Australia and China Forty Years On

At midnight on 5 July 1971 in Peking, the leader of the opposition, Gough Whitlam, began a two-hour meeting with China’s premier, Zhou Enlai. This was the first direct meeting between a senior Australian political figure and the Chinese leadership since the Communist Party asserted its control over China in 1949.

On 12 July, the prime minister, William McMahon, responded to the news saying: ‘It is time to expose the shams and absurdities of his excursion into instant coffee diplomacy. We must not become pawns of the giant Communist power in our region. I find it incredible that at a time when Australian soldiers are still engaged in Vietnam, the leader of the Labor Party is becoming a spokesman for those against whom we are fighting.’

Trying to extract maximum political capital from Whitlam’s visit, McMahon told 400 ‘cheering’ Young Liberals in Melbourne that ‘In no time at all Mr Zhou had Mr Whitlam on a hook and he played him as a fisherman plays a trout.’ Earlier he had said that the ‘establishment of Australian diplomatic relations with Peking was a long way off’.

Whitlam’s delegation went on to Shanghai and on the evening of 11 July the opposition leader celebrated his fifty-fifth birthday in the convivial company of legendary ALP figures of the modern era Mick Young and Tom Burns, together with Rex Patterson, Graham Freudenberg and Australia’s soon-to-be first ambassador to the People’s Republic of China, Stephen Fitzgerald. McMahon suffered the double misfortune for a politician of bad luck and bad timing. As the celebrations in Shanghai were getting into full swing, US secretary of state Henry Kissinger was in Islamabad boarding a Pakistan Airlines flight to make his secret mission to Peking. An unsuspecting world was riveted when, on 15 July, President Nixon announced that Kissinger had been to Peking and that he too would soon visit. Notwithstanding our commitments of blood and treasure to the United States in Indochina, Australia had not been informed nor given any hint of this imminent sea-change in US policy.

These were the darkest days of the Cold War. For more than two decades the West had been locked in a struggle against international communism. Australia, joined at the hip with the United States, was mired in what most analysts by then viewed as a hopeless struggle against a nationalist movement led by the Vietnamese Communist Party. Australian conservative governments, which had taken the country into that costly yet futile war, were facing mass protests in the streets of major cities, rising disillusionment and disgust over the war. The nation was deeply divided.

China was still in the grip of the madness of the Cultural Revolution, unleashed by Mao against factional enemies in the Chinese Communist Party, real and imagined. It had nearly gone to war with the Soviet Union, its fraternal communist ally at its founding, now its mortal enemy with which it shared extensive, militarised land borders. The notion that Vietnam represented the frontline in a fight against a global communist movement led by Moscow was looking increasingly absurd.

Nixon and Kissinger, super-realists in international relations, despite the anti-communist stridency of Nixon’s Republican Party, decided to accept Mao’s gestures towards some sort of conciliation. In this they saw a possible solution to their woes in Vietnam and a potential ally in the struggle against the Soviet Union.

Thus a major global strategic realignment was set in train, which continues to this day and has much further to run. Whitlam and the people around him understood this and sought to ensure Australia was well positioned and its interests protected in the world that was beginning to unfold. On the election of Labor in December 1972, Whitlam announced to great popular acclaim and national relief the withdrawal of Australian troops from Vietnam and his government’s intention to establish formal diplomatic relations with the People’s Republic of China.

This year marks the fortieth anniversary of diplomatic relations between Australia and China. Yet as we go through the motions of the celebrations, Australia is more conflicted about this relationship than at any time since 1972. Australia now is economically more dependent on China than on any other country since the days before Britain joined the European Common Market. China is not only Australia’s largest trading partner: it is our biggest export market by far, our biggest source of tourist revenue, the biggest source of full-fee-paying students, and our fastest-growing source of foreign investment. China was crucial to the continued growth of the Australian economy after the global financial crisis and during the subsequent years of economic malaise in Japan, Europe and the United States.

China is big, economically powerful and a rising military power. Opinion surveys from the Lowy Institute consistently show that Australians are uneasy over this, despite recognising the benefits derived from China’s growth. As at the start of the 1970s, we are caught in historical currents beyond our control.

