Earlier this year Minister Wong was even more direct when she raised concerns about “outside” powers being involved in Pacific security and said that regional “security is best provided by the Pacific family, of which we [Australia] are a part.”

What is Canberra hoping to achieve by seeking to deny China (by implication at least) a legitimate security role in the Pacific? If it wasn’t already clear to Beijing, this kind of messaging puts the Chinese government on notice that Australia doesn’t welcome its involvement in Pacific security initiatives. This kind of messaging equally signals to Pacific countries that not only does Australia seek to be their “security partner of choice,” but it also doesn’t want regional states to see extra-regional powers (and specifically China) as prospective security partners. So, the Australian government’s declarative policy can plausibly be seen as a twofold effort to dissuade both Beijing from involving itself in regional security and Pacific countries from engaging in security cooperation with China.

Added to these international considerations, there may also be a domestic rationale. In the wake of the Morrison government’s widely debated and criticised inability to forestall the China-Solomon Islands security agreement, the Albanese government might judge that there’s political advantage to be gained by taking a tough stance against China’s security role in the Pacific. Although China cooperating with Pacific countries on security obviously doesn’t necessarily entail the establishment of a People’s Liberation Army (PLA) base in Solomon Islands, Lowy polling on that latter issue seems to suggest that the Albanese government would be on solid public opinion ground when raising concerns about China’s security role in the Pacific. Some 88% of Australians said they were very or somewhat concerned “about China potentially opening a military base in a Pacific Island country.” It wouldn’t be much of stretch to infer from this that messaging aimed at warning China off playing a security role in the region is likely to be electorally popular.

The above considerations raise the first order policy question of whether Australia’s goal should be to stop China from playing a security role in the Pacific. Though a critical question, I won’t try and answer it in a few hundred words. But short of that, I’ll at least venture a (very) preliminary assessment of why the Australian government’s messaging might be counterproductive. As well as adding yet another irritant to the Australia-China relationship, Canberra’s opposition to outside powers (and especially Beijing) playing a regional security role seems highly unlikely to persuade China to give up its big Pacific ambitions. Notwithstanding China’s expressions of apparent deference to the “historical and traditional ties between Australia and the Pacific island countries,” it would be optimistic (maybe even wildly so?) to imagine that Beijing will moderate its long-term goals in the region because of Canberra’s concerns.

Perhaps more importantly though, it seems unlikely to persuade at least some Pacific countries. With news that Royal Solomon Islands Police Force have flown to China for training, it’s clear that Honiara at least is not averse to China making a security contribution to the Pacific. Meanwhile, Papua New Guinea, Fiji, and Tonga have previously received military equipment from China and the PLA hospital ship Peace Ark has periodically visited the Pacific. These and similar datapoints suggest another possible pitfall for the Albanese government’s messaging: The risk of long-term diplomatic embarrassment for Australia. It’ll arguably make Australian foreign policy look ineffective if Canberra’s calls for outside powers to not be involved in regional security are met with China’s deeper security engagement (at least in some parts of the Pacific).

Then there’s also the seemingly small but still important apparent gap between the Pacific Islands Forum (PIF) and Australian positions on the issue of outside powers and security. In July this year, the PIF leaders reaffirmed “the concept of regionalism and a family first approach to peace and security.” Although similar, a “family first approach” doesn’t imply, as Australia’s messaging sometimes does, that outside powers shouldn’t be involved in Pacific security. The implication of the PIF language seems to be (at least as I read it) that if outside powers are involved, it should be after regional security options are exhausted. Now, of course, it’s perfectly legitimate for Canberra to adopt different positions to the PIF on a wide range of issues (as it obviously often does). But it perhaps sits awkwardly with Australia’s emphasises on Pacific cooperation when Canberra takes a different view on a question as core to the PIF as regional security. (To be sure, I’m not a PIF expert, so please correct me if I’ve missed some important nuance or datapoints on this issue.)

Assuming the above is right, what should Canberra be saying? Perhaps the simplest solution is to ditch the idea that Pacific security should exclusively be handled by regional countries and opt for the more inclusive PIF language of a “family first approach to peace and security”. This less exclusive framing was used by the Prime Minister’s Office in the short read out of Solomon Islands Prime Minister Manasseh Sogavare’s visit to Australia earlier this month. Such a less exclusive framing would put Australia firmly on the same ground as its Pacific partners and probably wouldn’t make it any more likely that China will deepen its security engagement with the region.

We’re admittedly well and truly deep in the linguistic weeds here and all the above points are, I freely admit, totally contestable. Taking a tough diplomatic line against any security role in the Pacific for China might still be judged to be the most prudent position for Australia, especially considering the long-term potential for an expansion of China’s regional security presence to deeply impact Australia’s own security. Still, it seems that the message that outside powers shouldn’t be involved in Pacific security is unlikely to offer an appealing balance of costs and benefits for Australia. A PIF-style Pacific first message might be more realistic and less likely to alienate Pacific partners, while also not impacting China’s approach.

August trade data

Based on the latest trade data, the combined monthly value of Australia’s nine exports targeted by China’s trade restrictions (to China, the rest of the world, and total, May 2020 to August 2022):

Quick take:

Despite the value of these nine exports to China now sitting at approximately 11% of their value in May 2020 when trade restrictions were first introduced, their value to the rest of the world is now roughly 400% of their value two-and-a-bit years ago. These numbers no doubt reflect diverse factors such as favourable growing conditions for a range of Australian agricultural exporters and high food prices globally. But most importantly, these numbers are a result of the combination of the disproportionate value of coal exports in this basket of nine exports and the rapid and sustained rise in coal prices since 2020. Coal exports accounted for roughly 77% of the overall value of these nine exports as at August 2022, while coal prices have seen something in the order of a fivefold increase since late 2020.

At the same time though, these numbers also probably reflect the ongoing and generally successful redirection of the Australian exports that have been in some cases totally shut out of the Chinese market. The below graph charts the combined monthly value of the eight Australian exports excluding coal that have been targeted by China’s trade restrictions (to China, the rest of the world, and total, May 2020 to August 2022). Despite the value of these eight exports to China now sitting at approximately 32% of their value in May 2020 when trade restrictions were first introduced, their value to the rest of the world is now roughly 228% of their value two-and-a-bit years ago. This increase in the monthly value of these exports has occurred despite some of these exports, including copper ores and concentrates and barley, being entirely excluded from the Chinese market.

Of course, some Australian exporters have endured much more pain than others. As Minister for Trade and Tourism Don Farrell remarked on 11 October in relation to Australia’s lobster industry: “I’ve had some chats with the South Australian lobster exporters, and what they tell me is the prices they’re getting in Australia for their product in many cases don’t actually cover the cost of production.” And Minister Farrell has similarly raised the plight of Australian winemakers and sought to promote this industry during his recent visit to South Korea. Still, the aggregate numbers of impacted Australian exports seem to tell a positive story of successful export redirection to alternative markets.

Australia’s exports of copper ores and concentrates to South Korea provide an instructive example in that regard. The value of these exports to South Korea in the six months to August 2022 is 276% higher than it was in the same period in 2020 before China starting blocking imports of Australian copper ores and concentrates. These exports to South Korea have now risen to roughly 66% of the value of these exports to China shortly before that value was reduced to zero with the introduction of trade restrictions. Although global copper prices remain high, this alone presumably doesn’t account for the dramatic rise in the value of these exports to South Korea. So, as with the steep increase in Australia’s barley exports to Saudi Arabia that I noted the last time I looked at the trade numbers, the striking uptick in the value of Australia’s exports of copper ores and concentrates to South Korea is another indicator of the redirection of Australian exports in the wake of China’s trade restrictions.

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As always, thank you for reading, and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 19 September to 2 October 2022

Economic coercion concerns return

From the readout of Minister for Trade and Tourism Don Farrell’s meeting with his Spanish counterpart Maria Reyes Maroto Illera:

“We also discussed our shared interests in responding to economic coercion and acknowledged the importance of working with trusted partners to preserve the integrity of the multilateral system.”

Quick take:

The reference to “economic coercion” in this joint statement with Spain is striking in the broader context of the Albanese government’s seemingly concerted effort to turn down the previous government’s rhetorical heat on China’s trade restrictions. As I’ve noted in this newsletter and elsewhere previously, criticisms of economic coercion featured prominently in Morrison government messaging in the 2020-22 period. After the 21 May federal election, one of the most conspicuous shifts in Australian language on China was the new Albanese government’s reframing of economic coercion in less rhetorically charged ways. Aside from a small number of exceptions, Albanese government ministers have referred to China’s “trade sanctions” in a wide range of interviews and statements. As recently as late last month, the Prime Minister was describing China’s economic coercion simply as “sanctions.”

Crucially, concerns about economic coercion were dropped from bilateral and minilateral statements with likeminded countries. For example, whereas the May 2021 leader-level Australia-New Zealand Joint Statement “expressed concern over harmful economic coercion,” the July 2022 joint statement made no reference to economic coercion. It’s obviously not a like-for-like comparison, but the reference to “opposing coercive economic practices” from the inaugural August 2021 Australia-France 2+2 Ministerial Consultations didn’t feature in the leader-level July 2022 France-Australia Joint Statement. Beyond the recent joint statement between Minister Farrell and his Spanish counterpart, the only other exception to the excising of economic coercion from high-level statements since the May federal election (of which I’m aware) is the Quad Joint Leaders’ Statement from 24 May. But given the timing of that statement circa three days after the federal election, it’s highly likely (certain?) that it was agreed prior to Labor winning the election. It therefore presumably didn’t reflect the linguistic shift on China’s trade restrictions that the new government subsequently instituted.

What has prompted the return to raising concerns about economic coercion? One possibility is that this language wasn’t driven by Canberra. Perhaps Madrid wanted this reference inserted given that fellow European Union (EU) member Lithuania has been subjected to China’s sustained coercive economic measures since 2021? I’m very, very far from qualified to comment on Spanish foreign policy. But a cursory glance doesn’t turn up regular references to concerns about economic coercion in Madrid’s diplomatic messaging (leaving aside EU statements and measures). (Any readers with knowledge of the granular details of recent Spanish foreign policy, please correct me if I’ve missed something.)

Other possible explanations might be that the Albanese government in general is planning on resuscitating the language of economic coercion. Though possible, this explanation sits oddly with the Foreign Minister cautiously referring to China’s economic coercion as “trade blockages” in late September in both an interview and the bilateral meeting with her Chinese counterpart Wang Yi. It also doesn’t fit with the absence of a reference to economic coercion in the 24 September Joint Readout of the Quad Ministerial Meeting. This lacuna is especially conspicuous considering that concerns about economic coercion were forcefully tabled in the previous Quad ministerial meeting in February during the Morrison government’s tenure.

Given the mixed evidence so far, I’d want to wait for more datapoints to get a firm sense of how the Albanese government will describe China’s trade restrictions going forward. Perhaps we’re witnessing the early stages of rethink of the tactic of reducing the use of economic coercion language on the grounds that the tweak in nomenclature may not have delivered obvious results? Or perhaps Minister Farrell is positioning himself to speak more strongly on one of the most critical issues impacting his portfolio and the broader Australia-China relationship?

Regardless of how the language evolves, Minister Farrell’s recent joint statement makes it clear that Canberra hasn’t abandoned more rhetorically forceful references to economic coercion. Consistent with this reading, reporting from The Australian Financial Review suggests that Spain was backing up Australia’s effort to reform the World Trade Organization to better adjudicate coercive trade practices. Based on all this and despite a more cautious start to criticising China’s trade restrictions, I’d expect stronger expressions of concern about economic coercion from the Albanese government in the months ahead.

The case for emphasising concerns about economic coercion

From the speech on 30 September by (I’m assuming, though it’s not specified) the Chinese Ambassador to Australia Xiao Qian at a reception celebrating the 73rd anniversary of the founding of the People’s Republic of China:

“Since the new Labor government came to power after the recent federal election, we have seen a good start to reset the China-Australia relationship. … It is our strong belief that, as long as both sides take concrete actions and move towards each other in the spirit of mutual respect and mutual benefit, we’ll be able to bring China-Australia relations back on the right track at an early date.”

Quick take:

Questions of what the Albanese government is saying on China’s trade restrictions aside, what should they be saying? Should the Prime Minister and his ministers revive their predecessors’ practice of regularly and forcefully calling out economic coercion specifically? These kinds of questions are likely to be especially tough to answer given strikingly positive messaging like the above coming from the Chinese government. Isn’t there a chance that reverting to tougher Morrison government-era language, such as calling out economic coercion by that name, could jeopardise the so-far rapid warming of bilateral ties? The costs and benefits of returning to the language of economic coercion to criticise China’s trade restrictions are mixed. But, on balance, I’d be inclined to revert to the previous government’s regular expressions of concerns about economic coercion.

On the cost side of the ledger, using the language of economic coercion again is likely to modestly frustrate Beijing. The Chinese government presumably noticed and appreciated Australia’s linguistic shift away from economic coercion. Nevertheless, reviving economic coercion is unlikely to singlehandedly derail the cautious diplomatic entente between Australia and China. Canberra’s resurrection of the language of economic coercion would presumably pale into relative unimportance in Beijing’s eyes compared to the intense policy disagreements over everything from Taiwan and AUKUS submarines to China’s security role in the Pacific and human rights abuses in Xinjiang. The improvement of bilateral ties has continued despite all these fractious substantive disputes, so it seems implausible to imagine that raising concerns about economic coercion specifically would upend the more positive trajectory in Australia-China relations. That doesn’t mean that reusing the language of economic coercion won’t be a net negative for bilateral atmospherics. But it alone probably won’t stop, for example, Australian ministers (and perhaps leaders) getting ad hoc meetings with their Chinese counterparts.

On the benefit side of the ledger, the language of economic coercion elevates the Australian experience with China’s trade restrictions among allies and partners and in prominent minilateral groupings, such as the G7 and Quad. Of course, the same substantive issue of China’s trade restrictions can be raised without the specific language of economic coercion. But this snappy and emotive turn of phrase is presumably a more powerful framing for the purposes of increasing international awareness and galvanising opposition to coercive economic practices. Importantly for Australia, this language of economic coercion was embraced by a range of Australia’s key allies and partners in the Indo-Pacific that tend to be more reluctant (in relative terms, at least) to use language that can be interpretated as critical of China. These regional countries that have previously joined Australia in raising concerns about economic coercion include India, New Zealand, Malaysia, Singapore, and Vietnam. Giving up on the effective Morrison government effort to have allies and partners sign onto concerns about economic coercion can plausibly be seen as abandoning a diplomatic strategy that had successfully and perhaps surprisingly garnered widespread regional and global support.

The language of economic coercion also likely serves a domestic political function. Calling out economic coercion explicitly may help the Australian public understand the pressures that their government and exporters are under at the hands of the Chinese government. This could incrementally foster the kind of whole-of-nation solidarity and resilience that is beneficial for riding out enduring economic coercion and other pressure campaigns. It might not factor into matters of statecraft, but the label of economic coercion is also probably more analytically accurate. After all, despite intermittent efforts to cultivate plausible deniability, China is seeking to, among other things, punish Australia for its actions and pressure the Australian government, which makes Beijing’s trade restrictions nakedly coercive. Calling China’s actions simple trade restrictions is therefore on some level euphemistic.

To be clear, the domestic benefits of using the language of economic coercion depend on the Albanese government being careful to level accusations of economic coercion against Beijing and the Chinese government specifically, as opposed to using loose terms like “Chinese economic coercion.” Using rubbery adjectives like “Chinese” without linking them to the Chinese state specifically risks blurring massively important distinctions between Chinese peoples, Chinese diaspora communities around the globe and in Australia, China the country, the Chinese government, the Chinese Communist Party, etc. As others have persuasively argued, using imprecise terms like “Chinese economic coercion” could easily have a corrosive impact on Australia’s social cohesion and indirectly endanger Australians of Chinese backgrounds.

Of course, more forcefully naming and shaming Beijing by raising concerns about economic coercion specifically almost certainly won’t convince China to stop imposing its trade restrictions. After all, it didn’t achieve that result when the Morrison government repeatedly used the language of economic coercion (albeit in the context of markedly different bilateral dynamics). But the inverse is true also: using the rhetorically softer language of trade restrictions or sanctions is alone almost certainly not going to dramatically improve the Australia-China relationship and convince Beijing to dismantle its coercive trade measure.

In the grand scheme of bilateral ties, calling out China’s economic coercion will only probably be a minor additional drag on the relationship and will likely have some diplomatic and domestic benefits for Australia. If that’s right, there’s a case (albeit not a totally clear-cut one) for Minister Farrell and his colleagues to start once again using the language of economic coercion. Others, no doubt, will calculate the balance of costs and benefits differently. And the above, of course, is a just a preliminary assessment. But there may still be cause for replicating this specific aspect of the Morrison government’s diplomatic oeuvre on China.

From naming and shaming to flattery?

Minister for Foreign Affairs Penny Wong responding on 23 September 2022 to a question about calls for China to be more critical of Russia’s invasion of Ukraine:

“China is a great power. China is a P5 member [permanent member of the United Nations Security Council]. China has like all of us, signed up to the UN charter. We believe as does every country with the exception of Russia that Russia is in breach of the UN charter through its illegal invasion of Ukraine. And we encourage China as a member – P5 member with a special responsibility to uphold the UN charter to use its influence to end the war.”

Quick take:

Notwithstanding Minister for Trade and Tourism Farrell’s more forward-leaning messaging on economic coercion, Minister for Foreign Affairs Wong has recently sounded some softer notes on China. In other interviews during her recent US visit, the Minister emphasized (and reemphasized) that “the world … look[s] to China as a great power” and also that it has a “special responsibility to ensure that the UN Charter is upheld.” These remarks were made in the grim context of Russia’s invasion of Ukraine and efforts to convince Beijing to use its influence in Moscow to seek an end to the invasion. Yet these appeals to China on the basis of its great power status also fit into a recent pattern of weaving some complimentary strands into Canberra’s messaging about Beijing.

This tendency was also on show in Minister Wong’s meeting with her Chinese counterpart during the same US visit. In her opening remarks, the Minister noted: “Trade has been the platform from which the PRC [People’s Republic of China] has made historic achievements in poverty alleviation.” To be clear, this kind of laudatory rhetoric about China’s remarkable development story is not new for Australia. As I’ve noted previously, highlighting China’s herculean poverty reduction achievements was a regular talking point used by the Morrison government even during the freeze in bilateral diplomatic ties in the period 2020-22. Still, combined with appeals to China’s great power status, this language suggests a willingness on the part of the Albanese government to combine its continued criticisms of China with select offers of praise.

These kinds of rhetorical status boosts for Beijing presumably won’t alone convince China to change its approach to Russia’s invasion of Ukraine or any number of bilateral issues in the Australia-China relationship. Nevertheless, these complimentary messages will probably be noted and appreciated by Beijing. This is likely to be especially true when they feed into the Chinese government’s positive self-conception. For example, Beijing regularly touts its record on poverty reduction and proudly brandishes its status as, according to Chinese officials, a great and responsible world power. These and related themes were, for example, front and centre both during Foreign Minister Wang’s address to the United Nations General Assembly and the Chinese Embassy in Canberra’s Nation Day reception. It’s reasonable to imagine that Minister Wong’s use of versions of these points in her own appeals to Beijing will resonate with the Chinese government and its representatives.

Offering such praise is also savvy because it costs Australia very little/nothing beyond adding a few additional talking points to ministerial messaging. With the Albanese government consistently signalling its determination to not compromise on any points of substantive policy disagreement with China, flattering Beijing with these kinds of diplomatic messages is an economical way of appealing to the Chinese government without conceding any policy ground. Even if it only yields the most marginal of improvement in bilateral ties, it’ll likely still be on balance a worthwhile diplomatic tactic given how low-cost it is for Canberra.

Perhaps more importantly though, periodic compliments could help build an additional quantum of goodwill in Beijing that Canberra can store up for times when it must take tough actions in other policy arenas. The Albanese government will likely be pushed in the coming months to, among other things, impose targeted sanctions against Chinese government and communist party officials in response to human rights abuses in Xinjiang. Canberra semi-regularly flattering Beijing probably won’t stop China responding to such sanctions with blistering diplomatic attacks and perhaps even countersanctions. But it equally seems plausible that offering ad hoc compliments will incrementally add to the warmth of bilateral ties and therefore somewhat mitigate and help manage the fallout from harder-edged China policy decisions in the future, including targeted Australian sanctions.

Full disclosure: I’d previously rationalised Australian rhetorical olive branches like the above and other possible symbolic gestures as a means of improving the overall tenor of bilateral ties and maybe in time persuading Beijing to normalise high-level diplomatic and political contact and wind back its trade restrictions. It’s still admittedly a question in my mind, but I’m now more inclined to see these low-cost diplomatic tactics as tools for managing the near-inevitable future turbulence of bilateral ties rather than substantively improving the relationship. Of course, such gestures might eventually shift the relationship overall to a more positive trajectory. But even if that doesn’t happen or indeed can’t happen due to all the deep-seated disagreements between Beijing and Canberra, diplomatic messages like Minister Wong’s recent compliments may still serve the important function of building a modest reservoir of goodwill in Beijing to moderate the incline of future downturns in bilateral ties.

(Addendum: There are of course numerous other low-cost options for Canberra to flatter Beijing with diplomatic messaging. I’ll [hopefully] share some other tentative ideas in the coming weeks.)

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Weeks of 29 August to 18 September 2022

I’ve recently been on leave, so this edition of the newsletter covers the three-week period of 29 August to 18 September. BCB will return to its regular fortnightly programming for the next edition.

The moral and political stakes of Magnitsky-style sanctions

Australian Shadow Minister for Foreign Affairs Simon Birmingham in response to the release of the UN High Commissioner for Human Rights’ report on human rights abuses in Xinjiang:

“Given the bipartisan legislation of Australia’s Magnitsky sanctions this year, now followed by this concerning report, it is appropriate for the Albanese government to consider targeted sanctions in response to human rights abuses in Xinjiang.”

Quick take:

With the release of this latest report on human rights abuses in Xinjiang, pressure is mounting on the Albanese government to level targeted sanctions against Chinese government and communist party officials. The UN report found: “The extent of arbitrary and discriminatory detention of members of Uyghur and other predominantly Muslim groups … may constitute international crimes, in particular crimes against humanity.” This report comes on the back of a large body of evidence (e.g., here and here) and other detailed studies documenting systematic and severe human rights abuses in Xinjiang. Not only does Canberra have a compelling moral case for taking concrete action against responsible individuals, but the introduction of Magnitsky-style sanctions powers provides a legal tool to respond.

Despite the moral force of the case for targeted sanctions, the net result of such measures is far from clear. Assuming similar measures to likeminded European and North American countries, Australia may in the end only level sanctions against a handful of individuals and organisations. The European Union (EU), for example, sanctioned four individuals and one organisation in March 2021. I haven’t seen any authoritative accounts of how many Chinese government and communist party officials the Australian government might target. But given the precedent set by European (and other) countries, it seems likely that a relatively small number would be targeted. Probably less than 10 and perhaps closer to the four individuals sanctioned by the EU and others. Moreover, there’s every chance that the four individuals that the EU and others sanctioned don’t have extensive financial exposure to Australia and wouldn’t be planning to visit. And if they previously had such exposure or plans, one imagines that they would have sought to reduce their vulnerability to any possible Australian sanctions in the wake of Canberra’s legislation of Magnitsky-style sanctions powers and coordinated US, Canadian, UK, and EU sanctions.

To my mind, the likely small number of individuals targeted and the potentially limited costs for those individuals doesn’t undermine the principled moral case for such sanctions. But it does raise serious questions about how effective such sanctions would be at shaping Beijing’s behaviour. If only four individuals and one organisation are targeted, then presumably the adverse material impact would be limited and the deterrent effect on the Chinese government would also be minimal. Although there has been cautious press reporting of some softening of China’s draconian policies in Xinjiang and examples of positive outcomes in individual cases of detained Uighurs following media attention, it’s hard to draw straight and clear lines between these developments and measures such as sanctions. Given the difficulties of demonstrating causality, it’d be wise to have modest expectations for the ability of Australian targeted sanctions to change China’s policies and tangibly improve conditions for persecuted minorities in Xinjiang.

Despite these likely limitations on the effectiveness of targeted sanctions, my working assessment is that there’s still a strong principled case for such measures. As I’ve argued previously, shaping Beijing’s behaviour might be one metric of success of such sanctions, but it’s not the only relevant consideration. A relatively persuasive case can be made for targeted sanctions based on the imperatives of raising public awareness about human rights abuses in Xinjiang, increasing the level of global scrutiny, and putting incrementally more pressure on the Chinese government. Targeted sanctions are likely to do all those things even if they don’t immediately and obviously lead to policy change in China.

On a self-interested level, there may also be a diplomatic risk for Australia in not introducing such sanctions. The Australian government might be seen as lagging many likeminded European and North American liberal democracies that have introduced targeted sanctions in response to the Chinese government’s human rights abuses in Xinjiang. That said, the diplomatic argument can potentially go in both directions. Just as not levelling targeted sanctions leaves Australia at odds with many European and North American liberal democracies, introducing such measures against China would be out of step (for at least the foreseeable future) with the actions taken by all of Australia’s friends in the region, including close partner Japan and ally New Zealand.

To be sure, the above moral and diplomatic considerations may in the end prove moot. Regardless of what happens in China and on the international stage, potent domestic political forces are likely to push in the direction of levelling targeted sanctions. Per Senator Birmingham’s comments, the Opposition has signalled its willingness to prod the Albanese government on sanctions. It’s potentially noteworthy that Senator Birmingham’s formal joint statement in response to the UN report didn’t explicitly call for Australia to level targeted sanctions. But the combination of raising the prospect of such sanctions in comments and the clear joint call with Senator James Paterson to use such measures in response to cyber attacks suggests a willingness on the part of the Opposition to encourage the Albanese government to impose targeted sanctions against Chinese government and communist party officials.

This makes sense given that the Autonomous Sanctions (Magnitsky-style and Other Thematic Sanctions) Amendment Bill 2021 was legislated by the Opposition when they were in government and was done so with an eye to, among other goals, responding to China’s human rights abuses. But beyond the Coalition’s principled position on targeted sanctions, holding Labor’s feet to the fire on the issue is also likely to be electorally popular. Lowy Institute polling points to overwhelming (82%) public support for “travel and financial sanctions on Chinese officials associated with human rights abuses”. So, beyond the moral case for staying forward-leaning on the issue, Coalition calls for Labor action would put the Opposition firmly on the side of majority Australian public opinion. The twin incentives of moral principles and pragmatic politics suggests the Albanese government will be semi-regularly and publicly pushed on targeted sanctions against Chinese government and communist party officials.

Australia’s likely sanctions strategy

Then-Leader of the Opposition in the Senate Penny Wong speaking on 1 December 2021 on the second reading of the Autonomous Sanctions (Magnitsky-style and Other Thematic Sanctions) Amendment Bill 2021:

“Decisions to implement sanctions against individuals and entities are and should remain executive decisions of government, which have to take account of all relevant factors, including foreign and strategic interests and implications of bilateral relations.”

Quick take:

Despite the powerful principled and political reasons for pursuing targeted sanctions against Chinese government and communist party officials, the Albanese government will also probably want to minimise the bilateral relationship and related fallout. Australian Minister for Foreign Affairs Wong’s comments from late 2021 are an acknowledgement of the complex and multifactorial national interest calculations thrown up by the question of whether to impose such sanctions. Although the moral case for denying human rights abusers financial and travel opportunities is clear, the Australian government is saddled with the unenviable and devilishly complex task of weighing such ethical imperatives against a range of economic, diplomatic, security, and other interests that impact the Australian nation.

Although Canberra won’t compromise Australian interests and values for the sake of pleasing Beijing, the Albanese government would presumably on balance prefer to maintain the momentum of more positive diplomatic rhetoric from Beijing and ad hoc ministerial meetings. These kinds of considerations may count in favour of slow pedalling or perhaps even entirely eschewing targeted sanctions. On top of that, there’d also presumably be calculations in some quarters that levelling such sanctions could scuttle a previously flagged (though, of course, by no means guaranteed) reprieve in China’s trade restrictions on Australian coal. This is not to say that we can be confident that Beijing will start dismantling some trade restrictions if Canberra doesn’t impose targeted sanctions. But I’d be willing to wager that imposing such sanctions would at least delay the lifting of trade restrictions and may even prompt Beijing to impose additional trade restrictions.

The risk of tit-for-tat sanctions against Australian individuals and organisations will also presumably play on the minds of Albanese government ministers. China has form in this regard, sanctioning as it did European think-tanks, academics, and parliamentarians in the wake of EU targeted sanctions. On a more speculative note, there’s also the possibility that Beijing will respond to Canberra’s targeted sanctions by, among other things, delaying progress on high-profile Australian consular cases or even arbitrarily detaining other Australians in China. I freely acknowledge that I don’t have concrete evidence regarding the likelihood of such outcomes. But Australian ministers will probably worry about such possibilities given the Chinese government’s acute sensitivity regarding its human rights abuses and its willingness to use hostage diplomacy (notably in the case of the Two Michaels and the Huawei executive Meng Wanzhou). As such, it’s possible that Beijing would detain individual Australians as a strongarm negotiating tactic and means of registering its deep discontent. To be sure, I’m not aware of retributive detentions of citizens of, for example, EU countries in response to previously introduced targeted sanctions. Still, it would be imprudent to not consider such possibilities given the still strained state of Australia-China relations and Beijing’s track record of using coercive measures against Canberra.

Then there’s the risk of such sanctions taking future ministerial- and leader-level meetings off the table. With China’s 20th Party Congress now slated to open on 16 October and President Xi Jinping planning to attend the G20 summit in Indonesia in November, the first leader-level meeting between the Australian and Chinese governments in three years looks possible. The announcement of Australian targeted sanctions would presumably make any such a leader-level meeting much less likely. Considering the context of a range of long-term and seemingly intractable disputes between Canberra and Beijing, a leader-level meeting in November probably wouldn’t dramatically shift the overall trajectory of bilateral ties. Still, the Albanese government is likely to want to be able to express its views and prosecute its interests with the Chinese government at the leader level, and targeted sanctions may jeopardise such an outcome.

Taking all the above together, the Albanese government is likely navigating the complex calculation of at once being pushed to introduce targeted sanctions for both principled moral and pragmatic domestic political reasons, while also wanting to minimise the fallout for Australians and the bilateral relationship. What then can Canberra do? Clearly, there’s no risk- or pain-free option. Perhaps the most palatable and likely outcome is the introduction of targeted sanctions in tandem with select Australian allies and partners. One could plausibly infer that such an outcome is in the offing from Minister Wong’s ambiguous remark on 6 September: “We will consult with countries around the world, other parties, about how we can best respond and working our way through options.”

Such a coordinated approach would serve the moral goal of responding to grave human rights abuses and ensuring that individuals implicated don’t enjoy benefits in Australia. At the same time, with Beijing’s discontent also directed at other capitals, moving on sanctions in a coordinated fashion would likely diffuse the diplomatic heat on Canberra. The United States, Canada, the United Kingdom, and the EU have already introduced such coordinated targeted sanctions on Chinese government and party officials. Yet given the authoritative and high-profile nature of the UN report, there may be scope and political appetite for additional sanctions among these likeminded governments. Australia could potentially join such expanded targeted sanctions while also playing catch up with the North American and European sanctions already in place.

Given the novelty of targeted Australian sanctions and the already fractious bilateral relationship, Beijing would still be deeply unhappy with Canberra. But a coordinated response might give Australia a measure of safety in numbers. An alternative might be for Australia to wait and level sanctions in tandem with other countries such as Japan and New Zealand, which are apparently exploring similar autonomous sanctions regimes. This might be seen as an especially appealing option as it would allow Australia to associate its sanctions with two countries that have comparatively smooth relations with China. But given the seemingly early stages of these discussions in Tokyo and Wellington, such an option might mean being forced to wait many months and perhaps even years before levelling targeted sanctions. Considering the moral urgency of the human rights abuses in Xinjiang and the Australian domestic political forces in support of targeted sanctions, such an extended timeline may be untenable.

A leader-level meeting

Australian Prime Minister Anthony Albanese responding on 7 September to a question about indications from the Chinese Embassy that a leader-level meeting is possible in November on the sidelines of the G20:

“I’m open to dialogue with anyone at any time, particularly with leaders of other nations. It’s a good thing if there is dialogue, and certainly, if such a meeting took place I would welcome it as I welcome dialogue with leaders throughout the region and throughout the globe.”

Quick take:

This is one of the best signs yet that the nearly three-year break in leader-level meetings between Australia and China will end. This positive signal from Prime Minister Albanese came amid a flurry of warm messaging form both sides. It was followed by an upbeat speech by Chinese Ambassador Xiao Qian to the Australia China Business Council Canberra Networking Day. Ambassador Xiao emphasised that the “new Australian government has provided a possible opportunity to reset the China-Australia relationship.” Meanwhile, the same event saw Assistant Minister for Foreign Affairs Tim Watts suggest: “If China engages with Australia directly and constructively, we will respond in kind.” These broadly optimistic messages followed Minister for Defence Richard Marles’ reiteration that “what we’ve done as a new government is tried to change the tone, be respectful in our language, be professional, be sober, be diplomatic.” Meanwhile, Minister for Trade and Tourism Don Farrell also stressed that the Australian government is “putting out the olive branch to China, to the Chinese Government, saying we’re happy to talk with you about these [trade] issues.”

Does this sunny side up signalling mean that a leader-level meeting during Asia’s summit season in November is a lock? In a word, no. The new-ish Chinese Ministry of Foreign Affairs Spokesperson Mao Ning offered taciturn responses to two questions on 7 September about a leader-level meeting between Australia and China. Twice, she effectively said she had “no information to offer.” It’s also hard (though not impossible) to imagine a leader-level meeting in the wake of, for example, the Australian government levelling targeted sanctions in response to human rights abuses in Xinjiang (assuming such sanctions were announced before November). Presumably a negative finding in the review of the 99-year lease by the Chinese company Landbridge of the Port of Darwin would also be enough to foreclose a leader-level meeting. Still, a meeting between Australian and Chinese leaders now seems increasingly likely. So, in the absence of a new significant bilateral dispute over Australian targeted sanctions or something equally fraught, I’m willing to predict a meeting between Prime Minister Albanese and either the Chinese President or Premier on the sidelines of a multilateral meeting in November this year. Though, to be fair, it’s equally possible that I’ll be eating a serve of humble pie in a couple of months.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnight of 15 to 28 August 2022

Doubling down on disinformation

China’s Ambassador to Australia, Xiao Qian, writing in The Australian Financial Review on 24 August:

“Australia’s commitment to one-China principle is clear-cut in both concept and content. … The Government of Australia is obliged to stick to its commitment to one-China principle, both in words and in deeds, in name and in essence, with sincerity, without discount.”

Quick take:

This article, which was later published on the Chinese Embassy’s website, further ups the ante in Beijing’s disinformation campaign on Australia’s one-China policy. In recent months, Beijing has offered a misleading impression of Canberra’s one-China policy in statements and readouts of bilateral meetings posted to the Ministry of Foreign Affairs (MFA) and Chinese Embassy websites. Now, Beijing’s deceptive rendering of Australia’s one-China policy has found its way into the opinion pages of the Australian press.

Beyond the apparent brazenness of China’s inaccurate description of Australian government policy, this op-ed is noteworthy because of the scale of the audience that it potentially misleads. Apart from officials and analysts, statements and meeting readouts posted to Chinese government websites likely receive a relatively modest audience among the Australian public. By contrast, a much larger and more diverse range of Australians are exposed to an op-ed in one of the country’s major mastheads.

As I argued last edition, this is dangerous for Taiwan. The kind of disinformation being spread about Australia’s one-China policy is part of a much larger suite of Chinese government tactics aimed at shaping public opinion globally and isolating Taiwan. These efforts to change the way in which publics see Taiwan might not be as central to China’s strategy as People’s Liberation Army (PLA) modernisation and PLA Air Force flights towards the island. But they are still aimed at incrementally creating conditions more conducive to China’s eventual annexation of Taiwan.

On top of dangers for Taiwan, such unchecked disinformation also poses risks for Australia. I’m admittedly still grappling with how precisely to parse the impact of such disinformation on Australian politics and policy. But it strikes me that, at minimum, this disinformation campaign could constrain Australia’s cross-Strait policy options through its potential shaping of Australian public opinion. Ambassador Xiao’s op-ed gives the Australian public the deceptive impression that Canberra is committed to, in his words, Beijing’s view that “the government of the [People’s Republic of China] PRC should exercise China’s full sovereignty, Taiwan included.” As well as misleading Australians, such messaging could eventually constrict Canberra’s policy options on cross-Strait issues by eroding the democratic licence for the Australian government’s current approach of engaging with and, where consistent with its one-China policy, supporting Taiwan.

As the 1972 joint communique establishing official tries between Australia and the PRC makes plain, Canberra “acknowledges” but does not necessarily support Beijing’s view that “Taiwan is a province” of the PRC. (Unsurprisingly, there’s a meme for that.) The linguistic nuance of only acknowledging the PRC position means that although Canberra “recognises the Government of the People’s Republic of China as the sole legal Government of China,” Australia need not accept, much less actively endorse, efforts by China to undermine Taiwan’s de facto independence and make it in practice a province of the PRC. By contrast, Ambassador Xiao’s rendering of Australian policy implies that Canberra is committed to supporting Beijing’s view that Taiwan is already in principle and ought to be in practice a province of China.

If Ambassador Xiao’s disinformation gains currency, it can be expected to limit Australia’s policy options. More Australians erroneously believing that Canberra supports Beijing’s one-China principle could easily undermine the perceived legitimacy of Australia’s diverse and growing connections with Taiwan. For example, the successful propagation of the Chinese government’s view that Canberra adheres to Beijing’s one-China principle may undermine domestic acceptance of Australia’s principled and relatively forward-learning positions on a range of Taiwan-related issues. These include Canberra’s recent strong advocacy for the preservation of peace and stability in the Taiwan Strait and its support for Taiwan’s membership of/contribution to international organisations where appropriate and/or where statehood is not a prerequisite.

Despite what I’ve suggested, is the impact of Beijing’s disinformation campaign likely to be that far reaching? Probably not in the short term. It would be a stretch to claim that the Australian government will immediately encounter dramatically stronger domestic opposition to, for example, its support for Taiwan’s contribution to international organisations simply by virtue of the Chinese government’s disinformation. But while the Chinese government’s efforts to shape public perceptions of Australia’s one-China policy might not immediately constrict Canberra’s range of movement, there is the serious long-term risk that it could undermine popular acceptance of Australia’s engagement with and support for Taiwan by convincing the Australian community that their government is bound by Beijing’s one-China principle.

Preserving Australia’s Taiwan policy latitude

Australian Representative Jenny Bloomfield speaking about the Australia-Taiwan English Language Learning Partnership Action Plan on 17 August:

“Australia and Taiwan are Indo-Pacific partners with rich Indigenous histories, open, diverse societies, and close economic and people-to-people links.”

Quick take:

Australia’s language on Taiwan has significantly stiffened in recent years. This includes the evolution of AUSMIN language that culminated in the 2021 Joint Statement emphasising “Taiwan’s important role in the Indo-Pacific region” and labelling it a “leading democracy and a critical partner for both countries [i.e., Australia and the United States.” But Representative Bloomfield’s speech is the first instance I can recall of the specific formulation of Australia and Taiwan as “Indo-Pacific partners”. It’s also the first public example I’ve seen of an Australian official (as opposed to a minister) using such warm and forward-leaning language on Taiwan. (Please correct me if I’ve missed something on either of those counts.)

This messaging provides another concrete example of the value of counteracting Beijing’s one-China disinformation campaign. A successful Chinese government effort to convince Australians that Canberra shares Beijing’s one-China principle would likely make messaging about Australia and Taiwan as “Indo-Pacific partners” much harder to justify and sustain. The point is not that describing Australia and Taiwan as “Indo-Pacific partners” is objectively the right form of messaging for Canberra. One can remain agnostic on Representative Bloomfield’s messaging or even oppose it and yet still think that Canberra should retain its freedom to choose from a wide range of cross-Strait messages and positions consistent with its relatively flexible one-China policy. In other words, the core issue with Beijing’s disinformation is that foisting the one-China principle on Canberra would lock Australia into a narrower path on Taiwan. And from the point of view of maximising Canberra’s strategic autonomy, such an outcome is a net negative for Australia regardless of one’s view of recent changes in the Australian government’s messaging on Taiwan.

Last edition, I made the case for the Australian government to counteract Beijing’s disinformation by explicitly correcting the Chinese government’s misleading statements. Given the above considerations, I’d be inclined to argue that the case for such a correction is even stronger in the wake of Ambassador Xiao’s op-ed. If the above analysis is right (and please tell me if you think it’s not), then there’s the real risk that the Australian government will undermine its own cross-Strait policies if it leaves Beijing’s disinformation unanswered. Sustaining domestic political support for Australia to engage with and, where consistent with its one-China policy, support Taiwan depends on public understanding and acceptance of Australia’s one-China policy and the government’s associated approach to Taiwan. The Chinese Ambassador’s article directly undermines the basis for this by seeking to propagate the falsehood that Australia supports the one-China principle and is locked into the view that Taiwan is and ought to be a province of the PRC.

Accepting the argument that the Australian government should set the record straight, such a correction does need not be elevated to a full-blown ministerial statement. Minister for Foreign Affairs Penny Wong might instead use a speech to reiterate Australia’s one-China policy and clarify that although the Australian government acknowledges the Chinese government’s position, Canberra doesn’t subscribe to a one-China principle. Even less dramatically, Minister Wong and perhaps some of her ministerial colleagues could simply incorporate a rebuttal of the idea that Australia adheres to the one-China principle into regular responses to media questions on Taiwan.

Although the Department of Foreign Affairs and Trade (DFAT) website might not be bookmarked by most Australians, there is also arguably a case for updating DFAT’s language to explicitly debunk the notion that Canberra has adopted Beijing’s one-China principle. If the Albanese government has an obligation to ensure that the Australian public clearly understands Australia’s one-China policy and the space that this provides Canberra to tailor responses on cross-Strait issues, then ministerial messaging on the issue is essential. But a similar logic likely holds at the departmental level as well. Perhaps DFAT should issue an explainer or fact sheet laying out the finer nuances of Australia’s one-China policy and making plain that it is not now and has never been tantamount to the PRC’s one-China principle.

