Commentary on Political Economy

Saturday 23 May 2020

Party’s over for the bullies of Beijing

China has shown its true colours to the world, and it will suffer consequences. Australian citizens won’t allow a return to just shutting up and taking the money.
Chinese Communist Party delegates, all wearing protective masks, stand during the national anthem at the opening of the National People's Congress at the Great Hall of the People on May 22, 2020 in Beijing, China.
Chinese Communist Party delegates, all wearing protective masks, stand during the national anthem at the opening of the National People's Congress at the Great Hall of the People on May 22, 2020 in Beijing, China.
You know things must be serious when Trade Minister Simon Birmingham, usually unfailingly on message about our trusted and mutually respectful relationship with Beijing, says it is time to diversify Australia’s export markets.
There is no more urgent policy imperative for the Morrison government than to start to unpick the most damaging aspects of inter­dependence with the People’s Republic of China.
Frankly, this has been obvious for years. Governments of all political stripes have gone to extraordinary lengths to look the other way whenever the Chinese Communist Party’s bad behaviour — in everything from human rights abuses to industrial-scale cyber-spying and intimidating Australian-Chinese citizens — risked damaging the economic pipeline.


To be sure, when hard decision points could no longer be avoided, Australian federal governments made the right choices to modernise our anti-espionage laws, keep “high-risk” (meaning Chinese) companies out of the 5G network and push back against Beijing’s ­influence, buying domestically and in the Pacific island countries.
But too often these actions were accompanied by unbelievable denials that the policy steps in question had nothing to do with China — they were “country agnostic”. This softly, softly approach has been immensely damaging for Australia’s interests. It is what made it possible for our universities, some state governments and sections of the business community to continue deepening interdependence with China without properly considering the risks of a democracy building an addictive reliance on an angry one-party state.
The effect has been invidious. Consider the content of so much media reporting of Australia-China relations. Through accident or negligence, a virus from Wuhan is unleashed on the world and ­hidden by the Communist Party for weeks in ways that led to hundreds of thousands of deaths and a global depression.
Soldiers of the People's Liberation Army march in front of the entrance of the Forbidden City on May 20. Picture: Getty
Soldiers of the People's Liberation Army march in front of the entrance of the Forbidden City on May 20. Picture: Getty
But much media reporting would have it that Australia’s sensible and balanced call for an open investigation of the virus is the ­reason why Beijing puts tariffs on barley, bans beef purchases and threatens coal exports. Far too much effort is made by policy-makers and analysts to examine how the tone of our words and ­actions will be received in Beijing when Australian governments are elected to speak for our national interests.
Likewise, the many calls for Australia to snap back to its ­pre-coronavirus relationship with China should force a national discussion about what that really means. Are we to “snap back” to saying nothing about the origins of COVID-19, to ignore Beijing’s ­illegal annexation of the South China Sea, illegal undermining of Hong Kong, increased pressure on Taiwan and mass human-rights violations in Xianjang and elsewhere?
Snapping back to shutting up and taking the money is not a ­viable option for Australia. It would be rejected by many Australian citizens and is not in keeping with our national values and strategic interests.
The option is not viable because the CCP seems to be on a self-destructive path towards more aggressive and intolerant policy positions. Reports last Thursday of the CCP proposing further repressive security laws for Hong Kong are particularly concerning.
In the words of the Chinese ­embassy, laws “establishing and improving the legal framework and enforcement mechanism for safeguarding national security” in reality just attack Hong Kong’s autonomy and undermine the ­so-called “one China, two systems” policy.
Beijing’s harder-line approach to Hong Kong is evident on other policy matters as well. The CCP is doing its best to narrow Taiwan’s capacity to operate in the international community as a successful democracy. If there is criticism of the CCP anywhere in the world, China’s “wolf warrior” diplomats will respond with insults and threats of retaliation.
It is a mystery how anyone in a leadership position in Beijing could hope that this panicked ­assertiveness will promote China’s long-term interests. What we are observing around the world is centrally co-ordinated, not accidental.
My supposition is that Beijing’s aim is to draw the attention of ­Chinese citizens away from the party’s domestic failings and on to nationalist aspirations for regional dominance.
Unwise as Beijing’s strategy is, it helps to clarify the choice Australia and other countries in the ­region face. China’s own bullying actions make it clear that we now need a plan for strategic distancing between ourselves and the CCP.
To be clear, strategic distancing does not mean completely disconnecting from China. It does mean that we need a sector-by-sector ­assessment of where and how to reduce unhealthy dependence and a plan to build other more trustworthy markets.
This will take years and there will be economic casualties, not necessarily because of political ­retribution from Beijing so much as the effects of the post-COVID global depression.
Strategic distancing probably will have a limited impact on Australia’s four biggest commodity ­exports to China: iron ore, natural gas, metallurgical coal and gold. China needs assured, quality, long-term supply of these products and Australia provides this in a way that Brazil and others cannot without significant transition costs to Beijing. Economics, rather than CCP politics, will drive demand for the first three commodities, and gold is likely to do well in depression years.
On food products, China needs protein and Chinese people value Australia’s reputation for clean, green, uncontaminated products. The CCP can apply tariffs to barley and will presumably threaten other sectors with similar retaliation, but Chinese consumers will also be punished by such moves. That complicates the party’s ability to be too punitive.
On education and tourism, frankly no one knows how long travel restrictions will put these ­industries into the deep freeze. The more dependent our universities are on the Chinese market, the greater the risk some institutions may fold. We built this dependence; China didn’t force it on us.
Universities will have to diversify and rethink their business model. A greater challenge will be to review and reduce the many hundreds of research connections between Australian and Chinese institutions.