The China problem for Australia is threefold. First, we have become deeply dependent on the commercial benefits of China’s growth, and the employment and income that flow from this. Second, China is not like us. Its political system, values, the extent of its adherence to internationally accepted human rights standards and its willingness to provide global public goods commensurate with its economic weight, for example, are not what we would regard as acceptable norms. Third is our relationship with the United States, a problem now as it was forty years ago when the bold decision was made to establish diplomatic relations with China. This relationship is rightly the cornerstone of Australia’s security, yet China’s growth is inevitably changing the security balance in our region.

Today, the Australia–China bilateral relationship is therefore like no other relationship. It is highly complex, and because China is so different there is much potential in Australia for misunderstanding and errors of judgement. China, too, has its own difficulties in managing the relationship. It often presents the face of a bully, indifferent to Australian values and historical experience, and is sometimes utterly inept at managing the nuances and complexities of a vibrant representative democracy with a free and forceful media.

Much of this would not matter greatly if China were still a small economy. After a dozen years of hyper-growth, however, all has changed and we are struggling to adjust policy and levels of engagement to respond to the new realities in our bilateral relationship. The changing role and standing of the United States in recent years has greatly added to the policy complexity Australia faces.

When diplomatic relations were established between Australia and China, the United States had been harmed and its economy damaged by the wars in Indochina. It nevertheless still held overall strategic dominance. It also commanded legitimate moral leadership in a world divided between the Soviet Bloc and the West. The world today has multiple centres of significant economic dynamism and, while the United States may well recover its unmatched economic vitality, there is a sense that the international system is being reorganised by market forces without the United States leading the way.

In these circumstances, a heightened sense of anxiety can be expected in the United States and among its allies. A purposeful, rising China—ill at ease with its neighbours as they are with it—is deeply unsettling for those neighbours and the United States. Opinions vary: some deny that anything has really changed, others call for ways to accommodate China’s quest for strategic space, while yet others propose strategies to hedge or contain China. It is to be expected that this range of opinions is on display in Australia. Yet all this adds to the challenges for government in managing relations with China. These issues are far from settled and will have a long time to run in Australian public policy discussions.

Although the Labor Party has sought to claim it is the custodian of the China–Australia relationship, both sides of politics have contributed to its development over the past forty years. Even in the early years, prime ministers tended to take charge of the China relationship. After Whitlam, with considerable vision Malcolm Fraser gave it his personal attention even though the relationship with China was insignificant for us throughout the 1970s. During his 1976 visit, Fraser was able to secure the release of Harry Song and his eventual emigration to Australia by raising the case directly with Deng Xiaoping. Song was the son of a former senior military cadre and had been assigned to guard an Australian female teacher, but they became romantically attached.

Bob Hawke understood well the immense possibilities and opportunities China’s early economic reforms held for Australia. He took the unusual step of appointing Ross Garnaut, his principal economic adviser, to China as ambassador in 1985. At the time, within the old Department of Foreign Affairs, Beijing (which some still insisted on calling Peking) was viewed as a boutique posting for specialist China hands. After Garnaut’s appointment, the foreign policy establishment in Canberra began to recognise China’s wider importance for Australia’s interests. The Hawke government had to deal with the first major crisis in bilateral relations when in June 1989 the People’s Liberation Army was used to put a brutal end to several months of protests centred on Tiananmen Square in Beijing. Notwithstanding the prime minister’s deep emotional response, which saw him weep openly at the memorial service for the victims held in Parliament House, the government’s response was clear, measured and realist as it sought to safeguard Australia’s interests.

Sanctions were directed at the military and security apparatus, but official channels of engagement and dialogue were kept open. Unlike the Congress in the United States, the Australian Government worked to avoid politicising Australia’s response. The trade minister at the time, Neal Blewett, was the first Western Cabinet minister to visit Beijing officially after the June crackdown when he attended a bilateral trade meeting in October that year. In Beijing he faced a hostile Australian media contingent, including fielding questions about shaking hands with those who had blood on theirs.

Paul Keating was late to China, making his first visit in May 1989, when he was treasurer, to attend the Asia Development Bank’s meeting of governors. But he understood immediately China’s economic and strategic potential. As prime minister he worked to bring China and Taiwan into APEC and to establish the APEC summit. This leaders’ meeting brought China and the United States together for the first time in a regional heads of government forum. John Howard did not give China much attention initially, and for a number of reasons the relationship went through the most difficult period since 1989. His first visit in 1997 did much to change the atmosphere. He understood that whatever his private views of China’s political system, it was a rising economic power of potentially enormous importance to Australia. He set about creating a pragmatic policy framework in which both sides acknowledged differences but concentrated on common interests. By 2003 a twenty- five year agreement had been signed to supply liquefied natural gas to China. Towards the end of Howard’s period, his attention was focused on Iraq and Afghanistan, and Australia’s ever-closer ties to the Bush administration began to affect the management of Australia’s relations with China. Reflecting this, a more ideological, neo-conservative view of China began to form in Canberra.