Of course, there may be pragmatic grounds for not wanting to directly contradict the Chinese Ambassador in either a speech or responses to media questions. Rebutting the substance of a Chinese official’s op-ed may be seen as neither a productive nor a diplomatically astute use of ministerial energy (even if it’s done relatively obliquely by not mentioning Ambassador Xiao by name). In that case, there may be an argument for leaving the Chinese government’s words unanswered for a period and then taking the initiative with a positive statement of what Australia’s one-China policy is and, crucially, what it is not. As well as potentially reducing the likelihood of a backlash from Beijing, such a delayed response would be less obviously reactive and more of an agenda-setting manoeuvre from the Albanese government. Perhaps such an approach could be timed to coincide with AUSMIN 2022 or a strong unilateral US statement on Taiwan to provide some measure of diplomatic cover.

But even if the Albanese government’s messaging doesn’t take the form of a quick and direct riposte to Beijing, presumably there’s every chance that China still won’t approve of an explicit Australian disavowal of the Chinese government’s one-China principle. It stretches credulity to breaking point to imagine that the Chinese government doesn’t know that it is offering a misleading rendering of Australia’s one-China policy. But Beijing might still be unhappy that its disinformation was pointed out. And this displeasure might remain even if the pointing out is done in a cautious and considered manner.

There may also be misgivings in some quarters of the Albanese government. This may be especially likely considering that actively clarifying that Australia doesn’t support the PRC’s one-China principle might be seen as an unhelpful play while ministers are trying to stay “positive” about relations with China. But as the Prime Minister and his ministers have been at pains to stress, Australia shouldn’t and won’t compromise on matters of policy to please the Chinese government. And given that there are few matters of China-related policy more foundational than the one-China policy, Canberra arguably has a compelling case for clearly and consistently correcting Beijing’s disinformation on the issue.

Aggregate leader-level engagement

The number of face-to-face meetings between Australian prime ministers and governor-generals and Chinese leaders and senior officials, December 1972-August 2022:

Quick take:

This graph combines previously shared data on meetings at the level of Prime Minister with data of meetings at the level of Governor-General. It hopefully offers something akin to an aggregate record of leader-level meetings between Canberra and Beijing since the establishment of official ties. As with the data on prime ministerial meetings shared last edition, the underlying database on which the above graph is based is still very much a work in progress and doubtless misses some face-to-face meetings between Australian prime ministers and governor-generals and Chinese leaders and senior officials. This is especially likely to be true of the first decade or so of the formal diplomatic relationship. As with the prime ministerial data, the absence of any in-person meetings in 2000 also appears odd in the context of on average three such meetings each year in the five years before 2000 and on average five such meetings each year in the five years after 2000. Like last edition, any corrections or additions that readers might be able to offer would be gratefully received. I’ll continue updating and correcting this graph as I capture more datapoints.

The vast majority of the Chinese leaders and senior officials captured in the above dataset are Chinese Communist Party (CCP) officials at the level of Politburo or above or Chinese government officials at the level of Minister or above. In a small number of cases, the data includes meetings between prime ministers and governor-generals and senior Chinese representatives who did not hold CCP or Chinese government positions at those ranks (e.g., former Vice Premier Gu Mu’s meetings in 1987 with Prime Minister Bob Hawke and Governor-General Ninian Stephen). Although the inclusion of these meetings can certainly be debated given that they may not carry the same import as a true leader-level meeting, I’m inclined to add them given the prime ministerial and governor-general participation.

Noting these caveats, here are a few preliminary observations:

• Australia is currently experiencing the most sustained period since 1989-91 without engagement between the Prime Minister and Governor-General and Chinese leaders and senior officials. This historical contrast is especially striking considering that prime ministers and governor-generals met with Chinese leaders and senior officials on average more than six times each year in the ten-year period 2006-15.
• Since the freeze in high-level engagement between Canberra and Beijing after the Tiananmen Square Massacre, the Australia-China relationship has not experienced any other break in face-to-face meetings as sustained as the current episode. This current curtailment of engagement at the level of Prime Minister and Governor-General has lasted more than two years since November 2019 (last update August 2022).
• Even in the 1970s and 1980s—when face-to-face meetings between Australian and Chinese leaders and senior officials were much less frequent—the longest period without a meeting for the Governor-General or Prime Minister was the period of April 1973 to June 1976. Leaving aside the post-Tiananmen Square Massacre collapse in leader-level meetings, this means that one would need to go back to the very earliest years of the Australia-China relationship to find a longer gap in face-to-face meetings at the leader level. This also means that there have only been two gaps in face-to-face leader-level engagement longer than the current curtailment: 1973-76 and 1989-91.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnight of 1 to 14 August 2022

A one-China policy or principle?

The Chinese Embassy Spokesperson’s remarks on 6 August in relation to the Joint Statement made by the United States, Australia, and Japan:

“The one-China principle is a solemn commitment by successive Australian governments. It should be strictly abided by and fully honoured. It should not be misinterpreted or compromised in practice.”

Quick take:

Per a succession of statements from the Chinese Embassy in Canberra (e.g., here, here, and here), Beijing seems intent on giving the misleading impression that Australia endorses the Chinese government’s one-China principle. This isn’t the first time that the Chinese government has misrepresented Australia’s one-China policy. Beijing (almost certainly) verballed Minister for Foreign Affairs Penny Wong last month when it attributed to her something to the effect: “The new Australian government will … continue to pursue the one-China principle.”

Beijing’s twisting of the one-China policy into its preferred principle isn’t unique to Australia. The Chinese government regularly seeks to convince the world-at-large that recognition of the People’s Republic of China (PRC) as part of a one-China policy entails endorsement of Beijing’s one-China principle (i.e., that, among other things, “Taiwan is part of China”). For example, here’s Ministry of Foreign Affairs (MFA) Spokesperson Wang Wenbin speaking on 8 August: “The applicability of this [one-China] principle is universal, unconditional and indisputable. All countries having diplomatic relations with China and all Member States of the UN should unconditionally adhere to the one-China principle and follow the guidance of UNGA Resolution 2758.”

In recent week, the Albanese government has been especially disciplined in its recitation of its enduring one-China policy. Given recent official statements (e.g., here and here) and interviews (e.g., here, here, here, here, here, here, and here) from Prime Minister Anthony Albanese and his ministers, it should be absolutely clear that Australia adheres to a one-China policy rather than principle. This consistent messaging serves as an indirect rebuttal of Beijing’s misleading references to Canberra’s supposed one-China principle. But the determined regularity of China’s misrepresentation of Australia’s position on Taiwan raises the question of whether Canberra should more directly reject Beijing’s erroneous characterisation. Is there a case, for example, for the Australian government to explicitly set the record straight and correct Beijing’s error?

The argument for explicitly counteracting China’s disinformation is especially strong considering that a central pillar of China’s Taiwan strategy is informational. Notwithstanding China’s growing use of hard power around Taiwan in recent years (and in recent weeks, in particular), Beijing would still prefer to make its annexation of Taiwan a fait accompli through a range of measures short of war. These include shaping politics and policy debates in other countries, diplomatically isolating Taiwan, weaponizing Taiwan’s export dependence on China, seeking to intimidate Taiwan and the world militarily with People’s Liberation Army Air Force flights in the Taiwan Strait, and a range of other grey zone tactics.

Disinformation campaigns, including the effort to create the impression that the world endorses Beijing’s view that Taiwan is rightfully part of China, are a prominent element of these strategies to incrementally strengthen China’s hand. The Chinese government is seeking to cultivate the impression of a settled international consensus that Taiwan should be and in fact is part of China. Consider, for example, Beijing’s insistence in June this year: “The one-China principle is an established norm of international relations and a universal consensus of the international community.” Is spreading the meme that the world endorses Beijing’s one-China principle the most important aspect of China’s overarching strategy towards Taiwan? Probably not. But it is nevertheless a tactic that Beijing is now employing more regularly and adamantly. (I readily admit that I don’t have a strong sense of the longer record on China’s mischaracterisation of other countries’ one-China policies as principles, so please correct me if I’ve missed something here.)

Of course, Beijing would likely take umbrage if Canberra clearly called out its misrepresentation of Australia’s one-China policy. But any frustration from the Chinese government would presumably be moderated by Beijing’s awareness that it is wilfully misconstruing Canberra’s position. A sceptical response might retort that China sincerely believes that the world, including Australia, ought to adopt its one-China principle and that’s what is driving Beijing’s references to Canberra’s supposed one-China principle. But even if that’s the case, it’s hard to imagine that the Chinese government wouldn’t realise that Australia hasn’t in fact adopted (and probably never will) China’s one-China principle. Indeed, even China’s Ambassador to Australia, Xiao Qian, referred to Australia’s one-China policy in the Q&A portion of his National Press Club (NPC) address.

Regardless of the reaction from China, there are potentially grave long-term policy and political implications of leaving unchallenged Beijing’s erroneous narrative about near-universal adoption of the one-China principle. Over the course of years and decades, the propagation of the one-China principle narrative could incrementally contribute to conditions where more publics and their governments accept as legitimate China’s annexation of Taiwan. And unsurprisingly, as recent comments from China’s Ambassador to France about “re-education” suggest, the results are likely to be grim for the rights and freedoms of many millions of Taiwanese.

So, for the sake of combatting misinformation and counteracting China’s information operations against Taiwan, Canberra has compelling reasons to directly and clearly rebuff Beijing’s suggestion that Australia endorses the one-China principle. The next time a Chinese government representative incorrectly refers to Australia’s supposed one-China principle, Minister Wong and her colleagues should consider calmly correcting the record with something along the lines of the following:

“Australia doesn’t endorse the one-China principle. We have a one-China policy. Among other things, that means that although we acknowledge the position of the Chinese government that Taiwan is a province of the PRC, we don’t support the Chinese government’s view. We remain committed to both recognising the government of the PRC as the sole legal government of China while also deepening our rich and mutually beneficial unofficial ties with the peoples of Taiwan.”

Leader-level meetings since 1972

The number of face-to-face meetings between Australian prime ministers and Chinese leaders and senior officials, December 1972-August 2022:

Quick take:

The database (more detail to follow in the coming months) on which the above graph is based is still very much a work in progress and doubtless misses some face-to-face meetings between Australian prime ministers and Chinese leaders and senior officials. This is especially likely to be true of the first decade or so of the formal diplomatic relationship. The absence of any in-person meetings in 2000 also appears odd in the context of at minimum one meeting per year from 1992 onwards. Any corrections or additions that readers might be able to offer would be gratefully received. I’ll continue updating and correcting this database and graph here as I capture more detail.

The vast majority of the Chinese leaders and senior officials captured in the above dataset are Chinese Communist Party (CCP) officials at the level of Politburo or above or Chinese government officials at the level of Minister or above. In a small number of cases, the data includes meetings between prime ministers and senior Chinese representatives who did not hold CCP or Chinese government positions at those ranks (e.g., the meeting between Prime Minister Bob Hawke and at that time former Vice Premier Gu Mu in 1987). Although the inclusion of these meetings can certainly be debated given that they may not carry the same import as a true leader-level meeting, I err on the side of adding them given the prime ministerial participation.

Noting these caveats, here are a few of preliminary observations:

• Australia is currently experiencing the most sustained period since 1989-91 without in-person engagement between the Prime Minister and Chinese leaders and senior officials. This historical contrast is especially striking considering that the data suggests that prime ministers met in person with Chinese leaders and senior officials on average nearly five times each year in the ten-year period 2006-15.
• With the exception of the freeze in high-level diplomatic relations between Canberra and Beijing after the Tiananmen Square Massacre, the Australia-China relationship has never experienced such a sustained break in face-to-face meetings between prime ministers and Chinese leaders and senior officials. This current curtailment of engagement at the level of Prime Minister has lasted more than two years since November 2019 (last update August 2022).
• Speculation is swirling about whether Prime Minister Anthony Albanese will have a face-to-face meeting with President Xi Jinping or Premier Li Keqiang during summit season in November, which will include the EAS, G20, and APEC meetings in Cambodia, Indonesia, and Thailand. There are, of course, many political and policy developments that could upend the prospects of such a leader-level meeting later this year. The Albanese government’s new review of the 99-year lease by the Chinese company Landbridge of the Port of Darwin and the potential use of Australia’s Magnitsky-style sanctions against senior Chinese government or Party officials who have been implicated in human rights abuses in Xinjiang and elsewhere are just two such examples. It’s therefore unclear at this stage whether such a meeting will occur. But even if such a meeting does take place, the spell of a total lack of face-to-face meetings between November 2019 and November 2022 would still be the longest single absence of direct contact at that level since the more than three-year gap between Premier Li Peng’s Australia visit in November 1988 and Vice Premier Zhu Rongji’s visit in February 1992. Unless I’m missing something?

Old and new disputes

China’s MFA Spokesperson Wang speaking on 8 August:

“In the past few years, China-Australia relations have experienced serious difficulties for reasons caused by the Australian side. The merits of the issues involved are quite clear. China’s position on developing relations with Australia is consistent and clear. The sound and steady development of China-Australia relations serves the fundamental interests and shared aspirations of the two peoples. We urge the Australian side to develop a clear understanding of the situation, pursue the right course, respect China’s core interests and major concerns, abide by the one-China principle, observe basic norms governing international relations, stop interfering in China’s internal affairs, stop saying or doing the things that undermine regional peace and stability, refrain from echoing or assisting certain countries’ misguided strategy of using the Taiwan question to contain China, and avoid creating new obstacles for China-Australia ties.”

Quick take:

Despite its clear frustration with Australia, the Chinese government consistently provides little to no detail on what precisely it wants the Australian government to do. Despite extensive remarks about five action areas for Canberra, Ambassador Xiao’s speech at the NPC on 10 August similarly shied away from concrete and specific policy requests for the new-ish Albanese government. But despite being short on specific detail, both Spokesperson Wang’s comments and Ambassador Xiao’s speech again leave little reason to think that Australia-China ties are headed in an upward direction longer term.

Although broad brush stroke, Beijing’s displeasure with Canberra points to deep political and policy disputes. Requests that Australia “respect China’s core interests and major concerns [and] stop interfering in China’s internal affairs” are irreconcilable with Canberra’s bipartisan commitment to, for example, calling out the Chinese government’s systematic human rights abuses and diplomatically objecting to Beijing’s legally untenable maritime claims in the South China Sea. These are just two among many other issues on which China sees Australia’s statements and actions as threatening its core interests and interfering in its internal affairs.

The above points are neither surprising nor original. The Chinese Embassy’s warmer rhetoric since late 2021 and the broader Chinese government’s diplomatic overtures since the May federal election occurred in the context of deep-seated and enduring political and policy disputes between Beijing and Canberra over everything from Australia’s investment review processes to China’s efforts to influence Australian politics. Added to these long-term points of disagreement are new-ish, emerging and intensifying disputes over China’s security role in the Pacific (e.g., here and here), the AUKUS security partnership (e.g., here, here, and here), and Taiwan Strait tensions (e.g., here and here).

Despite these fractious fundamentals, the Australian government continues to simultaneously use softer messaging while holding the line on substantive China-related policy. A slew of prime ministerial and ministerial comments of late have emphasised the case for staying “positive”, continuing to “cooperate”, and seeking a “productive relationship”. But like Australian government ministers, there’s every reason for the rest of us to maintain modest expectations for the relationship. As Minister for Defence Richard Marles aptly observed on 10 August: “[I]f engaging in a more respectful, diplomatic way takes us some way down a path [to a better place], it does. And if it doesn’t, it doesn’t. We can only control our end of this equation, but we will always be speaking up for the national interest.” So, not only has Beijing left ambiguous precisely what it wants Canberra to do, but the Australian government continues to make it abundantly clear that it’ll offer China gentler words but no substantive policy concessions. The impasse endures.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnight of 18 to 31 July 2022

Australia’s shifting statements on Taiwan

Prime Minister Anthony Albanese speaking on ABC’s 7.30 to Sarah Ferguson on 26 July:

“It is very important that we don’t [deal with hypotheticals] because that’s not in the interest of peace and security in the region. And that’s why there has been for a long period of time a position of, a bipartisan position, of the one-China policy firstly, but also a position of support for the status quo.”

Quick(-ish) take:

These remarks come on the back of a series of recent comments on Taiwan from senior ministers in the Albanese government. Taken together, this record suggests Australia has modified its messaging on Taiwan in important respects. But before getting to that, let’s look holistically at the recent string of statements. Added to the Prime Minister’s “support for the status quo,” both Minister for Foreign Affairs Penny Wong and the Minister for Defence Richard Marles separately emphasised in June and July that Australia doesn’t support unilateral shifts to the status quo. Minister Marles further added on 13 June that tensions should be resolved “in a way which is peaceful, and which involves the mutual agreement of both sides of the Taiwan Strait.” Separately, Minister Marles has at least three times specified (twice in June and once July) that “Australia does not support Taiwanese independence.”

Taking all of this together, the Albanese government’s position on Taiwan seems to be (broadly speaking) fourfold:

1. Canberra won’t engage in hypotheticals about cross-Strait conflict and Australia’s involvement therein;
2. Australia’s (bipartisan) one-China policy remains unchanged;
3. Australia supports the status quo and opposes unilateral changes to the status quo on a bipartisan basis; and
4. Australia does not support Taiwanese independence.

As the Prime Minister and his ministers have emphasised, 2 and 3 appear unchanged from the previous government. But despite this bipartisan continuity, 1 and 4 are noteworthy shifts. Given the previous Minister for Defence’s willingness to discuss the prospects of war in the Taiwan Strait, the Albanese government’s refusal to get into that kind of discussion is a departure from past practice (at least relative to the historical baseline of the Morrison government). This alone doesn’t constitute a shift in the sense of taking a new concrete and explicit stance on cross-Strait issues. But unwillingness to engage in Taiwan-related hypotheticals is at least indicative of a rolling back of the previous government’s (seemingly unambiguous) position that Australis would join the United States in a military conflict in the Taiwan Strait. Perhaps the new government has reembraced Australia’s long-emphasised strategic ambiguity of neither confirming nor denying Australian involvement in any US-led response to a military contingency over Taiwan?

The Albanese government’s explicit message that it doesn’t support Taiwanese independence is perhaps even more significant than its unwillingness to discuss hypotheticals. I don’t recall any Morrison government minister explicitly stating, as Minister Marles has done at least three times in just a couple of months, that Australia does not support Taiwanese independence. (But please correct me if I’ve missed something in that regard.) This is an especially big break with the Morrison government considering the Albanese government has also (so far at least) dramatically dialled back its rhetorical support for Taiwan as an exemplar of liberal democracy in East Asia and the wider world. Former Minister for Foreign Affairs Marise Payne described Taiwan as “leading democracy” and a “critical partner,” while also advocating that Australia “strengthen ties with Taiwan.” In stark contrast, the Albanese government’s language on Taiwan to date has largely talked about Taiwan in terms of security challenges and has seemingly abandoned regular references to shared liberal democratic values. Given the strong language on Taiwan in the 2021 AUSMIN Joint Statement, the 2022 version will be a revealing indicator of Australia’s position and whether a gap has opened up between Canberra and Washington on Taiwan.

How will these shifts be received on each side of the Taiwan Strait? Presumably the government in Beijing will be pleased to no longer hear references to it being “inconceivable” that Australia wouldn’t support US military action, including in a Taiwan contingency. The Chinese government would also probably be happy to hear straightforward statements that Australia doesn’t support Taiwanese independence. Given the wide diversity of political views in Taiwan on the wisdom of a de jure declaration of independence, the Australian government’s lack of support for Taiwanese independence would presumably receive decidedly mixed reviews. That said, the Taiwanese government would probably be on balance content for Australian ministers to not get into hypotheticals about warfare scenarios in the Taiwan Strait. These discussions tend to focus on the competing views of the biggest combatants, namely China and the United States. As a result, they often quickly lose sight of the Taiwanese people and their interests. Moreover, talk of war typically means that the minds of policymakers and the public leap straight to the worst-case scenario of high-intensity conflict in the Taiwan Strait. This plays into China’s hands by framing Taiwan’s enduring de facto independence as a potential source of war and glossing over all the practical forms of diplomatic, political, economic, etc., engagement with Taiwan that can avoid its international isolation and help preserve its security.

Beyond the range of views form Beijing and Taipei, there’s a potential structural problem with the Australian government’s support for the status quo. Two striking features of the current state of cross-Strait relations are Beijing’s campaign of economic coercion against Taipei and regular People’s Liberation Army (PLA) Air Force flights in Taiwan’s vicinity. Presumably Prime Minister Albanese’s support for the status quo is not intended to be a statement of support for these economic and military pressure campaigns. But with cross-Strait conditions quickly evolving, the substance of what’s endorsed by support for the status quo is also liable to rapidly change. In other words, with the status quo simply referring to the current state of affairs (something that is near-constantly evolving) the status quo ends up being a rubbery concept. Perhaps it would be preferable then to ditch support for the status quo and replace it with something more specific. For example: “Support for the preservation of peace and security across the Taiwan Strait, including freedom from coercive measures and intimidation.” (Andrew Chubb made a similar point about the imprecision and malleability of status quo language in 2015 in relation to the South China Sea.)

The imperative of clarifying what the Australian government supports in relation to Taiwan is especially pressing as China’s tactics and strategies towards Taiwan continue to evolve. As with the economic coercion and PLA Air Force flights, a notable feature of Beijing’s approach to Taipei is to incrementally increase pressure in a range of domains. On issues like the Taiwanese economy’s participation in regional free trade agreements or the number of countries that diplomatically recognise Taiwan, China is seeking to push the envelope and ensure that the status quo continues to evolve in its favour. This means that ongoing statements of support for the status quo will strengthen China’s position by indirectly legitimising Beijing’s creation of new diplomatic, economic, military, etc., realities.

To be fair, ministers Wong and Marles each made plain that Australia opposes unilateral changes to the status quo. But once these unilateral changes have been made, a new status quo is created. And even if one still opposes those past unilateral changes, expressing support for the status quo can be (mis)interpreted as, by implication, an endorsement of the changes that brought about the new status quo. Given that the Australian government presumably doesn’t seek to legitimise a series of new status quos created by China’s evolving tactics and strategies, there’s a strong case for dispensing with “support for the status quo.” It should be, I think, replaced with language that more precisely signals Australia’s position on the preferred state of cross-Strait relations. Namely, that they be free from coercion and intimidation and consistent with the preservation of peace and security.

The electoral factor in China’s changed tone

China’s Ambassador to Australia, Xiao Qian, speaking at the 15th Australia-China Emerging Leaders Summit on 29 July:

“Regrettably, in the past few years, our relationship has encountered serious difficulties. With the new government in office following the Australian federal election this year, our bilateral relations are facing new development opportunities. Recently, high-level bilateral engagements and communication have been conducted, and important consensus has been reached on advancing China-Australia comprehensive strategic partnership and promoting mutually beneficial cooperation. To maintain, consolidate and strengthen this positive momentum, it requires joint efforts from both sides.”

Quick take:

This is another strong statement of optimism from Ambassador Xiao about the prospects for improved Australia-China relations under the Albanese government. But beyond the positive messaging, these comments are also noteworthy for their tinge of partisan politics. Different parts of the Chinese government have long made plain their dissatisfaction with the Morrison government and have recently emphasised Beijing’s openness to a relationship “reset” with the arrival of the Albanese government. But Ambassador Xiao’s comments are unusually direct in attributing the prospect of improved ties to a specific event: the departure of the Morrison government. As well as being an uncommonly clear statement from a foreign government about its preference for a particular Australian government, this comment raises some big analytical questions about what’s driving the recent softening in China’s diplomatic rhetoric.

On one level, the shift in diplomatic language after the election might seem utterly obvious and unsurprising. The Chinese government clearly had a dim view of the Morrison government and its key representatives. But on another level, the possibility that the bilateral diplomatic trajectory altered course as a result of a change of government could shape how we interpret current dynamics in the Australia-China relationship. As I’ve highlighted in recent fortnights, Canberra has softened elements of its messaging about Beijing and this shift has been noticed and presumably welcomed by the Chinese government. One plausible inference from this is that the shift in Australia’s rhetoric has contributed to the recent diplomatic détente between Beijing and Canberra. This explanation attributes an elevated degree of agency to the Australian government and its ability to shift diplomatic dynamics through its choice of rhetoric.

But an alternative explanation suggested by Ambassador Xiao’s recent comment would be that the shift in the bilateral diplomatic dynamic has little (if anything) to do with Canberra’s changing language. Extrapolating from Ambassador Xiao’s comment, this shift might have been much more a function of the simple fact that the 21 May federal election ushered in a change of government. On this telling, China gave Australia a diplomatic grace period purely (or at least largely) as a result of the changing of the guard in Canberra. And this might have occurred even if the Albanese government hadn’t in any way softened its rhetoric.

Of course, we’re in the speculative realm of hypotheticals at this point. But it strikes me that it’s a line of analysis worth pursuing: It holds out the prospect of answering the question of whether the Albanese government’s tonal change is producing results. By using softer language, is Australia shaping China’s behaviour and prompting a softer response? Or is it just coincidence that Beijing’s softer messaging coincided with Canberra’s softer messaging (i.e., has the Chinese government actually just been responding to the result of the federal election)?

These questions also matter for figuring out the future trajectory of the relationship. If Canberra’s change in rhetoric has (at least to some extent) prompted Beijing’s change, then there’s a much better chance that the Australian government can shape China’s behaviour via ongoing and additional changes in messaging. But if Beijing is just responding to the end of the Morrison government and the Albanese government’s more cautious language hasn’t had an impact, then there’s less of a reason to think that Canberra will have the power to change the bilateral diplomatic dynamic via its messaging. If the latter is the case, then we’re likely to be in for a reversion of sorts to a rougher ride in the Australia-China relationship, notwithstanding Ministry of Foreign Affairs talk of the prospect of the “steady development of economic and trade ties” (e.g., here and here). If the lack of influence of Canberra’s change in diplomatic tone is right, then Australia may not have effective tools at its disposal to encourage China to offer more diplomatic olive branches (given Canberra doesn’t plan to compromise on its policy positions). And once it becomes clear to Beijing that the change in government hasn’t ushered in (many or perhaps any) substantive China-related policy shifts from Canberra, the crop of diplomatic olive branches is likely to wither.

Australia’s coal exports keep climbing

The monthly value of Australia’s coal exports (to China, the rest of the world, and total, May 2020 to May 2022):

Quick take:

Speculation is now swirling about the possibility of China easing its informal restrictions on imports of Australian coal. This promising chatter has even extended to a relatively upbeat assessment of the future of the Australia-China trade relationship in the nationalistic Global Times (hat tip to a reader for directing me to this). But despite the positive atmospherics, the latest Australian trade data from May 2022 still has the total value of Australian coal entering China sitting at $0. Notwithstanding this long-flatlining figure (it hasn’t budged from $0 since March 2021), the monthly value of Australian coal exports to the rest of the world continues to boom. Due in no small part to an astronomical run up in coal prices, the value of this export to alternative markets is now nearly four times the value of Australia’s coal exports to China and the rest of the world combined prior to Beijing introducing its informal trade restrictions on coal in October 2020.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnight of 4 to 17 July 2022

Australia’s modified messaging

Joint statement from prime ministers Jacinda Ardern and Scott Morrison on 31 May 2021:

“The Prime Ministers affirmed their strong support for open rules-based trade that is based on market principles. They expressed concern over harmful economic coercion and agreed to work with partners to tackle security and economic challenges.”

Joint statement from prime ministers Jacinda Ardern and Anthony Albanese on 8 July 2022:

“The Prime Ministers … agreed to continue to work together in the World Trade Organization, APEC and other key international organisations in support of open, rules-based trade.”

Quick take:

This is one of the clearest pieces of evidence yet that the new government is taking a softer diplomatic line on China. As I suggested last fortnight, a range of ministerial interviews seem to indicate that the Albanese government has opted to tone down the rhetoric around China’s trade restrictions. Rather than continuing its predecessor’s habit of regularly criticising China’s “economic coercion,” the new government has opted to highlight concerns about “sanctions” instead. With this latest joint statement providing a direct point of comparison between language from the previous and current governments, there’s now a much stronger case for concluding that a shift is taking place.

It’s certainly possible that Wellington welcomed the change in language and may have even pushed to not refer to economic coercion specifically. But given that it is Canberra that has conspicuously reduced its use of the term economic coercion since May this year, it seems plausible to conclude that the change was driven by the Australian government. Largely dropping references to China’s economic coercion now appears to be one of the most obvious examples of the Albanese government’s follow through on its commitment to use more cautious language on China. Minister for Defence Richard Marles summarised the government’s new approach on 8 July as a renewed emphasis on “the power of diplomacy and a change of tone”.

To be sure, Minister Wong did make two references to “coercive trade and economic measures” during a press conference with her Singaporean counterpart on 6 July. (And Minister for Defence Marles mentioned “coercive statecraft” and “coercion” in general in a speech and media release during his visit to Washington.) But despite being a regular feature of the previous government’s criticisms of China’s trade restrictions against Australian exporters, use of the specific term economic coercion by Australian ministers is now seemingly limited to relatively rare press conference remarks. In most instances, the Prime Minister and his ministers have preferred to use the less rhetorically charged term “sanctions” to refer to China’s trade restrictions (e.g., here, here, and here).

How much is the linguistic shift from economic coercion to sanctions likely to appeal to Beijing? The use of less rhetorically charged language will probably reduce the Chinese government’s frustration given Beijing’s clear displeasure with the label economic coercion. As Ministry of Foreign Affairs Spokesperson Zhao Lijian stressed on 8 July: “measures Chinese authorities have taken on imported foreign goods … are definitely not ‘coercive’ trade practices as described by the Australian side.” Despite this, it’s unlikely that Beijing will be entirely happy with criticisms of its sanctions. For one thing, the way in which China now describes the trade restrictions means that the Chinese government is likely to rebuff the accusation that it is imposing sanctions against Australia. In a way deeply at odds with the Albanese government’s description of China’s sanctions, Beijing now says that the trade measures are “completely reasonable, legitimate and lawful.”

On top of this disagreement over the legitimacy of China’s trade restrictions against Australia, Beijing is also likely to chafe at the sanctions label given the Chinese government’s generally negative view of these tools—at least when used by others (e.g., here and here). Despite China itself being a regular user of sanctions (e.g., here and here), President Xi Jinping argued last month: “It has been proved time and again that sanctions are a boomerang and a double-edged sword. To politicise the global economy … will only end up hurting one’s own interests as well as those of others, and inflict suffering on everyone.” So, even if the term sanctions might have less negative connotations than economic coercion, it seems likely that Beijing still won’t appreciate being accused of imposing sanctions on Australia.

None of this to say that Canberra should stop criticising Beijing for its use of sanctions/economic coercion. Given the international principles and Australian export interests at stake, calling out these measures is simply consistent with the prosecution of Australia’s interests. As Prime Minister Anthony Albanese put it on 13 July: “Australia will continue to assert our national interests, which are that these sanctions should be removed.” But it is to say that the diplomatic upside of criticising sanctions rather than economic coercion may be limited given the Chinese government’s regularly expressed views on the illegitimacy of sanctions (at least when imposed by others).

Diplomacy’s (limited?) dividends

Minister for Defence Marles speaking to Nine’s Sarah Abo on 8 July:

“[W]e will continue to advocate very strongly for Australia’s national interest. And there’s no backward steps in relation to any of that. But we are going to go about our business in the world in a way which is professional, which is sober, and which understands the power of diplomacy. And that’s what this meeting [between Australian and Chinese foreign ministers] is about today. And what you won’t see from this government is the kind of chest-beating that we saw from the former Coalition government, which actually did nothing to advance our national interest at all. Now, diplomacy we think, is important and we’ll see how far it takes us.”

Quick take:

Beijing should now be in no doubt: Despite softer diplomacy under the Albanese government, the substance of Australia’s China policies remains just as strong as it was during Scott Morrison’s tenure. Minister for Foreign Affairs Penny Wong was similarly unequivocal on 8 July when she met China’s Minister of Foreign Affairs Wang Yi: “Australia’s Government has changed but our national interests and our policy settings have not.” This followed a similar statement to the media earlier that same day: “We’re clear. We won’t be making any concessions when it comes to Australia’s national interests.” (Although the Minister for Trade and Tourism Don Farrell raised the prospect with The Guardian of nutting “out a compromise situation,” this comment was made specifically in the context of specific World Trade Organization disputes about barley and wine tariffs and duties rather than the broader bilateral relationship.) The general points about not compromising on the national interest were also reiterated by the Prime Minister on 9 and 13 July.

In response to Canberra’s firm statements of policy continuity, Beijing repeatedly called (e.g., here, here, here, here, and here) for the Australian side to “take concrete actions” to improve the Australia-China relationship. Minister Wong has freely said that stabilising the relationship “would require both parties to make a step.” But it’s unclear whether this “step” qualifies as the kind of “concrete action” that China seeks. Such an equation seems especially unlikely if the Australian step Minister Wong is referring to is limited to the adoption of softer rhetoric on China. On top of the possible gap between Australia’s “step” and China’s “concrete actions,” it appears that China and Australia have different end points in mind in any case. Per some of Minister Wong’s recent comments, Canberra seems to be aiming at the relatively modest goal of “stabilising the relationship.” By contrast, Chinese government representatives have called for “concrete actions” as a means of achieving a “reset” in bilateral ties. Seemingly, China has a much more ambitious agenda for improving relations, which presumably would require Canberra to make much more significant changes—hence the repeated calls for “concrete action” and reminders that “[t]here is no ‘auto-pilot’ mode in improving China-Australia relations.” So, in addition to differences between Canberra’s and Beijing’s views of precisely what changes relationship repair requires, they also seem to have in mind substantively different end points (i.e., Canberra’s stabilisation Vs. Beijing’s reset).

For these and other reasons I’ve written about previously, there’s a strong case for remaining circumspect about the long-term future of Australia-China relations. As the Minister for Defence observed on 8 July: “I can’t promise that the power of diplomacy will deliver anything specific in terms of trade or any … other outcomes.” This doesn’t mean that Canberra doesn’t have other options beyond diplomacy to achieve its desired stabilisation of bilateral relations. As I argued last week in The Sydney Morning Herald, proposing a rehabilitated ministerial dialogue on climate change might appeal to China without compromising on Australia’s security and economic interests or its commitments to human rights, the rule of law, and liberal democracy. But with Canberra rightly judging that improving bilateral ties shouldn’t come at the expense of Australia’s interests and values, Canberra doesn’t have that many options to shift the relationship dynamic. So, Canberra’s ongoing effort to eschew rhetorically charged language while pursuing substantive policies that still deeply frustrate Beijing looks set to provide a consequential case study in whether finessing diplomatic messaging is powerful enough to alter the trajectory of a bilateral relationship.

Federalising foreign policy

China’s Ambassador Xiao Qian speaking at the celebration of the 25th anniversary of the establishment of the Hong Kong Special Administrative Region on 5 July in Sydney:

“Over the past two years and more, the Hong Kong national security law has been formulated and enforced, and the electoral system has been amended and improved, ensuring the implementation of the principle of patriots administering Hong Kong. It has served to fully ensure the democratic rights and freedoms enjoyed by Hong Kong residents.”

Quick take:

These remarks from the Ambassador are starkly at odds with the severe erosion of political rights and freedoms with which Beijing has hobbled Hong Kong in recent years. As Foreign Minister Wong observed on 30 June: “The National Security Law has been applied broadly to arrest or pressure pro-democracy figures, opposition groups, the media, trade unions and civil society. The electoral reforms imposed by Beijing in 2021 have further eroded Hong Kong’s democratic governance.” There’s no evidence (that I can see) that representatives from the Australian federal parliament attended the celebration at which the Chinese Ambassador spoke. Nevertheless, a New South Wales government Minister and Member of the Legislative Assembly were present.

My thought bubble: This once again reinforces the rationale for an integrated and federalised approach to Australia’s external policy. Canberra is ultimately responsible for the key pillars of Australia’s external policy. But the reality of contemporary international relations involves extensive paradiplomacy, including subnational government-to-government engagements between, for example, New South Wales and Hong Kong. This creates a compelling case for state and territory government ministers, parliamentarians, and bureaucracies to be receiving regular briefings and advice from the relevant federal government departments and agencies on a range of foreign and security policy issues.

The above is not to suggest that the federal government isn’t already regularly communicating with the states and territories on a range of these external policy considerations. From what I’ve heard anecdotally (and I freely admit it’s just anecdotal!), they are, albeit not broadly and deeply enough to meet state and territory demand. There’s equally no reason to think that Minister for Multiculturalism and Minister for Seniors Mark Coure and Member of the Legislative Assembly Tim James weren’t armed with the relevant details about the dire political situation in Hong Kong prior to attending the celebration. Still, given the significant exposure of state and territory governments to extremely thorny foreign and security policy issues, it’s worthwhile regularly revisiting the kinds of structures and processes that might further strengthen Australia’s whole-of-nation external policy.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnight of 20 June to 3 July 2022

Reframing coercion concerns

Prime Minister Anthony Albanese speaking to Leigh Sales on the ABC’s 7.30 on 23 June:

“China has sanctions against Australia that should be removed … it is China that has changed, and China needs to remove the sanctions.”

Quick take:

From the South China Sea to Hong Kong and much besides, there’s broad continuity between the previous and current Australian governments on substantive China policy. Consistent with this general bipartisanship, Minister for Defence Richard Marles was on 1 July quick to definitively reject the prospect of “any type of concession to reset” Australia-China relations: “No. Absolutely not.” But despite this bipartisan policy consensus, Australia’s diplomatic messaging on China continues to evolve. The Morrison government pursued a longstanding, determined, and explicit strategy of naming and shaming China by unilaterally, bilaterally, and multilaterally raising concerns about economic coercion. In a noteworthy shift, “economic coercion” is a label that has (so far) been largely absent from the new Australian government’s diplomatic vocabulary when talking about China (or any other country, for that matter).

It’s especially conspicuous that the new government has avoided references to economic coercion even when speaking about “trade and investment” and the case for “disputes among states [to be] resolved via dialogue, and in accordance with international law”. Economic coercion equally didn’t get a mention in the Joint Statement between Australian and Spanish leaders, despite an emphasis on the rules-based global trading system. (It’s critical to caveat this last datapoint by noting that the previous government never issued [so far as I’m aware] a leader-level joint statement with Spain, so a direct point of comparison isn’t available. Still, economic coercion featured in joint statements with other European likemindeds, such as the United Kingdom and France.)

To be sure, economic coercion was mentioned in the Quad Joint Leaders’ Statement with a reaffirmation of collective “resolve to uphold the international rules-based order where countries are free from all forms of military, economic and political coercion.” But it was absent from the Prime Minister’s opening remarks at the Quad Leaders’ meeting. And, so far as I can see, the term hasn’t appeared in remarks, speeches or press releases from either the Prime Minister or his foreign, trade, and defence minsters. As I wrote last month, this comes as references to economic coercion were absent from press releases about the new Minister for Trade and Tourism Don Farrell’s meetings with US and Indian and EU trade/commerce ministers.

Beyond obvious changes like eschewing comparisons with Nazi Germany in the 1930s, we are perhaps now getting a clearer sense of the new government’s rhetorical shift on China. It seems plausible that winding back the use of terms like economic coercion is part of the pledge to purse what Minister for Defence Marles described as a “change of tone”, which would avoid “chest beating”. Given that the old label of economic coercion is more emotive and rhetorically charged than the new preferred nomenclature of sanctions, we seem to be seeing tangible evidence of the government’s more sotto voce approach to China diplomacy. Such an interpretation fits with the new government repeatedly saying that it would shift its China messaging. This includes Prime Minister Albanese’s statement the Monday after the federal election: “You will not get the call earlier because you yell.”

Will such linguistic tweaks change the dynamic of Australia-China relations? This rhetorical movement has presumably been noticed and welcomed in Beijing. Although there’s admittedly no definitive evidence for this (at least not publicly), it’s reasonable to imagine that the Chinese government would prefer to be criticised for using sanctions as opposed to being accused of economically coercing another country. Especially considering that sanctions are often considered legal and legitimate, whereas coercion by its nature is typically considered much more nefarious and unjustified. Although speculative, it is intriguing that Canberra’s decision to drop the economic coercion language has coincided with a perceptible softening of Beijing’s own language on its trade restrictions against Australia.

Previously, the Chinese government was comfortable articulating the coercive intent behind its trade restrictions. As Ministry of Foreign Affairs (MFA) spokesperson Zhao Lijian stated on 6 July 2021: “We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China and undermining China’s core interests based on ideology. When a certain country acts as a cat’s paw for others, it is the people that pay for misguided government policies.” By contrast, it now appears that Beijing is back in the business of denying that the trade restrictions are coercive. As MFA spokesperson Wang Wenbin insisted on 22 June: “What I would like to tell you is that the measures China has taken on imported foreign goods are strictly consistent with Chinese laws and regulations and WTO rules with a view to protecting the legitimate rights and interests of relevant industries in China and the safety of our consumers. The measures are legitimate, lawful and beyond reproach.” As with other recent statements, China seems to be again seeking to create grounds for plausible deniability regarding the coercive nature of its trade restrictions.

Are Beijing’s efforts to downplay and even deny the coercive intent behind the trade restrictions a direct response to Canberra dropping the language of economic coercion? Not necessarily. This shift in Beijing’s messaging could be a subset of the general warming of the way that China talks about Australia rather than being directly prompted by Canberra opting to describe Chinese trade restrictions as sanctions. Beyond the causal question, there’s also (so far) little grounds for thinking that the softer words on both sides will necessarily see trade restrictions dismantled any time soon. Still, this concurrent dialling down of rhetoric raises the possibility that we’re witnessing a diplomatic quid pro quo unfold that allows both Canberra and Beijing to concurrently take less adversarial positions. That said, there’s always the possibility that I’m overanalysing these linguistic tweaks.

Australian-grown olive branches

Minister for Trade and Tourism ​Farrell speaking to Jonathan Green on ABC Radio National on 30 June:

“I’ve continued to hold out the olive branch, I’ve continued to say, ‘Look, we’ll meet with you, and we’ll try and sort these problems out.’ There’s been no indication from the Chinese that at some future point in time that that won’t happen.”

