Australia demonstrates the limits of Chinese coercion
Relations between Australia and China are at a historical low
Australia's relations with China have deteriorated rapidly this year from a state of mutual suspicion and bilateral tension to open hostility and blatant Chinese coercion. China has blocked imports of Australian goods, arrested Australian nationals, issued threatening remarks and released a list of its grievances against Australia.
What next
China's treatment of Australia is the clearest demonstration yet of which behaviours Beijing considers 'unfriendly' and what punishments smaller countries can expect in response. It also demonstrates that the leverage which China's economic preponderance is presumed to confer cannot reliably bend other countries to its will. Australia will not capitulate to Beijing's demands or make substantive shifts in its security policy, though subsequent governments may try to strike a less confrontational tone.
Subsidiary Impacts
- China's actions towards Australia will spur other countries' efforts to diversify their economic partnerships to withstand Chinese coercion.
- Poorer, weaker countries without powerful allies may be less able than Australia to endure Chinese pressure.
- Australia will strengthen security cooperation against China with the United States, Japan and India.
Analysis
Bilateral relations have been mired in acrimony for more than three years, since Australia's high-profile legislative response to China-connected political donations scandals in 2016 and 2017. Canberra passed sweeping new laws in June 2018 that created new foreign interference offences and expanded the definition of national security to include Australia's political, military or economic relations with another country.
No high-level bilateral meetings have taken place since 2018, and more recently Chinese ministers have refused to take phone calls from their Australian counterparts.
Australia's call, in April this year, for an investigation into the origins of COVID-19 aggravated the tensions. China saw Australia's pointed focus on origin of the virus rather than its spread (which was a more pressing matter at that point), and its talk of 'weapons inspector'-style powers, as hostile and threatening.
Chinese measures
China, under various pretexts, imposed a series of obvious, if plausibly deniable, economic retaliation measures. They include:
- tariffs on Australian barley and wine on anti-dumping grounds;
- suspension of imports from four meat processing facilities over alleged safety breaches;
- deferred coal shipments; and
- discouragement of Chinese tourism and overseas study in Australia.
Other sectors targeted include lobsters, cotton and copper.
Estimates of the total value of goods sanctioned range from AUD20bn (USD15bn) to AUD40bn. The latter is around 10% of Australia's total exports.
5-10%
Estimated share of Australia's exports subject to Chinese retaliation measures
The wine and barley industries will certainly be hit hard, since the Chinese markets for them are not readily replaceable. The impact will be much less pronounced for coal and other sectors that are less dependent on China's market and have better prospects of finding alternative buyers, or that ship less perishable products. International education and tourism will be only minimally affected in the short term, given Australia's strict entry and exit restrictions due to COVID-19.
The iron ore trade, which accounts for the bulk of Australian exports to China, will likely escape sanction. Beijing has few easy alternatives to imports of Australian iron ore (see CHINA: Pushback from the West will increase - October 12, 2020).
Iron ore is likely to escape Chinese sanctions
Chinese grievances
Beijing's public rhetoric towards Australia has escalated markedly.
In November, China's foreign ministry issued a detailed statement pinning the blame for deteriorating relations entirely on the Australian side, while Chinese diplomats in Canberra circulated a 14-point list of grievances.
These included:
- Australia's rejection of Chinese investments in infrastructure and agriculture;
- bans on Huawei 5G equipment;
- revoking of the visas of Chinese scholars and journalists;
- the 2018 foreign interference legislation; and
- public criticism of the Chinese government by Australian officials, lawmakers, civil society and media.
It would be politically impossible for the Australian government to make any significant concessions on these issues, especially those where capitulation would directly undermine national security or liberal democratic values.
China's list of grievances included an Australian bill giving the foreign minister powers to veto sub-national government agreements with state institutions in other countries. It does not target China by name, but is in fact the federal government's response to the state of Victoria signing a memorandum endorsing the Belt and Road Initiative in 2018, contrary to the government's wishes (see AUSTRALIA: New bill will limit some foreign ties - September 17, 2020). The bill was enacted on December 8.
Journalists
China detained Australian citizen Cheng Lei in August and announced in October that charges had been brought against another Australian national, Yang Hengjun, who was detained last year. Both were detained on vague security-related allegations.
Separately, two Australian journalists fled Beijing in September, fearing for their safety after they were questioned by security officers. China then accused Australia's security services of "harassing and oppressing" Chinese state media reporters in June, apparently linking the two cases.
Propaganda
After an Australian military investigation concluded that Australian troops had committed war crimes in Afghanistan, Chinese foreign ministry spokesperson Zhao Lijian on November 30 tweeted a lurid computer-generated image depicting an Australian soldier holding a bloodied knife to an Afghan child's throat. Prime Minister Scott Morrison called a press conference to demand an apology -- a demand China promptly rejected.
Zhao is China's leading 'Wolf Warrior diplomat', with an unusually large Twitter following and a record of provocative statements that include publicly backing a conspiracy theory that the US army planted COVID-19 in Wuhan (see CHINA: Risks from reputational damage mount - September 17, 2020).
China in Australian politics
Both the Liberal-National government and the Labor opposition supported the foreign interference legislation and hold virtually identical positions on defence spending increases and the alliance with the United States. Both have increasingly vocal 'China hawk' groups that favour various degrees of decoupling of economic and social ties and have sought to gain from China-related scandals.
Labor accuses the government of mishandling China diplomatically, but there is little prospect of substantive shifts on major issues such as foreign interference, telecommunications and critical infrastructure under a Labor government.
Amid heightened rhetoric about China, there have been instances of racism against ethnic Chinese politicians. In October, Australian senators asked ethnic Chinese witnesses at a senate hearing to denounce unconditionally the Chinese Communist Party, raising comparisons with the 'loyalty tests' of the early Cold War era in the United States.
The possible adverse consequences for civil liberties of security measures undertaken in response to Chinese threats also generate controversy, though pushback so far has come largely from civil society rather than opposition politicians.
