The China Question and the National Interest

The most important reason to address the China question is not to gain a better understanding of the People’s Republic of China (PRC) but rather to ensure we have a clear understanding of ourselves.

A nation’s foreign policy should be an outward expression of its values: a reflection of its people, who they are and what they believe in. Settled as a colony of Great Britain, European Australia inherited a history that was British and its history, in turn, was a European one, evolving from the ancient Greeks and Romans, from Medieval Europe to the Renaissance, from the Reformation to the Enlightenment. Australia is a product of the West and when our nation’s story is placed in that context, it helps explain the nation we have become.

This essay appears in the latest Quadrant.
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Australia was born at a critical juncture of Western civilisation. When Captain Arthur Phillip and the First Fleet arrived in Botany Bay in 1788, it was five years after the American Revolution and one year before the French Revolution, two culminating events of the Enlightenment.

Unlike England and the rest of Europe, Australia didn’t carry the baggage of an “old world”. As historians such as John Gascoigne and David Kemp have recognised, the Enlightenment, with its ideals of reason, science and progress, did not cut against long-standing orthodoxies in Australia as it did elsewhere. Rather, in Australia, Enlightenment and Christianity learned to co-exist. Both supported the notion of individual human dignity and morality and the potential for self-improvement through discipline and endeavour.

Australia was effectively a blank canvas upon which the ideals of Enlightenment and Christianity were laid, and these ideals are still reflected in the liberal values that unite Australia today. We believe in life, freedom, self-reliance and a fair go. We believe in the right to property, equality of opportunity, the importance of the individual and the family, and the need to balance rights with responsibilities. 

While these values are shared with other liberal democracies, how we express them is unique. A quintessential “Australian way” has emerged which, like our values, is a reflection of our history. Our nation’s convict roots, for example, seared character traits deep into our national psyche. These include a lack of vanity and a healthy suspicion of authority.

Our forebears, their mettle forged with a determination to leave behind the bleak rigidity of Britain, became straight talkers. To this day, notwithstanding the choking effects of political correctness, we tend to say what we think. Our language is typically plain and forthright, albeit friendly and respectful.

Instead of adopting hereditary privilege or a land-owning aristocracy, Australia developed a strong middle class which sought equality of opportunity. To this day, ours remains a proudly egalitarian society. 

Australians have never ruled an empire, let alone run the world: we are mostly a humble and understated people, albeit fiercely competitive and industrious.

We are a pragmatic lot, and we are not ones for pomp and ceremony. We appreciate good humour, relish taking the mickey out of others, and embrace self-deprecation. And while we don’t pick fights unnecessarily, we don’t shirk when we find ourselves in one.

When it comes to our place in the world and our relationships with major powers like the PRC, there is nothing more important than staying true to who we are and what we believe in. We must always stick to our values. 

The international political economy is in the midst of a period of heightened uncertainty. The most important bilateral relationship—between the US and the PRC—is under great strain, and how it evolves will have an enormous impact on the rest of the world.

We may see the US and PRC find a new way of doing business; a competitive coexistence that rebalances supply chains to exclude co-operation in strategically important areas while still maintaining free trade and a multipolar, rules-based international order. Or, we may see greater confrontation between the US and PRC, a decoupling of their economies and the creation of a bipolar world with two spheres of influence akin to a new Cold War. Or, a “hot war” may erupt. While the cost of armed conflict is unfathomable, the economics of war do not always deter its outbreak.

No matter what the future holds for the US–PRC relationship, the notion that Australia must choose between the US and the PRC is offensive. It implies a weakness in our national character that does not exist; as if we’re in the game of selling ourselves holus-bolus to whoever is most powerful. That’s not who we are as a people and it’s not how we make decisions as a nation.

Australia should neither passively bide its time and wait to see which way the wind blows, nor be foolishly fatalistic. We should continue to soberly assess all plausible future scenarios for the international political economy, and prepare ourselves accordingly.

When the federal government took a principled stand on the need for a review into the cause and effect of COVID-19, it drew all sorts of criticism. Some claimed we didn’t show sufficient diplomatic finesse or we failed to first garner broader international support, while others accused us of doing the bidding of the US or over-reaching by taking the lead. 

These criticisms overlooked something more fundamental. Our foreign policy should be an outward expression of our liberal values and identity; an expression of who we are and what we believe in. Not only is an independent review into COVID-19 in our interest and the interest of all humanity, but having spoken plainly and forthrightly without hyperbole and then having stood firm without emotion or beating of the chest, we reflected the Australian way.

It was the same when it came to Hong Kong. Australia extended the hand of solidarity to Hong Kongers facing the chill of the PRC’s extraordinary national security laws. Giving a chance to freedom-loving, skilled and educated Hong Kong people accords clearly with our interests, and is consistent with who we are and what we believe in. 

The Australian government’s approach to the PRC has been right.

I want to see bilateral relations improve. However, the temperature is too high for any major renewal of the relationship at present. The day for renewing the relationship will come but it cannot be forced prematurely. In the meantime, Australia should act on three critical fronts to advance and defend our interests. First, we should build our strength as a nation. Second, we should exert our influence internationally. Third, we should assert our interests by playing a greater leadership role in our immediate region.