Quick take:

This is the latest in a series of interviews in which the Minister for Trade and Tourism has emphasised that reengaging with his Chinese counterpart is a key priority. Even more so than his Prime Minister and his foreign affairs and defence portfolio colleagues, the new Minister for Trade and Tourism has adopted an upbeat tone on the importance of reengaging with China. Although making plain that “national security is our number one priority,” he’s placed a premium on reviving relations with China. As he said on 28 June: “My objective into the future is to, as best I can, try and re-establish that relationship with the Chinese, get them to understand our point of view.” He’s even raised the prospect of a reset in the relationship, saying on 21 June: “I think the change of government gives us an opportunity to reset the long-term arrangements with the Chinese.” Given the stingingly sour state of bilateral ties for the last two-plus years, this is a remarkably optimistic assessment from an Australian minister.

On one level though, such a sanguine view is likely to be at least partly a function of the Minister’s portfolio. Not only have Australia’s exporters suffered some of the toughest fallout from the decline in bilateral ties, but trade is likely to be one of the biggest beneficiaries of a normalisation of the Australia-China relationship. So, there’s a clear rationale for the relevant minister to be especially forward-leaning on the issue of relationship repair. Moreover, even during the previous government’s tenure when critical rhetoric about China was flying thick and fast, then Minister for Trade, Tourism and Investment Dan Tehan opted for much more cautious language. In a landmark speech on Australia’s economic statecraft in September 2021 he said: “Patience has been essential in our dealings with our largest trading partner, China. When I became Trade Minister, I wrote to my Chinese counterpart in January setting out how we can work more closely together.”

As with last year though, there’s still a strong case for moderating expectations for bilateral ties in 2022. Notwithstanding the proliferation of olive branches from the Australian Minister for Trade and Tourism, the Chinese Ambassador to Australia’s recent and widely reported speech puts in stark relief the sheer scale of the barriers to a sustained improvement in bilateral relations. As with his other interventions, Ambassador Xiao Qian offered up optimism as he spoke on 24 June at the University of Technology Sydney’s Australia-China Relations Institute (UTS ACRI). Yet even with upbeat references to getting “our bilateral relationship back on the right track of development at an early date,” the Ambassador’s “five major areas where it is important for China and Australia to make joint efforts” point to some serious structural challenges.

Many of the intense and longstanding points of policy disagreement between Beijing and Canberra flow from the five areas for joint effort outlined by the Ambassador. But even just focussing on the first area alone highlights the scale of the challenge. According to Ambassador Xiao: “Respect for each other’s sovereignty, territorial integrity, political system and development mode, these are the basic principles for sound and healthy relations between two sovereign states.” But whether the question is systematic human rights violations against ethnic and religious minorities in China, the erosion and abrogation of political rights and freedoms in Hong Kong or China’s maritime and territorial claims in the South China Sea, it’s easy to see how deeply Canberra and Beijing are divided on even the first of Ambassador Xiao’s five points.

Given Canberra’s commitment to speaking out on human rights abuses, Hong Kong, legally untenable maritime claims, and many other critical policy and political questions, it’s nearly inevitable that the Australian government will fall well short of what the Chinese government would consider to be respect for its “sovereignty, territorial integrity, political system and development mode”. These and other similar deep disagreements mean that Australia and China won’t be able to agree on how to operationalise Ambassador Xiao’s “five major areas where it is important for China and Australia to make joint efforts.” To be sure, none of this is to say that there aren’t other specific things that Canberra and Beijing can do to further improve ties (TBC but I’ll hopefully write a short piece elsewhere on this practical question in the next week or so). But it is to say that the structural barriers to a significant improvement in the Australia-China relationship are much more monumental than either Ambassador Xiao’s or Minister Farrell’s remarks might suggest.

It’s not me, it’s you

Ambassador Xiao speaking at UTS ACRI on 24 July:

“The recent years our relationship has been a difficult period, nonetheless, China’s policy of friendship towards Australia remains unchanged.”

Quick take:

If my above assessment of the long-term trajectory of Australia-China relations wasn’t gloomy enough, there’s another point of disagreement to add to the mix. Despite the warming diplomatic rhetoric between Beijing and Canberra, neither side can agree on who’s changed and therefore who’s responsible for the last couple of years of intensely strained ties. In contrast to the Chinese Ambassador’s insistence that China’s approach to Australia remains the same, the Australian Prime Minister and his ministers are equally adamant that Beijing has been the disruptive force. Just a couple of days after Australia’s federal election, the Prime Minister stated his position plainly: “It is China that has changed, not Australia.” This accusation has since become one of Prime Minister Albanese’s preferred refrains on China (for example, here, here, and here).

The simple fact that Canberra and Beijing can’t agree on who upset the previous status quo doesn’t mean that relations can’t improve. It’s entirely possible that each government could continue blaming the other, all the while working to improve ties in practical ways. Indeed, it’s plausible to interpret these assessments about who’s changed as being aimed as much at their respective domestic publics and governments as the other side. In other words, insisting on one’s own consistency and blaming the other side for changing could serve a range of domestic political and ideological purposes. Moreover, presumably neither Canberra nor Beijing truly believes that they haven’t changed their approach to the other side, especially considering the many dramatic policy and political shifts pursued by both the Chinese and Australian governments in recent years. These caveats aside, it’s equally hard to imagine that this underlying disagreement over who’s changed won’t add yet another wrinkle to the Australia-China relationship.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Fortnights of 23 May to 19 June 2022

Mea culpa for the tardiness of this newsletter and its slightly/very bloated form. A punishing bout of flu combined with work travel kept me away from government press releases. In what follows, I won’t even try to cover all the twists and turns in these last few bumper weeks of bilateral ties. Instead, this issue will only do a measure of justice to three of the developments that caught my eye. Beijing to Canberra and Back will be return to its regular fortnightly programming in the next issue.

More reports of rapprochement

China’s Ambassador to Australia Xiao Qian speaking at the National Conference of the Australia-China Friendship Society on 11 June:

“The healthy and stable development of China-Australia relations is in line with the fundamental interests and shared aspirations of our two peoples, and conducive to peace, stability, development and prosperity of the Asia-Pacific region. So long as both sides stick to the right direction of our relationship, uphold the principle of mutual respect and mutual benefit, strengthen dialogue and communication, properly handle differences, China-Australia relations will surely embrace an even brighter future.”

Quick take:

Ambassador Xiao’s speech typifies a dramatic post-Australian federal election shift in the way the Chinese government describes bilateral relations. As well as the Ambassador, spokespeople from both the Ministry of Commerce and the Ministry of Foreign Affairs (MFA) now regularly describe Australia-China ties as being a positive for both countries and the wider region. Since the change of Australian government, this kind of upbeat language has become a mainstay of MFA talking points at the regular press conference (e.g., here and here). Even contentious developments, such as the encounter between Australian and Chinese military aircraft in the South China Sea (on which, more below), haven’t stopped usually combative MFA spokespeople from emphasising the mutual importance of the Australia-China relationship. So buoyant is the mood that even the typically pugilistic Global Times is showcasing the upside of bilateral relations.

If optimistic language wasn’t enough, the roughly 29-month long drought in ministerial contact has also broken. On 25 May, I (tentatively) predicted there’d be a direct ministerial meeting between Canberra and Beijing before the year was out. But I didn’t expect it to happen this fast. Despite the stream (maybe it’s a torrent now?) of relatively positive rhetoric from the Chinese government and face-to-face ministerial talks, I remain cautious about the long-term trajectory of political and diplomatic ties. Beijing still seems to be holding out for a substantive policy shift from Canberra before the relationship reverts to a regular schedule of high-level contact at the ministerial level and above. This, presumably, is the implication of MFA Spokesperson Wang Wenbin’s claim on 13 June: “to improve China-Australia relations, there is no ‘auto-pilot’ mode. A reset requires concrete actions.” It’s reasonable, I think, to conclude that the “concrete actions” called for by the Chinese government entail more than just opting for less combative rhetoric about China.

So, where does that leave bilateral ties? The flurry of more positive messaging from Beijing, including at the leader-level, combined with the first direct ministerial contact since January 2020 are clear signs of an upward swing in the trajectory. But the broader political and policy context points to a ceiling on how high the relationship can go (for now). Not only has the new Australian government backed in the China policies of its predecessor and made plain their unwillingness to compromise on substantive political and policy points to please the Chinese government, but they’ve said that bilateral relationship repair should start with Beijing lifting its trade restrictions. As Prime Minister Anthony Albanese has emphasised: “It is China that has placed sanctions on Australia. There is no justification for doing that. And that’s why they should be removed.” Given China (so far) appears unwilling to make that kind of concession first, the political and diplomatic relationship seems unlikely to shift to a dramatically more positive trajectory. Rather than a reset, we seem to be heading towards a moderately more positive (but still generally tense) settling point.

And that’s before we start thinking about the future pitfalls for bilateral ties. As well as longstanding and intense disagreements over human rights abuses in China, the national security dimension of Australia’s investment review processes, high-profile consular cases, and much besides, the future might throw up new and severe roadblocks for the relationship. On top of the new review of the 99-year lease by the Chinese company Landbridge of the Port of Darwin (to which the Albanese government has committed), there’s the potential use of Australia’s Magnitsky-style sanctions against senior Chinese government or Party officials who have been implicated in human rights abuses in Xinjiang and elsewhere. Moreover, there’s also the enduring possibility of the Australian government rejecting a large Chinese investment bid on national security grounds. Any one of these developments could reverse or at least stall the recent upward trend in bilateral relations.

Does all this mean that more Australian ministers won’t meet their Chinese counterparts in the next few months? In a word, no. Although political and diplomatic ties might be unlikely to get back to their regular pre-2020 rhythm, there’s still scope for Australian and Chinese foreign ministers to meet on the side-lines of multilateral meetings as the Indo-Pacific’s summit season ramps up in November. Nevertheless, I’d expect any high-level ministerial engagements to still be ad hoc and relatively few and far between for the rest of 2022 and perhaps even beyond. Pending, of course, a significant policy concession or political gesture from either Canberra or Beijing (both of which seem unlikely at present).

That said (I promise this is the final point), Canberra’s softer rhetorical tone is still likely to appeal to Beijing even in the absence of substantive political or policy concessions. For example, China almost certainly appreciates the new Minister for Defence Richard Marles not continuing his predecessor’s regular habit of comparing (albeit indirectly) the military challenge posed by China today with the threat represented by Nazi Germany in the 1930s. It also probably didn’t go unnoticed that recent Australian press releases (regarding meetings with US and Indian and EU trade/commerce ministers) didn’t mention “economic coercion”.

These press releases from the new Minister for Trade and Tourism Don Farrell were short and were issued on the occasion of a World Trade Organization meeting in Geneva. So, it’s entirely possible the absence of “economic coercion” language doesn’t constitute a shift from the previous government’s strategy of seeking to cause China reputational damage by regularly raising concerns about coercive economic practices. The case for concluding that the new government’s approach to messaging on this issue hasn’t shifted is strong considering that “economic coercion” was mentioned in the Quad leaders’ joint statement issued just days after Albanese became Prime Minister.

Still, at the risk of overreading ministerial press releases, the absence of a reference to “economic coercion” in messaging on trade meetings with likemindeds who’ve previously joined Australia in calling out coercive trade practices piqued my interest and may well have been noticed and welcomed in Beijing. This is not to endorse a reduction in the diplomatic emphasis on concerns about economic coercion (if that is in fact happening). But it is to say that any such shifts in diplomatic language will probably further push bilateral ties in an upward direction even if Canberra doesn’t shift on the many substantive political and policy positions that have deeply frustrated Beijing in recent years.

Top-down PLA strategy or ad hoc actions?

From the Australian Department of Defence’s press release on the interception of a Royal Australian Air Force (RAAF) P-8 maritime surveillance aircraft by a People’s Liberation Army (PLA) Air Force J-16 fighter aircraft in the South China Sea on 26 May:

“The intercept resulted in a dangerous manoeuvre which posed a safety threat to the P-8 aircraft and its crew.”

Quick take:

With both the Australian and Chinese governments (understandably) offering limited detail on this military encounter, it’s hard to reach firm conclusions about its significance. Were the PLA aircraft’s actions a deliberate effort to endanger and intimidate the RAAF aircraft and by extension deter Australia’s military presence in the South Chia Sea? Or is it possible that the incident was a result of the PLA Air Force pilot’s unauthorised decisions or even human error? If the PLA aircraft’s actions were authorised, at what level of seniority were these actions approved and are they likely to become part of PLA Air Force standard operating procedures? Do these actions indicate a change in PLA Air Force tactics in the South China Sea and perhaps even a shift in China’s strategy towards more assertive measures aimed at deterring external military presence? These and a range of other similar questions mean the implications of the incident are still relatively murky.

All that uncertainty notwithstanding, one reason for thinking that the incident wasn’t a product of an unauthorised decision or human error is its apparent location. Although the Australian media release didn’t specify where in the South China Sea the incident occurred, the Chinese Ministry of National Defense said it took place proximate to the Xisha or Paracel Islands. This is the northernmost group of disputed South China Sea islands/features, which is also closest to both the Chinese mainland and large PLA Navy and Air Force bases on Hainan Island. This is also the group of disputed South China Sea islands/features that has been firmly in China’s hands the longest—South Vietnam was fully expelled from these islands/features in a deadly battle in 1974. China has also made the bold and legally dubious decision to draw straight baselines around the Paracel Islands, thereby seeking to claim all the waters out to 12 nautical miles surrounding these islands/features as China’s territorial waters.

For all those reasons, it would be unsurprising if China was much more sensitive to foreign military activities close to the Paracel Islands than similar activities around the Spratly Islands or in areas of the South China Sea far from Chinese-controlled features. So, this kind of more assertive PLA Air Force response to a RAAF aircraft may well be a product of the incident’s location proximate to the Paracel Islands. This in turn means that it’s entirely possible that the PLA aircraft’s actions were authorised but that this isn’t indicative of a broader shift in PLA tactics or China’s overreaching strategy towards external military presence in the South China Sea in general. In other words, this encounter might simply be indicative of how the PLA Air Force will respond to foreign military activities proximate to the Paracel Islands specifically.

Of course, even if the above explanation is correct, the PLA Air Force’s response is still concerning. On top of its apparently dangerous nature, the PLA Air Force’s actions were seemingly an effort to defend legally dubious maritime claims that are themselves based on contested territorial claims. So, China’s militarily response may be neither surprising nor indicative of a broader shift in tactics and strategy in the South China Sea as a whole. But these plausible caveats don’t make the actions any less dangerous or inconsistent with international law. Moreover, there also are recent signs of more assertive PLA Air Force tactics well beyond the South China Sea. It’s therefore too early to conclude that this latest incident doesn’t foretell a shift towards more muscular tactics and strategies from the PLA in China’s air and sea approaches.

In the absence of additional publicly available information, we should remain open to the possibility that this was an unauthorised action or human error. On balance though, I’m inclined to conclude that this was probably formally authorised at some level (precisely how high is unclear) and may be part of the PLA Air Force’s standard operating procedures proximate to the Paracel Islands. If all that is true, the incident might not be evidence that China has changed its tactics and strategies in the South China Sea in general. But it would equally be unsurprising if Beijing began using these tactics in other parts of the South China Sea and shifted its strategy to embrace a more forward-leaning form of military deterrence aimed at complicating Australian and other external military presence in this disputed waterway. Although the precise military and strategic significance of this incident might remain uncertain, we can at least be confident that this isn’t the last time the strategic implications of encounters between the PLA and foreign militaries in the South China Sea will be debated.

Out of the Pacific family by implication

Minister for Foreign Affairs Penny Wong speaking to Radio New Zealand National on 16 June:

“[W]e do have concerns about the security of the Pacific being engaged in by nations outside of that Pacific family.”

Quick take:

Positive rhetoric about the Australia-China relationship is proliferating among Chinese officials and the state-controlled press. Despite this, the substantive political and policy divide between Canberra and Beijing regarding the Pacific appears to have widened ever further in recent weeks. Having simmered since roughly 2018 when press reporting emerged about an apparent PLA effort to secure an access arrangement in Vanuatu, the Australian government’s concerns about China’s security role in the Pacific is now at a rolling boil. Building on the previous Morrison government’s deep discomfort with China’s security aspirations in the region, the Albanese government now regularly and pointedly reiterates messages that seem to deny China a legitimate role in securing the region.

Speaking in Honiara earlier this month, Minister for Foreign Affairs Wong stated: “Australia’s view does remain that the Pacific family should be responsible for our security. And the Pacific family is more than capable of providing that security.” Taken in combination with a series of press conferences, media releases, and interviews, the implications of the Minister’s remarks are clear. In Canberra’s eyes, Australia is part of the “Pacific family” and therefore has a vital and legitimate role to play as a regional security provider. By contrast, China is a nation “outside of that Pacific family”, and therefore its efforts to contribute to regional security are to be met with deep reservations. This position contrasts markedly with the Chinese government’s view that “China is a direct stakeholder in the security of the South Pacific region.”

Canberra’s efforts to delegitimise Beijing’s security role in the Pacific is especially striking in the context of the Chinese government’s almost deferential language about Australia’s role in the region: “China always respects the historical and traditional ties between Australia and the Pacific island countries.” Ambassador Xiao even floated Australia-China cooperation in the Pacific, remarking during a speech on 11 June: “China attaches great importance to Australia’s traditional ties in the Pacific islands, and is willing to maintain communication with Australia, engage in active discussions on how to better support the sustainable development of island countries and on trilateral cooperation.” This followed similarly positive messaging about Australia’s role in the Pacific from the Chinese Embassy on 26 May and came on the back of repeated assurances from Beijing that “China has no intention to establish military bases [in Solomon Islands].”

It’s also potentially noteworthy that this Australian language about the security of the “Pacific family” being provided by its own members didn’t make it into the joint statement between Minister for Foreign Affairs Wong and her New Zealand counterpart Nanaia Mahuta. New Zealand’s Foreign Minister also refrained from using this kind of language during their joint press conference. Despite many mentions of the Pacific and security, the joint statement didn’t replicate any of the indirect objections to China playing a security role in the region. To be sure, it’s possible that Wellington shares Canberra’s concerns but didn’t want to elevate them so publicly by including them in a bilateral joint statement. But it equally seems possible that Canberra’s concerns have opened a significant foreign policy gap with Wellington.

None of this is to say that Australia shouldn’t object to China taking on a security role in the Pacific. The question of the costs and benefits of standing strongly against or accepting China’s expanding security activities in the region is far too big and complex to begin to answer here. But we can at least conclude that Canberra’s and Beijing’s contrasting positions on the legitimate security role for China in the region adds another dispute to the already long list of political and policy disagreements between the Australian and Chinese governments.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 9 to 22 May 2022

More words to woo

From Ambassador Xiao Qian’s op-ed published in The Australian Financial Review on 12 May 2022 (available on the Chinese Embassy’s website here):

“It is our belief that the common interests between China and Australia far outweigh our differences, and we have every reason to become partners of mutual benefit. We expect the Australian side to view China and China’s policies in an objective and rational light, act in the interests of Australia and its people, adopt a positive policy toward China, and work with China in the same direction with mutual respect as the political foundation, so as to push China-Australia relations back on the right track at an early date.”

Quick take:

This was the second of a pair of op-eds that Ambassador Xiao published with The Australian Financial Review on 11 and 12 May. (The first of which is available here and on the Chinese Embassy’s website here.) Both op-eds reemphasised and expanded on the positive rhetoric about the Australia-China relationship that we’ve seen from Ambassador Xiao since he arrived in Australia in January. These op-eds also fit into a longer record of more optimistic messaging from Chinese diplomats in Australia that stretches back to the end of 2021. (Needless to say, despite this relatively friendly tone from the Chinese Embassy in Canberra, the Ministry of Foreign Affairs spokespeople in Beijing have persevered with their familiar criticisms.)

Ambassador Xiao’s op-eds were followed by a Xinhua article on 15 May that struck an unusually upbeat note regarding ties between Victoria and China and was featured in the People’s Daily—the official newspaper of the Central Committee of the Chinese Communist Party (CCP). This article was also spotlighted on the website of Chinese Embassy in Canberra. Meanwhile, The Guardian’s Daniel Hurst reported on 18 May that Chinese diplomatic sources had said Beijing’s “wish to improve the relationship” was “genuine”. (Premier Li Keqiang’s congratulatory message on 23 May is the latest and most significant example of this shift in messaging.)

Despite the change in tone, it seems doubtful that a dramatic improvement in bilateral ties is in the offing. Ambassador Xiao’s op-eds suggest that Beijing is still waiting for Canberra to shift policies or at least make amends on issues that displease China but are—at least in these op-eds—unspecified. As the Ambassador made plain, his government expects Australia to take an “objective and rational” view of his country and “adopt a positive policy toward China.” This presumably implies that in Beijing’s view the new Australian government shouldn’t simply pursue a business-as-usual approach to China policy by replicating the positions of its predecessor.

But even with a change of government, Canberra’s China policy positions are unlikely to change and so are likely to be left wanting in Beijing’s eyes. Notwithstanding the real possibility of a more cautious rhetorical overlay, the strong bipartisan consensus on key elements of China policy (and China-related policy) means that the new government is likely to take many of the same positions that have most aggravated the Chinese government. This makes it unlikely that Ambassador Xiao and his colleagues will see the change they’re looking for from Canberra.

Direct talks on the table?

Former Minister for Foreign Affairs Marise Payne speaking at the National Press Clubs’ 2022 foreign affairs debate:

“I have said at every opportunity that Australian ministers, foreign ministers, prime ministers, trade ministers, finance ministers, treasurers, are open and available to engage with our colleagues in Beijing. And, of course, we are. But that opportunity has not been availed by the government in Beijing, and ultimately Australia continues to indicate that we are open to that constructive engagement.”

Quick take:

Despite the entrenched barriers to a big positive upswing in bilateral ties, the warmer messaging and the change of government may still foretell one tangible improvement in relations: a resumption of some form of direct high-level political contact (beyond congratulatory missives). If I was going to take a punt, I’d say that there’s a good chance that there’ll be a meeting between Australia and China at the ministerial level or above before the end of 2022. A leader-level visit to Canberra or Beijing seems off the table for the foreseeable future (for a wide range of COVID-related, political, and diplomatic reasons). But a quick bilateral between Prime Minister Anthony Albanese and President Xi Jinping or Premier Li at a multilateral gathering seems possible (assuming, of course, that China’s leaders resume their pre-COVID international travel).

East Asia’s summit season later this year might provide a few opportunities for such a meeting, with the East Asia Summit, G20, and APEC all taking place in South-East Asian counties in November this year. With these meetings potentially coinciding with the CCP’s 20th Party Congress (dates still TBC), Prime Minister Albanese might meet not meet a Chinese government representative as senior as President Xi or Premier Li. But the Prime Minister might nevertheless be able to instead meet a more junior government representative, as former Prime Minister Scott Morrison did in October 2019 when he met Vice President Wang Qishan, or perhaps a Chinese minister, as former Prime Minister Malcolm Turnbull did when he met Foreign Minister Wang Yi in February 2017.

In the absence of a meeting between Prime Minister Albanese and a senior Chinese leader or official, contact at the ministerial level seems feasible. This might take the form of an in-person meeting or even just a phone call between ministers, which hasn’t happened since January 2020 when former Minister for Foreign Affairs Payne spoke to her Chinese counterpart Wang over the phone. Some form of direct engagement at the ministerial level seems most likely in the foreign affairs and trade portfolios, perhaps on the side-lines of one of a number of multilateral regional engagements coming up in the next six months, which include the East Asia Summit Foreign Ministers’ Meeting and the ASEAN Regional Forum Ministerial Meeting.

Beyond the recent stream of more positive rhetoric, on what am I basing this (very) tentative prediction? Partially, it’s the unrelated factor of the ramping up of in-person diplomacy. With COVID restrictions easing further and more diplomatic gatherings happening *gasp* in real life, the barriers to face-to-face meetings between Chinese and Australian representatives are lowered (after all, they’ll all be working many of the same conference rooms). Beyond that, it also appears that Beijing is interested in exploring whether the election of a new government in Canberra might be an opportunity to incrementally improve bilateral relations. This doesn’t necessarily mean that we’re likely to see regular leader- and ministerial-level engagements and the free flow of Australian exports into the Chinese market. But my guess is that it at least means Beijing would be willing to have some form of direct contact with an Australian minister or leader to discuss the relationship.

But isn’t this kind of direct contact still unlikely given that it’d be inconsistent with China’s apparent preconditions for dialogue? Possibly. But even if Canberra doesn’t agree to preconditions, it’s entirely possible that these preconditions were reserved for the previous government specifically, thereby opening the way for dialogue with the new government. Alternatively, Beijing might justify a once-off ministerial- or even leader-level meeting by saying (to itself) that one instance of direct discussions doesn’t constitute full-blown and formal dialogue and so it isn’t actually abandoning the preconditions at all. I’m clearly way too down in the weeds at this point. Suffice it to say, I think the atmospherics augur well for some kind of high-level direct discussions this year.

That said, it’s entirely possible that there won’t be any high-level contact between Canberra and Beijing this year. (Please mercilessly remind me of my erroneous prediction if we end the year without direct words being exchanged between an Australian prime minister or minister and a senior Chinese representative.) Regardless, the longstanding points of bilateral tension mean that the relationship is unlikely to take a sharp positive turn even if this contact occurs. But I’d still be surprised if 2022 comes to a close without some form of meeting or call.

Bigger forces at play

From the joint 21 May statement from the American Institute in Taiwan, the Australian Office, Taipei, the British Office Taipei, the Canadian Trade Office in Taipei, and the Japan-Taiwan Exchange Association:

“We … wish to reaffirm our support for Taiwan’s meaningful participation in the work of the World Health Organization and Taiwan’s participation as an observer in the World Health Assembly.”

…

“The World Health Assembly would benefit from Taiwan’s world-class expertise, and Taiwan can help the World Health Organization live up to its commitment to ‘health for all.’” 

Quick take:

Despite all the positive atmospherics of recent messaging from the Chinese Embassy in Canberra and other sources (see above), a range of deep and enduring disagreements still divide the Chinese and Australian governments. These include familiar and longstanding disputes over the application and observance of international law in the South China Sea, human rights abuses in China, and the role of security considerations in Australia’s foreign investment review processes, among many others. A change of government in Canberra and warmer rhetoric from Chinese officials are unlikely to bridge these divides, especially since the new Australian government has backed in their predecessor’s approach to many of these policy issues.

Added to this though, there are also emerging and intensifying points of contention. Among others, these include Australia’s stronger diplomatic support for Taiwan, dramatically diverging views of the appropriate security role for China in the South Pacific, and Australia’s possible use of Magnitsky-style sanctions against Chinese officials. This is not to say that Canberra should, for example, avoid coming out in support of Taipei’s participation as an observer in the World Health Assembly. (Although it’s an argument for another time, I’m personally supportive of a range of relatively low-risk political, diplomatic, and geoeconomic measures to support Taiwan, provided they’re consistent with Australia’s longstanding one-China policy.)

But it is to say that regardless of the good reasons for elevating positive diplomatic messaging on Taiwan, this and a range of other Australian policy decisions are likely to create natural limits on how much the Australia-China relationship can improve. And that’s likely to remain the case even with a veritable forest of rhetorical olive branches from Beijing greeting the new government in Canberra. So, not only will longstanding points of disagreement between Australia and China likely keep ties relatively cool, but a growing roster of recent developments are liable to further chill the relationship.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 25 April to 8 May 2022

Pacific dialoguing

From China’s Ministry of Foreign Affairs’ (MFA) readout of the virtual meeting between Australian and Chinese officials discussing the Pacific on 6 May:

“Solomon Islands and South Pacific islands are not the ‘backyard’ of any country. China is a direct stakeholder in the security of the South Pacific region. China has no selfish interests in the South Pacific, does not seek ‘spheres of influence’ or engage in bullying and coercion, and will unswervingly advance practical cooperation with South Pacific island countries in various fields.”

Quick take:

Australian ministers and Chinese government representatives have been publicly criticising—either explicitly or implicitly—each other’s countries for weeks now in the media and official statements. Following news of the security cooperation agreement between Beijing and Honiara, Canberra has raised a steady stream of concerns about the security implications of the agreement and the way in which China apparently conducts itself in international affairs. Meanwhile, Chinese MFA and Ministry of National Defense spokespeople have repeatedly hit back, accusing Australia of interfering in the affairs of a sovereign state and stoking regional tensions.

Against this backdrop of a prolonged war of words, news of direct talks between Canberra and Beijing is encouraging. To be sure, it seems likely that the Australian and Chinese governments would have already engaged repeatedly on the security agreement via their respective embassies. (The Australian Embassy in Beijing has presumably already made private representations to MFA regarding Canberra’s concerns and the Chinese Embassy in Canberra has presumably done the same to the Department of Foreign Affairs and Trade [DFAT] in response to the Australian government’s publicly expressed worries.) But the fact these recent talks have been publicly advertised by both MFA and DFAT might mean they occurred at a higher level of seniority or in a more prolonged and/or formalised structure than typical embassy representations.

Regardless of the cautiously positive sign of extra official engagement on the security agreement, the talks seemed to yield little in the way of common ground. The bulk of the respective press releases issued by MFA and DFAT detailed the starkly different ways in which Canberra and Beijing view the security agreement. Indeed, beyond some of the particulars of the meeting’s time and place, the only point of overlap between the two press releases was the perfunctory final sentence detailing other Pacific-related issues that the two sides discussed.

Is this difference of views surprising? Not particularly. Canberra’s and Beijing’s strongly diverging positions on this issue are well established and it was always unlikely that one round of official talks would produce common understanding, especially considering the different visions for the Pacific that the Australian and Chinese governments have advocated in recent weeks. Compare Canberra’s view that “the Pacific family remains best placed to meet the security needs of Pacific island countries comprehensively” with Beijing’s position that “China is a direct stakeholder in the security of the South Pacific region.” So, notwithstanding exchanges like this, expect the Beijing-Honiara security agreement to emerge as yet another long-term source of tension in the Australia-China relationship.

1930s redux?

Minister for Defence Peter Dutton speaking at the National Press Club defence debate on 5 May:

“China’s intimidatory use of grey zone warfare tactics, like hacking and like economic coercion, is threatening the sovereignty and prosperity of every Indo-Pacific nation. We live in times echoing the 1930s with belligerent autocrats seeking to once again use force to achieve political outcomes.

If history has taught us anything, it is that when dictators are on the march, you can only preserve peace by preparing for war. You can only deter aggression from a position of strength.”

Quick take:

There’s long been a conspicuous contrast between how Minister Dutton and minsters in the foreign affairs and trade portfolios speak about China. At times, this even takes the form of what could plausibly be interpreted as substantively different assessments of the threat posed by People’s Liberation Army modernisation. This difference is now also apparent when it comes to commonly used historical baselines. In a speech to the United States Studies Centre on 28 April, Minister for Foreign Affairs Marise Payne raised concerns about China’s behaviour that were not dissimilar to those regularly highlighted by Minister Dutton. Minister Payne stressed the need for Australia to clearly and consistently respond to the “changing circumstances, particularly China’s growing assertiveness in the Indo-Pacific.” But while both ministers seek to stand “firm on our values and principles even in the face of pressure,” the historical reference points with which they frame current circumstances are sometimes vastly different.

While criticising China’s current behaviour, the Minister for Defence has made repeated recent references to the turbulent pre-war years of the 1930s when fascism was ascendant. As Minister Dutton said on 25 April: “We’re in a period very similar to the 1930s now, and I think there were a lot of people in the 1930s that wish they had spoken up much earlier in the decade than they had to at the end of the decade. I think that’s the sobering reality of where we are.” By contrast, the Minister for Foreign Affairs seems to prefer much more contemporary and less historically striking reference points to contextualise current circumstances. On 28 April, Minister Payne said: “The pace at which China has sought to exercise influence and raw power in the Indo-Pacific has been rapid, more so than many were predicting only a decade ago.”

How much significance should be attributed to these contrasting historical reference points? Any tentative conclusions should be caveated by the context of the heat of the ongoing election campaign, which is liable to prompt stronger and more varied rhetoric from ministers and their shadow counterparts alike. This is perhaps especially likely to be the case when the ministers are up for re-election in different houses and different states. (Minister Payne is safely placed first on the Coalition Senate ticket for New South Wales, while Minister Dutton is campaigning for a Queensland seat that he holds by a not-entirely-comfortable 4.6%.) Moreover, each of these ministers speak on behalf of different portfolios with different equities and they each have different communication and rhetorical styles.

Those considerations notwithstanding, it seems likely that such historical comparisons are liable to further strain ties between Canberra and Beijing. Especially in light of the frosty reception from Beijing when similar allusions to World War II have previously been made in relation to China. When Coalition Member of Parliament and now Assistant Minister for Defence Andrew Hastie penned an op-ed in August 2019 drawing parallels between Australia today and the poor preparedness of France in 1940, the Chinese Embassy shot back by decrying “Cold War mentality and ideological bias” and stressing that it was “detrimental to China-Australian relations.” This is not to say that all ministers should frame the same issues in precisely the same way or that there aren’t pragmatic political grounds for making such historical comparisons. Such references may galvanise domestic public opinion and may rally like-minded nations. (Although the ledger on both counts is unclear.) But even if we ignore the historical aptness or lack thereof of refences to the 1930s, such comparisons will seemingly do Canberra few favours in its efforts to thaw its frozen political ties with Beijing at the ministerial level and above.

Market access measures

Based on the latest trade data, the combined monthly value of Australia’s nine exports targeted by China’s trade restrictions (to China, the rest of the world, and total, May 2020 to March 2022):

Quick take:

Despite the value of these nine exports to China now sitting at approximately 8% of their value in May 2020 when trade restrictions were first introduced, their value to the rest of the world is now roughly 276% of their value two years ago. These numbers no doubt reflect factors such as persistently high coal prices, favourable growing conditions for a range of Australian agricultural exporters, and high food prices globally. They are also a product of the disproportionate value of coal exports in this basket of nine exports—roughly 80% of the overall value of these exports.

At the same time though, these numbers also reflect the ongoing and generally successful redirection of the Australian exports that have been shut out of the Chinese market. To take just one example: the value of Australia’s exports of barley to Saudi Arabia was zero in May 2020; those same exports have averaged roughly $71 million a month in the last 12 months. To put that in perspective, that’s approximately 150% of the average monthly value of barley exports to China before Beijing introduced anti-dumping and countervailing duties and the value of these exports to the Chinese market fell to zero.

What does the future hold? As I’ve argued before: Although the monthly value of targeted Australian exports has surged despite China’s trade restrictions, these industries may yet face tougher times if Beijing’s ongoing economic coercion is combined with less favourable weather and global market conditions. The impact on Australia’s exports would also probably be much more prolonged and severe if China decided to extend it trade restrictions to Australian education. Redirecting to alternative markets is likely to be much slower and harder for education providers given the relatively long process of finding new prospective students and China’s unrivalled status as the largest source country for international students. Despite these potential headwinds, Australian government initiatives in a range of markets, including Taiwan, South Korea, and Peru, point to steadily expanding opportunities for Australian exporters in alternative markets. Although none of these measures or markets could offset the loss of the Chinese market, additional market access and promotion initiatives will incrementally assist impacted Australian exporters redirect to alternative markets.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 11 to 24 April 2022

Interrogating the Solomon Islands-China security agreement

Ministry of Foreign Affairs (MFA) Spokesperson Zhao Lijian speaking on 22 April 2022:

“We firmly reject the irresponsible remarks by certain Australian politicians on China-Solomon Islands relations.”

Quick take:

In recent weeks, assessments have flown thick and fast regarding the possible strategic implications of the Solomon Islands-China security cooperation agreement. On top of a range of concerns raised by the Prime Minister and his ministers, Labor’s Shadow Minister for Foreign Affairs Penny Wong labelled the development the “worst failure of Australian foreign policy in the Pacific since the end of World War II.” In response to some of these worries, and in textbook whataboutist style, China sought to quickly turn attention away from the new security agreement to what Beijing claims is the duplicitous and covert character of Australian statecraft. Responding to questions from the press, MFA Spokesperson Zhao pivoted from talking about the security agreement to lambasting Australia and its AUKUS partners: “The three countries are trying to make South Pacific countries once again pawns in group politics and military confrontation and make the innocent people in South Pacific countries pay a heavy price for their selfish political agenda.”

Notwithstanding the need to carefully scrutinise this security development, I think it’s premature (at least for now) to conclude that the agreement entails dramatically negative consequences for Australia. This is not to say that I’m confident the security agreement will be a net neutral development for Australia. It’s entirely possible that the agreement will eventually lead to changes that further erode Australia’s and the region’s security. But I’m struck by the limited nature of the concrete outcomes China appears to have achieved via this new agreement (principally, the possibility of contributing to stabilisation missions and receiving logistics support). Moreover, and perhaps more important in the long term, China would still need to overcome many hurdles if it wanted to use this security agreement as the basis for acquiring a permanent People’s Liberation Army (PLA) presence or base in Solomon Islands. (Of course, it goes without saying that my assessments are based exclusively on information in the public domain.)

Rather than providing clear answers, the agreement, as I read it, poses a range of big and as-yet unanswered analytical and policy questions. Among others:

• How will the security agreement be operationalised given what appear to be Solomon Islands’ deep domestic political divisions regarding China policy?
• What in practice are the likely next steps in Solomon Islands-China security cooperation?
• Quite aside from concerns in Canberra, Washington, Tokyo, and Wellington, will scepticism among Pacific capitals impose limits on how much China can gain from the agreement strategically and militarily in the long term?
• If (and it’s still a case of ‘if’ not ‘when’ at this stage) China seeks some form of enduring military presence in Solomon Islands, what are the likely warnings and indicators that such a plan is being pursued?
• If China had an enduring military presence or even a formal military base in Solomon Islands, how large and sophisticated is it likely to be given the South Pacific’s distance from both China’s most critical trade routes and Beijing’s pressing geostrategic priorities in its immediate maritime approaches in East and South-East Asia?
• If China sought more than an ongoing rotational military presence and pushed for a formal military base, what are the likely domestic political, legal, social, etc., barriers in Solomon Islands to such an arrangement?
• In terms of intelligence collection against Australia and/or shadowing Australian Defence Force (ADF) platforms and probing ADF responses, how much of an additional advantage would China gain from an ongoing military presence or base in Solomon Islands beyond what it will be able to achieve in the coming years with its growing fleets of intelligence collection platforms, aircraft carriers, long-distance submarines, and expanding military footprint in the South China Sea and other potential overseas locations such as Cambodia? (NB I don’t doubt that there would be advantages given proximity to Australia but there are also added costs and complications associated with bases that might make other mobile options more appealing for China.)
• In a conflict scenario, how much of a threat to Australia would a PLA rotational presence or permanent base pose given such an installation’s vulnerability to Australian and allied forces and the difficulties that China would face with logistics and sustainment?

None of these questions mean that China won’t seek to use this security agreement to pursue goals that undermine Australia’s influence and interests. Nor do these questions mean that high impact/low probability scenarios such as a full-scale PLA base being used to project power against Australia in a conflict scenario are impossible. Nevertheless, these and many other similar questions at least suggest that the strategic implications of this security agreement for Australia are far from clear. They also point to a range of serious political, diplomatic, social, legal, logistical, etc., hurdles that China will need to overcome if it does eventually seek a permanent PLA presence or base in Solomon Islands. As political leaders and ministers have been at pains to stress, Solomon Islands is a sovereign state and Beijing’s ambitions will have to contend with the agency and interests of Solomon Islanders. As such, it seems there are many more moves and counter-moves to come before we can confidently assess the security implications of this agreement.

Red lines on the water

The Prime Minister Scott Morrison speaking on 24 April:

“I share the same red line that the United States has when it comes to these issues. … We won’t be having Chinese military naval bases in our region on our doorstep.”

Quick take:

Despite disavowals from Honiara and Beijing, Canberra is clearly deeply concerned about the possibility of a PLA base in Solomon Islands. The Prime Minister’s reference to the spectre of such a possibility followed a strong and ominously ambiguous US statement: “If steps are taken to establish a de facto permanent military presence, power-projection capabilities, or a military installation, the delegation noted that the United States would then have significant concerns and respond accordingly.” Given Solomon Islands’ proximity to Australia, Canberra’s concerns about a possible PLA presence are unsurprising. But while it might make strategic sense for Australia to pre-emptively telegraph its objections to the PLA looking for real estate so close to Australian shores, Canberra’s concerns may not be realistic when extended to the region more broadly. In short: Is it feasible for Australia to have the goal of keeping a permanent PLA presence out of the South Pacific and South-East Asia? (Of course, much hinges on how one defines the Prime Minister’s reference to Australia’s “region”. For present purposes, let’s go with something akin to the geographic location of the 2016 Defence White Paper’s second Australian strategic defence interest: the South Pacific and South-East Asia.)

Considering the scope of Beijing’s global military aims and the resources at its disposal, keeping PLA naval bases out of Australia’s region begins to look extremely ambitious. President Xi Jinping has stated plainly his country’s goal of building a “world-class military”. To achieve this goal, defence spending in China continues to rapidly rise in absolute terms and the PLA is undertaking a massive capability modernisation effort—all despite military spending as a percentage of GDP remaining well below the global norm for the largest and most advanced military powers.  Meanwhile, China’s military strategy has since 2015 emphasised a shift in “focus from ‘offshore waters defence’ to the combination of ‘offshore waters defence’ with ‘open seas protection,” which provides the PLA Navy with a strategic mandate to project power across the globe’s oceans. Noting these expansive military missions, it’s unsurprising that China has been seeking PLA access and basing options.

These and other data points suggest a determined and well-resourced effort to not just expand the capability and international role of the PLA, but also acquire the access and basing arrangements needed to sustain military presence around the globe and in Australia’s region. This is not to advocate fatalistic acceptance of what Beijing may seek to achieve via the Solomon Islands-China security agreement and other possible security agreements between China and Australia’s neighbours in the South Pacific and South-East Asia. Nor is it to suggest that Australia should not seek to shape the way in which the growing PLA presence in its region evolves. Depending on how China’s statecraft and basing plans progress, it may prove prudent for Canberra to devote significant financial, diplomatic, and political resources to forestalling specific future PLA access or basing plans. This imperative may be especially strong in cases where such access arrangements or bases are close to Australia or could complicate the ADF presence at overseas bases, including Royal Malaysian Air Force Base Butterworth.

