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China has turned its charm on Australia, but it won't last forever

Peter Hartcher

Australia was told to bend over and brace for a kicking from China last week. 

Julie Bishop had given a speech urging Beijing to adopt a more liberal and democratic system, at home and abroad.

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Chinese/Australian free trade deal boosted

Prime Minister Malcolm Turnbull and Chinese Premier Li Keqiang have signed a deal to further boost trade between the two countries, including an agreement to boost chilled beef exports.

While the region's governments were in a "holding pattern" to see whether Trump's America would recommit to upholding the regional rules-based order, China should shape up: "While non-democracies such as China can thrive when participating in the present system, an essential pillar of our preferred order is democratic community."

Bishop suggested China join it.

It should be accepted as normal and natural that Australia's foreign minister speaks plainly and advocates Australian values and interests. 

But Australian media and commentators told us that China would be very cross indeed. Didn't we know that China's Premier Li Keqiang was about to visit Canberra?

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Sure enough, China's Foreign Affairs Ministry produced an official to say: "In the future we would like our friends in Australia to discard ... ideological prejudice and take the right approach to China."

This was headlined in the Financial Review as "China Rebukes Bishop on Eve of Li's Visit."

In this line of thinking, where Australia should shut up and live in fear of China, we were surely in line to receive not just a kicking but a triple kicking. 

Because Australia last week signed a letter, together with 10 other nations including Canada, Japan, Germany and Britain, asking China to stop torturing human rights lawyers.

And, at the same time, the Turnbull government had rejected a Chinese overture to join its signature infrastructure plan. The Beijing government wanted Australia's northern development plans to come under the rubric of its ambitious "One Belt, One Road" initiative, but was rebuffed.

But, in the event, there was no kicking. Quite the contrary. 

Even as the China's Foreign Affairs Ministry was going through the rhetorical motions, other arms of the Chinese government were preparing valuable concessions to Australia.

In the days before Li's arrival, China's Commerce Ministry announced the indefinite delay of tough new regulations on some e-commerce imports.

The share prices of Australian beneficiaries surged. Dairy exporter a2 Milk was up by 5 per cent, supplement firm Blackmores by 13 per cent and infant formula producer Bellamy's by 16 per cent.

Next, Li announced a change to access for Australian beef exports worth about $400 million a year. This concession was not made to any other beef supplying country.

And, in a decision that could have far bigger implications, Li agreed to bring forward a review of access to services markets under the China-Australia free trade agreement (Chafta).

This is where we have some key advantages in health, finance, aged care, design.  Already, Australia generates from China a third of its $20 billion annual exports of education.

The two governments had not been scheduled to even explore the possibility of talking about expanding services trade till the end of this year. That's now accelerated dramatically.

Why bouquets, not brickbats, for Australia?

Two simple reasons. One, China has been accelerating every aspect of its engagement with Australia for years now because Australia is useful to its long-term needs. 

Two, China sees an historic opportunity to hasten the end of US military and strategic domination of the Asia-Pacific. This opportunity is a gift straight from Donald Trump. 

Central to breaking US dominance is the breaking of the US alliance system. Australia is a vital part of that system. China is charming Australia in the hope of luring it out of America's sphere.

Does this mean China will never try to kick Australia? It does not. 

Look at South Korea. Even now, when China is playing nice to pull other countries into its orbit, it is giving South Korea a painful kicking.

First, China waged a charm offensive on Seoul. But after a few years the South Koreans saw though it.

China had no intention of restraining its rogue ally, North Korea. Even as Pyongyang barrels towards building nuclear missiles. So South Korea turned to its ally, the US, for help. 

South Korea, with American help, is today installing a defensive system to intercept incoming missiles, the Terminal High Altitude Area Defence (THAAD) system.

China claims that this system will also allow South Korea a glimpse into their territory. Why do they care? Because it would blunt China's power to threaten South Korea in future

So Beijing has turned off the charm and turned on the anger. It has imposed undeclared economic sanctions on Seoul. The targets so far? So-called K-culture – South Korea's burgeoning exports of music, TV and film – and tourism. Services trade, in other words.

The pain is spreading across South Korea. A survey by the Korea International Trade Association last week found that 57 per cent of companies polled were suffering.

This is the possible future for any country doing business with China. And Australia needs to be prepared for it.

An exceptionally useful new book braces Australia for its Chinese future. China Matters is written by two China experts who've adopted Australia as home, Linda Jakobson, originally a Finn, and Bates Gill, an American.

This brisk book is a realistic introduction to China today, neither romantic nor rabid. 

Australia's economic relationship with China has flourished, they observe, "but this flourishing relationship also gives ... China the increased ability to threaten and use economic coercion in its relations with Australia.

"Australian political leaders and the broader public need to be aware of the pronounced intertwining of security and economic interests with China [and] the ways in which Chinese can exercise economic hard power."

In short, today's profitable concessions from China are tomorrow's painful points of coercion.

They recommend that Australia embrace China, but at the same time diversify its economic, diplomatic and security relations with "the full range" of regional and global partners.

We should not assume the preemptive kowtow position, forever inviting a Chinese kicking.

But Australia does need to realise that there is a possible future of Chinese coercion, and brace by seeking as many support points as possible.
     
Peter Hartcher is international editor

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