This week any pretence was dropped. For months, the trade dispute between Australia and China that has plagued 2020 was put down to infringements: incorrect labelling on beef, elevated metal levels in lobster, pests found it timber.
The matters were unrelated, Beijing insisted, these were customs issues that had nothing to do with the spiralling bilateral relationship that threatened up to $20 billion in Australian exports. The media was left to connect the dots: the trade hits came after Australia banned Chinese telecoms equipment supplier Huawei in 2018 then accelerated after the Morrison government called for an independent coronavirus inquiry. It was implicit not explicit.
At Canberra’s Hyatt Hotel on Tuesday afternoon the Chinese embassy gave up the charade.
The two embassy officials were uncharacteristically late. Between tables of spring diners picking their way through high tea, they delivered a message.
Unprompted, one official reached into her large blue purse and unfolded a list of Beijing’s 14 grievances. She followed it up with a warning: “China is angry,” she told Nine News reporter Jonathan Kearsley. “If you make China the enemy, China will be the enemy”.
If Australia backed away from policies on the list, it “would be conducive to a better atmosphere,” she said.
The threat was unmistakable. Having severed ministerial contact, China’s foreign mission was now making its diplomatic and economic coercion explicit through the media.
Hours later in Beijing, China’s Foreign Ministry spokesman Zhao Lijian issued his own verdict: “It is clear that some people in Australia…tend to regard China’s development as a threat, and have subsequently taken a series of wrong moves related to China, which is at the root cause of China-Australia relations taking a sharp downturn and stuck in the current difficult situation.”
The list of grievances is detailed. There are familiar references to Huawei and the coronavirus inquiry but others are more specific. Government funding for “anti-China research” at the Australian Strategic Policy Institute, a perception that Australia is driving international condemnation of China’s actions in the South China Sea, Xinjiang and Hong Kong and that the Australian government is responsible for antagonistic reporting in the media.
Chinese investment in Australia on a substantial scale is finished. In 2016 it was $16 billion. Last year it was $2.5 billion.
Two are specifically targeted at claims that Australia has undermined China’s business interests. One is legislation currently before the Parliament that is likely to see Victoria’s Belt and Road deal torn up. The other is at the very top of Beijing’s list of disputes: 10 Chinese investment projections that have been rejected by Australia citing ambiguous “national security concerns” and putting restrictions on investment in areas like infrastructure, agriculture and animal husbandry.
In this, Treasurer Josh Frydenberg’s decision to block the $600 million sale of Lion’s dairy and drinks business to China Mengniu Dairy in August looms large.
It remains unclear what component of the national interest was threatened by this purchase.
The government has not elaborated on what components of the dairy deal would be contrary to these values. There is no agricultural land involved in the deal and the Australian Competition and Consumer Commission, Foreign Investment Review Board and Treasury all approved the sale.
Regardless, the message to the market was clear. By November, Woodside petroleum had shelved plans to sell a stake in its $16 billion Scarborough natural gas project after potential Chinese buyers withdrew.
The episode lays out the stark reality. Chinese investment in Australia on a substantial scale is finished. In 2016 it was $16 billion. Last year it was $2.5 billion. We can now expect it to fall to almost nil.
Poorly articulated grounds for blocking business deals and unhelpful interventions from one Liberal senator calling for Chinese-Australians to condemn the Chinese Communist Party do not help Australia’s negotiating position. Both are noted on the list of grievances. These are easy propaganda wins for Beijing, best avoided.
Unfortunately, as business links diminish, there is now a rapidly narrowing avenue for mediation between two “comprehensive strategic partners” that still don’t appear to understand each other.
Nowhere is this more evident than in the Chinese Communist Party’s claim that the Australian government is responsible for unfriendly media coverage.
“It shows [China] holds countries responsible for their free civil societies and serves as a template for illiberal order-building,” noted Rush Doshi, the Director of the Brooking’s China Strategy Initiative in Washington.
“China is not obligated to trade with [Australia], but that misses an interesting point.
“The deployment of coercive economic leverage to shape [Australia’s] internal behaviour is a kind of illiberal order-building. This list is a partial guide to the norms of that illiberal order.”
As Doshi pointed out in a Twitter thread on Thursday, China is a hypocrite.
It limits foreign investment, foreign involvement in its politics, erects visa barriers, treats journalists far worse, condemns other governments, has antagonistic media and limits provincial foreign policy freelancing.
A backdown on any of the 14 demands would be seen as a humiliation in Beijing and Canberra.
But China also knows Australia can not retaliate. Australia’s one big lever, stopping $80 billion in iron ore exports for example, would hammer the local economy and federal budget as it attempts to get out of the worst recession in a century.
It is clear that the Chinese government is frustrated by a lack of tangible results or Australian concessions after almost 10 months of trade strikes, vague threats and a shutdown of ministerial contact. That is why Beijing decided to go public. Australia may not be the intended audience.
The blunt message from Beijing to other countries is: if you cross us this is what happens to you.
The problem with this escalation is it now leaves neither side with room to move. A backdown on any of the 14 demands would be seen as a humiliation in Beijing and Canberra.
The world is looking forward to a better 2021, but this trade dispute is here to stay.
Source: Thanks smh.com