But despite all this, more PLA presence in more locations in South-East Asia and the South Pacific seems almost certain. Australia can and should seek to influence where in the region China’s military platforms end up and how many of them materialise close to home. But Canberra will probably need to resign itself to mitigating rather than entirely blocking this PLA presence in its region. China has the means and intent to build a military with power projection capabilities throughout the Indo-Pacific, and Beijing has long appreciated the need for bases and access arrangements to sustain such a force posture.

Australia may well be on sound strategic ground seeking to minimise China’s security cooperation with a country less than a couple of thousand kilometres from its coast. But Canberra will need to be judicious with its objections to PLA presence in South-East Asia and the South Pacific more broadly. Over the longer term, it appears unlikely that Canberra, or even Washington for that matter, will be able to entirely stop the PLA gaining additional access and basing options in the region. In Cambodia, for example, even forceful US tactics of sanctions and stiff diplomatic warnings don’t seem to have slowed Phnom Penh and Beijing’s military embrace. If the past few centuries of military history are any guide, China’s growing military power and expansive strategic objectives are likely to be accompanied by a range of military access points and bases around the globe.

Who’s changed?

Minister for Defence Peter Dutton speaking in Ipswich on 22 April:

“What’s changed here in our region is China under President Xi. Okay. If you look at what’s happened on the India-China land border, there have been Indian troops who have died there in the last three years at the hands of Chinese troops. Now, India hasn’t changed. India is not the aggressor. If you look at what’s happened in the East China Sea, the Chinese militia are bumping up against the Japanese Coast Guard in a provocative action on a regular basis. It’s not Japan that’s changed. Japan is not the aggressor there, China is. And if you look at what’s happening in the acts of interference within our own region, the corrupt payments in parts of Africa, the situation in Sri Lanka with the port, it’s not those countries that have changed, it’s China under President Xi.”

Quick take:

A couple of days later, Minister Dutton doubled down on this assessment that changes in China’s behaviour are driving a deterioration in regional security. On 24 April, he reiterated this point in even more forceful terms: “It’s not our countries [the United States, the United Kingdom, Japan, India, New Zealand, and Australia] that have changed. I mean we still stand for the same values. It’s China under President Xi. And as we found in the 1930s, if you just continue on an appeasement phase … then you will find yourself in conflict.”

Regardless of whether one accepts Minister Dutton’s characterisation, his comments highlight a critical divide in China debates that deserves much more attention. In its most stark form, it’s the chasm between Minister Dutton’s view that China has made the world less safe and other countries must respond accordingly and something akin to the Chinese Embassy official’s warning in November 2020: “If you make China the enemy, China will be the enemy.” According to one version of reality, China is threatening, and other countries have been forced to respond with more military capability and national security protections. According to the other version, China is pushing forward with a more assertive defence and national security posture as a response to the hostility of other states. Although I’ve simplified these positions somewhat/a lot, versions of these kinds of arguments regularly feature in public debates about the nature of China’s contemporary statecraft and the appropriate policy responses.

As well as intersecting with complex and longstanding academic debates about security dilemmas, escalatory cycles, and feedback loops, this divide has massive contemporary policy implications. Broadly speaking, if one believes that China has changed and become more threatening, one is probably going to stick with strong military and security responses to China’s growing strategic rise and reach. By contrast, if one believes that other countries’ policies towards China have (at least in part) prompted China’s more assertive military and security posture, then one is probably going to seriously consider actions that Australia and other countries might take to deescalate and reassure Beijing.

I don’t pretend to have a clear and compelling answer to which side of this debate is (more) right. And even if I did, I wouldn’t dare try and justify it in a few hundred words. More importantly though, I’m not even sure that such a generalised answer is possible: It seems plausible to me that the extent to which other countries’ actions towards China have influenced Beijing’s choices will vary significantly between different policy arenas. For example, China’s longstanding military modernisation goals and publicly declared plans to build a “world-class military” mean that the growth of the PLA is probably not driven by other countries’ recent decisions to acquire more military capabilities. By contrast, China’s increasingly enthusiastic embrace of various tools of economic statecraft has probably been spurred (at least to some degree) by the way in which the United States and other key economies have used similar tools against China. (On the latter point, I’m thinking especially of China’s use of tit-for-tat tariffs and sanctions following similar moves by the United States, the European Union, and others.)

What does all this mean for Australia and its relationship with China? My tentative sense is that there’s likely to be value in considering which of China’s policy decisions have been shaped (even if just in part) by Australia’s positions and which of these policy decisions were largely (or even entirely) uninfluenced by Australian actions. As well as highlighting policy arenas in which Australia might be able to exert more influence over China’s behaviour, such analysis would provide a more thorough account of how the Australia-China relationship came to be in its current state. Even if the Australian government and people are comfortable with Canberra’s current China policy settings, there’s value in understanding more fully how changes in Canberra’s positions (and not just Beijing’s) might have contributed to recent dynamics in bilateral ties.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 28 March to 10 April 2022

A united front on economic coercion

From the 29 March joint statement issued by Australian Minister for Trade, Tourism and Investment Dan Tehan and the United States Trade Representative Katherine Tai:

“Minister Tehan and Ambassador Tai discussed their shared concerns over the use of coercive trade actions and non-market-oriented policies and practices and affirmed their commitment to effectively deter and address these harmful policies and practices, which threaten the livelihoods of our citizens, harm our workers and businesses, and undermine the rules-based multilateral trading system. They committed to working together to seek support from other interested partners to tackle these practices head on.”

“The Ministers opposed the use of trade-related economic coercion to pressure or influence the legitimate decision-making of sovereign governments. They also expressed serious concern over the use of non-market policies and practices, including: industrial policies and practices that promote excess capacity; pervasive subsidization; discriminatory and anti-competitive activities of state-owned or -controlled enterprises; the arbitrary or unjustifiable application of regulations; forced technology transfer; state-sponsored theft of trade secrets; government interference with or direction of commercial decision-making; and insufficient regulatory and market transparency.”

“Minister Tehan and Ambassador Tai reiterated the shared commitment of Australia and the United States to maintaining an open, rules-based multilateral trading system and, working together with like-minded countries and other interested partners, to identify, prevent, deter, and address trade-related economic coercion and non-market policies and practices, including through the World Trade Organization (WTO). The Ministers discussed cooperation in WTO committees and in disputes to challenge these policies and practices, as well as the sharing of information, data, and analysis and the development of new tools.”

Quick take:

By my record, this is one of the strongest and most detailed government statements issued on economic coercion yet. This statement also deals with other non-market policies and practices but I still can’t recall a recent unilateral, bilateral or multilateral communique on the issue like this. Admittedly, this joint statement seemingly wasn’t accompanied by much in the way of concrete policy initiatives to respond to economic coercion. But that such a statement was made at all is significant. Its detailed nature is especially noteworthy considering that when Minister Tehan met Ambassador Tai less than a year ago in July 2021, economic coercion received a flat and pretty perfunctory mention. This recent joint statement was also followed a day later by a similar statement issued with Secretary of Commerce Gina Raimondo. That second statement was more rhetorically parsimonious on economic coercion but hit many of the same points.

These joint statements are a diplomatic win for Australia. Such shared messaging is testament to the successes of Canberra’s nearly two-year long campaign to rally international opposition to economic coercion. These strong signals from the Biden administration cap off an Australian campaign that has seen more than 11 countries and multilateral groupings join Australia (in some cases multiple times) and express shared opposition to economic coercion. Despite the diplomatic wins, there’s much less clarity regarding both the concrete follow-on action and the contrast these statements attempt to create between China and the United States/Australia.

It’s not obvious that there’s a big joint agenda that Canberra and Washington can pursue to operationalise their shared opposition to economic coercion beyond diplomatic signalling and action in the WTO. (On some other options for joint US-Australia action, this co-authored paper from my ANU colleague Darren Lim is a handy guide for policymakers.) To be sure, avenues like diplomatic signalling and WTO action are valuable. But jointly responding to economic coercion is hard if one wants to avoid the risks of escalatory retribution while also simultaneously adhering to the global rules-based trading system. And it’s especially hard if one’s allies and partners don’t want to distort markets by directing their companies to assist exporters that have been adversely impacted by trade restrictions. (None of this is to say that Australia doesn’t have options to individually respond to economic coercion. It continues to pursue an active policy agenda in that space focused on new export opportunities and additional support for Australian businesses.)

Meanwhile, the resurgence of economic statecraft even among economically liberal states makes it much more difficult to draw hard and fast distinctions between what one judges to be the nefarious practices pursued by other states and one’s own geoeconomic policies. The Tehan-Tai joint statement’s complaints regarding “non-market policies and practices” can be justifiably levelled at Beijing. But at least some of these same grievances could be made against the United States and, arguably in certain cases, Australia. For example, a plausible case could be made that both the Australian and US governments have at times in engaged in “trade-related economic coercion and non-market policies and practices” via a range of tariffs, sanctions, export controls, and state-backed strategic investments.

None of this is intended to draw a moral or economic equivalence between the Chinese government’s policies and those of the US and Australian governments. But it is to say that the age of resurgent economic statecraft makes it much harder to contrast (in an unambiguous way) those states that pursue broad-based geoeconomic polices and those generally economically liberal states that increasingly pull the levers of economic policymaking in a bid to deliver what they consider to be necessary strategic effects. There’s much more to say on this (hopefully another time) but one of the by-products of the return of geoeconomics is a gradual and partial but nonetheless very real blurring of previously clearer divisions between free-market and state-directed economies. This coincides with policymakers in economically liberal states being pushed to engage with a proliferation of complex and morally ambiguous calculations about precisely how deeply to embrace economic statecraft.

Beijing lobs the ball back in Canberra’s court

China’s Ministry of Foreign Affairs (MFA) Spokesperson, Zhao Lijian, speaking at the regular MFA press conference on 1 April:

“In the spirit of openness, inclusiveness and mutual benefit, China is committed to building an open world economy and sharing development opportunities with other countries. Australia has benefited greatly from its cooperation with China and is a beneficiary of China’s development. The accusation of ‘economic coercion’ cannot be levelled against China. Instead, it is Australia that stands guilty of the following. It has taken measures against market principles and even bullying acts, and imposed unwarranted restrictions on normal exchanges and cooperation between the two countries, disrupting the good momentum of bilateral practical cooperation. Meanwhile, it has played the victim to put the blame on China, ganged up to pressure China, and grossly interfered in China’s internal affairs and harmed China’s core interests in violation of international law and basic norms governing international relations.”

“The responsibility of the current difficulties in China-Australia relations lies entirely with the Australian side. It is imperative that Australia face up to the crux of the setbacks in bilateral relations, abandon the Cold War mentality and ideological bias, respect basic facts, take an objective and rational look at China and its development, earnestly follow the principles of mutual respect and equality when handling bilateral relations. The Australian side should also stop playing up ‘China coercion’ narrative for selfish political gain and do more to enhance mutual trust and strengthen cooperation.”

Quick take:

This was quite a comprehensive spray. Zhao has a reputation for being an especially combative MFA spokesperson. But this was a pummelling even by his standards. Amidst a range of familiar criticisms of Australia, two points stood out for me. First, Beijing still seems intent on waiting for a diplomatic olive branch or policy concession from Canberra before considering any roll back of trade restrictions. Second, not only does China still periodically deny that it’s using economic coercion against Australia, but it sees Canberra as the original instigator of coercive practices in the form of Australian restrictions on foreign investment, among other factors. (Of course, this second point may not be sincerely believed by political leaders and officials in Beijing. But that the MFA Spokesperson used this framing at least suggests that China would like to persuade others that its subsequent trade restrictions are on some level a justified response to Australia’s securitisation of foreign investment review processes.)

Zhao’s statement makes for a striking study in contrasts when placed alongside a long line of conciliatory messages from the Chinese Embassy in Canberra. As I’ve written previously (here, here, here, here, and here), there’s been a consistently softer rhetorical tone from senior embassy representatives since roughly December 2021. What does the contrast between the diplomatic demeanour of the MFA Spokesperson and the Chinese Embassy mean? My sense, probably not much. As I’ve suggested previously regarding Chinese Embassy statements, Beijing seemingly still expects Canberra to make compromises of some kind.

A preferred turn of phrase used by the recently arrived Chinese Ambassador is: “joint efforts to push forward China-Australia relations along the right track.” This way of looking at what’s needed to improve bilateral ties implies that responsibility for frosty relations also lies at Australia’s feet (i.e., the Australian part of the “joint efforts”). (Whether the action that Canberra is expected to take is a substantial policy concession or a largely symbolic gesture remains unclear.) So, despite the overlay of hostile rhetoric, Zhao’s point may well boil down to a broadly similar message: ‘Australia, you need to demonstrate goodwill and compromise before bilateral relations will get back onto an even keel.’ Given the current political climate (and a range of other factors I’ve previously floated), the chances of that kind of compromise are low. So, it’s seemingly a case of plus ça change.

Foreign direct investment data

China’s annual foreign direct investment (FDI) into Australia by value (A$ million) and number of approvals, FY03-04 to FY20-21, incorporating data from the latest Foreign Investment Review Board’s Annual Report:

Quick take:

This latest tranche of FY20-21 FIRB data indicates that the decline in the value of Chinese FDI into Australia may have bottomed out. After collapsing dramatically between FY15-16 and FY16-17, the FY20-21 data shows a modest rise in the overall value of Chinese investments combined with a modest decline in the number of approvals for Chinese investments. With a focus on Australian policymaking, it’s tempting to attribute the declining fortunes of China’s FDI into Australia to growing security concerns surrounding certain types of Chinese investment. Such an inference might seem especially plausibly considering that the numbers of FIRB approvals involving investors from other major source countries does not experience a comparably dramatic post-FY15-16 drop.

But the starkly downward trend in China’s FDI into Australia is presumably also partly a function of global trends in China’s FDI. After reaching a peak of US$216 billion in 2016, China’s FDI then fell suddenly in 2017 and had nearly halved to US$110 billion in 2020 (see below). The 2021 iteration of the below OECD data is not yet available but it’ll be interesting to see whether China’s global FDI flows roughly mirror the FY20-21 FIRB trends. That question notwithstanding, it seems unlikely that the decline in China’s FDI into Australia post-FY15-16 was simply a function of broader macro trends in the changing pattern of China’s FDI globally. Whereas China’s overall FDI in 2020 was 51% of its 2016 peak, China’s FDI into Australia in FY19-20 was approximately just 27% of its FY15-16 peak. This mismatch seems to suggest that the fall in China’s FDI into Australia in recent years was a product of factors beyond the fall in China’s FDI globally.

I hasten to add that I’m no expert on investment flows, so any corrections or extra context for this data would be especially welcome.

China’s annual global FDI by value (US$ million), 2005 to 2020:

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 14 to 27 March 2022

Different notes on China’s military modernisation

Minister for Foreign Affairs Marise Payne speaking to the ABC Radio National’s Patricia Karvelas on 24 March:

“I would note that China has increased its defence spending in the region by around seven per cent. They’re entitled to do that. We don’t criticise that. But ultimately what’s essential here is transparency. Transparency is vital. Australia is completely transparent about the approach that we take on defence spending. And, frankly, I’d urge all countries to be that transparent about capabilities and intentions as we are.”

Minister for Defence Peter Dutton addressing the American Chamber of Commerce on 18 March:

“[W]e know that China’s military build-up is of significant concern.

“Nations are, of course, entitled to modernise their military forces consistent with their national interests. We’re in the process of doing that now. But let’s be very frank – China is undertaking the largest peacetime military build-up of modern times.”

…

“Unless China provides more transparency and engages in strategic reassurance measures, regional neighbours like us, like many other countries in the region, cannot help but see this build-up as directed at them.”

Quick take:

Although it’s no surprise that ministers responsible for different portfolios would frame China’s military modernisation differently, the rhetorical contrast is nonetheless striking. One plausible interpretation is that despite the divergence in tone, both ministers are saying substantively the same thing. They are both in essence calling for more transparency regarding military capabilities and strategic intentions. Still, the Minister for Defence’s use of similarly strong language in two other recent speeches (e.g., here and here) and his clear statement that “China’s military build-up is of significant concern” fit awkwardly with the Minister for Foreign Affairs’ more cautious assessment that “[w]e don’t criticise [China’s increasing military spending]”.

If the audience for this messaging includes Beijing, the contrasting language is likely to be especially confusing. From the Chinese government’s perspective, it’d be hard to know whether the Australian government’s problem is with the growth in China’s military spending and capability in general or whether the issue is specifically what Canberra judges to be a lack of transparency and reassurances. If an analyst or policy officer in Beijing read the transcript of the Minister for Foreign Affairs’ remarks, they might conclude the latter. But if they read the Minister for Defence’s speeches, they might assess that Australia believes China’s military modernisation is itself problematic. (Of course, the Minister for Defence also emphasised the case for transparency and reassurances. But his focus on the scale of China’s military modernisation and Australian and regional concerns could give the impression that even additional transparency and reassurances wouldn’t be enough to allay fears.)

Not that it’s necessarily the job of Australian ministers to coordinate their messaging so as to make the lives of foreign officials easier. But the contrasting tone is nevertheless likely to make it that much harder for officials in Beijing to provide their leaders with a crisp and clear account of Canberra’s position on their government’s drive to build a “world-class military”. Beyond Beijing, these differences of tone might also raise questions in other capitals (including those of allies and partners) about the precise nature of Canberra’s core concern with China’s military rise. Am I overreading these ministerial remarks? Quite possibly. But if they prompt questions for Australians, there’s a good chance they’ll do the same for overseas observers.

None of this is to say that different ministers should use precisely the same language, especially considering that ministerial remarks often reflect the equities and views of their respective departments and agencies. It’s also perfectly reasonable and often necessary for ministers to speak to different audiences. Perhaps the Minister for Defence was seeking to impress upon the Australian public the sheer magnitude and historical significance of China’s military modernisation, while the Minister for Foreign Affairs’ intention might have been to deliver a more conciliatory message to China and the region as a whole. Notwithstanding all that, divergent rhetoric on the question of Australia’s concerns about China’s military modernisation is equally liable to lead to confusion in other capitals, including and especially Beijing.

The Chinese Embassy backs bipartisanship

From the Chinese Embassy’s readout of Shadow Minister for Foreign Affairs Penny Wong’s 16 March meeting with Ambassador Xiao Qian:

“Shadow Minister Wong expressed welcome to Ambassador Xiao on assuming his post in Australia and set forth Australian Labor Party’s views on relevant issues on Australia-China relations. Shadow Minister Wong hoped that the two sides would enhance engagement and dialogue.”

Quick take:

The readout from this meeting was eerily reminiscent of the language from the meeting between Ambassador Xiao and Minister for Foreign Affairs Payne on 9 March. These Chinese Embassy readouts have the Ambassador reciting substantively the same points. To both the Minister for Foreign Affairs and her shadow counterpart, the Ambassador reportedly expressed hope that “the two sides will work together to review the past and look into the future, adhere to the principle of mutual respect, equality and mutual benefit, and make joint efforts to push forward China-Australia relations along the right track.” The Chinese Embassy is doubling down on its preferred conciliatory language on the Australia-China relationship.

But even more noteworthy was the apparent similarity between Minister Payne’s and Senator Wong’s remarks to Ambassador Xiao. Both of the Chinese Embassy readouts have the Minister and the Senator delivering (nearly word for word) the same message. The only minor differences being Minister Payne apparently adding an affirmation of the “importance of Australia-China relations” and using the words “communication and exchanges” instead of Senator Wong’s “engagement and dialogue”. Needless to say, I’ve gone way too far down into the weeds. But the similarities are striking and particularly intriguing since (so far as I can see) the Chinese Embassy’s versions are the only official readouts available.

It’s unclear precisely what the consistency of messaging means. Have the Minister for Foreign Affairs and her shadow counterpart independently arrived at the same language or coordinated their messages to the new Chinese ambassador? Or perhaps more plausibly, is the Chinese Embassy simply reusing the same boilerplate language in lieu of reporting the substance of meetings? Or is the Chinese Embassy reproducing broadly the same language as a way of highlighting the bipartisan consensus among Australia’s major political parties on the Australia-China relationship? Regardless, it’s unusual to see such furious agreement on bilateral ties. Especially considering that the Government, the Opposition, and the Chinese Embassy don’t tend to agree on all that much at a time of politicised Australia-China relations and intensifying strategic competition.

Slowly climbing crustacean exports

The monthly value of Australia’s crustacean exports to China, the rest of the world, and the total value, May 2020 to January 2022:

Quick take:

The redirection of Australian crustacean exports to alternative markets has been much slower than some of the big-ticket energy and resources exports that have been hit by China’s trade restrictions. After the initial collapse in the value of these exports to China in November 2020, their monthly value to the rest of the world only slowly rose and their total monthly value hasn’t yet reached the levels seen immediately prior to the introduction of China’s trade restrictions. Moreover, it’s entirely possible that the above overstates the level of export redirection given that a large portion of Australian crustacean exports go to Hong Kong (circa 30% to 50% by value in recent months) and some of these almost certainly have found (and may still be finding) their way into the Chinese market.

Regardless of whether Hong Kong is a staging point for Australian crustaceans to enter the Chinese market, it’s clear that the city has been a big factor in the redirection of these exports. If one separates Hong Kong from the rest of the world, the rise in the value of crustacean exports to jurisdictions aside from China and the Special Administrative Region looks much more modest (see below). Still, the value of these exports to the rest of the world excluding both China and Hong Kong has gone up circa 60% (admittedly from the base of a low monthly value) since exports to China collapsed in November 2020. As part of the Australian government’s trade diversification agenda, there have also been additional access arrangements for Australian lobster exports (e.g., South Korea in January and Mexico this month). So, there’s a good chance that the value of exports to alternative markets beyond China and Hong Kong will continue to rise, albeit slowly.

The monthly value of Australia’s crustacean exports to China, Hong Kong, the rest of the world, and the total value, May 2020 to January 2022:

As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 28 February to 13 March 2022

Australia and China hand in hand

The number of face-to-face meetings between Australian governor-generals and Chinese leaders and senior officials*, 1972-2021:

Quick take:

The above graph is still very much a work in progress and doubtless misses some meetings between Australian governor-generals and Chinese leaders and senior officials. This is especially likely to be true for the first decade or so of the relationship. For example, I haven’t yet tracked down whether Politburo members Ulanhu and Chen Muhua met the Governor-General during their respective visits to Australia in 1977 and 1979. Any corrections or additions that readers might be able to offer would be gratefully received. I’ll continue updating and correcting the website version of this graph as I capture more datapoints.

Meetings between Australian governor-generals and Chinese leaders are, of course, not the most significant measures of the state of high-level relations between Australia and China. Still, these meetings tell an instructive story given the importance that the Chinese government and communist party appear to attach to engagements with the (largely) ceremonial position of the Governor-General. But I fully take the point about the limited analytical value of this measure alone. To that end, I’ll be adding data on prime ministerial engagement in the coming weeks to provide a fuller picture of the history and trajectory of Australia-China diplomatic relations at the leader level.

Noting all these caveats about the limitations of this data, here are a few preliminary observations based on the data of Governor-General meetings:

• Australia is currently experiencing the most sustained period since 1980 without engagement between the Governor-General and Chinese leaders and senior officials. This historical contrast is especially striking considering that governor-generals met with Chinese leaders and senior officials on average nearly two times each year in the ten-year period 2006-15.
• At the Governor-General level, the freeze in high-level diplomatic relations between Canberra and Beijing after the Tiananmen Square Massacre only lasted three years (1989-91). This current curtailment of engagement at the level of Governor-General has lasted four years and counting.
• If Ulanhu and Chen Muhua met the Governor-General during their respective visits to Australia, the current period would be the most sustained period since Mao Zedong’s death without engagement between the Governor-General and Chinese leaders and senior officials.

The above graph is from the first tranche of a dataset on the history of Australia-China diplomatic relations that I’ll be making progressively available on Beijing to Canberra and Back’s companion website. The website is still in a very, very, very beta and lo-fi mode for now. But it’ll be progressively refined and expanded in the coming weeks/months. The intention is to build it into an interactive repository of political, diplomatic, and economic data charting the history and trajectory of Australia-China relations. I’ll also add analysis to that website from this newsletter and elsewhere. In addition to the above data, the website will eventually feature other measures of the history and trajectory of Australia-China diplomatic relations. Regarding the above and other metrics of the relationship, many thanks to Gatra Priyandita and other researchers for their assistance compiling elements of this data.

* For the purposes of this graph, Chinese leaders and senior officials are defined as any Chinese Communist Party official at the level of Politburo or above and any Chinese government official at the level of Minister or above.

Getting relations back on track

The Chinese Embassy’s readout from Minister for Foreign Affairs Marise Payne’s 9 March meeting with Ambassador Xiao Qian:

“This year marks the 50th anniversary of the establishment of diplomatic relations between China and Australia. It is hoped that the two sides will work together to review the past and look into the future, adhere to the principle of mutual respect, equality and mutual benefit, and make joint efforts to push forward China-Australia relations along the right track.”

Quick take:

The Chinese Embassy’s readout of this meeting was broadly optimistic. The upbeat tone and calls to get bilateral relations back on the right track were consistent with Ambassador Xiao’s messaging since arriving in country. Although the Chinese Embassy’s rendering of the Foreign Minister’s remarks wasn’t negative per se, it seems to suggest that her positivity was more muted. The Foreign Minister’s website doesn’t mention the meeting, while the Chinese Embassy observed that Minister Payne welcomed the Ambassador, affirmed the importance of bilateral relations, offered Canberra’s perspectives, and expressed hope for enhanced communication and exchanges.

Canberra isn’t necessarily rejecting Beijing’s call for an improvement in bilateral relations. Canberra wants ministerial dialogue and, of course, a rolling back of China’s trade restrictions. As the Minister for Trade, Tourism and Investment Dan Tehan said back in February: “Well, obviously I wrote to my Chinese counterpart over two years ago now saying that we would be happy to sit down and work through all the disputes that we currently have with China.” But it’s also clear that the Australian government isn’t willing to predicate an improvement in the relationship on the policy and political changes for which the Chinese government has previously called.

Of course, all of this leaves unanswered the question of whether the “joint efforts” suggested by Ambassador Xiao would require Canberra to act on Beijing’s past complaints—to which the Australian government has repeatedly and firmly rejected acceding. If it isn’t already happening at the official level, perhaps there’s a case for Beijing to more clearly and explicitly detail how it sees these “joint efforts”. Failing that, Australians and their leaders will likely imagine that Beijing’s asks haven’t shifted since November 2020. And, as a result, no Australian government is likely to receive a popular mandate to make such “joint efforts”. Over to you, Beijing.

Inducements Vs. compromises

Minister for Foreign Affairs Payne delivering the fifth Tom Hughes Oration on 1 March:

“There is sacrifice involved [in introducing sanctions against Russia] – just as there has been in Australia’s response to China’s coercion over the part [sic] two years. We recognise the impact, for example, that China’s unjustified trade measures have had on some sectors in our economy, and the Government has worked and will continue to work closely with them to mitigate that impact.”

“But as a nation, we have stood firm. And consistency is key.”

“This has been the right decision – sometimes in the face of criticism from voices who have said we should make compromises to repair the relationship with China.”

Quick take:

Two big (and usually unanswered) policy and political questions loom over contemporary debates about the Australia-China relationship: 1. Which specific concessions would be enough to convince China to end its diplomatic freeze and economic coercion of Australia? 2. Should Canberra make these concessions? Despite their analytical and moral importance, I’m doubtful that these kinds of questions are the most productive approach to interrogating Canberra’s current China strategy. Australians and their governments understandably don’t want to compromise on their values and interests. That’s especially the case when it comes to Beijing’s complaints regarding fundamental priorities such as Australia raising human rights concerns and independently making decisions on foreign investment. This makes debate about many possible compromises moot, politically speaking at least.

But this leaves unanswered a question that is (in my view) too rarely posed: Could Canberra offer tactical inducements that would improve the Australia-China relationship? Such tactical inducements could be statements or initiatives designed to appeal to Beijing without changing Canberra’s current policy or political positions in relation to China. An example of such a tactical inducement might be the Australian government’s regularly repeated talking point praising China for its massive poverty alleviation achievements (e.g., here and here). As well as providing the government with something positive to say about China to a domestic Australian audience, rhetorical manoeuvres like this extend a diplomatic olive branch to Beijing without requiring any compromises on Canberra’s political and policy positions.

What other tactical inducements could Canberra offer? Here are three (very tentatively) offered possibilities:

1. Offer regular but measured support for China’s limited financial sector reforms. Of course, these reforms could go much further. But (partial) liberalisation has occurred and is likely a net positive for the Chinese economy and people, as well as being (at least somewhat) beneficial for Australia and the global economy. Such positive messaging probably wouldn’t cost Canberra more than a few talking points and would also likely be noted and appreciated by Chinese officials.
2. As well as noting China’s role as the world’s largest carbon emitter, acknowledge and commend Beijing for its ambitious goals of reaching net zero by 2060. Questions can certainly be asked about both the feasibility of such goals and whether they actually need to be even more ambitious. But encouraging China on this front would likely be welcomed by Beijing (and withholding such praise is unlikely to seriously incentivise Beijing to raise its emissions reduction targets further).
3. Related to 2 but more substantive: Propose and pursue the resumption of the Australia-China Ministerial Dialogue on Climate Change. Last held (I think) in 2014 during the Abbott government, such a dialogue would be a handy way to reestablish ministerial contact in a policy arena in which Australia’s and China’s goals and interests are (broadly) aligned. As well as an opportunity to pursue a cooperative agenda on combatting climate change, such a dialogue might allow Canberra to again start prosecuting a broader set of its interests with Beijing at the ministerial level.

To be sure, it remains unclear whether any such tactical inducements would convince China to change its approach to Australia. Afterall, the Prime Minister and his ministers have been lauding China’s poverty reduction achievements for many months without (seemingly, at least) any positive effects. We therefore admittedly don’t have an especially strong reason for thinking that inducements like the above would significantly shift the trajectory of Australia-China relations.  But such uncertainty isn’t a reason for ruling out these kinds of tactical inducements. These inducements are designed to be low cost. They don’t (so far as I can see) compromise on Australia’s fundamental interests and values. And as with positive diplomatic rhetoric on poverty reduction, the worst-case scenario would involve Australia expending modest diplomatic effort for no return.

Having said all of that, the above suggestions might be dead on arrival. The domestic politics of China policy in Australia means tactical inducements directed at Beijing may be unpalatable, especially during this testy election season. Moreover, recent stories of an Australian proposal to revive an Australia-China senior officials dialogue in the Pacific suggest versions of what I’ve proposed might have already been considered and rejected or tried privately and failed. Notwithstanding those caveats, I still think there’s a case for thinking about ways Canberra could appeal to Beijing to resume normal diplomatic and trade relations without Australia having to compromise on any of its values and interests. Australian exporters have for the most part been able to redirect to alternative markets in the wake of China’s trade restrictions and Australia-China relations at the institutional, people-to-people, and state and territory levels have survived a sustained absence of ministerial- and leader-level contact at the federal level. But assuming Australia doesn’t have to compromise on its values and interests, it’d still be preferable to get back to regular diplomatic and economic programming.

As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 14 to 27 February 2022

Whither Australia-China relations?

Chinese Ambassador Xiao Qian speaking in Canberra on 24 February at the presentation of the Gold Great Wall Commemorative Medal in honour of NSW Police Force Senior Constable Kelly Foster:

“Taking the 50th anniversary of the diplomatic relations between our two countries as an opportunity, China is willing to work with Australia to meet each other halfway, review the past and look into the future, adhere to the principle of mutual respect, equality and mutual benefit, and make joint efforts to push forward China-Australia relations along the right track.”

Quick(-ish) take:

This is yet another noteworthy rhetorical olive branch from a Chinese diplomat in Australia. By my rough count, it’s at least the fourth broadly positive speech in just over two months by a senior Chinese diplomat in Australia. This latest example comes off the back of conciliatory speeches in December 2021 and January 2022 by Wang Xining, Chargé d’affaires at the Chinese Embassy in Canberra. Both these earlier speeches emphasised the shared benefits of strong Australia-China ties and expressed cautious optimism about the future of the relationship. Ambassador Xiao’s latest remarks also follow the upbeat message that he delivered on January 26 as he arrived in Australia. (Update: although the speech isn’t yet available in full on the Chinese Embassy’s website, it seems Ambassador Xiao delivered a similarly warm message when he spoke at the Australian National University’s Lunar New Year celebrations on 26 February.)

Although the specifics of Chargé d’affaires Wang’s and Ambassador Xiao’s messaging have differed, there appears to be more consistency in the new ambassador’s language. Both on 26 January and 24 February he emphasised the shared endeavour of jointly pushing “China-Australia relations” either along or back onto “the right track”. Given that we’re talking about just two datapoints in the case of Ambassador Xiao, it’s probably too early to describe this as a concerted messaging strategy from Chinese diplomats in Australia. But at the very least it appears that the new ambassador has some preferred talking points about the bilateral relationship. I’d expect to hear much more about shared efforts to get “China-Australia relations back to the right track” in the coming months, as we did when Ambassador Xiao presented his credentials to the Governor-General earlier this month.

This apparent shift in tone raises the question of what it means for the trajectory of the overall Australia-China relationship. It’s tempting to imagine that these messages could be the prelude to a broader positive shift in bilateral relations, which might eventually take the form of a winding back of trade restrictions and a resumption of ministerial contact. But one swallow does not a summer make. And more importantly, there are bigger weather systems on the horizon suggesting winter will continue. Here are a few of the (many) factors that make me doubtful of a bigger positive shift any time soon:

• All four of these speeches included more conciliatory messaging. But that’s hardly surprising considering that they were each focussed on the people-to-people and cultural dimensions of bilateral relations or were delivered on an occasion where a more optimistic tone is de rigueur. Even in the context of a generally frosty bilateral relationship, it’d be highly unorthodox for Ambassador Xiao to let fly with critical invective on either the occasion of his arrival in Australia or a ceremony in honour of Senior Constable Kelly Foster.
• The last few weeks of Australian national politics strongly suggest that China policy will feature in the election campaign. With the Coalition seemingly seeking to wedge Labor hard on their tough-on-China credentials, there’s little incentive for the Australian government to respond positively to China’s diplomatic olive branches. In fact, a resuscitation of high-level and public contact between Canberra and Beijing before the federal election might even be seen as a net negative for the Coalition, electorally speaking. Minister for Foreign Affairs Marise Payne seemed on 26 February to be in no hurry to engage with the new ambassador, responding unenthusiastically to a question about a possible meeting: “I will meet the ambassador in due course”.
• Perhaps most importantly though, Beijing appears to be asking for Canberra to make changes that any Australian government simply won’t countenance. The bipartisan consensus on China policy that Labor has been at pains to stress of late covers a wide range of political and policy decisions that deeply upset Beijing. These include, among others, Canberra’s foreign investment review policies, often strong public messaging on human rights abuses in China, and support for international maritime law in the South China Sea. Per Ambassador Xiao’s most recent speech, Canberra and Beijing need to “meet each other halfway”. But given such a meeting in the middle is likely to be interpreted in Australia as a call to compromise on non-negotiable political and policy positions, such common ground may remain elusive. (On this, more below.)

Notwithstanding the above, the Ministry of Foreign Affairs (MFA) press conference on 25 February provided an interesting titbit that may point to a thaw in the Australia-China relationship. Asked about Senior Constable Kelly Foster’s bravery and sacrifice, MFA spokesperson Wang Wenbin responded:

“What has happened is further proof of the unquestionable friendly sentiment between the two peoples. The two peoples’ shared wish is our command. I recall our remarks on the heroic act of Ms. Foster last year: the kindness and compassion of humanity shines brilliantly even in the harshest winter. It is China’s hope that the light will continue to warm the two peoples and nourish the tree of friendship between China and Australia.”

This is remarkably positive—even effusive—language about Australia-China ties. I can’t recall an MFA press conference with language about bilateral relations even remotely this positive in years. (I’d welcome any data points that prove me wrong on that.) This alone doesn’t signify a deeper shift in Beijing’s view of Canberra. As with the caveats listed earlier, you’d expect a story of human fellowship and sacrifice to prompt a relatively positive response from even the most hardened geopolitical strategists. But it’s likely revealing that the Chinese state broadcaster CCTV asked the MFA spokesperson about Senior Constable Kelly Foster and that the story received coverage in Xinhua. Presumably the MFA spokesperson highlighting the commemoration with exceedingly warm rhetoric points to higher-level—though it’s unclear how high— support for emphasising a positive story about the Australia-China relationship. It’s also noteworthy that although both the MFA spokesperson and Chinese press acknowledged Senior Constable Kelly Foster’s bravery and sacrifice at the time of her death in January 2021, no comments were offered about the broader Australia-China relationship at the time.

But I’d still be reluctant to interpret that as being indicative of a broader change in how Beijing sees Canberra. The positive remarks from MFA spokesperson Wang on 25 February came in the midst of the typical tongue lashing given to Australia. That same day Wang responded to a question about Australia’s stance on China-Russia relations during the invasion of Ukraine by saying: “For some time, the Australian side, entrenched in the Cold War mentality and ideological bias, has time and again spread disinformation to smear and criticise China. Such irresponsible behaviour is despicable.” Moreover, despite the recent focus on Russia’s intimidation and invasion of Ukraine, the MFA spokesperson has still had the bandwidth over the last couple of weeks to hit Australia hard with numerous rhetorical broadsides (e.g., here, here, and here).

What do all these diplomatic datapoints mean, cumulatively speaking? My tentative prediction would be that we’re highly unlikely to see a significant improvement in bilateral ties until at the very earliest after the Australian federal election. Even after that, I’d expect any positive changes (if they eventuate at all) to be slow and halting. As well as Canberra’s long-term and bipartisan disinterestedness in compromising on Beijing’s key complaints, macro international factors don’t point to a positive shift in the overall Australia-China relationship. To the extent that bilateral relations are shaped by the tenor of the US-China relationship, global geopolitics, and Beijing’s overarching statecraft, there aren’t any obvious broader changes on the horizon that are likely to have to a significant positive impact on ties between Canberra and Beijing. Relations between Washington and Beijing are likely to remain frosty in the leadup to the US midterms and the 20th Party Congress at the end of this year, while Russia’s invasion of Ukraine is likely to unleash waves of international economic, military, and political instability. Meanwhile, with President Xi Jinping on track to remain in a preeminent position of power in both the Chinese state and communist party after the 20th Party Congress, there’s little reason to expect a major reorientation in China’s external goals and policies. Plus ça change…

Ambassador Xiao Qian speaking in Canberra on 24 February 2022 [Embassy of the People’s Republic of China/http://au.china-embassy.org/eng/]

Not for negotiating

Prime Minister Scott Morrison speaking to journalists in Adelaide on 25 February:

“[I]n terms of meeting halfway, there are 14 points, I don’t agree with changing any them. So happy to have the dialogue. Happy to have the ministerial and political level dialogue. But those 14 points are not for negotiating.”

Quick take:

It’s not been made explicitly clear whether the Chinese Ambassador’s call for Canberra and Beijing to “meet each other halfway” requires Australia to address China’s now-infamous 14 points. But if it does, any effort to meet halfway will likely be a non-starter. As well bipartisan support for current China policy, the Prime Minister has repeatedly emphasised his commitment to holding the line on the 14 points. As he made plain in an online briefing in early February with members of Australia’s Chinese-languages media: “[T]he only condition on that [dialogue between ministers at a political level] is that we’re not about to go and accede to any of those 14 points, which I suspect you’re all very familiar with. And we think that’s entirely reasonable from our point of view.” So, if there is to be a halfway meeting between Canberra and Beijing, it’ll almost certainly need to be predicated on China’s acceptance that it won’t get any movement on its key complaints. (On the question of what Canberra might be able to do to reengage Beijing at the ministerial level without compromising on policy and political positions, I’ll hopefully share some thoughts about that in the next edition.)

Export redirection (again)

The monthly value of Australia’s barley exports to China, the rest of the world, and the total value, May 2020 to December 2021:

The monthly value of Australia’s copper ores and concentrates exports to China, the rest of the world, and the total value, May 2020 to December 2021:

The monthly value of Australia’s alcoholic beverages (principally wine) exports to China, the rest of the world, and the total value, May 2020 to December 2021:

Quick take:

China introduced trade restrictions against these three exports at different times: barley in May 2020, copper ores and concentrates in November 2020, and alcoholic beverages (principally wine) in November-December 2020. The value of Australian barley and copper ores and concentrates exports to China was flatlining at zero for all of 2021, while the value of alcoholic beverage exports is hovering around roughly 5% of its pre-trade restrictions levels. Despite the sustained collapse of the value of these export to China, monthly trade data up to December 2021 tells a relatively upbeat story about the ability of Australian exporters to redirect to other markets. To varying degrees, the overall value of each of these three exports climbed after low points following China’s introduction of trade restrictions.

But while each of these graphs suggest a positive overall story, they also point to the uneven impact of China’s trade restrictions and the way unrelated factors shape the fortunes of Australia’s exports. Despite Australian barley being priced out of the Chinese market by anti-dumping and countervailing duties, the overall value of Australia’s barley exports has surged, far surpassing its monthly value prior to China’s introduction of trade restrictions. As well as being partially driven by successful redirection to alternative markets, this booming export value is probably primarily a function of favourable weather and global market conditions. Meanwhile, the value of Australia’s exports of cooper ores and concentrates quickly recovered in late 2020 and early 2021, despite being entirely frozen out of the Chinese market. These experiences contrast markedly with the value of Australian wine exports, which have only recovered slowly and are still below their monthly average before China introduced trade restrictions. Among other factors, this is probably a function of the relatively long lead times needed to develop new distribution networks and customers and the associated differentiated nature of wine exports as compared to broadly fungible barley and cooper exports. So, while the overall value of Australian exports impacted by China’s trade restrictions suggests ongoing successful export redirection to alternative markets, adjustments have been (unsurprisingly) much slower and harder for some export industries.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Fortnight of 31 January to 13 February 2022

Quad contra economic coercion

From the 11 February joint statement by the Quad foreign ministers:

“We reaffirm our commitment to upholding and strengthening the rules-based multilateral trading system, with the World Trade Organization at its core. We oppose coercive economic policies and practices that run counter to this system and will work collectively to foster global economic resilience against such actions.”