We cannot turn our backs on four decades of economic liberalisation as we move into a COVID-19 recovery phase. Protectionism makes you poorer, not richer, and if we’re to respond to future economic and strategic challenges from a position of strength, economic prosperity is a pre-requisite. I therefore reject the popular suggestion that we should proactively decouple our economy from the PRC’s. 

We will have to deal with trade and investment challenges as best we can, even when we believe the PRC is unfairly targeting our trade-exposed sectors. But trying to manipulate all supply chains across the Australian economy to sever them from the PRC’s would be to cut off our nose to spite our face.

So long as we’re not compromising our values or key strategic interests, Australia should unashamedly continue its economic relationship with the PRC because it’s vitally important for our economic recovery from COVID-19. It’s in our interest to get the most out of the PRC, just as it is in their interest to get the most out of us.   

While an economic decoupling from the PRC would be counterproductive, economic diversification is paramount, for two reasons. First, our trade is overly concentrated in too few sectors, and it is overly reliant on the PRC. Our lack of diversification heightens the risks of dire impacts at times of crisis, and it also jeopardises the resilience required to bounce back. Second, there are areas of strategic importance in which we require greater sovereign capability including critical infrastructure, the technology, communications and defence sectors, and critical supplies, including personal protective equipment.

Australia should embrace economic reforms including tax, industrial relations and deregulation. As foreign direct investment falls globally, we should leverage our strengths to position ourselves as a safe haven while finding new ways to encourage super funds to unlock capital to fund infrastructure. We should build a more robust industrial policy, especially in food and agriculture, energy and advanced manufacturing. But we should avoid any mad rush to onshore activities unless they are of strategic importance or areas in which Australia can genuinely compete internationally. 

We should double down on our free trade agenda by encouraging businesses to take full advantage of our recent agreements with nations such as Indonesia, and expand existing Free Trade Agreements (FTAs) including the TPP, RCEP and PACER Plus, and fast-track FTAs with the EU and UK. We should also progress deals with India and smaller markets in the Indo-Pacific. Finally, we should pursue an FTA with Taiwan, which has a mature economy that complements our own. 

Australia has FTAs or is negotiating FTAs with each of our Top Ten export markets except Taiwan, our tenth-largest. Australia is a champion of free trade and is a respected and ambitious trading partner. It should therefore come as no surprise if we were to begin negotiations with Taiwan.

The PRC will of course be sensitive about Australia pursuing an FTA with Taiwan. We should speak openly with the PRC and assure them that doing so is motivated by neither geopolitical ambition nor a challenge to our bilateral relationship. Rather, like our many other FTAs, an Australia–Taiwan FTA would reflect our interest in providing greater access for Australian businesses in the Taiwan market.

The world’s major international institutions including the United Nations, the World Trade Organisation, the International Monetary Fund and the World Bank were created to support an international order based on liberal values: freedom, sovereign equality, the balance of rights and obligations. These are our values and we have an interest in defending and promoting them.

However, international institutions are sick; they are suffering a crisis of legitimacy with weak governance, poor leadership and an over-reach of bureaucracy. The performance of the upper echelons of the World Health Organisation, a UN agency, at the early stages of COVID-19 is just the latest case in point.  

Institutional reform need not be the stuff of fantasy. As we’ve seen recently, fifteen members of the WTO, including Australia and the PRC, have backed a new global dispute umpire in lieu of the dysfunctional WTO Appellate Body. Some impasses can be overcome. However, there is a danger in relying on incremental reform because more powerful states can better corral support to win the day.

It is transformational reform that we should seek. The complexity and cost of doing so cannot be overstated. It would require an international bargain as ambitious as Bretton Woods in 1944. Although Australia cannot single-handedly orchestrate a recasting of the world’s major institutions, we can build a coalition to pursue the objective by engaging other democracies and nations that are similarly reliant on a rules-based order for their peace and economic prosperity.

What’s more, we should appeal to the US to take the lead in championing such a cause. Regardless of signs of a US retreat from global institutions, we should use our relationship to encourage them to take the lead. The US also has an interest in a stable international political economy, including in the Indo-Pacific. This task of appealing to the US to lead may become more achievable after this year’s presidential election, regardless of who wins.  

It is also important to persuade Australians that reform rather than abandonment of international institutions will deliver the bigger dividend. It is not hard to imagine the consequences of a dismantled international order. What would our options be? Watch the liberal institutions that have helped deliver us growth, prosperity and peace wither away, and hope that whatever fills the vacuum might benefit us? No thanks.   

The elephant in the room is the PRC. President Xi Jinping has declared a goal to “foster a new type of international relations” as part of an “evolution of the global governance system”. It would not be in the PRC’s interest to destroy the international system because they too have been a winner from it. But the PRC wants to remould the system so it better aligns with the norms it practises as an authoritarian state. That is, less transparency, more scope to leverage bilateral power imbalances and less reliance on existing international law.

Any major reform agenda would have to account for a far more powerful PRC, and to think otherwise would be naive. Nevertheless, two prerequisites should be considered.