NOV 17, 2019

China’s first case of COVID-19 is reported, according to government data that describes him as a 55-year-old man from Hubei. This data is not released until March after authorities identified at least 266 people with the virus.

NOV 17, 2019

One to five new cases of the lung infections are reported each day from this date at hospitals around Wuhan.

DEC 10, 2019

Wei Guixian, a seafood merchant in a Wuhan’s Huanan wet-market, becomes sick. She was released from hospital in January and remains the earliest identified patient.

DEC 20, 2019

A total of 60 cases of SARS-CoV-2, the virus’ official name, were recorded in China.

DEC 26, 2019

Multiple Chinese genomics companies are sent evidence of a new virus from the Wuhan patient data.

DEC 27, 2019

Dr Zhang Jixian from Hubei Provincial Hospital of Integrated Chinese and Western Medicine, warns authorities of a new disease affecting 180 patients was caused by a novel coronavirus. She would later defend China’s response, describing it as “timely”.

DEC 30, 2019

Chinese officials alert the World Health Organisation’s China office of an outbreak of pneumonia with an unknown cause in Wuhan.

DEC 30, 2019

On the same day, Chinese internet authorities begin stripping posts from social media that include the terms “Wuhan unknown pneumonia,” “SARS variation,” “Wuhan seafood market”. They also remove any related keywords and phrases critical of the government’s handling of the infection. 

JAN 1, 2020

The health commission in China’s Hubei province orders a genomics company to stop all testing and destroy samples of the new coronavirus, according to the Straits Times.

JAN 1, 2020

Officials finally close the Huanan Seafood Wholesale Market, but they are accused of eliminating evidence by disinfecting it without swabbing individual animals and cages for samples or drawing blood from infected workers.

JAN 1, 2020

Wuhan police publicly reprimand and bring in for questioning eight doctors who had warned about the new virus via social media in late December.

JAN 1, 2020

Condemned for “making false statements on the internet”, those rounded up included Dr Li Wenliang. An opthomolagist, Dr Li would later die of COVID-19, but not before he was forced to write a Maoist-style self-criticism denouncing his own prior statements.   

JAN 2, 2020

The government run Wuhan Institute of Virology identifies coronavirus and maps its genetic sequence but doesn't publicly announce the findings. 

JAN 3, 2020

The National Health Commission, China’s top health authority, issues a gag order directing that all virus samples be moved to designated state testing facilities or destroyed. Institutions are also ordered to not publish any research or information about the disease.

JAN 5, 2020

Researchers in Shanghai map the coronavirus genome and hand the data to Beijing, urging that control measures be introduced.

JAN 6, 2020

China’s CDC activates emergency response, but this is not publicly announced.

JAN 7, 2020

President Xi Jinping takes charge of response, although this is not publicly disclosed until February.

JAN 9, 2020

Chinese officials and the World Health Organization announce a cluster of pneumonia cases in Wuhan.

JAN 10, 2020

Chinese government expert Wang Guangfa describes the Wuhan pneumonia as “under control” and a “mild condition” on state television.

JAN 11, 2020

Frustrated that his work to map the genome hasn’t yet been released by the government, Professor Zhang Yongzhen publicly releases the sequence, six days after handing it to national authorities and seeing no response. 

JAN 12, 2020

Prof Zhang’s lab is closed by Shanghai authorities for “rectification”, just a day after sharing genomic sequence data for the first time and allowing scientists around the world to begin looking for a cure.

JAN 14, 2020

The WHO announces for the first time there may be “limited” person-to-person transmission on the same day that the National Health Commission holds a national meeting on fighting virus, which they would not publicly disclose until February.

JAN 14, 2020

The cover-up continues as plainclothes police in Wuhan arrest journalists and destroy footage from their phones and cameras, which are confiscated. 

JAN 15, 2020

Chinese CDC emergency centre Li Qun claims on state TV the risk of transmission is low. “After careful screening and prudent judgment, we have reached the latest understanding that the risk of human-to-human transmission is low.” 

JAN 18, 2020

Tens of thousands of families in Wuhan turn out for a “potluck” banquet to celebrate Lunar New Year, encouraged by authorites to try to attempt to break a world record.