Quick take:

This latest Quad ministerial meeting is the first time that the grouping has collectively called out economic coercion specifically. Past leader-level Quad statements in March and September 2021 raised concerns about “coercion” in general. Meanwhile, Australia has issued bilateral statements with all three of the other Quad countries raising concerns about economic coercion. But the explicit expression of collective opposition to “coercive economic policies and practices” is a noteworthy evolution in the Quad’s diplomatic messaging. (Unless I’ve missed something?)

When the Quad foreign ministers met in October 2020 for their second ministerial meeting, China’s campaign of economic coercion was already more than four months old. Despite this, the accompanying media release made no mention of coercion, much less coercion of an economic kind. The public readouts from the series of Quad Senior Officials’ Meetings equally don’t flag explicit concerns about coercion of any kind. Although stopping short of mentioning economic coercion specifically, the third Quad foreign ministers’ meeting in February 2021 pledged to support a region “free from coercion”. Contrasting these past diplomatic statements with the Quad’s now clear opposition to “coercive economic policies and practices” highlights the striking alignment of the grouping’s stance with Australia’s regular criticisms “economic coercion”.

As the candour of Quad ministerial joint statements stiffens, the scope and scale of the gatherings grow. Starting with a lowkey readout of the first meeting in 2019, the Quad ministerial mechanism now also features photo ops, op-eds, and general pomp and circumstance. Unsurprisingly, China’s economic coercion of Australia featured prominently in these diplomatic garnishes, including in media appearances on the Quad ministerial sidelines by Secretary of State Antony Blinken and External Affairs Minister Subrahmanyam Jaishankar. With the addition of these repeated concerns about economic coercion in the Quad agenda, it seems that Australia has successfully used this minilateral mechanism to prosecute its diplomatic agenda of naming and shaming China’s behaviour. (Incidentally, the Quad’s expression of concern about coercive economic practices followed a similar message in a joint Australia-Lithuania statement and coincided with the release of the US Indo-Pacific Strategy, which explicitly cited China’s economic coercion of Australia as a top-level regional concern for Washington.)

It remains to be seen whether this diplomatic strategy of seeking to impose reputational costs via the Quad and other fora will materially change China’s behavior towards Australia. But regardless, this Quad messaging on economic coercion is likely to further compound Beijing’s suspicions of the grouping. A few days after the Quad ministerial meeting, Ministry of Foreign Affairs Spokesperson Zhao Lijian fired back dismissively: “China believes that the so-called Quad group cobbled together by the US, Japan, India, and Australia is essentially a tool for containing and besieging China to maintain US hegemony. It aims to stoke confrontation and undermine international solidarity and cooperation.”

China’s opposition to the Quad isn’t new. As Zhao himself noted while delivering this recent broadside: “I have expounded on our position on the Quad for many times.” [sic] But the inclusion of thinly veiled concerns about China’s economic coercion in the Quad joint statement can be expected to harden Beijing’s perception that the grouping has an anti-China bent. This isn’t to say that the Quad shouldn’t raise concerns about economic coercion. But aligning the Quad with Australia’s diplomatic messaging is likely to give the grouping (even more of) an unmistakably China-focussed agenda.

A fitting end to a busy day. Quad FMs visit the @MCG. Presented @MarisePayne with a bat signed by @imVkohli.

A message of fair play and rules of the game. pic.twitter.com/c3KrKdRq6G

— Dr. S. Jaishankar (@DrSJaishankar) February 11, 2022

Values-based foreign policy

Prime Minister Scott Morrison’s remarks to the Quad foreign ministers on 11 February:

“We are great democracies, great liberal democracies, who see an economy that is founded on enterprise and innovation, and we support a world order that favours freedom through our international institutions, and it was liberal democracies that provided the framework and the foundation for those important institutions of our world, and we will always work together, I think, to reinforce those to to [sic] ensure that all countries can enjoy their own sovereignty and the freedoms of their own peoples.”

Quick take:

The Quad’s joint statement was light on ideological rhetoric about liberal democracy. Except for concerns about human rights in Myanmar, the norms and rules that it espoused were primarily focussed on how states interact. Although the joint statement shied away from issues of political legitimacy and systems of government, it was unequivocal on its preferred principles of international relations: “Quad partners champion the free, open, and inclusive rules-based order, rooted in international law, that protects the sovereignty and territorial integrity of regional countries.” The statement reiterated past support for a “free and open Indo-Pacific” but made plain that this emphasis on freedom was a matter of states being able to prosecute their interests “free from coercion” rather than being concerned with domestic political values and institutions.

Although consistent with the Prime Minister’s previous characterisation of his overarching political vision for the world, his emphasis on the virtues of liberal democracy stands in stark contrast to the Quad ministerial statement’s emphasis on the norms and rules of state-to-state relations. But despite the contrast with the Quad as a whole, the US and Australian ministers seemed to follow the Prime Minister’s lead and characterise the Quad as, among other things, a grouping of “four great liberal democracies”. As Minister for Foreign Affairs Marise Payne put it in an op-ed: “The Quad has particular value because we are four of the leading democracies in the region, with the will and the capability to work with all our friends and partners, while standing firm against the risk authoritarianism poses to all countries who do want to make their own strategic decisions, free from coercion.”

It remains unclear whether more emphasis on liberal democratic values will emerge as a feature of Quad rhetoric. For now, it seems unlikely, especially considering that the Japanese and Indian foreign ministers generally steered clear of such political rhetoric. But regardless of whether the Quad as a whole formally enters the ideological fray, China won’t resile from a fight over political values. In response to a question about democracy and the Quad agenda, Ministry of Foreign Affairs Spokesperson Zhao sought to pre-emptively delegitimise any Quad advocacy on political values: “democracy is a common value of humanity, not a monopoly of a few countries. It’s up to the people of a country to decide whether this country is democratic or not. Despite its ruined democratic brand, the US still forces other countries to accept its democratic standards and cobbles together cliques by drawing the ideological line. This is sheer betrayal to democracy.” So, regardless of whether liberal democratic rhetoric formally shapes Quad messaging, it seems likely that ideology will increasingly infuse the geostrategic competition between the Quad and China.

Ongoing export redirection

Based on the latest trade data, the combined monthly value of Australia’s nine exports targeted by China’s trade restrictions (to China, the rest of the world, and total, May 2020 to November 2021):

Quick take:

The latest trade data from November 2021 seems to again tell a relatively upbeat story about the ability of Australian exporters to redirect to other markets. The above graph covers all nine exports impacted by China’s confirmed trade restrictions: barley, beef, cotton, timber products, coal, copper ores and concentrates, sugar products, crustaceans, and wine. As they have for effectively all of 2021, the value of exports of coal, copper ores and concentrates, and barely to China were still flatlining at zero as of November 2021. Meanwhile, there wasn’t a significant uptick in the overall value of the other targeted exports to China, which remained down on their levels prior to the introduction of trade restrictions.

But the total value of the nine targeted exports to the rest of the world was hovering around A$10 billion a month as of October-November 2021. That is by a wide margin a record high since May 2020 when China introduced the first in an expanding barrage of politically punitive trade restrictions. Although the monthly value of these exports to China in November 2021 was approximately 9% of its value in May 2020, the value of these same nine exports to the rest of the world in November 2021 was approximately 267% of its value in May 2020. Given the persistently high coal prices and the disproportionate overall value of coal exports in this basket of nine exports, it’s worthwhile considering the monthly value excluding coal. But even taking coal out of the equation, the value of the other eight Australian exports to the rest of the world in November 2021 was approximately 186% of its value in May 2020.

The data points to ongoing successful export redirection to alternative markets in the wake of China’s trade restrictions. But the simple monthly value of impacted exports is far from the full story. As well as elevated coal prices, these values are being driven by a range of fortuitous circumstances for Australian exporters. These include factors such as global food prices rising to their highest level since June 2011, high global prices for specific impacted agricultural exports like barley and cotton, and generally favourable growing conditions in Australia. For example, the volume of the 2020-21 Australian barley season was the second highest on record behind 2016-17. So, although the monthly value of targeted Australian exports has surged despite China’s trade restrictions, these industries may yet face much tougher times if Beijing’s ongoing economic coercion is combined with less favourable weather and market conditions.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

December 2021 to January 2022 catch-up

I hope you’re having a great start to the New Year (both 2022 and 虎年). After an extended break for the Australian summer, Beijing to Canberra and Back is returning.

There’ll be some tweaks in the coming weeks, including the addition of an accompanying website in beta mode and a shift to fortnightly rather than weekly publications (depending on the pace of developments in the bilateral relationship). Beyond that, the format and style will remain broadly the same this year.

As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Expanding anti-coercion coalition

From the AUKMIN 2022 Joint Statement issued on 21 January:

Ministers reaffirmed their support for the rules-based multilateral trading system, with the World Trade Organization at its core, and expressed concern regarding practices that undermine this system. Both agreed to foster global economic resilience and support trade diversification, and to oppose the use of coercive economic policies and practices.

Quick take:

This is the fourteenth bilateral joint statement that Australia has issued opposing economic coercion. It also marks the first time that the United Kingdom has joined Australia in issuing such a bilateral joint statement. The G7 statements raising concerns about economic coercion in May and December 2021 involved the United Kingdom. But economic coercion didn’t get a mention in either the readout from Prime Minister Scott Morrison’s meeting with British Prime Minister Boris Johnson in May 2021 or (unsurprisingly) the Joint Ministerial Statement from the last AUKMIN in 2018.

On top of the Joint Statement, concerns about economic coercion were raised in the AUKMIN 2022 press conference. Australian and UK ministers made explicit reference to “economic coercion”, as well as raising concerns about coercive practices more broadly. Both Minister for Foreign Affairs Marise Payne’s op-ed marking AUKMIN 2022 and Foreign Secretary Liz Truss’ speech to the Lowy Institute called out economic coercion as well. The Chinese Embassy in Canberra issued a swift rebuke: “The joint statement of the Australia-UK 2+2 meeting is just recycling and making groundless accusations against China.” But the Embassy’s concerns seemed to centre on Australian and UK messaging on Taiwan, the South China Sea, Xinjiang, and Hong Kong rather than economic coercion. In a similarly blunt response, the Ministry of Foreign Affairs Spokesperson Zhao Lijian primarily criticised the AUKUS aspects of AUKMIN.

This latest Australian-UK joint commitment to addressing economic coercion follows similar recent statements that Australia has issued with first Vietnam in December 2021 and then Japan in January 2022. Flagged in November 2021 when prime ministers Morrison and Pham Minh Chinh met in Glasgow, the Australia-Vietnam Enhanced Economic Engagement Strategy reemphasises shared opposition to economic coercion. Per the joint strategy: “The two countries agree to work with partners to address economic challenges and coercive economic practices.” This message was also repeated in the press release from Minister for Trade, Tourism and Investment, Dan Tehan, which marked the launch of the strategy.

Meanwhile, economic coercion featured prominently in the prime ministerial Joint Statement that accompanied the signing of the Reciprocal Access Agreement between Australia and Japan. As well as criticisms of coercive behaviour in general, the statement made plain that “[Prime Minister Morrison and Prime Minister Fumio Kishida] … opposed the use of economic coercion, which undermines the rules-based trading system and the links between nations fostered by economic engagement.” Interestingly, the Joint Statement put China on notice that it won’t be able to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) until it dismantles its politically motivated trade restrictions. The Joint Statement was unambiguous: “The two leaders … recognised the strategic significance of the CPTPP and noted that economic coercion and unjustified restrictive trade practices are contrary to the objectives and high standards of the Agreement.”

Do these kinds of statements help Australia respond to China’s economic coercion? As I’ve previously written, one could plausibly argue that criticisms of this sort won’t change China’s behaviour towards Australia. Yet equally, these jointly expressed concerns with Vietnam, Japan, and the United Kingdom still represent an incremental diplomatic win for Australia given Canberra’s explicitly stated goal of imposing reputational costs on Beijing. Moreover, this type of diplomatic messaging is not Canberra’s only tactic. As well as challenging China’s anti-dumping and countervailing duty measures against Australian barley and wine via World Trade Organization (WTO) processes, Canberra is seeking to respond to Beijing’s economic coercion by requesting to join the European Union WTO dispute consultations with China concerning restrictions on trade with Lithuania. The WTO route to redress is likely to be slow and winding but it adds legal and institutional force to the diplomatic responses to China’s economic coercion.

For reference, here’s the updated working tally of states/multilateral groupings that have joined Australia and raised explicit concerns about economic coercion:

• Australia-Japan; 17 November 2020; Leader; Bilateral
• G7 (with Australia as a guest country); 5 May 2021; Ministerial (foreign affairs and development); Multilateral
• Australia-United States; 13 May 2021; Ministerial (foreign affairs); Bilateral [NB from a joint press conference between Secretary of State Antony Blinken and Foreign Minister Payne.]
• Australia-New Zealand; 31 May 2021; Leader; Bilateral
• Australia-Japan; 9 June 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 21 July 2021; Ministerial (trade); Bilateral
• Australia-France; 30 August 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-India; 11 September 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 16 September 2021; Ministerial (2+2 ASUMIN – foreign affairs and defence); Bilateral
• Australia-New Zealand; 20 September 2021; Ministerial (trade); Bilateral
• Australia-Vietnam; 3 November 2021; Leader; Bilateral
• Australia-Malaysia; 9 November 2021; Ministerial (foreign affairs); Bilateral
• G7 (Australia invited); 12 December 2021; Ministerial (foreign affairs and development); Multilateral
• Australia-Vietnam; 21 December 2021; Leader & Ministerial; Bilateral
• Australia-Japan; 6 January 2022; Leader; Bilateral
• Australia-United Kingdom; 21 January 2022; Ministerial; Bilateral

Pleased to sign the RAA with 🇯🇵 PM Kishida @JPN_PMO, a landmark treaty to facilitate advanced defence and security cooperation. Trade, science, emissions reduction technologies, and people-to-people links also underpin our Special Strategic Partnership. pic.twitter.com/45Gai9BS5E

— Scott Morrison (@ScottMorrisonMP) January 6, 2022

Taiwan trending in Australia’s diplomacy

Again, from the AUKMIN 2022 Joint Statement:

Ministers underscored the importance of peace and stability across the Taiwan Strait and encouraged the peaceful resolution of cross-Strait issues without the threat or use of force or coercion. They expressed support for Taiwan’s meaningful participation in international organisations, as a member where statehood is not a prerequisite and as an observer or guest where it is.

Quick take:

This is a striking joint emphasis on the importance of security in the Taiwan Strait and Taiwan’s international role. To be sure, this AUKMIN statement was more cautious than the Australian-US AUSMIN statement in September 2021, which labelled Taiwan “a leading democracy and a critical partner for both countries.” But the 2022 AUKMIN paragraph devoted to Taiwan is still conspicuous considering that the previous AUKMIN Joint Statement in 2018 didn’t mention Taiwan at all. It’s also noteworthy that AUKMIN went further than the recent Australia-Japan Leaders’ Meeting Joint Statement, which used more cautious language and didn’t raise the issue of Taiwan’s participation in international organisations. It instead only “underscored the importance of peace and stability across the Taiwan Strait and encouraged the peaceful resolution of cross-Strait issues.”

Beyond these differences, messaging on Taiwan exhibits some conspicuous similarities. Much of the language in the AUKMIN joint statement is identical to the words used in the ill-timed (i.e., pre-AUKUS) Australia-France 2+2 Ministerial Consultations in late August 2021. Alongside their Australian counterparts, all four French and British ministers “underscored the importance of peace and stability across the Taiwan Strait and encouraged the peaceful resolution of cross-Strait issues,” while also “express[ing] support for Taiwan’s meaningful participation in international organisations”. With Canberra the common participant in these two statements, it seems prima facie plausible that Australia was the party advocating for stronger and consistent Taiwan language.

Of course, it’s equally possible that the French and UK governments have independently come to similar conclusions on the importance of Taiwan. Afterall, analysts and policymakers in London and Paris are tracking the same People’s Liberation Army Air Force flights through the Taiwan Strait and following Beijing’s concerted effort to exclude the Taiwanese government from international fora. The stronger language on Taiwan from France and the United Kingdom could also be partially explained by the growing focus on Taiwan among multilateral organisations such as the G7 (e.g., here and here) and the United States (e.g., here and here). Still, the uncanny similarities in language that both London and Paris used in joint statements with Canberra certainly gives the impression that the Australian government is a driving force in the effort to mainstream diplomatic support for Taiwan.

On another level, however, it’s largely moot whether this stiffening Taiwan language is being pushed by Canberra or whether it’s a product of countries simultaneously and independently landing on similar views. Regardless of the root cause, the result is the same: Australia and other countries are increasingly prioritising Taiwan in their bilateral diplomatic messaging. This includes not just expressing shared commitment to peace and security in the Taiwan Strait, but also in select cases support for Taiwan’s meaningful participation in international fora. How this diplomatic messaging will impact Beijing’s strategies and goals remains to be seen. But it’s clear that there’s a growing commitment in at least some capitals to resist China’s effort to internationally isolate Taiwan.

#AUKMIN 2022 has commenced in Sydney. We are resolutely focused on deepening foreign and defence policy cooperation in the Indo-Pacific and globally. 🇦🇺🇬🇧 pic.twitter.com/bv31n1TzuK

— Marise Payne (@MarisePayne) January 21, 2022

The bilateral temperature

Wang Xining, Chargé d’affaires at the Chinese Embassy in Canberra, speaking on 15 January at the opening ceremony of the 14th Australia-China Emerging Leaders Summit:

As you know, our government-to-government relationship is not in good shape. Unfriendly words and actions were exchanged between state departments and administrations. There are wide-range and sometimes deep-set misunderstandings between each other.

Quick take:

Chargé d’affaires Wang’s speech struck a conciliatory tone. At a stretch, the reference to “deep-set misunderstandings between each other” could even be read as an implicit acknowledgement that the Chinese government has misinterpreted some of the Australian government’s words and actions. (It’s admittedly a contorted stretch.) The speech still included barbs, especially for unnamed media moguls that Chargé d’affaires Wang called “septuagenarians and even octogenarians” who monopolise “major traditional media outlets” and “keep on preaching ideas both outdated and out of touch with reality”. Despite this, the tone was generally warm and upbeat.

This optimistic messaging comes on the back of Chargé d’affaires Wang’s positive speech in December 2021 and the incoming Chinese Ambassador Xiao Qian’s sanguine outlook on bilateral ties. Ambassador Xiao emphasised on 26 January: “I look forward to working with the Australian government and friends in all sectors to increase engagement and communication, enhance mutual understanding and trust, eliminate misunderstanding and suspicion, promote mutually beneficial exchanges and cooperation in all areas between the two sides, and jointly push the China-Australia relations back to the right track.”

Do these statements signal a course correction in Australia-China relations? So far, the evidence appears uncompelling. Firstly, Chargé d’affaires Wang’s December and January speeches were delivered at events dedicated to cultural diplomacy and fostering people-to-people links. And on top of Chargé d’affaires Wang’s relatively junior position in the grand hierarchy of China’s foreign policymaking, the tenor of the Chinese Embassy’s public diplomacy is not necessarily indicative of Beijing’s approach to the broader bilateral relationship.

Secondly, even if the Chinese Embassy’s more conciliatory messaging reflected a shift in Beijing’s overarching view of Australia-China ties, Canberra isn’t buying it. Regardless of the wisdom or lack thereof of Canberra’s sceptical response, a range of Australian government voices hosed down the significance of the more buoyant Chinese Embassy language. Speaking to Sky News, Liberal MP Dave Sharma said: “China might be changing its tactics but its ultimate goals and objectives I think have not shifted here.”

Thirdly and finally, a positive shift in language likely won’t overcome the ongoing and intense disputes between Canberra and Beijing on human rights, international law, trade and investment flows, and global politics, among many others. Notwithstanding some past dramatic dips in ties that have variously stemmed from both Beijing’s and Canberra’s diplomatic messaging, most of the deepest disputes between Australia and China are a product of substantive policy disagreements. So, despite recent diplomatic soft talk, bilateral ties look set to stay in their (stormy) holding pattern.

China's new ambassador H. E. Xiao Qian arrived in #Australia on Jan 26 to assume office. He looks forward to working with the Australian government and friends in all sectors to jointly push the China-Australia relations back to the right track. https://t.co/Imn3yDINss pic.twitter.com/prU82teDo4

— Chinese Consulate General in Sydney (@ChinaConSydney) January 26, 2022

Weeks of 6 to 19 December 2021

Let’s be friends

Wang Xining, Chargé d’affaires at the Embassy of the People’s Republic of China in Canberra, speaking on 13 December at the opening of an exhibition at the National Museum of Australia:

“I find that our people have many things in common, such as giving priority to protecting life and health, preserving solidarity of community in face of crisis, creating opportunities for those we care and love, and many others.”

“There are so many common values that we share and present at this challenging juncture. I believe that there is no reason that Australian and Chinese people can’t be good friends.”

Quick take:

This was a remarkably upbeat speech. It was focused on shared interests, values, and experiences, and didn’t make any mention of the numerous points of tension and sources of frustration that typically feature prominently in Chinese government messaging on the Australia-China relationship. The speech even made the case for in-person meetings. Per the published version: “we need to meet in person and talk face-to-face, in order to deepen mutual understanding and forge stronger bond”. That immediately made me wonder whether Chargé d’affaires Wang thinks it’s time for Australian and Chinese ministers to meet. But these comments about face-to-face meetings could have just as easily been a reference to Chargé d’affaires Wang’s frustration with, in his own words, the “long and tedious lock-down in ACT”.

Chargé d’affaires Wang also expressed what he described as the common hope that “friendly connection and rapport between our peoples will return to normal”. To be sure, even when expressed by a Chinese government official, this kind of aspiration doesn’t signal that an improvement in bilateral relations is in the offing. Throughout the prolonged recent downturn in the Australia-China relationship, Beijing has expressed various versions of the hope that bilateral ties will improve. But, of course, on the proviso that Canberra changes its ways, thereby allowing relations to get back on track. So, Chargé d’affaires Wang’s wish for a friendly relationship is entirely consistent with Beijing waiting for Canberra to align its policies more closely with China’s interests.

The speech’s unusually warm tone might be partially explained by the context of cultural diplomacy. Chargé d’affaires Wang’s remarks lauded an exhibition that is part of a longstanding cultural exchange program between the National Museum of Australia and the National Art Museum of China. Even at a time of fractious bilateral relations, it stands to reason that a relatively uncontentious cultural initiative would be an unproductive backdrop for sharp political and policy points. The Chinese government also has many other avenues for delivering those less-friendly messages. And per recent Ministry of Foreign Affairs press conferences (especially here and here), Beijing is still making good use of those mechanisms to chastise Canberra. Although Chargé d’affaires Wang’s tone paints a positive picture, the overwhelming weight of public messaging doesn’t suggest an optimistic outlook for the Australia-China relationship as 2021 draws to a close.

The G7 on economic coercion

From the G7 Foreign and Development Ministers’ Meeting Chair’s Statement:

“We also expressed our concern about coercive economic policies.”

Quick take:

As I’ve highlight previously (see here, here, and here), Australia has been involved in a string of bilateral statements since late 2020 that have raised concerns about economic coercion. As well as old friends such as Japan, New Zealand, and the United States, this group includes regional partners and emerging powers such as India, Vietnam, and Malaysia. But unlike this recent G7 Chair’s Statement, the bulk of these instances of bilateral messaging have not singled out a particular country and have instead raised general concerns about economic coercion. (The most notable exception being US-Australian diplomatic messaging on economic coercion, which is at times explicitly framed as being about China.) The context of these bilateral statements—China’s internationally renowned and explicitly coercive economic pressure campaign against Australia—means that most audiences would fully understand that Beijing’s trade restrictions are at issue. But given that some of the partners that have joined these bilateral statements with Australia have experienced economic coercion at the hands of other countries, these statements need not be interpreted as being narrowly focussed on China.

By contrast, the G7 Chair’s Statement was explicitly aimed at China. Although the sentence about economic coercion didn’t mention China by name, it came in the middle of a paragraph devoted to the G7’s misgivings about a range of elements of China’s behaviour. No other country appeared to be an object of concern in this part of the statement. This framing of the issue of economic coercion by reference to China specifically follows the format of the G7’s previous statement on economic coercion in May this year. A range of tough questions can be asked about how representative and fit for purpose the G7 might be considering the shifting global centre of power away from the North Atlantic and towards the Indo-Pacific. But regardless, the explicitness of the G7’s criticism of China’s economic coercion is at least one measure of the diplomatic value for Australia of involvement in this grouping. Of course, one could plausibly argue that these kinds of criticisms won’t change China’s behaviour towards Australia. But to the extent that Canberra seeks to impose reputational costs on Beijing, these G7 concerns are a diplomatic win for Australia, albeit an incremental one.

Relatedly, the recent Joint Statement on the Australia-Republic of Korea Comprehensive Strategic Partnership provides a noteworthy counterpoint to the explicitness of the G7 Chair’s Statement. Not only did that Joint Statement not reference China specifically, but it did not even mention economic coercion by name. It instead opted for this—presumably purposefully ambiguous—formulation: “They [the leaders] expressed their commitment to open, inclusive, sustainable and transparent market economy principles and the rules-based international trading system that should not be compromised by the misuse of economic policies and measures in ways that cause economic harm.” Just as this could plausibly be interpretated in Beijing as an opaque criticism of its coercive economic practices against Australia, it could equally be viewed in Tokyo as an indirect objection to its trade restrictions against South Korea. Maybe such ambiguity is precisely what a joint diplomatic win for Canberra and Seoul looks like? Sometimes you can say more by not saying anything specific.

For reference, here’s the updated working tally of states/multilateral groupings that have joined Australia and raised explicit concerns about economic coercion:

• Australia-Japan; 17 November 2020; Leader; Bilateral
• G7; 5 May 2021; Ministerial (foreign affairs and development); Multilateral
• Australia-United States; 13 May 2021; Ministerial (foreign affairs); Bilateral [NB from joint press conference between Secretary of State Antony Blinken and Foreign Minister Marise Payne.]
• Australia-New Zealand; 31 May 2021; Leader; Bilateral
• Australia-Japan; 9 June 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 21 July 2021; Ministerial (trade); Bilateral
• Australia-France; 30 August 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-India; 11 September 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 16 September 2021; Ministerial (2+2 ASUMIN – foreign affairs and defence); Bilateral
• Australia-New Zealand; 20 September 2021; Ministerial (trade); Bilateral
• Australia-Vietnam; 3 November 2021; Leader; Bilateral
• Australia-Malaysia; 9 November 2021; Ministerial (foreign affairs); Bilateral
• G7; 12 December 2021; Ministerial (foreign affairs and development); Multilateral

Australia’s vision for a free & open #IndoPacific is underpinned by secure & reliable critical technologies & infrastructure. At the #G7, we discussed cooperation to promote shared values, security & economic growth through the design & use of emerging technologies. pic.twitter.com/db8SEr7Oom

— Marise Payne (@MarisePayne) December 13, 2021

Talk again in 2022

This is the last edition of Beijing to Canberra and Back for 2021. After what feels like an especially long and tumultuous year, the newsletter will take an extended break during the Australian summer. All going well, it’ll return to your inboxes towards the end of January 2022. Details are still TBC, but the newsletter will hopefully re-emerge from this hiatus with a companion website featuring some new empirical data from an ongoing research project on the history and trajectory of the Australia-China relationship.

On a personal level, thank you for reading and spreading the word these past six months. Writing about the Australia-China relationship often pulls you into ethically and analytically ambiguous terrain in which interests clash with values and the known unknowns outnumber the known knowns. (And that’s before you even start speculating about the unknown unknowns.) But despite this often messy collision of political, ideological, economic, and social forces, the bilateral relationship remains (at least to my biased mind) one of the most fascinating and important areas for foreign policy analysis.

Notwithstanding the often-grim topics covered, writing Beijing to Canberra and Back has been a genuine pleasure and a useful research exercise for me. If reading it has been a fraction as enjoyable or helpful for you, I’ll call it a win. Stay safe, and I hope that the New Year brings long-overdue rest and respite.

Week of 29 November to 5 December 2021

The subnational face of foreign policy

Stuart Ayres, NSW Minister for Jobs, Investment, Tourism and Western Sydney and Minister for Trade and Industry, on the NSW-Guangdong relationship:

“NSW’s relationship with Guangdong Province is one of our state’s oldest and strongest trade relationships. We recently unveiled an ambitious plan to double our exports globally by 2030, and we look forward to China continuing to play a significant role in this goal.”

Quick take:

As a wide range of diplomatic, economic, and political metrics make plain, the relationship between Beijing and Canberra is strained. So much so that the last publicly reported instance of ministerial-level contact was January 2020 (although working-level diplomatic contact continues). Despite these gloomy atmospherics at the national level, political ties between NSW and Guangdong seem to have remained relatively strong. Indeed, given the stalled national relationship, the recently concluded NSW-Guangdong Joint Economic Meeting (JEM) might now be the highest-level political contact between the Chinese and Australian systems. (Please correct me if I’m wrong on that.)

To be sure, the 2021 JEM occurred with lower-level representation and significantly less fanfare than previous iterations. For example, both former NSW Premier Gladys Berejiklian and Guangdong Governor Ma Xingrui attended the 2017 JEM and signed a Joint Statement. By contrast, the NSW Premier didn’t participate in the 2021 JEM (although the NSW Governor Margaret Beazley did), while the Guangdong side was represented by Vice Governor Zhang Xin. Just as this could reflect the creeping impact of the frosty national relationship on subnational ties, it could also be partially explained by COVID-19 travel restrictions. Regardless, the simple fact that the meeting occurred at all is a feat considering the freeze in Australia-China political ties at the national level.

This rare instance of political contact makes me wonder whether the federal government might seek to gain additional indirect access to the Chinese system via state and territory governments. In particular, could state and territory premiers, chief ministers, and ministers engage the Chinese government (albeit at the provincial level) on federal government priorities as a way of circumventing blockages in national government contact? Admittedly, such an approach might already have been pursued. And even if it hasn’t, it’s likely to face challenges. Not only might raising national government priorities in a forum like JEM jeopardise that kind of state-to-province political contact, but it’s not entirely clear what raising Canberra’s concerns with a Vice Governor would achieve. Such a quasi-devolution of Australian foreign policy would also sit oddly with the centralising tendency of the Foreign Relations Act. These complications notwithstanding, the ongoing freeze in political contact at the national level may still make more coordination on foreign policy priorities between the federal government and states and territories worthy of further consideration.

Today’s #JEMSydney2019 coincides with the 40th anniversary of the NSW-Guangdong sister province relationship and creates opportunities for ongoing collaboration. pic.twitter.com/2e8VU28sZx

— Gladys Berejiklian (@GladysB) October 25, 2019

An Australian-style Magnitsky Act

Victorian Liberal Senator James Paterson speaking on 1 December about the Autonomous Sanctions (Magnitsky-style and Other Thematic Sanctions) Amendment Bill 2021:

“I am particularly pleased to see a uniquely Australian innovation in this version of a Magnitsky act. For the first time ever in the world, our act will equip us to target not only those who abuse human rights or engage in seriously corrupt conduct but also those who threaten our national interest in the cyber realm. This will become an increasingly important tool to help shape and deter our adversaries.”

Quick take:

Interventions on the Bill in the Senate made few references to China. But Beijing’s actions were clearly front of mind. Some Senators framed the Bill as not just a means of targeting human rights abusers, but also a means of strengthening the rules-based international order and responding to the perceived threat of authoritarianism. As Senator Paterson put it: “It is time democracies had the ability to push back and enact a real and personal cost for those who abuse human rights and seek to reshape the international rules-based order from one that respects the freedoms of the individual to one where the [sic] power can be exercised without any restraint.”

Given the way in which these challenges are typically framed in contemporary Australian political discourse, it’s hard to read them as anything other than thinly veiled references to—among other states—China. Moreover, the combination of this political framing with the inclusion of “malicious cyber activity” within the scope of reforms makes it likely that targeted sanctions will be directed at Chinese officials. As per recent Australian attributions and cyber threat assessments, Beijing’s actions in cyberspace are a prime concern for Canberra. So, the newfound ability of “Australia to sanction individuals and entities responsible for, or complicit in … malicious cyber activity” seems most likely to be used against Chinese officials.

If targeted sanctions against Chinese officials are coming through the pipeline, when might they be introduced and what would the impact be? Canberra would presumably prefer to introduce such targeted sanctions in coordination with other capitals. This would minimise the conspicuousness of such actions and thereby potentially reduce China’s ire, while also possibly increasing the impact of the sanctions via the involvement of other jurisdictions. Although Canada, the European Union, the United Kingdom, and the United States already introduced targeted sanctions against Chinese officials in March this year, Australian sanctions could potentially be combined with a future round of sanctions from some or all of these partners (assuming that additional rounds of such sanctions are likely).

An alternative would be for Australia to wait and sanction Chinese officials in tandem with other countries such as Japan and New Zealand, which are apparently exploring similar autonomous sanctions regimes. This might be an especially appealing option given that it would allow Australia to associate its sanctions with two countries that have comparatively smooth relations with China, thereby possibly lowering the heat of Beijing’s response. But even if Canberra waits to join Tokyo and Wellington, Beijing’s response is still likely to be swift and hostile. Retributive measures, including possible additional formal sanctions against Australian parliamentarians, academics, and research organisations, seem highly likely and the bilateral relationship is likely to take a further hit.

One final thought bubble: If sanctions are going to be levelled at individuals “who threaten [Australia’s] national interest in the cyber realm” are we likely to eventually see the autonomous sanctions regime expanded further to allow the government to target officials with responsibility for economic coercion against Australia and other states? This is not to endorse such an expansion, and any such expansion would presumably require further legislative amendments. But the levelling of targeted sanctions in response to “malicious cyber activity” at least raises the prospect of their use to combat other national security threats.

That said, there are a range of caveats and questions to unpack here: Could Australia apply economic coercion sanctions consistently given the longstanding use of coercive trade practices by the United States? How big is the risk that such targeted sanctions would provoke yet more economic coercion by way of retribution? And how would Canberra manage the intelligence and policy complexities of attributing responsibility for economic coercion to particular decisionmakers? These and many similar questions notwithstanding, it’s easy to imagine that we’re at the beginning of an expansion of the use of targeted sanctions on national security grounds.

Resuscitating plausible deniability?

Ministry of Foreign Affairs Spokesperson Wang Wenbin speaking on 1 December:

“China takes measures on imported products according to Chinese laws and regulations and WTO rules to protect the legitimate rights and interests of relevant Chinese industries and the safety of Chinese consumers. This is totally reasonable, lawful and beyond reproach. It is the Australian side that has adopted a series of measures in violation of market principles and the spirit of China-Australia free trade agreement.”

Quick take:

After a string of statements making plain the political motivations for China’s trade restrictions against Australia, Wang’s emphasis on laws, rules, and regulations is a noteworthy reversion to earlier apparent efforts to cultivate plausible deniability regarding the coercive nature of China’s trade restrictions. Does this shift in tone signal a future change in China’s strategy regarding its economic pressure campaign against Australia? Unsurprisingly, not necessarily. Such a statement might amount to little more than a different diplomatic gloss on China’s actions.

Moreover, beyond tentative signs of optimism from some Australian businesses, I can’t yet see strong indications that trade restrictions are likely to ease any time soon. Especially with the fast-growing likelihood of Australia employing targeted sanctions against Chinese officials over human rights abuses and malicious cyber activities. That said, Wang’s formulation might at least indicate that Beijing is seeking to soften its diplomatic messaging and avoid the impression that its trade restrictions are nakedly coercive. But of course, Wang’s apparent shift in tone might be totally overtaken by a future series of statements from Zhao Lijian or Hua Chunying.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 22 to 28 November 2021

Still welcoming ‘win-win’

Minister for Defence Peter Dutton speaking at the National Press Club on 26 November:

“Australia has welcomed China’s rise as a major economic power in the region.”

“We want China to continue to do well economically.”

“We want to see the Chinese people continue to prosper.”

…

“We want a productive trading partnership with China – one that mutually benefits both our peoples.”

Quick take:

Minister Dutton’s speech included strong criticisms of the Chinese government and dire predictions about possible future trajectories for China’s statecraft. Understandably, these elements of his remarks attracted the bulk of media and public attention. But as well as highlighting the depth of concerns about China in some quarters in Canberra and around Australia, the Minister’s remarks are also a striking reminder of the distance between the United States and Australia in the geoeconomic realm. These comments suggest that even the Australian Minister for Defence—who is among the government’s strongest critics of Beijing—has a markedly more positive view of China’s economic rise than the US Secretary of Commerce.

Canberra’s and Washington’s misgivings about Beijing’s behaviour are broadly aligned on human rights, Taiwan, the South China Sea, and a range of other diplomatic, geostrategic, and political questions. Both the United States and Australia seek many of the same general outcomes: better protection of human rights in China, the preservation of the status quo in Taiwan, and China’s observance of the United Nations Convention on the Law of the Sea (UNCLOS) in the South China Sea and elsewhere. Of course, Washington and Canberra each use different methods for pursuing these generally similar goals. For example, while Canberra has ratified UNCLOS and Washington (seemingly) won’t, the US Navy regularly asserts navigational rights under UNCLOS that Australia doesn’t.

Regardless of these divergent strategies, both Washington and Canberra are still working towards complementary goals in a broad range of diplomatic, geostrategic, and political arenas. By contrast, Minister Dutton’s comments highlight an overarching divide between Australia and the United States on the geoeconomic front. Whereas Australia welcomes China’s economic rise, the United States appears to view it as a threat, especially in the arenas of emerging technology and the innovation economy. Although Washington’s trade and China policies seem to still be under development, the signs so far suggest that the United States will continue constraining China economically via a combination of competition and economic coercion. Despite the deepening strategic alignment between Washington and Canberra, it’s noteworthy that one of the Australian government’s most forward-leaning China sceptics hasn’t embraced the adversarial US approach to economic statecraft.

LIVE NOW: @PeterDutton_MP addresses the #NPC in his role as Minister for Defence. Live now on @ABCTV and streaming on iview. #auspol pic.twitter.com/xFRZ7wSsgW

— National Press Club (@PressClubAust) November 26, 2021

Positive signals?

Australia’s International Business Survey (AIBS) 2021 paraphrasing the owners of Bec Hardy Wines, a family-owned wine business based in McLaren Vale:

“The owners highlighted that the short-term opportunities in China will be constrained, but (they) remain confident of the medium to long term prospects there.”

Quick take:

Given the year of trade restrictions suffered by Australian wine exporters in China, this optimism is remarkable. But it’s not entirely isolated. It follows recent Xinhua reporting quoting a representative from an Australian company during the China International Import Expo: “Economies between China and Australia are complementary. The relationship will be back to normal sooner or later. After all, a sound and healthy relationship of the two countries benefits the ordinary people.” Notwithstanding these upbeat assessments, gloomy bilateral prognostications also abound. CGTN characterised the recent remarks from China’s Chargé d’Affaires in Canberra, Wang Xining, with this headline: ‘Chinese envoy: Time not conducive for ministerial talks with Australia’.

It’s still entirely possible that 2022 will see an easing of China’s trade restrictions and a resumption of ministerial dialogue. But as I’ve argued before, significant tests of the bilateral relationship may lay in store in the final weeks of 2021 and into 2022—ranging from future potential uses of the Foreign Relations Act to the outcome of the review of the 99-year lease of Darwin Port. Combining these possible future bilateral potholes with the likelihood of yet more rhetorical sound and fury as China policy emerges as a election issue in Australia, it seems that additional trade restrictions are just as likely as a winding back of China’s campaign of economic coercion.

Carry on and diversify

Minister for Trade, Tourism and Investment Dan Tehan’s media release in relation to AIBS 2021:

“Businesses also underscored the importance of market diversification when exporting, with those businesses selling into a greater number of export markets more likely to report being better off financially compared to a year ago.”

Quick take:

AIBS 2021 was released the same week as the Australian Strategy for International Education 2021-2030, which aims to rebuild Australia’s international education sector more sustainably and create new opportunities for growth. Resilience and diversification are key themes in both documents. Each adds more detail to Australia’s “China plus” trade policy: Continue to pursue export opportunities in China while also seeking to expand trade links elsewhere to provide ballast in the event of market disruptions. Given the natural economic complementarities between Australia and China and the sheer size and value of the Chinese market, it remains uncertain whether the long-term and difficult task of export market diversification will offset potential future losses for Australian businesses excluded from the Chinese market. Regardless, the short- to medium-term story of Australia’s export redirection in the face of China’s trade restrictions is a generally positive one: As an emerging body of research highlights (especially here and here), open global markets and Australia’s competitive industries have blunted the economic costs of China’s economic coercion.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 15 to 21 November 2021

Cross-Strait tactics

A Chinese government adviser on Taiwan affairs, quoted in the South China Morning Post (SCMP) on condition of anonymity on 20 November:

“[Beijing] is saying that there is no need to worry [about war in the Taiwan Strait] as long as we are in control of the overall situation.”

Quick take:

This is an interesting datapoint suggesting that Beijing’s preferred option remains achieving its goals in Taiwan without resorting to large-scale military conflict. As well as the potentially existential risks for the Chinese Communist Party (CCP) of initiating an unsuccessful military campaign in the Taiwan Strait, Beijing’s preference for avoiding war also appears driven by the wide scope to ramp up and expand its use of grey zone tactics—activities designed to coerce Taiwan while also avoiding military conflict. As Yu Xintian from the Shanghai Institutes for International Studies put it in the same SCMP article: “Some think that ‘opposing Taiwan independence’ is either a question of whether to fight or not to fight. It is not that simple. There are many steps to take and we have a lot of tools in our toolbox which haven’t been used yet.”

The grey zone tactics that China could/is likely to use more frequently and forcefully include, among others: increasing the diplomatic pressure on the international community to limit Taiwan’s participation in multilateral fora; pushing countries to downgrade their official and unofficial diplomatic and economic engagement with Taiwan; more coercive economic measures against Taiwanese exporters; and additional PLA air and maritime presence around Taiwan. Given these and other means of incrementally isolating Taiwan, testing and straining the Taiwanese military, and intimidating foreign governments, caution vis-à-vis the use of military force would still seem to make compelling strategic sense for China.