First, liberal values must continue to underpin the international system because of their record of facilitating economic growth and international peace while lifting people from poverty and promoting universal human rights. We cannot afford to have the liberal rules-based international order replaced by a “balance of power” where nations use their economic and military might to achieve their desired outcomes.

Second, while respecting the PRC’s ascendancy as a major power, its influence should not be left unfettered or unchecked. The rights it accrues as a rising power should be commensurate with the responsibilities it bears.

There is something the PRC could do to demonstrate its goodwill in this regard: it could let go of its “developing nation” status. This is not something that can be taken from the PRC; they themselves would have to forfeit it.

The PRC’s status as a “developing nation” delivers it substantial benefits including, for example, preferential treatment in international trade despite being the world’s second-largest economy, and limited obligations on reducing greenhouse gas emissions despite being the world’s largest emitter. Its status as a “developing nation” also delivers the PRC important strategic benefits such as being the de facto leader of the developing world, a position it uses to advance its own interests.

Australia should continue to assert its interests by playing a larger leadership role in our immediate region. But the starting point is here at home. 

We should adopt a Team Australia approach to important areas of foreign policy, including strategic engagement with the PRC. Take the Belt and Road Initiative (BRI), for example, a geopolitical tool of the PRC for prioritising overseas lending, trade and investment. It is ludicrous that despite the Australian government’s strategic and wise decision to decline to sign on to the BRI, Australian states and territories have nevertheless felt free to strike deals with the PRC.

We need to stand united as a nation, not just a collection of polities to be picked off one by one. We need a co-ordinated approach, with an Australian consensus on how to deal with the PRC.  

A Team Australia approach would require continuing intelligence briefings for Premiers and Chief Ministers. It would also require a level of bipartisanship, which is why continuing to share intelligence with the leadership of the Federal Opposition is important.

We also need more regular engagement with the PRC at the political level, beyond ministerial meetings. My parliamentary colleagues and I should learn more about the PRC and engage more regularly with our Chinese counterparts. 

Let’s not forget that Australia’s Chinese communities are an invaluable part of Team Australia. I reject any attempt on the PRC’s part to expand the notion of sovereignty beyond territoriality and nationality to include claims based on ethnicity or ancestry. We must be uncompromising in our refusal to accept such interference in Australia’s affairs and people, especially from a PRC that purports to prize non-interference in foreign states’ affairs so highly.    

Australian nationals living and working overseas, and the many ethnic diasporas living and working in Australia are often an under-utilised asset for assisting Australia to build ties, trade and invest. We should audit the untapped human capacity of these groups and engage them as valued members of Team Australia. 

Beyond our own shores, Team Australia should assume a more expansive role in Australasia which includes New Zealand and the Pacific Islands. Building on our Pacific Step-Up policy, we could deepen people-to-people relations by expanding the labour mobility program, exploring new opportunities in education and training, and leveraging south-east Queensland’s bid to host the 2032 Olympic and Paralympic Games to unleash a bold sports diplomacy program across the region.

We should also explore a more structured, possibly even a multilateral, defence relationship with Pacific Island nations to ensure that foreign powers whose interests do not align with ours struggle to gain a strategic foothold in the region. The imperative to avoid encirclement is well understood by the PRC and I believe we should speak very plainly about our interests in this regard. 

If Australia were to continue to expand its wings and take a bigger leadership role in our immediate region, this would incentivise the US to engage more in our region, not less. It would demonstrate our preparedness to share the burden. President Trump’s positive response to the government’s recent commitment of $270 billion for our defence capabilities was recognition of our preparedness to invest in building our own capacity over the next decade.

Beyond Australasia, we should deepen relations with Indonesia and other South-East Asian nations. We could, for example, put scholarship programs like the Australia Awards on steroids, and nurture deeper military-to-military ties. 

Improvement in bilateral relationships should be complemented by the strengthening of other alliances and forums. Deepening ties and finding opportunities for collective action with fellow members of the Quadrilateral Security Dialogue—the US, Japan and India—together with South Korea, Vietnam and other countries will also become increasingly important.

Meanwhile, the Five Eyes alliance remains crucial. Consisting of the US, Britain, Canada, Australia and New Zealand, no other pre-existing network treats liberal values as sacrosanct as the Five Eyes. Recent engagement of the Five Eyes partners on co-ordinating an economic response to COVID-19 has expanded discussions beyond national security and intelligence. Politics and economics are intertwined, and it therefore makes sense that the Five Eyes address both.  

I want Australia to have an improved and enduring relationship with the PRC, one based on mutual respect. In seeking such a relationship, we should always be our usual pragmatic selves—open, consistent, direct and respectful.

There will come a time when the temperature is right for a major renewal of the Australia–PRC relationship, but that time is not now. Until then, we must ensure the winds of uncertainty do not blow us in the wrong direction. Instead, we must take control of our own destiny by continuing to defend and promote liberal values as the foundation of the international political economy. We should build our strength as a nation, exert our influence internationally and assert our interests by working even more closely with our partners in the region. 

Ted O’Brien is the MHR for the Queensland seat of Fairfax in the Commonwealth Parliament.