JAN 20, 2020

As President Xi makes first public statement about the outbreak, he avoids mentioning human-to-human transmission, but encourages people to continue celebrating the Lunar New Year, with “caution”.

JAN 20, 2020

It is left to government task force chief Zhong Nanshan to announce the same day that the virus is being spread person-to-person. Dr Nanshan will later say that if authorities hadn’t covered up the spread: “the number of sick would have been greatly reduced.”

JAN 20, 2020

Meanwhile, Wuhan Mayor Zhou Xianwang blames Beijing for imposing rules stopping him disclosing the threat.  

JAN 23, 2020

Chinese authorities finally lock down Wuhan, but not before allowing 5 million to flee the city without screening.

FEB 6, 2020

China’s internet watchdog announces it has set up supervision on social media platforms to “create a good cyberspace environment to win the battle against the epidemic”. This follow’s Xi’s directive that online media be controlled to “maintain social stability”.

FEB 6, 2020

The same day, prominent citizen journalist and former human rights lawyer Chen Qiushi disappears in Wuhan after releasing videos of packed hospitals and distraught families. His whereabouts is still unknown. 

FEB 7, 2020

Dr Li Wenliang’s death from coronavirus, five weeks after police detained him for trying to alert fellow doctors to the outbreak, sparks a national outpouring of grief and open anger at Chinese authorities.

FEB 9, 2020

Another citizen journalist, Wuhan businessman Fang Bin disappears after posting footage on social media from hard-hit Wuhan. His whereabouts is still unknown.

FEB 15, 2020

Lawyer and civil rights activist Xu Zhiyong is arrested after 50 days on the run, after he had published an essay calling on Xi to step down for suppressing information.

FEB 16, 2020

Prominent Xi critic, Tsinghua University professor Xu Zhangrun under is placed under house arrest and cut off from the internet after he slamming Beijing. “The coronavirus epidemic has revealed the rotten core of Chinese governance,” he wrote in Viral Alarm: When Fury Overcomes Fear.

FEB 19, 2020

Chinese foreign correspondents from US publications including The New York Times and Wall St Journal have their press credentials revoked by Beijing and are expelled from the country.

MAR 14, 2020

Real estate entrepreneur and activist Ren Zhiqiang, known as The Cannon on social media, disappears in Beijing after criticizing Xi’s virus response. He described Xi as a “clown” who had made the outbreak worse. On April 7 Beijing announces it is investigating him for corruption.

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An overall blind spot in this ­debate has been a failure to understand that China’s economy is struggling as a result of the pandemic, meaning consumer demand and Chinese exports are in trouble. That alone means trade won’t grow as recently projected.
Australian Strategic Policy Institute research has set out in detail the open and covert connections that link many Chinese research centres back to their military and intelligence services. Frankly, Australian universities have been played by savvier counterparts looking to steal or develop intellectual property that will give China a military edge.
Chinese purchasing of Australian residential property has been falling substantially since 2015 and the Treasury has recently taken “temporary” steps to review all foreign purchases of businesses and critical infrastructure, regardless of purchase cost. That lends some confidence that distressed Australian businesses won’t be acquired by China in a COVID fire sale.
A far more challenging task for the Morrison government will be to work through past sales of ports, medical facilities and businesses, the electrical grid, gas infrastructure, IT systems and the rest.
If the government doesn’t trust so-called “high-risk vendors” to be part of the 5G network, it can hardly trust them to be running other parts of critical infrastructure. Last week, the Department of Foreign Affairs and Trade warned “malicious cyber actors are seeking to damage or impair the operation of hospitals, medical services and facilities, and crisis response organisations outside of Australia”.
Crucially, DFAT said it wanted “countries to cease immediately any cyber activity”, rather than pointing to non-state criminal groups. China is one of a very small number of countries with the cyber capabilities to reach into and damage the IT systems running critical infrastructure.
It is true China doesn’t need to own critical infrastructure to be able to damage it, but ownership and control can facilitate malicious cyber access. This will all have to be pared back over time.
Recently published work by The Henry Jackson Society in the UK reveals in sobering detail that of the Five Eyes intelligence countries (UK, Canada, US, Australia and New Zealand), Australia has the highest level of dependence on Chinese imports for a vast range of critical items. We have seen the implications of this for personal protective equipment. Beyond that, Australia has allowed itself to become dependent on a single market for pharmaceuticals, che­micals, fertilisers, resource extraction, manufacturing equip­ment, and even some foodstuffs.
In some cases, it may be acceptable to let these dependencies continue; in others, a review of these connections informed by a nat­ional security perspective might conclude that being addicted to a Leninist sole supplier is dangerous.
The CCP’s Australian supporters tell us that China is just too big a market to replace. The truth is we haven’t tried very hard to do that. Beijing’s flailing actions in recent months suggest to me a fragility that has Beijing spooked. The CCP is not too big to fail. Australia should be positioning to make sure we don’t go down with that ship.
Peter Jennings is the executive director of the Australian Strategic Policy Institute and a former deputy secretary for strategy in the Department of Defence.

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