China’s tactical options in the grey zone have immediate policy implications for Australia. Canberra has a long-term goal of delivering a high-end military deterrent in the Taiwan Strait via nuclear-power submarines, which can remain on station proximate to Taiwan for longer periods. But Beijing’s grey zone activities impact Taipei today. Although the range of grey zone tactics reduces Beijing’s incentive to pursue the option of large-scale military conflict, it equally means that China has immediately available methods to ratchet up the pressure on Taiwan and the international community. Beyond Australia’s efforts to support Taiwan’s productive involvement in multilateral fora and pursue shared trade interests, what can Canberra do to assist Taipei manage this pressure in the short-term? Although I’ve previously suggested potential areas of collaboration in the defence space, economic statecraft is another possible arena for more cooperation between Canberra and Taipei. Especially considering some of the shared Taiwanese and Australian experiences with China’s politically motivated trade restrictions.

What might Australian and Taiwanese cooperation on economic statecraft look like? A few possibilities come to mind:

• Working-level exchanges between relevant Australian government departments and agencies and their Taiwanese counterparts on their experiences with China’s economic coercion and how to develop effective policy responses.
• Closer coordination on diplomatic messaging and agenda setting in key multilateral economic fora of which both Taiwan and Australia are members, including the World Trade Organization (WTO) and Asia-Pacific Economic Cooperation (APEC).
• Establishing a de facto Strategic and Economic Dialogue with Taipei that builds on Minister for Trade, Tourism and Investment Dan Tehan’s ongoing conversations with his Taiwanese counterpart.

The Australian government might already be pursuing elements of the above without public fanfare. But to the extent that Canberra isn’t, it’s worth emphasising that the above initiatives would be consistent with the government’s efforts to ensure Australian policymaking can navigate the current collision of trade and economic policy with national security and geopolitics. This integrated approach to economic and security policy has been advocated explicitly in recent months by both the Treasurer and Trade Minister. Beyond broad alignment with Australian moves to develop its own economic statecraft, the above measures would also dovetail with what appears to be a renewed focus in the Department of Foreign Affairs and Trade (DFAT) on managing and responding to economic coercion and other emerging challenges at the intersection of economic and security policy.

Although the above initiatives would be politically sensitive for Beijing, they could be pursued quietly and discreetly to minimise diplomatic blowback. It also seems prima facie plausible that, for example, exchanging notes on experiences with economic coercion would not diverge from Australia’s one-China policy given that such initiatives could be framed as engaging with Taiwan as an economy. But even if these types of initiatives were pursued, the economic and strategic benefits of cooperation with Taipei would need to be balanced against the costs of potentially provoking (more of) Beijing’s ire. For your consideration, Canberra.

Duelling preconditions

Minister Tehan speaking at the Bloomberg New Economy Forum 2021 on 17 November:

“So, we would need some sort of ministerial dialogue to be able to work through that market accession [to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)]. Obviously economic coercion, trade disputes, those types of things, would all have to be dealt with and we’d have to work through those but also there would have to be that firm commitment to those gold standard rules.”

Quick take:

The challenges of CPTPP accession should now be clear for China. For Canberra, it’s a nonstarter unless Beijing is willing to restart ministerial dialogue and map out a path towards ending its politically motivated trade restrictions. But the trouble doesn’t end there for China. As Minister Tehan recently reemphasised, any eventual Chinese accession must be a “consensus-based decision”. The implication of this seems to be that Canberra reserves the right to unilaterally render Beijing’s accession bid futile. And that’s even before questions are asked about whether China can meet the CPTPP’s “gold standards” on goods and services trade liberalisation.

But not to be outdone, Beijing has its own preconditions for dialogue. As China’s Chargé d’Affaires in Canberra, Wang Xining, put it recently when speaking to The Guardian’s Daniel Hurst: “First, we need to prepare for concrete results. We need to find a real solution for certain problems between certain ministers, and we need an atmosphere. When you see top-tier officials keep on saying that China is a threat, and Australia may get involved in a military conflict in certain parts of China, this is not a conducive environment for engaging in ministerial talks.” In other words, ministerial dialogue depends on preconditions, including a deliverable of some kind and a shift in the tenor of public statements from Australian ministers about China.

So, where are we at in this story of duelling preconditions? We’re likely left with no ministerial dialogue for now and little chance that China’s bid for CPTPP accession will progress. The impasse looks something like this:

• Canberra won’t consider China’s CPTTP accession until (at minimum) ministerial dialogue with Beijing recommences.
• But Beijing won’t restart ministerial dialogue with Canberra unless the atmospherics of the bilateral relationship improve and concrete deliverables are on the table.
• However, Canberra won’t agree to dialogue with Beijing that comes with such preconditions. And there seems little reason to conclude that Canberra’s threat perception of Beijing or willingness to speak about it will change.

Is it possible that Beijing and Canberra might agree to a compromise solution in which ministerial dialogue recommences and the deliverable that this provides China is simply the announcement that the two countries are discussing Beijing’s CPTPP accession? This would be a pretty meagre “concrete result” for China and Australia might still judge that it amounts to an unacceptable precondition for dialogue. But given that Canberra in any case wants dialogue with Beijing, and it remains unclear whether China requires results that are any more substantive than talking about possible CPTPP accession, such a compromise solution might just work. So, perhaps we’ll see high-level dialogue restart in the form ministerial contact on the topic of China’s possible CPTPP accession? Yet given all the preconditions above and the gloomy bilateral atmospherics, it’s equally possible I’ve gone way too far down a chain of hypotheticals. We might yet reach the two-year anniversary of the January 2020 telephone call between foreign ministers Marise Payne and Wang Yi without any ministerial contact between Beijing and Canberra.

Delighted to meet with 🇦🇺Trade Minister @DanTehanWannon in Melbourne today. A/NZ cooperate across the trade and economic board, and have the most successful bilateral trade agreement in the world, creating opportunities for our exporters and strengthening our economies. 🇳🇿🤝🇦🇺 pic.twitter.com/9o3ngwz7sX

— Damien O'Connor (@DamienOConnorMP) November 19, 2021

China keeps door closed to (Australian) coal

The monthly value of Australia’s coal exports (to China, the rest of the world, and total, May 2020 to September 2021):

Quick take:

So far, coal is by a wide margin the most valuable Australian export to China that has been hit with politically motivated trade restrictions. After reaching a near-record high in May 2020, the value of Australia’s coal exports to China declined precipitously between May and December last year. Notwithstanding reports in October of small amounts of Australian coal being release into the Chinese market, the September data still has Australian coal exports to China flatlining at zero. Despite the gloomy story of the value of coal exports to China, the value of coal exports to the rest of the world has boomed. Although being driven in part by surging coal prices, the value of these exports to alternative markets is now far higher than the combined value of Australia’s total coal exports before Beijing introduced trade restrictions. The monthly value of these exports to the rest of the world is also approaching previous past highs.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 8 to 14 November 2021

US military action

Minister for Defence Peter Dutton speaking to The Australian’s Troy Bramston:

“It would be inconceivable that we wouldn’t support the US in an action if the US chose to take that action. And, again, I think we should be very frank and honest about that, look at all of the facts and circumstances without pre-committing, and maybe there are circumstances where we wouldn’t take up that option, (but) I can’t conceive of those circumstances.”

Quick take:

Minister Dutton’s comments were framed by both the domestic and international press as being a statement of Australia’s intent to support US military action to defend Taiwan. Although the full transcript of the Minister’s interview isn’t available, the published excerpts leave open the possibility of at least some ambiguity as to whether the Minister’s point was about supporting US military action in general or specifically supporting such military action in the event of conflict in the Taiwan Strait. Subsequent reporting in The Australian added Taiwan in parentheses—“support the US in an action (in Taiwan)”—seemingly making it clear that the question revolves around Taiwan specifically.

On one level though, any such ambiguity is hair-splittingly moot. If Minister Dutton can’t conceive of circumstances in which Australia wouldn’t support US military action, then presumably that implies that Australia will support any such military action in the Taiwan Strait. On another level though, the distinction matters considering that a statement of support for US military action in general is (very broadly speaking) consistent with Australia’s involvement in a number of notable past instances of US military action. By contrast, an explicit statement of support for all conceivable forms of US military action to defend Taiwan would be a significant development considering infamously ambiguous past expressions of Australian intent in such scenarios.

Regardless of the extent to which this latest statement constitutes a shift in Australia’s declaratory policy, it is yet another datapoint suggesting a deepening alignment of US and Australian statecraft in the Indo-Pacific. Per the Minister’s comments, Australia is declaring its intent to support the United States militarily “if the US chose to take that action.” It seems plausible to infer from the Minister’s remarks that Australia will join the United States in all conceivable forms of military action that the US chooses to take in Taiwan. By signalling support for Washington’s decisions about possible war, these statements seem to position Australia in the role of a force multiplier for the United States in extreme conflict scenarios in the Taiwan Strait.

In addition to the (many) serious ethical, political, and military questions about whether Australia should support the United States in any specific action in Taiwan, there are at least three general risks for Canberra in declaring Australian support in advance:

1. Statements of support for all conceivable forms of US military action in Taiwan will likely heighten expectations in Washington. Given US moves to station more of its military platforms in Australia and share highly sensitive military technology with Canberra, expectations are already presumably high. And these expectations are only likely to grow further considering that bipartisan legislation on strategic competition with China places Allies such as Australia at the centre of US statecraft. But it would also be natural for Washington to expect even more from Canberra considering the Minister’s recent comments.
2. The future trajectory of US domestic politics remains a source of serious risk for Australia. President Joe Biden’s poll numbers continue to slump and the campaign war chest of former President Donald Trump continues to expand. President Trump still enjoys high approval ratings among Republicans and seems to be prepositioning to again seek the Republican nomination in 2024. Given the political chaos, violence, and uncertainty of the final months of the Trump presidency and the possibility of a second Trump term in just over three years, it would seem imprudent for Australia to declare in advance its commitment to follow the US lead on questions of war.
3. Canberra will likely compound the perception in Beijing that Australian policy is simply a proxy for US goals and interests. Regardless of how unfair this characterisation might be, it is how Beijing often views Canberra. To be sure, refraining from making statements of support for all conceivable forms US military action will not on its own cause China to abandon its view of Australia. Yet equally, making such statements will presumably further entrench China’s image of Australian actions as an extension of US external policy.

Of course, it remains possible that Minister Dutton’s statements are part of the signalling and theatrics of deterrence. Flagging Australian support for US military action in Taiwan might simply be intended to chasten Beijing by indicating that the People’s Liberation Army will also face the Australian Defence Force in any military confrontation involving the United States. As Minister Dutton acknowledged in the interview, Australia does not possess the military capability to singlehandedly deter China. But such statements of Australian intent to support US military action in Taiwan can be expected to incrementally increase the deterrent effect against China.

Moreover, notwithstanding Minister Dutton’s comments, nothing binds Australia to support future US military action. Statements of intent today won’t predetermine Australia’s future behaviour, and the consultations and joint actions prescribed by the ANZUS Treaty permit much interpretative latitude. In other words, Canberra could easily make such statements of support for all conceivable forms of US military action in Taiwan as a deterrence stratagem with the intention of fully reviewing and scrutinising any eventual US request for assistance. But with Washington, Beijing, and other capitals having heard that it’s inconceivable that Australia won’t support the United States militarily, Canberra might eventually have its range of movement restricted. The United States, China, and other powers may chalk Australia up as a US lock, thereby creating a tangle of expectations that Canberra won’t be able to easily shake.

Taiwan and trade

Minister for Trade, Tourism and Investment Dan Tehan responding to a question on 11 November about whether Taiwan had raised its bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

“We haven’t had a discussion since they formally put in their proposal to accede, but I’ve had regular dialogue through this year with the Taiwanese.”

Quick take:

Minister Tehan is maintaining a consistent line on Taiwan’s CPTPP accession. He emphasised repeatedly on 11 November that any aspiring member would need to meet the CPTPP’s “gold standards” and its emphasis on “trade liberalisation.” The Minister seems at pains to emphasise that any CPTPP accession should be based on the relevant economic and trade considerations rather than political or geostrategic priorities.

But while the ideal CPTPP accession decision might not be driven by international politics, it equally seems nigh on impossible to entirely separate the economic from the geostrategic. The Minister’s “regular dialogue” with Taipei is driven by shared economic interests between Australia and Taiwan. Yet these ongoing engagements have geostrategic significance as well. For a Taiwanese government seeking avenues to respond to China’s efforts to diplomatically, politically, and economically isolate Taiwan, an Australian Minister’s discussions with Taipei are inevitably about more than shared trade interests, great though these may be.

The infusion of the geostrategic into Australia’s trade engagement with Taiwan is no bad thing though. In contrast to the high stakes of military deterrence in the Taiwan Strait, deepening trade ties with Taipei is a much lower-risk and immediate way of strengthening Taiwan’s international position and delivering an incremental deterrent effect against China. What is more, unlike hard deterrent initiatives in the military realm, building the Australia-Taiwan trade relationship is likely to have concrete upsides for Australian exporters.

And then there were more

The Joint Statement from the 4th Australia-Malaysia Annual Foreign Ministers’ Meeting released on 9 November:

“The Ministers … agreed to work to strengthen the rules-based multilateral trading system with the World Trade Organization at its core, to provide a level playing field, address unfair and coercive economic practices while responding to the acceleration of protectionist measures.”

Quick take:

After the recent Australia-Vietnam Joint Statement on 3 November, this makes Malaysia the second South-East Asian country to raise concerns about economic coercion alongside Australia. This takes to 11 the number of countries raising these concerns in 12 joint statements, communiques, and readouts since late 2020. The Australia-Malaysia Joint Statement was followed on 12 November by a readout from the Australia-Aotearoa New Zealand Foreign Minister Consultations in which the two countries “affirmed their strong support for open, rules-based trade based on market principles.” Although economic coercion wasn’t singled out as it was in previous instances of Canberra’s coordinated messaging with Wellington, the readout emphasised the importance of states being able to “pursue their interests free from coercion.”

Here’s the updated working tally of states that have joined Australia and raised explicit concerns about economic coercion:

• Australia-Japan; 17 November 2020; Leader; Bilateral
• G7; 5 May 2021; Ministerial (foreign affairs and development); Multilateral
• Australia-United States; 13 May 2021; Ministerial (foreign affairs); Bilateral [NB from joint press conference between Secretary of State Antony Blinken and Foreign Minister Marise Payne.]
• Australia-New Zealand; 31 May 2021; Leader; Bilateral
• Australia-Japan; 9 June 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 21 July 2021; Ministerial (trade); Bilateral
• Australia-France; 30 August 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-India; 11 September 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 16 September 2021; Ministerial (2+2 ASUMIN – foreign affairs and defence); Bilateral
• Australia-New Zealand; 20 September 2021; Ministerial (trade); Bilateral
• Australia-Vietnam; 3 November 2021; Leader; Bilateral
• Australia-Malaysia; 9 November 2021; Ministerial (foreign affairs); Bilateral

Australia & Malaysia share a vision for a resilient & prosperous region. Today, I co-hosted the 🇦🇺+🇲🇾 Annual Foreign Ministers' Meeting with 🇲🇾 Foreign Minister @SaifuddinAbd – the first since our relationship was elevated to a Comprehensive Strategic Partnership. pic.twitter.com/VPBrrop4i2

— Marise Payne (@MarisePayne) November 6, 2021

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 1 to 7 November 2021

Strange bedfellows

Point four of the Joint Statement on the finalisation of the Australia – Vietnam Enhanced Economic Engagement Strategy:

“The Strategy reaffirms both countries’ commitment to strengthening the rules-based global trading system as the basis for open international trade and working together to address economic challenges and coercive economic practices.”

Quick take:

This makes Vietnam the first South-East Asian country to explicitly call out economic coercion/coercive economic practices in a joint statement with Australia. Although China is not mentioned by name, the context of the messaging leaves little to the imagination regarding who the coercive party might be. China’s internationally renowned and explicitly coercive economic pressure campaign against Australia means that most audiences would fully understand that Beijing’s trade restrictions are at issue. This conclusion would be especially easy to reach given that Vietnam likely also felt the sting of China’s politically motivated trade restrictions in 2014.

Adding Vietnam to the list of countries that have previously voiced concerns about economic coercion alongside Australia leads to a total of 10 countries raising these concerns in 11 joint statements, communiques, and readouts. Some countries, such as Japan, New Zealand, and the United States, have joined Australia in raising concerns about economic coercion multiple times and some countries have done so multilaterally via the G7. Here’s my rough working tally:

• Australia-Japan; 17 November 2020; Leader; Bilateral
• G7; 5 May 2021; Ministerial (foreign affairs and development); Multilateral
• Australia-United States; 13 May 2021; Ministerial (foreign affairs); Bilateral [NB Strictly speaking, this was not a joint statement/communique, coming as it did from Secretary of State Antony Blinken during a press conference with Foreign Minister Marise Payne.]
• Australia-New Zealand; 31 May 2021; Leader; Bilateral
• Australia-Japan; 9 June 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 21 July 2021; Ministerial (trade); Bilateral
• Australia-France; 30 August 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-India; 11 September 2021; Ministerial (2+2 foreign affairs and defence); Bilateral
• Australia-United States; 16 September 2021; Ministerial (2+2 ASUMIN – foreign affairs and defence); Bilateral
• Australia-New Zealand; 20 September 2021; Ministerial (trade); Bilateral
• Australia-Vietnam; 3 November 2021; Leader; Bilateral

In addition to the above countries and multilateral groupings, both the Quad and Singapore have raised concerns about “coercion,” albeit without specifying in the economic domain. This lengthening list again suggests that Australia is making a concerted effort to build a coalition of countries willing to raise concerns about economic coercion and, by extension, impose some reputational costs on China (without mentioning Beijing explicitly). Beyond this, the latest joint statement with Vietnam also highlights the way in which contemporary international politics makes for strange bedfellows.

Despite Vietnam’s historical and recent experiences of war and conquest with China, Beijing’s and Hanoi’s interests are now relatively closely aligned on questions of domestic governance and the primacy of their respective communist parties. As President Xi Jinping stressed in a call with Nguyen Phu Trong, General Secretary of the Communist Party of Vietnam (CPV), earlier this year: “[I]t serves both sides’ fundamental and strategic interests to safeguard the Communist Party’s governance and the institution of socialism. China firmly supports Comrade General Secretary in leading the CPV and the Vietnamese people to follow the socialist path that suits its national conditions.”

Unsurprisingly, the values embodied by Hanoi’s communist one-party system of government share more ideological affinity with Beijing’s Leninist Party-state than Canberra’s liberal democracy. But despite this deep political divide between Australia and Vietnam, Hanoi and Canberra share overlapping interests and goals when it comes to advancing key elements of the rules-based international order, including on trade liberalisation and elements of international law. This close alignment between certain Australian and Vietnamese international policy priorities combined with a striking misalignment on human rights and domestic political questions highlights the limitations of ideological lenses for analysing contemporary international politics.

Although the era of great power competition might be ideologically tinged (some might say infused?), strategic interests often won’t overlap with political preferences. Consider, for example, the about-face performed by many like-minded countries that went from denying Indian Prime Minister Narendra Modi visas on human rights grounds to feting him as the leader of a fellow liberal democracy. Framing strategic competition with China in terms of values will therefore only be partially effective considering that counterbalancing Beijing’s power and influence will regularly involve reaching across the ideological aisle, so to speak.

Delighted PM Morrison had productive meeting with PM Chinh at #COP26 . 🇦🇺 & 🇻🇳 share dynamic partnership, with strong economic, security & people-to-people ties. Next chapter opened with joint statement on climate action & new economic strategy: https://t.co/m8JNxuazCZ pic.twitter.com/OQPnXtA357

— Robyn Mudie 🇦🇺 (@AusAmbVN) November 3, 2021

Sticking to the message

Ministry of Foreign Affairs (MFA) spokesperson Wang Wenbin’s taciturn response to a question about Australia’s reputation and whether Prime Minister Scott Morrison lied to French President Emmanuel Macron:

“I have noted relevant reports.”

Quick take:

Twice last week MFA spokesperson Wang was asked about the France-Australia submarine drama. And beyond a short quip about Australia giving an “honest answers to its partner’s questioning,” twice he refused to weigh in on the substance of the diplomatic stoush between Paris and Canberra. Like a consummate public relations professional, he kept to the dictum that you should answer the question you wish you’d been asked. In response to both questions about the Franco-Australian diplomatic rift, he pivoted seamlessly to nuclear non-proliferation concerns and the way in which Beijing believes AUKUS undermines the rules-based international order.

Whether China’s diplomatic strategy of linking AUKUS to perceptions of rule flouting by Australia and its allies and partners will be successful remains to be seen. Recent bilateral and multilateral statements and repeated efforts by a number of Australian ministers to reassure South-East Asia and the wider world point to some early traction for China. But regardless, steering clear of the France-Australia fracas and hammering home non-proliferation concerns points to China’s determination to seek to use AUKUS to inflict reputational damage on Australia and some of its closest allies and partners.

What wasn’t said

The number of references to AUKUS and/or nuclear proliferation in the MFA and New Zealand Ministry of Foreign Affairs and Trade readouts of President Xi’s call with Prime Minister Jacinda Ardern:

0

Quick take:

In the context of Wellington’s longstanding aversion to both nuclear-powered military platforms and nuclear weapons, Beijing might have been hoping for jointly expressed concern about AUKUS. Especially considering that many of New Zealand’s close Pacific neighbours were willing to join China in making their reservations about new nuclear-powered military platforms in the region known.

But a more prosaic explanation for the nonmention of the nuclear issue might simply be that President Xi didn’t bring it up. China’s recent meetings in the region that have raised concerns about AUKUS and/or nuclear proliferation were at the foreign minister-level. Meanwhile, despite all the warm atmospherics of President Xi’s recent call with Papua New Guinea’s Prime Minister James Marape, there was no mention of AUKUS or proliferation concerns. Perhaps Beijing judges that it’s preferable to position President Xi above the fray and keep the divisive issue of anti-AUKUS diplomacy at arm’s length from the highest level of the Party-state?

Regardless, Canberra can draw some comfort from the nonmention. Even if President Xi did raise AUKUS and his government’s proliferation concerns, New Zealand seemingly won’t be publicly drawn into a China-driven effort to foster AUKUS scepticism.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 25 to 31 October 2021

US force posture in Australia

Minister for Defence Peter Dutton speaking at a joint press conference at HMAS Stirling on 29 October:

“As we announced in Washington, essentially, every aircraft type in the US Defence Force will visit Australia at some point, will cycle through and when you think of the scale of that US machine, you can get a grasp of the significant investment that will be made. So, you know, I think that’s quite a phenomenal outcome of AUKUS for our country and we’ll see that play out over the next few years.”

Quick take:

Announcements about Australia’s planned acquisition of nuclear-powered submarines and additional US force posture in Australia were rolled out at different events in different places. Yet Minister Dutton’s framing seems to imply that they can be seen as part of a larger omnibus AUKUS package. Regardless of the nature of the connection between AUKUS and the additional US military presence announcements at AUSMIN, Beijing’s nonresponse (unless I’m missing something?) to the US force posture announcements is noteworthy. Especially considering Beijing’s voluminous objections to Australia’s planned acquisition of nuclear-powered submarines.

Was China’s quiet response to the US force posture announcements simply an oversight? Was it a product of the overwhelming focus of debate and analysis on the AUKUS submarine news and the associated diplomatic ructions between France, the AUKUS countries, and others? Or instead, is Beijing just much less concerned about future US force posture in comparatively distant Australia than it is about the possibility of additional Australian submarines on station for extended periods in the South China Sea and Taiwan’s maritime approaches?

Beijing’s cautious response to the 2011 decision to establish a rotational US Marines presence in Darwin might seem to give weight to the theory that China is broadly unconcerned about additional US force posture (relatively) far away in Australia. Despite not welcoming the 2011 announcement, Beijing responded with restrained language. The Chinese Ministry of Foreign Affairs (MFA) spokesperson at the time noted: “Whether it suits the common interests of countries around the region and the whole international community remains under question.”

Although there might be parallels to be drawn between China’s reactions in 2011 and 2021 to US force posture announcements, comparing these datapoints is a stretch. There’s a massive military-strategic difference between US Marines in Darwin and potentially long-distance and nuclear-capable US bombers at Australian airfields. Moreover, Beijing’s relations with both Washington and Canberra have dramatically deteriorated since 2011, which makes China’s nonresponse to US force posture announcements especially surprising.

Whether Beijing ramps up its criticism of these US force posture initiatives once US aircraft start landing at Australian airfields and other US platforms arrive remains uncertain. But given the change in strategic circumstances between 2011 and 2021 and the potency and reach of some of the US military platforms that could visit Australia, the likelihood of more diplomatic broadsides from Beijing seems high. As strong as China’s criticisms of the planned capability acquisition aspects of AUKUS have already been, the US force posture elements of AUSMIN may yet elicit more objections.

Today we welcomed to Perth a @royalnavy Astute Class nuclear powered submarine. Her visit comes six weeks after we announced the #AUKUS partnership with the UK & US. It was a pleasure to meet the crew, I wish them well on their break. 🇦🇺🇬🇧🇺🇸 pic.twitter.com/A3vwgjWd3F

— Peter Dutton (@PeterDutton_MP) October 29, 2021

Indonesia and China on AUKUS (again)

Per the MFA readout of Foreign Minister Wang Yi’s meeting with his Indonesian counterpart Retno Marsudi on 30 October:

“The two sides also expressed grave concern over the risk of nuclear proliferation caused by the plan for nuclear-powered submarine cooperation of the AUKUS.”

Quick take:

Despite the Prime Minister’s best efforts to reassure ASEAN, Indonesia remains deeply sceptical. Although the Indonesian readout of this meeting doesn’t appear to be available, it is noteworthy that the two foreign ministers were willing to explicitly name AUKUS when criticising the security partnership. Although both Beijing and Jakarta have already mentioned Australia’s nuclear-power submarine acquisition plans explicitly in their own messaging, the previous bilateral intervention on the AUKUS security partnership was oblique (though the context admittedly left little doubt as to which countries were being held to account).

Given the Indonesian government’s ongoing support for the Non-Aligned Movement (NAM), this disconnect between Jakarta and Canberra is hardly surprising. Foreign Minister Marsudi’s speech marking NAM’s 60th anniversary bears a strong resemblance to familiar elements of Beijing’s diplomatic messaging about not just AUKUS, but also what China often decries as the “Cold War mentality” of the United States and its allies. Chinese diplomats could have just as easily expressed Foreign Minister Marsudi’s sentiment that a “zero-sum approach” is ill-suited to tackling humanity’s greatest challenges and that “[g]eopolitical rivalries threaten our ways of working together in addressing … global challenges”.

To be sure, there’s a danger in overinterpreting the significance of the rhetorical resonance between Jakarta’s and Beijing’s messaging. Notwithstanding their shared concerns about the trilateral security partnership, Indonesia and China are still separated by deep strategic divides, including large overlapping claims regarding maritime jurisdiction in the southern reaches of the South China Sea. But regardless, the similarities between the ways in which Jakarta and Beijing view not just AUKUS but also great power politics and strategic competition suggest that Australia’s efforts to reassure Indonesia still have a long road to travel.

Good to meet again with Foreign Minister Wang Yi of China (29/10) We spoke on 🇮🇩🇨🇳health cooperation as well cooperation in the framework of G20 and ASEAN pic.twitter.com/WxOInRouSf

— Menteri Luar Negeri Republik Indonesia (@Menlu_RI) October 30, 2021

The foreign investment blame game

MFA spokesperson Zhao Lijian speaking at the regular press conference on 27 October:

“The responsibility of the drop in Chinese investment in Australia fully rests with the Australian side. For a while, some in Australia have been politicizing and stigmatizing normal economic and trade cooperation between China and Australia at every turn and wantonly restricting normal bilateral exchange and cooperation. This has disrupted the sound momentum of practical cooperation and dampened Chinese companies’ confidence in investing in Australia.”

Quick take:

“It’s not me, it’s you” is now a familiar MFA refrain when questions come up about deteriorating Australia-China relations. Typically, Australian ministers and officials reject this characterisation, reemphasise that Canberra won’t compromise on the points of contention, and highlight by way of a response what they consider to be Beijing’s malfeasance. Australia’s statement last month to the World Trade Organization Trade Policy Review of China is a case in point of such a diplomatic counterpunch. Other examples abound (here, here, and here).

However, the dynamic in the debate over Foreign Direct Investment (FDI) is a little different. Even though Australian ministers and officials might reject the claim that responsibility for declining Chinese FDI “fully rests with the Australian side”, they would also likely accept that Australian policy settings are playing a significant role. They would also likely judge that this decline in Chinese FDI wasn’t per se a negative development given that it is, at least to an extent, an unsurprising by-product of the growing emphasis on national security considerations in the Foreign Investment Review Board’s (FIRB) decision-making. As FIRB’s Chair David Irvine observed recently: “Australia is actually not alone in taking greater account of national security issues in its investment regimes.”

The Minister for Trade, Tourism and Investment Dan Tehan has expressed optimism that the easing of border restrictions will be a positive development for Chinese FDI in Australia. Speaking last week to CNBC, the Minister said: “We’ve seen FDI drop by over 50 per cent as a result of the pandemic, but there’s a real hunger and appetite out there from investors, from the commercial sector, to look at Australia and get back investing in big numbers in Australia again. So, the reopening of Australia is important for our economic relationship with China as it is with every country across the globe.”

But even if 2022 sees an uptick, Chinese FDI into Australia is likely to face strong and long-lasting headwinds given FIRB’s greater emphasis on national security considerations combined with Beijing’s efforts to foster a stronger alignment between the Party-state and the country’s corporate sector. So, China might continue blaming Australia for these slumping FDI flows. But unlike other negative metrics of the Australia-China relationship, Canberra is unlikely to see a strong rationale for trying to dramatically change the trendline.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 18 to 24 October 2021

China and the PICs talk nuclear

Per the joint statement from the inaugural China-Pacific Island Countries Foreign Ministers’ Meeting on 21 October:

“All parties reaffirmed their firm position of upholding the international non-proliferation regime with the Treaty on the Non-Proliferation of Nuclear Weapons as its cornerstone and the South Pacific Nuclear Free Zone, and called on the relevant parties to fulfill treaty obligations and promote regional peace and stability.”

Quick take:

Another week, another seemingly successful effort by Beijing to regionalise its concerns about AUKUS. Although the “relevant parties” weren’t mentioned by name, the language bears an uncanny resemblance to the misgivings about AUKUS that China has been driving home for weeks via the state-controlled/affiliated press and Chinese officials. The regular Ministry of Foreign Affairs press conferences repeatedly made similar points last week (here, here, here, and here), albeit with more detailed and rhetorically charged language.

Of course, it’s possible (but unlikely?) that this language wasn’t directed at the AUKUS countries. This was the first China-Pacific Island Countries Foreign Ministers’ Meeting, so there’s no real historical baseline for these joint statements. But in the context of Beijing’s sustained and multi-pronged effort to raise many of the same concerns about AUKUS, it’s hard to not read this as a thinly veiled objection to AUKUS. As a resident power in the South Pacific neighbourhood, the statement also reads particularly pointedly for Australia.

Coming on the back of similar messaging from Indonesia and China the week before last, Beijing’s anti-AUKUS diplomacy seems to be gaining ground in Australia’s immediate region. To be sure, there are AUKUS supporters in South-East Asia, most notably the Philippines and Singapore. But South-East Asia and the Pacific also seem to be home to widespread AUKUS scepticism. And Beijing shows every sign of leveraging this in a bid to inflict reputational damage on AUKUS and, by extension, Australia.

This poses a direct challenge to Canberra. South-East Asia and the South Pacific have long been key areas of focus for Australian foreign and defence policy. Per the 2020 Defence Strategic Update: The “immediate region [ranging from the north-eastern Indian Ocean, through maritime and mainland South East Asia to Papua New Guinea and the South West Pacific] is Australia’s area of most direct strategic interest. Within it, Australia must be capable of building and exercising influence in support of shared regional security interests.” China’s coordinated diplomatic messaging on AUKUS with both Indonesia and the Pacific Island Countries seems to directly challenge Australia’s goal of “building and exercising influence” in its “immediate region.”

Will these coordinated expressions of AUKUS scepticism allow China to substantially change how countries in the region view Australia? That remains unclear. But at a minimum, Beijing has shown itself capable of using its diplomatic engagements in the region to: amplify and complement its own concerns about AUKUS; give its opposition to AUKUS added international legitimacy; and portray the US and its allies as rule breakers and, by extension, portray itself as a responsible power. AUKUS’ capability gains notwithstanding, China’s ability to coordinate concern about the trilateral security partnership looks set to create enduring difficulties for Australian diplomacy in its immediate region.

On October 21, Chinese State Councilor and Foreign Minister Wang Yi chaired the first China-Pacific Island Countries Foreign Ministers' Meeting via video link, vowing China's closer ties with PICs. https://t.co/ifHDngUOGq @FijianGovt @Fiji_MOFA @sun_fiji @fijitimes pic.twitter.com/J7Z3WulB0u

— Chinese Embassy in Fiji (@ChineseEmb_FJ) October 22, 2021

Latest export data

The latest trade data of the combined monthly value of Australia’s nine exports targeted by China’s trade restrictions (to China, the rest of the world, and total, April 2020 to August 2021):

Quick take:

The latest round of trade data from August again tells a relatively upbeat story about Australia’s exports. The above graph covers all nine exports impacted by China’s confirmed trade restrictions: barley, beef, cotton, timber products, coal, copper ores and concentrates, sugar products, crustaceans, and wine. As they have for effectively all of 2021, the value of exports of coal, copper ores and concentrates, and barely to China were still flatlining at zero in August. Meanwhile, there was no significant uptick in the value of other targeted exports to China, which remained down on their levels prior to the introduction of trade restrictions.

But the total value of the nine targeted exports to the rest of the world continued to surge in August. Although the value of these exports to China in August 2021 was approximately 1% of its value in April 2020, the value of these same nine exports to the rest of the world in August 2021 was approximately 164% of its value in April 2020. Presumably the rise in the value of the nine targeted exports to the rest of the world has been boosted by the ongoing growth in coal prices. But even excluding coal from the mix, the value of the other eight Australian exports to the rest of the world in August 2021 was approximately 190% of its value in April 2020. So, despite China’s ongoing trade restrictions, the latest export data suggests successful export redirection to alternative markets.

The way we were

Dan Tehan, Minister for Trade, Tourism and Investment, speaking to Sky News Australia’s Laura Jayes on 21 October:

“Look, we will continue to keep making the case that our bilateral relationship is incredibly important and the way we engage is incredibly important and especially how we do that economically, because that’s how both countries benefit, and we’ll continue to make that case. … [T]he economic relationship can help both countries, and we want to get back to how it was before 18 months ago.”

Quick take:

The Australia-China relationship continues to tread water. It’s been just shy of 1.5 years since Beijing first imposed politically motivated trade restrictions and it’s been some 21 months since an Australian minister was able to speak to their Chinese counterpart. But despite this frostiness, Minister Tehan continues to patiently wait for dialogue with China. In case there were any doubts in Beijing, the Minister has emphasised and reemphasised his forbearance again and again.

Australia’s statement to the Word Trade Organization’s Trade Policy Review of China was equal parts a strong defence of the rules-based trading system and a criticism of Beijing’s trade coercion. But despite this tough message for China, the Australian government and the Trade Minister have consistently and clearly stated that Canberra seeks to “constructively cooperate” with Beijing and that Australia’s trade policy concerns are specifically focussed on China’s deviation from the principles of the rules-based trading system.

Will Canberra’s patience get the relationship back to the way it was before? Incoming bumps in the bilateral relationship don’t augur well for a return to the old ways. These include the politics of the Beijing 2022 Winter Olympics and a range of decisions on the horizon over the Darwin Port, the use of the amended Autonomous Sanctions Act 2011, and Confucius institutes in Australia.

But at the very least, hopefully Beijing appreciates the Trade Minister’s patience and will reciprocate with a letter. As the Minister has stressed recently, Beijing has good reason to do so. China’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will likely depend on the resumption of ministerial contact.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 11 to 17 October 2021

AUKUS by implication

Per the Ministry of Foreign Affairs readout from Foreign Minister Wang Yi’s call with Luhut Pandjaitan, Indonesia’s Coordinating Minister of Maritime and Investment Affairs:

“Both sides are on the alert for and against acts that trigger the risk of nuclear proliferation and division in the region, and stress that all parties should work together to maintain regional peace and stability.”

Quick take:

Although neither AUKUS nor Australia were mentioned, it’s quite clear whose military capability acquisitions are at question. This is savvy signalling from Beijing. It gives China an opportunity to emphasise that objections to AUKUS are not just limited to its own concerns about what it considers to be a US-led and allies-supported effort to contain China and undermine its interests. Without making any comment on the substance of the thinly veiled criticism of AUKUS, it at least provides added regional and diplomatic weight to China’s efforts to delegitimise the new trilateral security partnership.

More broadly, it strikes me that China’s messaging on AUKUS has evolved and become increasingly shrewd. The initial AUKUS announcement was followed by predictable rhetorical broadsides from the more nationalistic and flamboyant parts of the Chinese press. But Beijing has increasingly sought to elevate the nuclear technology proliferation/safeguards concerns that it has about AUKUS (e.g., here, here, and here). Again, without commenting on the substance of these concerns—spurious or not—this strikes me as savvy for a few reasons:

• Focusing on nuclear technology proliferation/safeguards concerns allows China to present its objections to AUKUS as less about its own security concerns and more about the interests of the region and the globe.
• These concerns also allow China to present itself as a responsible actor and *gasp* a defender of the rules-based international order, given that the nuclear non-proliferation/safeguards regimes can plausibly be understood as elements of this order.
• The nuclear technology proliferation/safeguards concerns are a weak point for the AUKUS partners, especially considering that the limited detail provided so far on this issue sits uneasily with its critical importance.
• Finally, from the perspective of mounting a classic info/psyop, fixating on nuclear technology proliferation/safeguards is an effective way of dissembling and distracting. These issues are immensely technically complex (both legally and scientifically speaking), which leads to a huge information asymmetry and opens the way for claims and counterclaims that can be easily used to muddy the water.

I hasten to stress that none of the above is to endorse China’s criticisms of AUKUS. But from the point of view of Australian diplomatic priorities, Canberra and the other AUKUS capitals will need to mount much stronger and more fulsome responses to these concerns from China and other powers. Not only can Beijing do more to delegitimise AUKUS based on nuclear technology proliferation/safeguards criticisms, but these concerns clearly resonate in many quarters in the region. AUKUS might be in motion, but the battle over its international legitimacy is only beginning.

4 days ago SC&FM #WangYi had an online meeting w/ #Indonesia’s coordinator for cooperation w/ #China Luhut Binsar Pandjaitan. Friendly & meaningful talk covered bilateral relations, cooperation in vaccines, trade, Belt & Road (#BRI) esp. Jakarta-Bandung Railway, 5G & more! pic.twitter.com/lY7HGKQgjZ

— Ambassador Deng Xijun (@China2ASEAN) October 17, 2021

Olympic politics

Per a Xinhua summary of Australian Olympic Committee President John Coates’ National Press Club address on 15 October:

“Coates voiced against the boycott of the Olympic Games and reaffirmed that Australian athletes will take part in the Beijing Winter Olympic Games in 2022.”

Quick take:

These remarks were highlighted on the website of the Chinese Embassy in Canberra and were given a dedicated Xinhua article. That kind of emphasis makes sense. The Chinese government understands that the leadup to the 2022 Beijing Winter Olympics will prompt vocal and rhetorically charged calls for boycotts of varying levels of intensity and format. Regardless of whether they are acted upon, calls for boycotts and the associated publicisation of criticisms of both China’s human rights record and the 2022 Beijing Winter Olympics represent a reputational risk for the Party-state.

Notwithstanding recent indications that the systematic repression in the Xinjiang region may be easing—or at least taking different forms—the run up to the 2022 Beijing Winter Olympics is nevertheless likely to see additional global scrutiny of China’s domestic politics and human rights abuses. Given the strong positions that many Australian parliamentarians, human rights groups, and commentators have taken on China’s human rights record, the debate about boycotting the 2022 Beijing Winter Olympics is likely to be especially high-octane and damaging for the Party-state’s reputation in Australia.

Not only are often-outspoken parliamentarians like independent Senator Rex Patrick on the record calling for Australian to not participate in any way in the 2022 Beijing Winter Olympics, but members of both the Government and the Opposition seem to support a boycott of some kind. Senators Kimberley Kitching (Labor) and James Paterson (Liberal) are member so the international Inter-Parliamentary Alliance on China, which in June this year stated that the Olympics as “a shared celebration of sport, friendship and solidarity … cannot be reconciled with holding the Games in a country whose government stands credibly accused of perpetrating atrocity crimes against its own population. To do so discredits the ethos of the Olympic movement and undermines its purpose.”

Regardless of the format of any eventual boycotts, it seems clear that the leadup to the Olympics will see the airing of much more criticism of China’s human rights record from a range of voices in Australia, including parliamentarians. So, notwithstanding China’s and the International Olympic Committee’s best efforts to hose down the prospect of a politically charged human rights dimension to the Games, such an outcome appears unavoidable.

The Politburo’s philosopher

Wang Huning, Politburo Standing Committee member, writing in 1994, per David Ownby’s translation:

“The struggle for cultural sovereignty is not as intense as struggles for political or economic sovereignty, but no struggle over sovereignty can be completely divorced from politics, and under certain conditions, this struggle over cultural sovereignty will develop into an open struggle for political sovereignty. As a result, one cannot interpret conflicts over cultural sovereignty or cultural hegemony solely from a cultural perspective. Behind these struggles are reflections of struggles for political sovereignty, or of competition over national interests on the international stage, or of trends and structures of differing interests in the realm of international relations.”

Quick take:

Written when Wang was an academic and administrator at Shanghai’s Fudan University, this essay offers a fascinating tour of the views of one of China’s most powerful political leaders. As well as containing a useful survey of Wang’s assessment of post-Cold War intellectual debates, his account of the connections between state power, culture, and politics resonates with contemporary political developments in China and internationally. I don’t think it’s a stretch to find echoes of Wang’s holistic emphasis on cultural, political, and economic sovereignty in Beijing’s renewed focus on global “public opinion struggle” and the “right to speak,” which can plausibly be seen as elements of an overarching effort to safeguard China’s interests in an international contest over political and cultural discourse.

This and other resonances should come as no surprise though, considering that Wang has for decades wielded growing influence in the Party-state. As the explanatory introduction of the essay observes: Wang “has directly served the Chinese Communist Party Central Committee under three successive leaders: Jiang Zemin, Hu Jintao, and Xi Jinping. He is currently the fifth-ranked member of the Party’s seven-man Politburo Standing Committee and directs the Central Secretariat, effectively making him Xi Jinping’s deputy in managing day-to-day Party affairs.” For me, Wang’s words provide a timely reminder that many of the political and policy developments in China today are not as novel as they sometimes appear, with their intellectual lineage often stretching back years, if not decades.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 4 to 10 October 2021

Beijing not one for brooking

China’s President Xi Jinping speaking on 9 October at a meeting marking the 110th anniversary of the 1911 Revolution:

“The Taiwan question arose out of the weakness and chaos of our nation, and it will be resolved as national rejuvenation becomes a reality.”

…

“National reunification by peaceful means best serves the interests of the Chinese nation as a whole, including our compatriots in Taiwan. We will adhere to the basic policies of peaceful reunification and One Country, Two Systems, uphold the one-China principle and the 1992 Consensus, and work for the peaceful development of cross-Strait relations. Compatriots on both sides of the Taiwan Strait should stand on the right side of history and join hands to achieve China’s complete reunification and the rejuvenation of the Chinese nation.”

“The Chinese nation has an honorable tradition of opposing division and safeguarding unity. Secession aimed at ‘Taiwan independence’ is the greatest obstacle to national reunification and a grave danger to national rejuvenation. Those who forget their heritage, betray their motherland, and seek to split the country will come to no good end; they will be disdained by the people and condemned by history. The Taiwan question is purely an internal matter for China, one which brooks no external interference. No one should underestimate the resolve, the will, and the ability of the Chinese people to defend our national sovereignty and territorial integrity. The complete reunification of our country will be and can be realized.”

Quick take:

President Xi’s remarks again make explicit the connection between Beijing’s overarching goal of national rejuvenation and China’s plans for unification with Taiwan. Not only is taking Taiwan on China’s terms a sine qua non of national rejuvenation, but President Xi describes this outcome as an inevitability. None of this represents a significant evolution of Beijing’s goals in the Taiwan Strait or its policies towards Taipei. (These latest comments about Taiwan are broadly consistent with messages delivered previously in 2019 and earlier this year.) Yet these statements from President Xi once again strikingly capture the herculean task faced by Taiwan and its partners as they ramp up their efforts to deter China.

President Xi’s speech was presumably designed to appeal to both Party members and the broader Chinese population, while also delivering pointed messages to Taipei and other capitals that support Taiwan. But even if these words are partially political braggadocio, they still point to a dramatic rhetorical asymmetry. Even the language used by Taiwan’s closest and most powerful partners, such as the United States and Japan, is relatively rhetorically reserved when compared to President Xi’s definitive statements about the quasi-Hegelian historical telos of the future of cross-Strait relations.

Does this mismatch between Beijing’s apparently unswayable determination and the relatively cautious and nuanced messaging from Taipei’s international partners mean that the effort to safeguard Taiwan’s de facto independence is already lost? Certainly not, especially considering that deterrence efforts in support of Taiwan have been ongoing and successful for decades. Moreover, the prospects of successful and sustainable deterrence continue to be boosted by the growing array of countries that are utilising an expending toolkit of policies to deepen political, diplomatic, and economic ties with Taiwan.

But the strength of Beijing’s commitments does at least suggest that successfully deterring China in the coming years and decades will require deep and enduring determination. Especially since the global balance of economic and military power is likely to continue to drift in China’s favour. This is by no means to argue that efforts to deter China should be preemptively abandoned. Such an outcome would be disastrous for a range of reasons, including its likely dire consequences for the security, rights, and freedoms of some 24 million Taiwanese. Yet even short of the worst-case and ultimately unlikely scenario of the realistic threat of large-scale war in the Taiwan Strait, successfully deterring China will require a growing appetite for risk and a multigenerational commitment to acting against some of Beijing’s most fervent wishes. These are exacting demands that publics and political leaders should grapple with eyes wide open.

Australia’s evolving Taiwan policy

Minister for Foreign Affairs Marise Payne responding on 7 October to a question from David Speers about formally recognising Taiwan:

“Well we are committed to our One‑China policy and that has been a bipartisan position in Australia for a very long time. That does not mean to say however that we have not recognised our opportunity to strengthen ties with Taiwan. They’re a leading democracy. They’re a critical partner, and we continue to engage with them in practical ways that advance our interests.”

Quick take:

Although Australia’s formal “one China policy” remains unchanged, the particulars of the Australian approach to Taiwan are rapidly evolving. Replicating the language of “critical partner” from last month’s ASUMIN joint statement, Minister Payne again made plain that Australia sees strengthening ties with Taiwan as a priority. Unsurprisingly, Minister Payne eschewed the kind of rhetorically charged language used by former Prime Minister Tony Abbott when he addressed the Yushan Forum in Taiwan last week. Minister Payne, for example, made no reference to supposedly 1930s-style territorial expansionism or “a cult of the new red emperor.”

But despite the large linguistic differences between former Prime Minister Abbott’s and Minister Payne’s remarks, at least one of their substantive rationales for engaging more deeply with Taiwan is broadly similar. For Canberra, as for former Prime Minister Abbott, there is an underlying political/values-based rationale for further developing ties with Taipei. Given China’s ambitions to take Taiwan and the fundamentally different political systems on each side of the Taiwan Strait, Canberra seems to be edging towards the conclusion that Taipei is at the very front line of the global struggle to safeguard liberal democratic values and institutions against an ascendant authoritarianism.

Although former Prime Minister Abbott devoted less attention to practical considerations, the clear implication of Minister Payne’s remarks is that Australia is equally focussed on a range of pragmatic reasons for broadening and deepening engagement with Taiwan. As well as the benefits of expanding Taiwanese participation in multilateral fora, which the Australian foreign and defence ministers reiterated with their French counterparts in August this year, Canberra also clearly judges that there’s a strong economic case for stepping up bilateral engagement.

Tsai on the stakes in Taiwan

Taiwan’s President Tsai Ing-wen writing in Foreign Affairs:

“[I]f Taiwan were to fall, the consequences would be catastrophic for regional peace and the democratic alliance system. It would signal that in today’s global contest of values, authoritarianism has the upper hand over democracy.”

…

“[A] failure to defend Taiwan would not only be catastrophic for the Taiwanese; it would overturn a security architecture that has allowed for peace and extraordinary economic development in the region for seven decades.”

Quick take:

President Tsai’s language is much more florid and forceful than Minister for Foreign Affairs Payne’s short remarks. Yet it is nevertheless striking that both characterise the case for supporting and engaging with Taiwan partly in terms of fundamental political principles. Quite aside from any of the practical reasons for bolstering bilateral political, diplomatic, and economic connections, Canberra seems to increasingly share Taipei’s instinct to frame the case for deepening ties in terms of democratic values and institutions.

Ongoing Australian debates about the advantages and drawbacks of values-based foreign policy notwithstanding, it appears that this ship has already sailed on Taiwan policy. As well as a “critical partner” for both the United States and Australia, the 2021 AUSMIN joint statement labelled Taiwan a “leading democracy.” Among a number of other shifts in language, the explicit reference to Taiwanese democracy was absent from the 2020 AUSMIN joint statement. Like Taiwan’s presidential office, the Department of State and the Department of Foreign Affairs and Trade appear more willing and able to explicitly bring the case for supporting and engaging with Taiwan back to basic liberal democratic principles.

Despite the common emphasis on political values, President Tsai went much further in detailing the apparent consequences of the Mainland seizing Taiwan. She explicitly linked this scenario to nothing less than a collapse of the Indo-Pacific’s security architecture and a catastrophic outcome for peace and security in the region. Are President Tsai’s dire predictions accurate? It’s impossible to say in the abstract. The precise consequences of the Mainland taking Taiwan would substantially depend on how Taiwan was seized and the international political context in which it occurred, among a range of other relevant factors.

On one level though, the plausibility of President Tsai’s predictions is moot. As a piece of diplomatic messaging, these presidential prognostications are extremely apropos. The prevailing political mood towards China’s Party-state in many capitals is one of rising suspicion and fear. Beijing is seen as a source of numerous security threats and dangerously destabilising assertiveness. Meanwhile, anxieties continue to grow about the durability of the power and influence of the globe’s leading liberal democracies. In that context, messaging that both emphasises the threat that China’s Party-state poses and the risk of a dramatic decline in the power and influence of the liberal democratic world will find a willing audience.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 27 September to 3 October 2021

Contra containment

The Prime Minister Scott Morrison speaking at an online Indian media briefing on 30 September:

“[W]e’re not seeking in any way to constrain China’s growth. Never have. We’re not in the containment club when it comes to China. We have greatly benefited from their economic development, and and [sic] they have been very successful indeed, as India has, in taking millions, hundreds of millions of people out of poverty. It’s quite a remarkable economic success. This is good. We welcome that. We think that’s great.”

Quick take:

These comments in response to a question about the Quad and China are consistent with longstanding Australian government positions. Despite the steep southward trend in bilateral relations, Australia continues to welcome China’s economic development and distance itself from containment policies. The Prime Minister’s remarks also include familiar praise of China’s monumental poverty reduction achievements, messaging which remains a mainstay of leader- and ministerial-level statements about China.

But despite these repeated and longstanding Australian assurances, China remains unpersuaded. On the same day as the Prime Minister was sounding positive notes about China, Ministry of Foreign Affairs (MFA) spokesperson, Hua Chunying, stressed: “AUKUS, like Quad [sic], is subservient to and serves the Indo-Pacific strategy with US dominance.” These kinds of criticisms of both AUKUS and the Quad as elements of the United States’ supposedly hegemonic designs mean Canberra is unlikely to be able to shift perceptions in Beijing, regardless of how often it emphasises and reemphasises that it welcomes China’s economic development and doesn’t support containment.

This doesn’t make such efforts at reassurance futile diplomacy. The case for Canberra seeking to counteract accusations of containment is still strong. Failing to offer any such reassurances would likely further compound China’s concerns about Australia’s goals and strategies. But considering that the Quad and AUKUS are among Australia’s most significant diplomatic and military initiatives of recent years and are only likely to grow in importance for Canberra in the coming years and decades, China’s suspicions of Australia are only likely to intensify.

Of course, this doesn’t mean that China’s suspicions are well-founded. The ongoing debates among US and Australian analysts about the nature of US strategic competition with China and Australia’s role in it suggest that it’s still an open question as to whether the US is seeking to contain China and what role Australia might play in such a US effort. But regardless of the accuracy of China’s analytical assessments about Australian and US policy, it seems increasingly clear that Canberra’s rhetorical reassurances face a daunting task in seeking to shift Beijing’s view of Australia.

Constraining China

US Secretary of Commerce Gina Raimondo speaking to CNBC:

“If we really want to slow down China’s rate of innovation, we need to work with Europe.”

Quick take:

Despite previous explicit US disavowals of containment, these kinds of statements will push the needle in Beijing further towards the conclusion that the United States is bent on obstructing China’s rise. Given the importance that the Party-state places on the economic and technological dimensions of China’s rise, moves to undermine the country’s innovation efforts are especially poorly received. Unsurprisingly, Beijing fired back with rhetorical flair. Per MFA spokesperson Hua’s comments: “The remarks of this US official again exposes the US true intention to contain and block China’s development by all means. This is quintessential autocracy and bullying.”

Consistent with repeated authoritative Australian government statements (see above and elsewhere), Canberra welcomes China’s economic development, supports its ongoing growth, and seeks mutually beneficial economic cooperation with China where possible. By contrast, the United States has embraced “strategic competition” with China as one of the organising principles of its foreign policy and senior US officials and lawmakers regularly make statements that could plausibly be interpretated as support for containment. This increasingly adversarial US policy towards China comes as Washington under the Biden administration seeks to align its allies and partners more closely with US goals and strategies and marshal their support in its effort to maintain US “global leadership.”

Regardless of the rights and wrongs of US and Chinese claims and counterclaims, Australia finds itself in a tightening bind. The combination of Beijing’s deep-seated distrust of Washington and the newly networked (i.e., allies- and partners-focussed) US policy of strategic competition with China makes it increasingly hard for Canberra to pursue its dual-track effort of supporting US leadership while disavowing containment of China. Just as Canberra welcomes deeper cooperation with Washington and expanding US diplomatic, economic, and military engagement in the Indo-Pacific, Beijing views precisely these initiatives as central elements of a US-led effort to contain China’s legitimate rise.

This is not to say that Canberra should distance itself from Washington for the sake of reassuring Beijing. (The substantive normative question of what Australia ought to do is much too large and complex to cover here.) What at least seems clear though is that China is likely to increasingly view Australia’s actions through the prism of what it believes is a concerted US-led effort to block its rise and undermine its interests.

Chinese diplomats and Party-state officials are presumably aware of Canberra’s efforts to distinguish its goals and strategies from Washington’s policy of strategic competition. But if even some Australian commentators and analysts judged that AUKUS could constrain Canberra’s ability to disentangle itself from Washington’s grand strategy, it’s easy to imagine policymakers and analysts in Beijing concluding that Australia will be irresistiblly pulled along by the momentum of US strategic competition.

Trade trends

The combined monthly value of Australia’s nine exports targeted by China’s trade restrictions (to China, the rest of the world, and total, April 2020 to July 2021):

Quick take:

The latest tranche of export data from July paints a relatively rosy picture of Australia’s exports, despite China’s sustained and severe trade restrictions. The data above covers all nine exports impacted by China’s confirmed trade restrictions: barley, beef, cotton, timber products, coal, copper ores and concentrates, sugar products, crustaceans, and wine. The value of especially lucrative mineral and energy exports to China, such as coal and copper ores and concentrates, was still flatlining at zero in July. Meanwhile, key agricultural exports were still frozen out of the Chinese market, with the value of barley exports to China still zero and alcoholic beverage exports (previously mostly wine) still a small fraction of their pre-trade restrictions levels.

But despite the downcast state of these exports to China, their value to the rest of the world tells a much more upbeat story. The total value of the nine targeted exports to the rest of the world continued to rise rapidly rise in July. Although the value of these nine targeted exports to China in July 2021 was approximately 1% of its value in April 2020, the value of these same nine exports to the rest of the world in July 2021 was approximately 143% of its value in April 2020. Meanwhile, the total value of these nine exports to China and the rest of the world in July 2021 was approximately 143% of its value in April 2020.

Presumably the rise in the value of the nine targeted exports to the rest of the world has been boosted by the dramatic surge in coal prices. Although other commodity price fluctuations may have played a role as well, the impact of coal prices is likely to be especially significant considering that coal is by far the largest Australian export targeted by China’s trade restrictions. But even excluding coal from the mix, the value of the other eight Australian exports to the rest of the world in July 2021 was approximately 171% of its value in April 2020. So, despite China’s ongoing trade restrictions, the latest export data seems to further confirm that Australian exporters excluded from the Chinese market have been able to redirect to alternative markets relatively effectively.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 20 to 26 September 2021

Australia’s economic statecraft

Minister for Trade, Tourism and Investment, Dan Tehan, addressing the National Press Club on 22 September:

“[Australia’s] economic statecraft is principled; proactive and, where necessary, patient.”

…

“We … act to support and promote the rules-based trading system, whether it be bilaterally, regionally or multilaterally.”

…

“And while we are being patient [with China], we are also being proactive in supporting Australian exporters to diversify their international customers by expanding our extensive network of bilateral and regional free trade agreements, resolving non-tariff barriers and supporting new opportunities through our domestic programs, such as the Agri-Business Expansion Initiative.”

Quick take:

Minister Tehan’s speech is a significant and strong statement of Australia’s strategy and goals. The speech makes plain that Canberra is under no illusion about the geoeconomic realities of a world in which state’s increasingly use economic policies to pursue national strategic objectives. Yet the Minister’s clear message is that Australia will not resile its commitments to trade liberalisation and the rules-based multilateral trading system. Equally, despite the duration and intensity of China’s use of economic coercion against Australia, Canberra is still open to dialogue and is waiting for Beijing to come to the table.

In response to China’s economic coercion, many proposals have been put forward for Australia and its allies and partners to pursue various counter-coercion measures. These measures are aimed at economically pressuring China in a bid to stop China economically pressuring Australia. Although not addressing these kinds of policy proposals explicitly, Minister Tehan’s speech suggest that Australia is highly unlikely to incorporate these kinds of policies into its strategy. Such counter-coercion economic pressure campaigns would sit extremely uneasily with Canberra’s strong and enduring support for the rules-based global trading regime.

Regardless of Minister Tehan’s relatively conciliatory emphasis on patience towards China, Beijing should not take much comfort from the speech. Australia’s strategy and goals as laid out by the Minister imply that Canberra will get on with the complex and challenging tasks of trade diversification and seeking remedy for economic coercion via World Trade Organization processes. The scope and severity of China’s trade restrictions notwithstanding, there are no signs that Canberra will offer up the kinds of political, policy, and diplomatic concessions that Beijing has sought as a precondition for rolling back economic coercion.

Moreover, the speech strongly implies that China’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be nigh on impossible without thawing somewhat the high-level diplomatic deep freeze Beijing has inflicted on Canberra. Minister Tehan pointedly observed: “One of the most important things about negotiating the accession process of any country into the CPTPP is that you have to be able to sit down at ministerial level, look your economic partner in the eye, and talk about that accession process.” This unambiguously makes a return to ministerial dialogue with Australia a minimum precondition for China’s CPTPP accession. Of course, debate still swirls about the sincerity and broader viability of China’s bid for CPTPP accession. But if it is in fact genuine/realistic, it may be the first step towards the resumption of long-frozen ministerial contact between Beijing and Canberra.

China as a Quad partner?

The Prime Minister Scott Morrison speaking at a doorstop in Washington on 24 September:

“The Quad is a partner, whether it be for China or it be any other country that is in the Indo-Pacific region.”

Quick take:

Seeing China referred to as a possible Quad partner on the same day as the first in-person leader-level Quad meeting makes for unexpected optics. On one level though, this diplomatic olive branch to Beijing is unsurprising. Many—including China’s own Ministry of Foreign Affairs, it would seem—view the Quad’s primary strategic purpose as targeting and isolating China and counterbalancing its power. Regardless of whether these assessments are accurate, they provide a strong rationale for Quad leaders such the Prime Minister to at least seek to allay fears that the Quad constitutes a form of anti-China coalition.

The prospects of a Quad-China partnership are somewhere between non-existent and “doomed to fail.” But raising such a possibility might still be a useful tactic as part of a broader strategy of seeking to counteract concerns about the Quad’s intentions. So, the messaging doesn’t mean that anything has changed in terms of the Quad’s strategies and goals or the disquiet that it elicits in Beijing. But with this continuity also comes an enduring rationale for the Prime Minister’s warmer and more conciliatory Quad messaging to China.

Singing from the same song sheet

The New Zealand and Australian Trade Ministers’ Joint Statement on 20 September:

“Ministers reiterated their concern over the use of coercive economic practices, and noted the threat these practices pose to the integrity of the multilateral rules-based trading system.”

Quick take:

By my count, this is the second bilateral Australia-New Zealand joint statement raising concerns about economic coercion. Along with Tokyo and Washington, this makes Wellington one of Canberra’s most willing partners in its efforts to internationalise concerns about economic coercion. Not only is New Zealand willing and able to step up and join Australia in opposing the use of trade to apply political pressure, but it’s also amenable to explicitly highlighting the associated dangers for the rules-based global trading system in general. So, regardless of their different views of nuclear-power submarines and aspects of China policy, Canberra and Wellington are still extremely closely aligned on key strategic questions such as the importance of the global rules governing trade.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 13 to 19 September 2021

For better or worse, the all-consuming gravitational pull of AUKUS gives this week’s newsletter a singular focus. Let me freely acknowledge up front that the scale and significance of the AUKUS developments mean that the following analysis won’t cover the full gamut of issues.

The tightening ties that bind

A senior US official speaking about AUKUS and quoted in The Financial Times on 16 September:

“This is a fundamental decision that binds decisively Australia and the United States and Great Britain for generations.”

Quick take:

In addition to the expanding presence of US personnel and platforms in Australia announced at AUSMIN, AUKUS entails deepening Australian dependence on US technology and knowhow and paves the way for even greater interoperability between US and Australian forces. Of course, these kinds of developments are not entirely unique given the Australian purchase of F-35s, the US Marines’ presence in Darwin, and regular high-end US-Australian military exercises, among a wide range of other forms of military and capability cooperation. But the sheer scale of the expansion of the defence technology and procurement relationship—from nuclear-powered submarines to hypersonics—combined with the ramping up of US force posture in Australia represents a dramatic tightening of the strategic embrace between Canberra and Washington.

Canberra won’t necessarily be forced to accept holus-bolus Washington’s foreign and defence policy goals and strategies as a result. But Australia will likely become an increasingly important part of US grand strategy in the Indo-Pacific. The United States will probably rely more heavily on Australian military bases for sustainment and power projection into the region and will seek to cooperate more closely with Australian forces to deliver diplomatic signals and deterrent effects in the South and East China seas and in the Taiwan Strait. This deepening Australian enmeshment in US grand strategy is not bad per se, but it does come with serious political, diplomatic, and military risks for Australia.

The United States has embraced a bipartisan policy of forward-leaning strategic competition with China spanning the diplomatic, military, political, technological, and economic domains. Although Australia’s overarching goals align with those of the United States on a wide range of China policy questions, there are key areas of divergence and even disagreement with Washington. First and foremost, on trade and economic policy in the World Trade Organization (WTO) and beyond, but also regarding the use of sanctions diplomacy and the appropriate response to China’s maritime and territorial claims.

Moreover, and perhaps more importantly, there’s the very real possibility that future US administrations will embrace China policies that are further removed from Australia’s preferred approach. (How viable are Mike Pompeo’s or Marco Rubio’s 2024 presidential paths?) Meanwhile, there’s the ongoing risk of political dysfunction at the highest levels of US power. Regardless of the ground truth on the final months of the Trump presidency, Bob Woodward and Robert Costa’s account of political chaos and diplomatic backchannels makes plain the potentially grave risks of being so closely militarily bound to the United States.

These considerations do not necessarily mean that AUKUS and the deepening United States-Australia bilateral relationship will be net negatives for Australian interests. One could plausibly argue that the military capability gains alone are worth the diplomatic blowback from Paris and the attendant risks of being implicated in the potentially erratic and aggressive US exercise of military power. But for the purposes of establishing realistic expectations in Washington, allaying fears in the region, and reassuring the Australian public, it might be beneficial for the Australian government to follow AUKUS and AUSMIN up with a reiteration of Australia’s strategic autonomy. This wouldn’t need to be a departure from past practice given Foreign Minister Marise Payne’s explicit differentiation of Australian positions from those of the US at last year’s AUSMIN.

Taiwan’s take

Taiwan’s Vice President, Lai Ching-te, welcoming AUKUS via Twitter:

“Taiwan welcomes #AUKUS as a positive development for democracy, peace, and prosperity in the region.”

Quick take:

The AUKUS announcements coincided with noticeably stronger AUSMIN language on Taiwan, which this year labelled Taiwan a “critical partner for both [the United States and Australia].” This represents a significant upgrade from 2020’s milder language of a shared “intent to maintain strong unofficial ties with Taiwan.” But shifts of diplomatic language in the AUSMIN Joint Statement aside, members of the Taiwanese government believe AUKUS also represents a significant strategic gain for Taiwan.

The full range of reasons are open to debate, but it seems likely that they span a wide spectrum of diplomatic and strategic considerations:

1. The added deterrent effect of Australian naval platforms that are capable of staying on station in maritime East Asia for longer, including in Taiwan’s maritime approaches;
2. The prospect of a closer alignment between US and Australian foreign policy goals and strategies in East Asia as strategic competition with China emerges as the organising principle of US foreign policy;
3. The expected interoperability gains for US and Australian military platforms, especially in the realm of high-end naval warfighting and maritime, air, and land strike;
4. The expanded US military access and presence in Australia, which will incrementally increase the deterrent effect against China;
5. The signal that AUKUS sends to Beijing about added Allied resolve in East Asia and the Indo-Pacific more broadly; and
6. The confirmation that AUKUS provides of enduring US determination to work more closely with (some!) allies.

This is probably not a complete list of Taiwan’s reasons for supporting AUKUS. Nor are any of these reasons beyond debate. It remains unclear whether these developments would be a net positive for Taiwan given AUKUS’ range of so-far unknown second-, third-, and fourth-order effects. To take just one example, Beijing’s practical response to AUKUS remains unclear beyond an unsurprising diplomatic broadside. The full impact of AUKUS on the People’s Liberation Army’s (PLA) force modernisation and strategy remains to be seen and will presumably only play out over the course of years and even decades. (This, of course, is not to say that PLA acquisitions would have stalled in the absence of AUKUS. The point is simply that AUKUS will factor into Beijing’s policy planning.)

Regardless of the known unknowns (and unknown unknowns) of AUKUS’ impact on Taiwan’s security, the above list of Taipei’s possible reasons for supporting the trilateral security partnership highlights the enormity of this strategic leap for Australia. If this account of Taiwan’s reasons for supporting AUKUS is broadly correct and Taipei is on solid ground in making assessments 1-6 (granted, two big ifs!), then the agreement puts the Australian Defence Force (ADF) much more firmly in the business of delivering a high-end military deterrent effect to the PLA over any possible Taiwan Strait contingency.

Is that a welcome development for Australia and the Indo-Pacific? Any attempt I could muster to answer that question in a few hundred words would be woefully inadequate. That evasive manoeuvre notwithstanding, I’d at least argue that moves to position the ADF to deliver a military deterrent effect in Taiwan’s maritime approaches need not come at the expense of the many cheaper, easier, and immediately implementable strategic deterrent measures available to Canberra.

The range of concrete policy options that could assist Taiwan now include establishing a de facto defence attaché office in Taipei or incorporating Taiwanese Armed Forces personnel in multilateral security training and exercises. Of course, these deterrent measures aren’t comparable to long-range nuclear-powered submarines or enhanced maritime, air, and land strike capabilities. But these alternative deterrent options raise (to my mind at least) the critically important question of the nature of the deterrent role that Australia should seek to play in any possible Taiwan Strait contingency. Difficult though the debate may be, it’s not one that the Australian people can easily avoid.

The French connection

European Affairs Minister Clement Beaune speaking about ongoing European Union-Australia free trade agreement negotiations in the wake of the AUKUS announcement:

“I don’t see how we can trust our Australian partners.”

Quick take:

Beyond the heat of Paris’ immediate response to AUKUS, the cancelling of the Future Submarine Program (FSP) is likely to pose long-term challenges for Australia’s broader Indo-Pacific strategy. An element of the Australian government’s project of building a “strategic balance of power that favours freedom” in the region has been fostering a joined-up effort to counterbalance China’s growing military power and economic and political influence across the Indo-Pacific. And France was one of the key regional powers and most significant European state that Australia was cooperating with in this effort.

As a resident power in the Indo-Pacific with deep and abiding concerns about China’s statecraft, the AUKUS decision won’t cause France to disengage from the region or take a dramatically rosier view of the Party-state’s external polices. But France’s displeasure appears likely to adversely impact Canberra’s effort to cooperate with Paris to pursue shared regional goals. Last month’s inaugural Australia-France 2+2 Ministerial Consultations canvassed an ambitious range of areas of military, political, economic, and scientific cooperation in the region. The intensity of Paris’ frustration with Canberra would seem to suggest that a tangible and sustained downgrade of at least some of this cooperation is on the cards.

To be sure, it remains to be seen whether the negative impact on the bilateral relationship will last. Short-term domestic considerations in France, including next year’s presidential election and the immediate economic fallout of the FSP’s collapse, are probably partly fuelling Paris’ fury. But regardless of the impact on the Australia-France relationship, the early signs are that the AUKUS partnership has made the task of building a durable balance of power in the Indo-Pacific more diplomatically difficult. (I specify diplomatically difficult given that one could plausibly make the case that achieving a balance of power in a military sense will be made easier given the eventual Australian acquisition of nuclear-powered submarines.)

The fallout from AUKUS in France is especially noteworthy from the point of view of Australia’s efforts to respond to China’s economic coercion. As well as trade diversification measures and WTO processes, a key element of Canberra’s response to Beijing’s economic coercion has been internationalising its concerns. Just three weeks ago France joined Australia to become only the fifth country globally to issue a bilateral statement raising concerns about economic coercion. Future support of this kind is now under a cloud of uncertainty given the stormy atmospherics of the Australia-France relationship.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 6 to 12 September 2021

India takes aim

Per the 11 September Joint Statement from the inaugural India-Australia 2+2 Ministerial Dialogue:

“Ministers … underscored the importance of promoting economic openness and opposing coercive economic practices which undermine the rules based [sic] trading system.”

Quick take:

India joins a quickly lengthening list of countries that have explicitly called out economic coercion in bilateral joint statements with Australia. The group now includes a broad range of Australia’s Indo-Pacific allies and partners: Japan, New Zealand, the United States, Singapore, and France. Although not surprising given Jakarta’s hedged approached to touchstone China policy issues, it is conspicuous that the Australia-Indonesia joint statement issued a couple of days earlier did not include a reference to “economic coercion.” The closest in that statement was: “Ministers noted the importance of open markets and predictable and non‑discriminatory trade and investment in promoting national and regional economic recovery efforts.”

The Australia-India joint statement is yet another example of Australia successfully internationalising its concerns about China’s economic coercion. To be sure, there’s seemingly little chance of Beijing’s coercive practices being deterred by the associated reputational costs. Even when much more pressure is brought to bear on China in the form of sanctions and other punitive measures, Beijing’s typical response is retaliatory countermeasures rather than retreat. But regardless, these joint bilateral statements still stand as testament to Australia’s ability to marshal international support in the face of China’s coercive economic statecraft.

Moreover, and perhaps more importantly, Canberra is likely to be able to put even more diplomatic pressure on Beijing in the coming weeks. For example, the AUSMIN joint statement later this week could deliver similarly strong, if not stronger, language on economic coercion. But there’s an even more strategically significant prize in store. With India now joining Australia in explicitly opposing economic coercion, all four Quad countries are on the record in bilateral statements with Australia on this issue. This may pave the way for a Quad leaders’ joint statement next week that explicitly addresses economic coercion. Although previous public Quad statements (e.g., here and here) have mentioned coercion, they haven’t addressed economic coercion specifically.

“800 million lifted out of poverty”

The Treasurer Josh Frydenberg speaking on 6 September:

“[T]he re‑emergence of China and its rapidly growing economic weight … has helped to lift more than 800 million people out of poverty and been a major contributor to global economic growth and prosperity.”

The Minister for Trade, Tourism and Investment Dan Tehan speaking on the same day:

“[O]ver 800 million people have been lifted out of poverty as a result of them [the Chinese government] opening up their economy, of joining the World Trade Organisation, of adhering to world rules when it comes to trade.”

Quick take:

The appeal of striking statistics could explain two Australian ministers speaking on the same day using the same number. But the coincidence made me wonder whether something more strategic was afoot. Is Canberra seeking to throw Beijing a diplomatic bone by more regularly using a talking point designed to appeal to the Party-state? It’s difficult to know. But highlighting China’s record of poverty reduction would be near the top of my list of diplomatic manoeuvres if my goal was to thread the needle of simultaneously maintaining a tough line on substantive China policies while also offering a diplomatic olive branch to Beijing. Especially since poverty reduction is a key policy and political priority for President Xi Jinping.

The way in which the Australian ministers framed this statistic also made me wonder whether the message was carefully finessed to appeal to Beijing. The speeches noted that Chinese government actions and China’s economic rise helped lift Chinese citizens out of poverty. As well as giving a substantial portion of the credit for poverty reduction to policymakers in Beijing, this formulation downplays the agency and efforts of hundreds of millions of Chinese citizens who to a large extent “hauled themselves out” of poverty. This formulation with the Party-state as a driving force of China’s economic resurgence is especially noteworthy given the Coalition’s political roots in classical liberalism, which (to put it crudely) takes the individual as its primary unit of both analysis and moral worth. We’re admittedly now deep down in the speculative weeds. So, there’s a very strong possibility that I’m massively overanalysing the significance of this joint ministerial messaging.

But even if citing the 800 million figure was in fact a diplomatic overture, it seems that Beijing wasn’t picking up what Canberra was putting down. Wang Wenbin, the typically more measured (at least compared to Zhao Lijian or Hua Chunying) Ministry of Foreign Affairs (MFA) spokesperson, fired back a day later: “The current difficulties in China-Australia relations are entirely of Australia’s own making. It is imperative that Australia face up to the crux of the setbacks in bilateral relations, abandon the Cold War mentality and ideological bias, respect basic facts, take an objective and rational look at China and its development, earnestly follow the principles of mutual respect and equality when handling bilateral relations.” So, diplomatic stratagem or not, the 800 million figure will need to do some heavy lifting to publicly shift the dial in Beijing.

No room to manoeuvre

Minister for Defence Peter Dutton addressing the American Chamber of Commerce in Australia on 8 September:

“Australia wants a positive and constructive relationship with China, but the onus is now on the CCP [Chinese Communist Party] to demonstrate – through words and deeds – that China will contribute to the Indo-Pacific’s stability, not to continue to undermine it.”

Quick take:

This adds yet more weight to the prognosis that Australia-China relations have reached an impasse. Beijing has long insisted that Canberra needs to change its ways before relations can get back on track. One of the implications of Minister Dutton’s speech seems to be that although Canberra wants a healthy bilateral relationship with Beijing, China must now prove that it’s capable of behaving better. How this call for China to change squares with Minister Tehan’s patient and longstanding efforts to foster “constructive engagement with the Chinese Government” remains to be seen. Regardless, MFA spokesperson Zhao retorted a couple of days after Minister Dutton’s speech: “The responsibility for the current difficulties in China-Australia relations rests solely with the Australian side.” Clearly, neither Beijing nor Canberra has an appetite for compromise.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 30 August to 5 September 2021

Internationalising coercion concerns

Per the joint statement from the inaugural Australia-France 2+2 Ministerial Consultations on 30 August:

“Ministers committed to promoting economic openness and opposing coercive economic practices, which undermine rules-based international trade.”

Quick take:

This is the latest addition to a growing list (more details below) of joint statements and multilateral communiques that have addressed economic coercion and the global rules-based trading system. Although China is typically not mentioned by name, the context of the messaging leaves little room for doubt as to the guilty party. China’s internationally notorious and explicitly coercive economic pressure campaign against Australia means that most audiences would fully understand that Beijing’s trade restrictions are at issue.

France has longs been opposed—in both word and deed—to the US trade embargo against Cuba. With Australia having voted in the United Nations General Assembly in favour of a resolution urging the United States to end its economic blockade, it’s tempting to speculate that this joint statement might also have a subtle message for Washington. But given that joint statements and multilateral communiques addressing economic coercion have only become regular features of Australia’s diplomacy since circa late 2020, it’d be a massive leap to interpret this joint statement as a criticism of the United States’ decades-old Cuba embargo.

The lengthening list

With the addition of France to the list of countries expressing coordinated concerns about economic coercion, here’s my rough working record of who’s so far raised their voice in this way (apologies in advance for the dodginess of this graphic):

Quick take:

These are some of the recent public cases of bilateral and multilateral statements addressing (at least implicitly) China’s economic coercion against Australia. This record paints a picture of an increasingly active Australian effort to internationalise and multilateralise its concerns about China’s economic coercion. As Trade Minister Dan Tehan put the rationale for this strategy: “[W]e very much need to take a collective approach in calling [economic coercion] out – make sure that there is reputational issues at stake when countries use economic coercion.” I assume there are other bilateral and multilateral statements addressing China’s economic coercion against Australia that I’ve missed. (Although not explicitly connected to Australia, recent US-French statements might fit this bill.) Feel free to send through details of any that aren’t featured above. I’ll aim to expand the above and make it a working tally of such bilateral and multilateral statements.

This table excludes ambiguously framed references to coercion that don’t address economic coercion explicitly. Examples in that category include the August 2021 Quad Senior Officials Meeting’s reference to “coercive actions” and the regularly reiterated Australian and Japanese concerns about “coercive and unilateral actions”, which date back to at least the early 2010s. Although references to coercion broadly conceived presumably encompass economic coercion, specific references to economic coercion are a novel feature (so far as I can see) of the bilateral and multilateral messaging that emerges after the second half of 2020. Perhaps unsurprisingly, this shift to an explicit calling out of economic coercion correlates with the rapid expansion of China’s trade restrictions against Australia in late 2020.

The above table also excludes Australia’s independent interventions in bilateral and multilateral fora on the issue of economic coercion. Examples of this include the Prime Minister’s references to “economic coercion” in his July 2021 APEC Virtual Informal Leaders’ Meeting and his virtual address to the Australian American Leadership Dialogue in August 2021. These kinds of interventions are now a regular part of Australia’s diplomatic response to China’s economic coercion. But they are qualitatively distinct from bilateral and multilateral statements on the issue—not just because of how they are likely to be perceived in Beijing, but also because of the different weight they carry globally and what the bilateral and multilateral statements reveal about Australia’s ability to rally international support.

Plus ça change

“The most important current issue in the Asia-Pacific region is clearly the emergence of China as a dominant economic and military power. Recent regional expressions of concern about this development have centred not so much on China’s impressive economic and military capabilities, which have [long] been apparent … but on activities which appear to signal a change in its intentions. … [U]ncertainty about the terms of China’s inevitable transition to great power status and its willingness to seek regional accommodation … has led to profound questioning and healthy debate among politicians, academia and the public service as to how to read these signals and how best to manage the Australia-China relationship in the interests of both countries.”

Quick take:

Although published twenty-five years ago by the prolific scholar Ann Kent, this analysis could have been written in 2021. Some linguistic features might hint at its age (Asia-Pacific versus Indo-Pacific). But a central set of questions remains unchanged: The nature of Beijing’s intentions, the extent to which they are changing/remain unchanged, and the policy arenas in which they might be changing. As with the 1990s, the material measures of China’s power are today plain for all to see. But equally as with past decades, the debate over Beijing’s goals remains riven with deep analytical divides that have huge implications for many of the weightiest foreign and defence policy questions confronting Canberra today.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 23 to 29 August 2021

A rose by any other name

Australia’s Chief of Navy, Vice Admiral Michael Noonan, on the Royal Australian Navy’s participation in Exercise MALABAR 2021:

“Australia is committed to working closely with our partners to address shared regional challenges, including in the maritime domain.”

Quick take:

All four participating countries framed Exercise MALABAR differently. Japan emphasised the Free and Open Indo-Pacific and the United States highlighted the “rules-based maritime order in the Indo-Pacific” and the goal of deterring “malign influence.” Meanwhile, India’s official statement used more pared-back language. But regardless of these rhetorical differences, the exercise is a significant development in terms of the signal it sends about the potential evolution of the Quad.

Exercise MALABAR is not a Quad naval exercise and began life in 1992 as a US-Indian exercise. Moreover, as the Indian government’s press release was careful to point out, the Australian navy is not a permanent member of Exercise MALABAR, unlike its US and Japanese counterparts. But this is the second consecutive year in which Australia has participated, making it the second consecutive year in which all four Quad navies have been involved. In the context of deepening Quad cooperation on a range of fronts, Exercise MALABAR provides an indication of how the Quad might develop into a grouping with much more strategic and military weight.

Beijing criticised the Quad earlier this year as an example of “closed and exclusive ‘cliques’” that target and undermine the interests of third parties. If the Quad were restricted to coordinated diplomatic messaging and international economic and public health cooperation, this threat might remain relatively modest from China’s perspective. But with Exercise MALABAR showing that Quad countries are developing increasingly sophisticated interoperability, including anti-submarine warfare, Beijing probably sees the cooperation that this naval exercise represents as a growing and potentially serious long-term threat to China’s strategic and military ambitions in the Western Pacific.

China’s official public reaction to last year’s iteration of Exercise MALABAR was relatively muted, and the 2021 version hasn’t so far prompted a strong response, beyond the typical rhetorical salvos from the nationalistic tabloid press. But regardless of the rhetorical back and forth, the strategic fundamentals speak to the significance of an expanded Exercise MALABAR. The maritime domain will be one of the Indo-Pacific’s most critical, and China is in the process of building a navy capable of achieving overmatch against any regional navy, including eventually even the US Navy. Any effort to create a viable military counterbalance to China’s power in the Indo-Pacific of the future will therefore depend on cooperation and interoperability among the most capable regional navies, which is precisely what Exercise MALABAR is designed to deliver.

Calling out coercion

Joint Communique on 27 August from the 12th Meeting of the Singapore-Australia Joint Ministerial Committee:

“Ministers … underlined the importance of an open, inclusive, rules-based and resilient Indo-Pacific region, which supports and promotes free trade and open markets and respects the rights of countries to lead their national existence free from external interference, subversion and coercion.”

Quick take:

As a general statement of the principles of non-coercive state-to-state relations, this communique seems unremarkable. But in the context of China’s sustained and severe campaign of economic coercion against Australia, this is a noteworthy joint criticism of Beijing’s behaviour, albeit a relatively oblique one. Coming in the form of a joint communique between six Australian and Singaporean ministers—foreign affairs, defence, and trade—gives the message added clout, especially considering Beijing’s past admiration for the South-East Asian city-state and Singapore’s scepticism of the US policy of open-ended and adversarial strategic competition with China.

This joint communique also points to an emerging feature of Australian foreign policy. As well as directly calling out Beijing’s economic coercion unilaterally, Canberra is using bilateral and multilateral diplomacy to regularly raise its concerns with China’s statecraft and emphasise the principles of non-coercive state-to-state relations. Whether in joint leader- and ministerial-level statements with allies and partners or via interventions in multilateral fora and joint communiques, Canberra is using its bilateral and multilateral diplomacy to take issue with Beijing’s behaviour. Of course, many of these concerns about coercion don’t mention China by name, but international and domestic audiences are never really left with any confusion about which country is doing the coercing.

Will this diplomatic messaging change China’s behaviour? Almost certainly not. But these diplomatic responses to economic coercion are not intended to do anything quite so ambitious. Instead, Canberra’s goals are probably much more modest: Draw international attention to Beijing’s coercive conduct and strengthen the global legitimacy of the principles of the rules-based international order, including those embodied in the multilateral trading system. From Australia’s perspective, efforts to reinforce these principles are especially urgent when both the United States and China have mixed recent records when it comes to upholding the principles of the rules-based international order.

Stay calm and diversity

Recent market intelligence offered to Australian exporters as part of the government’s Agribusiness Expansion Initiative:

• Tariff reductions assisting Australian agricultural exports to Thailand
• Extended shelf-life for chilled, vacuum-packed beef and sheep-meat exports to Saudi Arabia
• Sri Lanka’s rule changes mean fresh opportunities for grain, pulse and oilseed exporters
• Seafood exports to Taiwan to be streamlined under new systems recognition arrangements
• Argentina introduces quota limits on beef exports ‘Eco-score’ labelling hits the shelves in Europe

Quick take:

Perhaps unsurprisingly, all these market insights share a couple of features. First, they all concern either specific exports or agricultural sectors that have been targeted by China’s trade restrictions. Second, they equally all concern either alternative markets to China or factors that may impact Australia’s access to these alternative markets.

Understandably, attention tends to focus on Australia’s public diplomatic responses to China’s economic coercion. Yet practical Australian policies for achieving diversification also contain an important diplomatic signal for China. As well as providing tangible support for Australian businesses to find alternative markets, initiatives such as the Agribusiness Expansion Initiative should be read in Beijing as a sure sign that Canberra plans to live with and manage the costs of economic coercion.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 16 to 22 August 2021

Coal climbs again

The monthly value of Australia’s coal exports to China, the rest of the world, and the total value, May 2020 to June 2021:

Quick take:

According to the recently released June trade data, Australia’s monthly coal exports to China are still flatlining at zero. But despite this, Australia’s exports to the rest of the world shot up again in June, jumping by more than half a billion dollars. Notwithstanding Beijing’s best efforts to punish Canberra, the value of Australia’s coal exports in June 2021 eclipsed their value in May 2020 when coal exports to China spiked to just shy of A$1.5 billion.

There’s good reason to be cautious of the implications of this though. Coal prices have surged in recent months, with the price for thermal coal in June this year being roughly double the price it was in October 2020 when reports emerged of China turning the screws on Australia coal. So, just as booming iron ore prices have made Australia’s trade relationship with China look rosier than it otherwise would be, surging coal prices have probably helped keep the value of Australian coal exports buoyant despite the burn of Beijing’s trade restrictions.

Iron ore under pressure

The Global Times’ GT Voice column on 19 August 2021:

“Australia is China’s main source of iron ore imports. Although there have been trade disputes between the two countries over a range of products, the previous surge in iron ore prices is widely considered to be a major factor in maintaining Australian exports to China at high levels amid their souring ties.”

“Yet, with the key variant, iron ore prices, returning back to a more regular range, the true state of China-Australia trade is likely to become clearer in the future.”

Quick take:

This Global Times’ column has a “bell tolls for thee” kind of vibe. But despite the ominous undertones, it makes sense that Australia’s export earnings from iron ore would dip and that exports to China would also start to slide. Brazil is the only country that comes remotely close to Australia in terms of the sheer quantity and value of iron ore exports, and its industry is bouncing back after a few troubled years. Meanwhile, China’s steel mills are under renewed pressure to curb output as the country pushes to reach carbon neutrality by 2060.

So, there’s no need to search out coercive intent from Beijing to find a powerful combination of price and demand pressures that presage declining fortunes for Australian iron ore exports to China. But even if coercion isn’t a factor for iron ore, iron ore price and demand pressures will make the impact of the very real examples of China’s coercive trade practices much clearer. In that context, it also isn’t surprising that the nationalistic Global Times would highlight emerging cracks in the shield that iron ore has provided for Australia’s overall trade relationship with China.

The iron ore colossus

The value of Australia’s iron ore exports to China in the first six months of 2021:

A$72.5 billion

Quick take:

This is an eye-watering number by any metric, but especially so considering that this is the value of just one export to just one market. It’s far above the value of the entirety of Australia’s annual exports to Japan—Australia’s number two export destination in 2020—and it’s roughly on par with the entirety of Australia’s two-way trade with the United States—Australia’s number two trading partner in 2020. It’s also more than double the annual value of Australia’s education exports, which were the country’s largest services exports in 2020 by a huge margin.

Given the above, it’s fair to say that iron ore’s likely price pressure from Brazil and softening demand from China will have significant and long-term reverberations throughout the Australian economy. Not least because of their impact on government coffers. Even though there are promising signs of the successful redirection of Australian exports to other markets in the wake of China’s economic coercion, there are potentially far more powerful headwinds building for Australia’s carbon-intensive exporters that are unrelated to Beijing’s efforts to punish Canberra.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 9 to 15 August 2021

A pox on both your houses

Prime Minister Scott Morrison delivering a virtual address at the Australian American Leadership Dialogue on 11 August:

“Unlike the Cold War, geostrategic competition in the coming decades will be engaged in the economic realm. Our recent experience with economic coercion underlines that. That’s why I believe our bilateral strategic cooperation must extend to economic matters. We should consider a regular Strategic Economic Dialogue between our most senior key economic and trade officials. Now, more than ever, we need to be working closely together on the common economic challenges that confront us. And, you know, we’ve got to deal with the hard stuff. We’ve got to deal with the reform of the World Trade Organization. We’ve got to deal with ensuring that there is a working appellate system that ensures that the rules of trade work because where there is [sic] no rules, others will seek to exploit and take advantage, and we know all about that down here in Australia with what we’re confronting. So we need a working WTO system to ensure that we have a working world trade system that we can rely on to ensure that no country, no country suffers any exploitation against its interests, as we are seeing at present.”

Quick take:

There’s a lot going on in this para. On one level, it’s a call for deeper and more strategic economic coordination between Washington and Canberra to confront Beijing’s coercive economic statecraft, among other shared goals. But on another level, it’s a rhetorical broadside at the Biden administration’s failure to reverse course on the obstructionist US approach to the WTO.

Prime Minister Morrison’s two-level message succinctly captures Australia’s economic and diplomatic bind. Faced with China’s economic coercion, Australia is seeking US support. Yet the international architecture that supports Australia’s multilateral method of choice for combatting China’s coercive practices is being undermined by the US spoiler role in the WTO Appellate Body.

Calling out economic coercion X4

US Department of State media note from 12 August on the latest Quad Senior Officials Meeting:

“The officials examined ways to advance ongoing cooperation on numerous topics of mutual interest, including strategic challenges confronting the region, countering disinformation, promoting democracy and human rights, strengthening international institutions including the United Nations and related organizations, and supporting countries vulnerable to coercive actions in the Indo-Pacific region.”

Quick take:

This reference to coercion is framed in general terms. But Beijing probably saw this as an unmistakable reference to its 15-month-old effort to economically coerce Canberra.

Will these kinds of obliquely expressed Quad concerns about coercion change Beijing’s approach to Canberra? Almost certainly not. But these kinds of statements about coercion nevertheless highlight the Quad’s growing utility for Australia.

Getting three major resident powers in the Indo-Pacific to jointly highlight the issue of coercive statecraft is a diplomatic win for Australia, even if the highlighting leaves some specificity to the imagination.

Mutually assured economic inefficiencies

Excerpt from the Productivity Commission’s report Vulnerable Supply Chains, which was released publicly on 13 August:

“On its own, iron ore accounted for nearly 95 per cent of the value of all vulnerable exports in 2019. It has been the largest source of Australian export revenue for the last decade; over 80 per cent has been exported to China in recent years, and China regularly accounts for over two thirds of global imports of iron ore. This makes both Australia and China vulnerable to disruptions in the iron ore market. It is equally a situation that lessens the risk of geopolitically-inspired disruptions, as the two economies have a vested interest in the efficient functioning of the market for iron ore.”

“The economic impact from a downstream disruption to Australia’s exports depends on how quickly markets adjust, which in turn will depend on the nature of the product. For example, the experience following the recent restrictions placed on some Australian exports by the Chinese government has shown that products like coal (which is not identified as vulnerable) can quickly find new markets while others, such as rock lobsters (identified as vulnerable) have greater difficulty.”

“The difficulty that exporters face in expanding to alternative export markets is a function of many factors not fully captured in our analysis of global trade data. For instance, the costs of finding new customers will likely be smaller for standardised commodity products like coal than for differentiated products like wine (which require significant marketing and reputation development).”

Quick take:

This tells a sobering story for Beijing. China’s trade restrictions have caused acute points of pain for select Australian exporters and the communities they sustain. But at the macro level, Australian exports have been able to redirect to alternative markets, albeit with price pressures and extra costs associated with moving to other markets.

Accepting that China probably won’t want to hit Australian iron ore exports for self-interested reasons, big questions remain about Australia’s largest services exports: education and tourism. These exports were among the four flagged as potential targets of Chinese consumers’ discontent in the wake of Canberra’s call in April 2020 for an inquiry into the origins of COVID-19.

Unlike the Australian commodity exports targeted to date, which have in most cases redirected to alternative markets, education and tourism very much fit the bill of differentiated products that “require significant marketing and reputation development.” COVID-19 and associated border closures have meant tourism and education are not appealing targets for Beijing’s economic coercion for now. But this Productivity Commission analysis once again highlights that these services exports remain especially vulnerable to future economic coercion.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 2 to 8 August 2021

Talking about talking

Foreign Minister Marise Payne addressing the Australia China Business Council’s Canberra Networking Day on 5 August:

“We’ve been advised by China that they will only engage in high-level dialogue if we meet certain conditions. Australia places no conditions on dialogue. We can’t meet the conditions such as the now well-known list of 14 grievances raised in the media last year. As the Prime Minister has said, indeed, no country would do that. But dialogue is not an end unto itself; it is a means to an end. And so we will continue to look for a constructive path forward, working with China where we are able to as a partner.”

Quick take:

This raises a range of tantalising questions. Were the conditions for high-level dialogue based on the 14 grievances? (The Foreign Minister’s framing leaves this ambiguous.) If so, which grievances were the conditions based on? Did Chinese government counterparts know that the Foreign Minister was going to go public with there being conditions for dialogue? Were the conditions an independent initiative from the Chinese Embassy in a bid to produce a deliverable? Or has the requirement come from Beijing?

Given these and other known unknowns, it’s hard to use this latest development as a reliable indicator of the trendline for bilateral relations. But at a minimum, it probably indicates that Beijing and Canberra are discussing at the official level whether their ministers should meet. That is on its own a noteworthy development. Of course, it’s early days, but it may be the start of a (presumably very long) process that could culminate in Australian minsters regaining access to their Chinese counterparts.

That said, the Foreign Minister’s framing might also effectively foreclose the possibility of ministerial meetings for now. The government has gone public not just with there being conditions for dialogue, but also with the government’s firm unwillingness to accept said conditions. In response, Beijing can either accommodate dialogue without conditions or double down on the option of no dialogue. Given China’s commitment to litigating the 14 grievances, it seems nigh on impossible that Beijing would back down and offer dialogue without conditions. So, perhaps we’re back to square one of no ministerial dialogue in the offing after all?

Bilateral diplomatic tactics aside, there’s presumably also a domestic political dimension to this story. There’s a federal election looming and the Australia-China relationship is one of the few areas of foreign policy where major party differences are emerging. The Foreign Minister’s remarks can plausibly be read as an effort to neutralise Labor criticisms of the way in which the Coalition has handled bilateral relations.

One key line of Labor attack is that the government has been playing fast and loose with belligerent rhetoric on China for domestic political gain and in so doing has jeopardised Australia’s national interests. Reiterating a criticism made in May by Senator Penny Wong, Opposition Leader Anthony Albanese said in June: “Australian [sic] needs more strategy and less politics when it comes to managing our differences with China.”

Politically speaking, the Foreign Minister’s speech is a counterpunch to this Labor criticism. An implication of her remarks is that better managing ties with China wouldn’t be easy for any government given the way in which Beijing imposes unacceptable conditions on even dialogue. From the point of view of domestic politicking, this takes responsibility for the lack of ministerial contact off the government’s shoulders and places it squarely at Beijing’s feet.

This won’t protect the Coalition from the broader Labor criticism that at key junctions the government took an impulsive and haphazard approach to China diplomacy. But it does at least insulate the government from the potential criticism that their ministers can’t call Beijing. And given slumping Australian public perceptions of China, it’s unlikely to play well politically for Labor to argue for dialogue with Beijing if it comes with strings attached.

We’ll say it again

The Chinese Embassy spokesperson’s remarks on 6 August in response to Foreign Minister Payne’s speech:

“The recent remarks by Foreign Minister Payne at the Australia China Business Council, as reported by The Australian, mischaracterized the current problem in China-Australia relations. As we have reiterated, the difficult situation in the bilateral ties is the result of Australia’s actions against China. We hope the Australian side will make serious reflection in this regard and take practical moves towards improving the bilateral relations.”

Quick take:

Given the emphasis on The Australian’s reporting, this response was presumably pumped out quickly and ahead of the full text of the Foreign Minister’s speech being available on the ministerial website. (Although at least some representatives from the Chinese Embassy were presumably in the audience on the day?) Would the full text of the Foreign Minister’s speech have changed the Chinese Embassy’s reaction?

The Foreign Minister did make some positive remarks about China. This comment struck me as noteworthy in that regard: “Australians across our community, not just in business, are proud to have supported the development of the Chinese economy … It’s been advantageous for our economy and for the Indo-Pacific region.”

Debates have been swirling, especially in United States since 2016, about whether the liberal democratic world should have facilitated and supported China’s economic rise over the last few decades. In that context, the Foreign Minister’s clear statement of the benefits of China’s economic development would presumably be noted and positively received in Beijing.

But despite those welcomed statements, the speech’s core emphasis was on the case for Australia to calmly and uncompromisingly pursue its national interests. Given the many areas of conflict between Beijing’s goals and Canberra’s security, economic, and political priorities, the bulk of the speech probably wouldn’t have prompted a shift towards warmer views of Australia among senior Chinese officials.

Sanctions diplomacy

The Foreign Minister’s media release on 5 August on strengthening Australia’s sanctions laws:

“The reforms will expand upon Australia’s current country-based autonomous sanctions framework to specify themes of conduct to which sanctions could be applied, such as the proliferation of weapons of mass destruction, gross human rights violations, malicious cyber activity and serious corruption.”

Quick take:

At least two of these categories of conduct could plausibly be applied to China’s Party-state. That does not mean that targeted financial sanctions and travel bans against Chinese government or Chinese Communist Party officials are a forgone conclusion. But the context out of which the plan for amendments to the Autonomous Sanctions Act 2011 emerged will likely create considerable pressure on the government to apply them to Party-state officials.

Australia criticised China over human rights abuses in Xinjiang earlier this year, while Canada, the European Union, the United Kingdom, and the United States imposed sanctions. Many considered these criticisms to be an inadequate response given the gravity of the human rights abuses occurring in Xinjiang. The early signs suggest that some parliamentarians, including influential Coalition voices, are now keen to pursue individual human rights violators in China with sanctions.

Fast forward to the end of this year when the Autonomous Sanctions Act 2011 has been amended, it’s worth asking: If pursued, will such sanctions change China’s behaviour? Historically, it has been extremely difficult to change China’s behaviour via punitive measures. Given this, it seems highly unlikely that such sanctions would cause Beijing to change course.

In the wake of US and other countries’ sanctions over human rights abuses in Xinjiang, China responded with tit-for-tat sanctions and there is (so far as I’m aware) no evidence of the Party-state amending its ethnic minority policies in response. Given Australia’s relatively small economic weight compared to the United States and others, it seems unlikely that Beijing would amend its policies in response to Canberra’s sanctions.

Does this likely inability to change China’s behaviour mean that the government shouldn’t pursue targeted sanctions against Party-state officials? Not necessarily. Changing China’s behaviour might be one metric of success, but it’s far from the only justification for imposing sanctions. A case could be made for such sanctions based on the imperatives of raising public awareness about human rights abuses and putting additional pressure on the Party-state to defend its policies.

Sanctions could also arguably be justified given the goal of ensuring that Australia’s opposition to systematic human rights violations is not restricted to diplomatic criticisms and initiatives in UN fora. In other words, the moral gravity of what is occurring in Xinjiang warrants tangible action regardless of whether such action will help end human rights violations there.

This very quickly takes us into analytically and morally messy terrain. If we’re not ultimately expecting to improve the human rights situation in China, then are the mooted sanctions more about Australia enhancing its own moral reputation than they are about assisting the victims of human rights abuses? Is it possible that such sanctions could make life harder for Australians caught up in China’s draconian ethnic minority policies? And will Australia be able to consistently impose sanctions when strategic partners, such as Indonesia, India, and Vietnam, have leaders and senior officials who have been implicated in massacres, systematic political repression, and crimes against humanity?

None of this is to say that sanctions should not be utilised against Party-state officials. But it seems clear that Australia is only at the start of a challenging, contentious, and critically important debate about how to respond to China’s severe human rights abuses.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 26 July to 1 August 2021

Wine wars

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) modelling on the costs of China’s anti-dumping and countervailing duties on Australian wine:

“In 2025, 60% of Australia’s wine exports originally destined for China will be diverted to alternative markets; the equivalent of $720 million in 2020 dollars. The negative impact on export earnings is likely to be more significant than on the volume of exports. The combined effect of lower prices and export diversion is estimated to result in a $480 million decline in total Australian wine export value in 2025 (in 2020 dollars) compared to what would otherwise be the case without the duties. Ignoring discount factors and assuming no activities to stimulate demand in alternative markets, the cost of the AD [anti-dumping] duties to the Australian wine industry are likely to be at least $2.4 billion over the 5-year period.”

Quick take:

This modelling paints a sobering picture. China accounted for 33% of the export revenue for Australian wine in 2020 and Australian exports of bottled wine to China are expected to cease under average anti-dumping duties imposed by Beijing. With the projected $2.4 billion loss over five years, this modelling drives home the case for the industry to seek new markets and for government to support these diversification efforts.

Of course, the Chinese market is uniquely large and lucrative and export diversification in a long and hard process. But the political headwinds in the Australia-China relationship have only picked up and more storms are on the horizon. So, there’s no compelling reason to expect these trade restrictions on wine to be unwound, meaning that the case for trade diversification only grows stronger, notwithstanding its difficulty.

Australian alcohol to the world

The monthly value of Australia’s alcoholic beverage exports to China, the rest of the world, and the total value, June 2019 to May 2021:

Quick take:

This graph doesn’t tell the story of what the value of Australia’s alcoholic beverage exports (which are primarily wine) would have been without China’s trade restrictions. But it seems to suggest that a significant amount of export redirection has already occurred since wine exports to China collapsed after Beijing’s November/December 2020 introduction of anti-dumping and countervailing duties. Although the total value of Australia’s alcoholic beverage exports dips deeply after November 2020 as the value of exports to China collapses, it has since climbed while exports to China have flatlined.

With wine presumably a big focus of the Australian government’s Agri-Business Expansion Initiative, an ongoing redirection of Australia’s wine exports seems achievable. Whether new export markets can fully offset the loss of the Chinese market remains to be seen. But given that the grim ABARES modelling assumes no activities to stimulate demand in alternative markets, the combination of new short-term Agricultural Counsellors at Australian diplomatic posts and various forms of additional support for exporters should at least avoid some portion of the modelled losses.

Wrestling with whataboutism

Secretary of Defense Lloyd J. Austin III delivering the Fullerton Lecture at the International Institute for Strategic Studies in Singapore on 27 July:

“Our partnerships draw strength from our shared belief in greater openness… and our belief that people live best when they govern themselves. Now, our democratic values aren’t always easy to reach. And the United States doesn’t always get it right. We’ve seen some painful lapses, like the unacceptable and frankly un-American discrimination that some Asian Americans and Pacific Islanders have endured in my country in recent months.”

“I believe that we’re better than that. Far better. But we aren’t trying to hide our mistakes. When a democracy stumbles, everyone can see and hear it. It’s broadcast in loud and living color, and not hushed up by the state.”

Quick take:

At the risk of overinterpretation, it seems noteworthy that senior US officials, such as Secretary of Defense Austin and Secretary of State Antony Blinken, are increasingly open about US failings. As well as speaking to the domestic political priorities of the Biden administration, is this newfound frankness partly motivated by the goal of taking the wind out of China’s concerted diplomatic efforts to discredit the United States? If so, and by extension, would more openly acknowledging Australia’s periodic difficulties living up to the principles it espouses be an effective means for Canberra to pre-empt and blunt the power of Beijing’s regular diplomatic attacks?

China’s efforts to discredit Australia span official diplomatic messaging and both the authoritative and nationalistic press. China’s diplomats and the country’s media often quickly pivot from Australian criticisms of China to Beijing accusing Canberra of similar malfeasance. So, when Canberra raises concerns about human rights abuses in Xinjiang, Beijing will respond by highlighting Canberra’s mixed human rights record, including alleged war crimes in Afghanistan and the long and painful history of violence, cultural destruction, and family separation inflicted on Indigenous Australians.

This whataboutist manoeuvre is a striking feature of China’s contemporary diplomacy. If the United States and its allies and partners criticise China’s espionage, then part of the response is to highlight the intrusive and large-scale espionage of the accusers. If the United States and its allies and partners raise concerns about China’s legally untenable maritime claims in the South China Sea, then part of the response is to lambast their patchy record on the United Nations Convention on the Law of the Sea and international law more broadly. Other examples abound.

As I’ve argued elsewhere, there’s a strong case for Australia to ensure that its policies align with the standards to which it holds China. As well as the clear moral imperative to be consistent, there’s a strategic rationale for such consistency. Without it, Australia leaves itself wide open to China levelling yet more whataboutist attacks the next time Canberra calls on Beijing to behave better.

In addition to this pragmatic case for consistency, Secretary of Defense Austin’s candour makes me wonder whether there’s also a rationale for being more open and honest about times when gaps emerge between policies and principles. To take just one example, wouldn’t the power and persuasiveness of Australian criticisms of China’s legally untenable maritime claims in the South China Sea and espionage activities be increased if they were combined with a much fuller acknowledgement of Canberra’s poor form on both counts against Timor-Leste?

This is not to draw a simple moral or empirical equivalence between Australia’s past actions towards Timor-Leste and China’s current behaviour in the South China Sea and cyberspace. But it is to raise the question of whether Australia’s diplomatic messaging on China would be more persuasive if Canberra was proactive about openly recognising the times when it failed to live up to the standards to which it holds Beijing.

To be sure, these kinds of frank acknowledgements of past failings won’t stop Beijing’s efforts to tarnish Canberra. But it seems at least prima facie plausible that such honesty would be a net positive. First, it would increase the credibility and moral force of Australia’s criticisms of China. Second, it would pre-empt and partially respond to the often-unspoken view among Australian partners in the Pacific and South-East Asia that the case for Canberra taking the moral high ground on international rules and norms isn’t always especially compelling. Freely acknowledging past transgressions would be a powerful way for Australia to convince the region that it wasn’t a bad faith actor on the standards to which it seeks to hold China.

Of course, there’s the possibility that a more honest appraisal of Australia’s failings would only give China more material to work with. (I’m doubtful of this though given that Beijing’s propaganda apparatus is already masterful at seizing on examples of past instances in which Canberra’s adherence to its own principles erred.) But regardless, one thing is sure, Beijing’s whataboutist diplomatic attacks on Canberra are likely to intensify given the current state of international politics and the parlous state of the bilateral relationship. In that context, there’s a case for Canberra to at least consider the benefits of more of the kind of candour that Secretary of Defense Austin displayed in Singapore last week.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 19 to 25 July 2021

Tai and Tehan talk

From the readout of Minister for Trade, Tourism and Investment Dan Tehan’s meeting with the United States Trade Representative Ambassador Katherine Tai:

“Ambassador Tai and Minister Tehan welcomed continuing senior-level discussions to address non-market practices, including economic coercion.”

Quick take:

Discussions between Tai and Tehan covered familiar ground, emphasising the “importance and strength of the bilateral trade relationship” and the US commitment to engaging allies to “address China’s state-led, non-market practices”. These issues were all covered in similar terms in the readout from the previous virtual Tai-Tehan meeting in March this year.

But the ongoing senior-level discussions aimed (in part) at addressing economic coercion are a potentially significant development. They were notably absent from the readout of the March meeting, and their inclusion in this readout might mean working-level progress towards joint action in response to China’s economic coercion.

As analysts have pointed out, so far Washington hasn’t been able to offer Canberra much in the way of support beyond expressions of solidarity. This is especially awkward given that the data seems to suggest that the United States is benefitting economically from China’s coercive actions against Australia.

The combination to date of strong US rhetoric and an absence of substantial support also creates a credibility issue for both the United States and Australia. As well as offering easy wins for China’s state-controlled media to excoriate the United States and Australia, the gap between words and deeds will eventually raise questions in Australia about the sincerity of US rhetorical commitments.

So, what are senior-level US-Australian discussions to address economic coercion likely to yield? One plausible scenario is nothing at all. It’s entirely possible that this reference is just a shot across the bow to put China on notice and encourage Beijing to change its ways before Washington and Canberra get serious.

Other options might include counter-coercion moves to punish China for its economic coercion of Australia. There’s also the possibility of efforts to support Australia economically via US commitments to buy Australian exports and/or not profit from the exclusion of select Australian exports from the Chinese market.

Neither of these options seem especially likely though. Counter-coercion strategies entail the serious risk of escalation, while tangible expressions of economic solidarity would be hard to sell domestically to the US private sector.

Given the recent track record of China’s tit-for-tat sanctions and well-resourced economic statecraft, counter-coercion responses could easily prompt Beijing to respond in kind by doubling down on its economic coercion with reciprocal countermeasures. (And on a sidenote, the history of deterring and shaping Beijing via coercive measures doesn’t inspire confidence.) Meanwhile, asking US coal mining states to take a haircut in solidarity with Australia seems like a political nonstarter.

So, where does this leave these senior-level US-Australian discussions? If I was placing bets, I’d wager that the most likely scenarios for joint action would be more carefully coordinated diplomatic responses and World Trade Organization (WTO) measures.

Washington and Canberra might lead a revitalised and more multinational effort to publicly name and shame China’s economic coercion. This might take the form of a leader-level communique or something similarly high-profile that could be issued at a forum such as the long-planned Summit for Democracy.

On a more concrete procedural front, there’s scope to combine this more active diplomacy with moves in the WTO. The United States and Australia might pursue a renewed and more coordinated effort to tackle China’s economic coercion via established mechanisms in the rules-based trading system.

Watch this space.

Tu quoque

Ministry of Foreign Affairs (MFA) spokesperson Zhao Lijian speaking at the regular MFA press conference on 22 July:

“The US remarks completely distort facts and confuse right with wrong.”

“The difficult situation in China-Australia relationship is the result of Australia’s moves to grossly interfere in China’s domestic affairs and undermine China’s interests, and its discriminatory trade practice toward China. The responsibility does not rest with China.”

Quick take:

MFA was quick to fire back after the Tai-Tehan meeting. The response was rhetorically changed and consistent with China’s regularly reiterated view that Australia is responsible for the economic coercion it is currently enduring.

As much as Zhao’s comments are a function of his combative personal style, they also point to the high degree of difficulty associated with any US-Australian effort to shape China’s behaviour.

This is not to say Washington and Canberra shouldn’t explore options to deter Beijing’s economic coercion. But Beijing has established a clear precedent of heaping all the blame on Canberra.

This may make conceding to US and Australian pressure nigh on politically impossible. In other words, in the absence of some kind of concession or symbolic olive branch from Australia, abandoning the line that Canberra is to blame and loosening coercive measures might be simply too much of an about-face for Beijing.

Who handled it better?

Japan’s Ambassador to Australia, Shingo Yamagami, responding to a question on Canberra’s handling of the Australia-China relationship:

“You know, you are doing an excellent job. We are in the same boat and we should work together.”

Quick take:

Given the fraught state of Australia-China relations, there’s an understandable inclination to compare and contrast the health of Canberra’s ties with Beijing with the state of relations between China and other US allies and partners in the region.

As well as being interesting analytical exercises, these kinds of comparisons are often aimed at teasing out whether there are lessons for Australia in the experiences of other countries’ efforts to maintain broadly positive relations with China. Ambassador Yamagami’s comments would seem to pour cold water on the possibility of Canberra usefully learning anything from Tokyo’s handling of the Japan-China relationship.

But it’s reasonable to assume that Ambassador Yamagami’s comments at the National Press Club were at least partially aimed at flattering his host government and advancing his own government’s goal of deepening ties between Japan and Australia. So, while the shifts in China’s foreign policy that Ambassador Yamagami alluded to are real, his comments about the state of Australia-China relations probably reflect his diplomatic priorities as much as his considered analytical judgements.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections very much appreciated.

Week of 12 to 18 July 2021

APEC broadside

Prime Minister Scott Morrison addressing the Asia-Pacific Economic Cooperation (APEC) Virtual Informal Leaders’ Meeting on 17 July:

“[W]e cannot have a recovery without a free and open Indo-Pacific. And that means respect for the rule of law. It means regional stability and security. It means the region being able to operate free of coercion and free of interference. And where we respect the law of the sea, where we respect the rule of law, we respect human rights right across our region, and that we hold fast to those important values for a free and open Indo-Pacific. And it also means we have rules based trading system [sic] that we can all trust, one that has binding mechanisms to resolve disputes. And it’s an urgent issue to ensure that the WTO’s appellate body is restored and fully functional, because without a referee, it’s very hard to play the game. And we all want to be on the field as we come back from this recovery. And the WTO plays an absolutely essential role in policing the rules of world trade and ensuring that no country can be subject to economic coercion, which can take place.”

Quick take:

Ouch. With presidents Xi Jinping and Joe Biden on the call, Prime Minister Morrison called out China’s economic coercion and the US spoiler role in the World Trade Organization (WTO) .

This address would have presumably left a sour expression on President Xi’s face. But from the Australian government’s perspective, China probably wasn’t the audience.

By my count, there were at least six other economies on the call that have experienced China’s economic coercion: Taiwan, Japan, South Korea, Vietnam, Canada, and the Philippines. Then there’s the long list of other APEC economies that probably worry about whether they’ll be hit with Beijing’s politically motivated trade restrictions.

Prime Minister Morrison was most likely speaking to this majority APEC constituency of past, present, and potential victims of China’s economic coercion. The size of this group could easily lead to the calculation that there’s more to be gained by convincing the Asia-Pacific region to share Australia’s concerns than there is to lose by entrenching President Xi’s already unfriendly view of Australia.

Maritime missives

Foreign Minister Marise Payne’s statement on 12 July, marking the 5th Anniversary of the South China Sea (SCS) Arbitral Award:

“Five years ago today, an Arbitral Tribunal established in accordance with the UN Convention on the Law of the Sea (UNCLOS) reached a clear and unanimous decision on the South China Sea arbitration between the Philippines and China.”

“It found that China’s claim to ‘historic rights’ or ‘maritime rights and interests’ established in the ‘long course of historical practice’ in the South China Sea were inconsistent with UNCLOS and, to the extent of that inconsistency, invalid.”

Quick take:

Although Australia hasn’t changed its position on the Arbitral Award, it’s striking how much Canberra’s SCS language has stiffened in recent years. At the time of the Award in 2016, Australia issued a statement. But the language was paired back compared to both the recent statement and Australia’s July 2020 Note Verbale in relation to Malaysia’s submission to the Commission on the Limits of the Continental Shelf.

The 2016 statement didn’t include explicit references to China’s claims being “inconsistent” with UNCLOS or “invalid.” Indeed, the strongest criticism of China in the 2016 statement was indirect, referring back to the Award itself: “The Australian Government calls on the Philippines and China to abide by the ruling, which is final and binding on both parties.”

The 2016 statement was also lower octane, rhetorically speaking. By contrast, last week’s statement lent heavily into the normative language of the rules-based international order: “Adherence to international law is fundamental to the continuing peace, prosperity and stability of our region.”

Despite not generating comment at the Ministry of Foreign Affairs’ regular press conferences last week, Beijing probably noticed Canberra’s stronger language on the 5th anniversary of the SCS Award. Afterall, China devoted one of its 14 grievances to Australia’s July 2020 Note Verbale.

But for all of Beijing’s frustration with this kind of statement, it likely won’t cause a big dip in bilateral relations. Rather, it’ll probably just serve as yet further confirmation in the Party-state’s eyes that Australia is a hostile actor in the SCS. So, perhaps just another case of status quo ante in frosty bilateral ties?

Tough trade talk

The spokesperson for the US Embassy in Canberra, talking to The Guardian on 14 July:

“We have Australia’s back against economic coercion, and other countries do too.”

Quick take:

Statements of support like this make eminent sense given the Biden administration’s foreign policy agenda of international coalition building and shoring up US allies and partners. And they are encouraging for Canberra to the extent that they signal concrete US support in WTO processes.

But they equally belie some uncomfortable realities. Beyond moves in the WTO, Washington faces a tough task in seeking to provide Australia with tangible support against China’s economic coercion.

To be sure, numerous policy options have been floated to help the United States back Australia against China’s economic coercion. These include proposals for measures like counter-coercion coalitions that might impose “punitive retaliatory tariffs on Chinese exports” and a Five Eyes “collective economic security measure, analogous to Article 5 of the North Atlantic Treaty establishing NATO.”

Yet regardless of the potential benefits (and costs) of these kinds of deterrence initiatives, it seems that even Washington lacks the risk appetite required to fight China’s economic coercion with counter-coercion. And that’s even in the context of the Biden administration’s “extreme competition” with China.

Politics aside, it remains unclear whether any of these count-coercion strategies would actually shift China’s calculus and deter Beijing. Then there’s the risk that these kinds of counter-coercion policies could lead to a host of negative unintended consequences, ranging from undermining the rules-based international trading regime and provoking more economic coercion from China. There’s also the complicating factor of US companies probably benefitting from China’s economic coercion of Australia.

So, beyond rhetorical gestures and support in the WTO, Washington is left with few (maybe 0?) risk-free and politically palatable means of supporting Canberra in the face of Beijing’s economic coercion. In the end, maybe the best way for the United States to back Australia would be to throw its full weight behind the WTO and, to quote Minister for Trade, Tourism and Investment, Dan Teehan, “champion support for a functioning global rules-based trading system”?

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Weeks of 28 June to 11 July 2021

Cat’s paw conniptions

Ministry of Foreign Affairs (MFA) spokesperson Zhao Lijian speaking at the regular MFA press conference on 6 July:

“We will not allow any country to reap benefits from doing business with China while groundlessly accusing and smearing China and undermining China’s core interests based on ideology. When a certain country acts as a cat’s paw for others, it is the people that pay for misguided government policies.”

Quick take:

This is not the first time that the Chinese government has made clear the politically coercive nature of its restrictions on Australian exports. But it is among the bluntest acknowledgements of the direct connection between Canberra saying and doing things that Beijing doesn’t like and China firing back with trade restrictions.

It also paints a bleak picture of the future: economic coercion will persist so long as Australia continues to say and do things that displease the Party-state. Economic coercion is therefore probably baked into the Australia-China relationship for the foreseeable future. Not only is Beijing explicitly saying that it will continue to punish Canberra for certain statements and actions, but there are also no signs of the Australian government shifting course on any of the sources of consternation in the Chinese government.

If anything, a range of political, diplomatic, economic, and strategic flashpoints loom on the horizon that are likely to make Beijing even more inclined to reach for the trigger of economic coercion. Among others, these include:

1. possible moves by the Australian Foreign Minister to veto Confucius Institute agreements;
2. the outcome of the review of the 99-year lease of Darwin Port to the Chinese company Landbridge Group;
3. pressure in Australia to launch targeted sanctions against Chinese officials implicated in grave human rights abuses; and
4. calls for Australian officials and athletes to boycott the 2022 Beijing Winter Olympics.

So, the kinds of threats that Zhao issued last week are likely to be on regular rotation at MFA pressers in the months and even years ahead.

Coal exports flatline

The monthly value of Australia’s coal exports to China, June 2019 to May 2021:

Quick take:

So far, coal is the most valuable Australian export to China that has been hit with politically motivated trade restrictions. The value of coal exports surged in May 2020 and then crashed. It’s now flatlining at zero.

Accurately reading the internal thinking in Beijing is notoriously difficult, but numbers like these at least give more prima facie credence to the pivotal role of April 2020 as a tipping point in Australia-China relations. In addition to all of Beijing’s explicit complaints about Australia’s call for an inquiry into the origins of COVID-19, the numbers also paint that period as a watershed moment.

That’s not to discount the myriad of other grievances that led China to embark on its current economic and diplomatic punishment campaign against Australia. But the close correlation between the start of this campaign and the April 2020 COVID-19 inquiry call makes it an obvious trigger.

46 trillion reasons not to decouple

Per Financial Times reporting from 5 July:

“HSBC … estimates that Chinese households will have Rmb300tn ($46.3tn) of investable assets by 2025 — an amount equivalent to the entire US bond market.”

Quick take:

In many liberal democracies, the story of China’s economic relations with the world is increasingly dominated by the strategic downsides of weaponised interdependence, economic coercion, and market-distorting industrial policy. But the financial story still seems to be one of eye-wateringly large upsides.

Notwithstanding the political and geopolitical risks associated with the Chinese market, international investment banks and funds are boosting their presence and expanding their activities in the gargantuan Chinese market. Although the Chinese market is fraught with strategic risks and moral compromises, it is equally still a source of stupendous wealth generation.

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As always, thank you for reading and please excuse any errors (typographical or otherwise). Any and all objections, criticisms, and corrections are very much appreciated.

Week of 21 to 27 June 2021

Friends like these

Counsellor Zhang Heqing from the Chinese Embassy in Pakistan:

Quick take:

Zhang’s tweet was soon deleted. So, while the limits of the Ministry of Foreign Affairs’ (MFA) tolerance for belligerent social media messaging are hard to discern from the outside, it would at least seem that this tweet transgressed the line of what’s considered kosher.

Does this herald a softening of MFA rhetoric in general? Probably not, especially since President Xi Jinping’s recommendation that China’s diplomacy showcase a softer side is aimed specifically at expanding “the circle of friends who understand China.” This would seem to imply that those who persist with their (in the Party-state’s eyes) misapprehension of China will remain outside the friendship circle. And that presumably means that they’ll continue to feel the hard edge of China’s diplomacy as Beijing pushes forward with its “public opinion struggle”.

More generally, both this tweet and President Xi’s recent guidance feel oddly reminiscent of German jurist Carl Schmitt’s definition of politics: “the specific political distinction … is that between friend and enemy.” Or maybe it’s just a doffing of the cap to Mao Zedong’s use of explicit and rhetorically charged friends/enemies distinctions? Either way, this Manichean approach to international politics does not point to a softening of diplomatic rhetoric towards those deemed enemies. And if the MFA press conference on 23 June is anything to go by, there’s little doubt as to which side of the divide Canberra is on.

Adamson’s foreign policy swan song

Recently departed Secretary of the Department of Foreign Affairs and Trade (DFAT), Frances Adamson, addressing the National Press Club on 23 June:

“What we tell the Chinese Government is that we are not interested in promoting containment or regime change.”

“We want to understand and respond carefully – for shared advantage. Not to feed its insecurity or proceed down a spiral of miscalculation.”

“Nor do we see the world through a simplistic lens of zero-sum competition.”

“What we are interested in, and will continue to strive for, is a peaceful, secure region underpinned by a commitment to the rules that have served all of us – China included. An order that will deliver more stability and welfare to its members, as it has done to date.”

Quick take:

This was a weighty address from one of the doyens of Australian foreign policy. There’s a huge amount to unpack in Adamson’s remarks, but two themes from her speech strike me as especially important:

1. Understanding the aspirations and fears of China’s Party-state will be critical for Australian foreign policy for decades to come. For a range of familiar political, diplomatic, economic, and military reasons, Australia’s strategic choices will play out in a world in which China’s Party-state exerts deepening—and sometimes decisive—influence by nearly every metric. In twenty-first century international politics, China will often be the most significant actor on the world stage. A strong grasp of the Party-state’s worldview and the internal logic of its ideology will be a critical national priority for Australian public servants, political leaders, and commentators. This is not about internalising or acquiescing to Beijing’s views. It’s simply about equipping ourselves to successfully prosecute the Australian national interest in a world in which Beijing’s means increasingly match its ambitions.
2. I might be overreading Adamson’s remarks, but they sketch a very different image (to my over-sensitive eyes??) than the Prime Minister’s speech earlier this month. The Prime Minister’s talk of liberal democracies “stepping up with coordinated action” sounds more like the ideologically infused language of the Biden administration’s embrace of strategic competition with China. By contrast, Adamson’s focus on a “strategic balance and a regional order based on rules” is much more akin to the pragmatic and paired-back language of the 2017 Foreign Policy White Paper (FPWP). Of course, that might just be because of Adamson’s proximity to the 2017 FPWP (she was DFAT Secretary during its drafting and worked closely over many years with a number of the 2017 FPWP’s key authors). But I also wonder whether it speaks to an increasingly important divide in Australian foreign policy between those who support Washington’s goal of maintaining the current US-led and liberal values-infused order and those who see an increasingly values-agnostic balance of power as the unavoidable long-term outcome of US relative decline?

Regardless, Adamson’s last major address as DFAT Secretary deserves to be dissected and debated. Hopefully we’ll still hear from her on China from time to time despite her new role as Governor of South Australia.

Chinese investment stabilises

The latest Foreign Investment Review Board (FIRB) Annual Report (2019-20) is out. It makes for an interesting read, not least because the total number and cumulative value of FIRB approvals for China only dipped slightly between 2018-19 and 2019-20:

4,314 approvals worth $12.8 billion in 2019-20 Vs 4,901 approvals worth $13.1 billion in 2018-19

Quick take:

Considering that these 2019-20 numbers cover the period of the initial spread of COVID-19 and the economic aftershocks, they seem surprisingly robust. Especially given that China’s Foreign Direct Investment (FDI) has dropped off dramatically globally. After reaching a peak of US$216 billion in 2016, Chinese FDI then fell suddenly in 2017 and had nearl