Labor’s return to office in late 2007, however, coincided with a profound change in the relationship as China’s period of hyper-growth was sustained. Associated with this was an unprecedented commodities boom. At the same time, China set about diversifying its holding of foreign assets as its foreign reserves accrued. A proportion of these was directed to the resources sector and Australia continues to be among China’s top destinations for investment. The scale and speed of the economic changes in China caught even the Chinese Government short. China’s emergence as a major global economic power presented everyone with new circumstances and challenges, but probably no country more than Australia.

The election of the Western world’s first fluent Mandarin-speaking head of government was an event of great import not just in Australia and China but around the world. It heralded a new, more intimate phase in the bilateral relationship. In China, Rudd had almost rock-star status at the beginning. Expectations were raised to unrealistic levels; inevitably there were disappointments and misunderstandings on both sides. Nonetheless, in the long-established practice of prime ministers, Rudd made China his own foreign policy domain (it took then foreign minister Stephen Smith almost eighteen months to make his first visit).

With hindsight, Rudd was always going to struggle in managing the China relationship. His close involvement with China over decades meant that he would be an easy target as being too close to China, even when adopting an informed, balanced approach. The irony was that anyone who knew Rudd would know that he would never be ‘soft’ on China. He made a huge error of judgement when he ignored Japan on his first official overseas trip. He spent four days in China, which is a long stay in prime ministerial travel these days. The message to Japan was clear: in Australia’s view it had been eclipsed in importance by China. The public reaction in Australia was vociferous, led by conservative opinion writers, and behind the scenes the Japanese Government lobbied strongly. Much of the subsequent management of the relationship with China was coloured by these events, with frequent travel to Japan by the prime minister and the foreign minister, and an almost allergic reaction to any suggestion that the prime minister was close to China.

The year 2009 was the lowest point in the bilateral relationship since relations had been established. It was our collective annus horribilus: distrust grew over what was seen as government efforts to frustrate Chinalco’s intention to increase its shareholding in Rio Tinto; the arrest and trial in China of Australian citizen Stern Hu; the defence white paper, which was read and understood by media in Australia and China as being about the ‘China threat’; statements made on the twentieth anniversary of the Tiananmen Square protests and the Ürümqi riots; and official China’s bullying over the screening of a documentary about Uighur leader Rebiya Kadeer. Each taken on its own would have been quite manageable, but the bunching together of problems rendered stewardship of the relationship particularly hard.

Until late in the year it seemed there would not be a high-level visit in either direction—the first time since the early years of the Howard government. Mistrust and hostility on both sides were festering. The Chinese Government was also becoming increasingly alarmed at the politicisation of China in Australian domestic politics, as the then leader of the opposition tried to cast Rudd as being too close to China.

The Chinese Government at short notice decided to send executive deputy prime minister Li Keqiang to visit Australia. Rudd held extensive meetings with him and the outcome was a joint statement on the bilateral relationship. That such a statement was issued was itself highly unusual. As a general rule, Australian diplomacy eschews such things. The visit and the statement served somewhat to restore relations. It codified the Howard approach to managing the bilateral relationship by stating in an agreed document that there were many points of difference, but that we also had major interests to advance through close cooperation bilaterally and multilaterally. In Howard fashion it said that we should be open with each other about our differences, but these should not be allowed to overshadow the many positives in the relationship. It spoke of mutual benefit, trust and cooperation.

This was a significant positive development in the relationship and has provided an explicit framework for managing the relationship since then. Unfortunately, it was then pitched to the media that we had stood up to China and China had blinked—a line that some in the media still repeat today. This, of course, was not in the spirit of mutual trust and respect that underpinned the document.

In February this year, to mark the fortieth anniversary of the establishment of diplomatic relations, a joint report was released by the newly established Centre for China in the World (CIW) at the ANU and the China Institute of Contemporary International Relations (CICR).¹ The CIW was an initiative of then prime minister Rudd. He announced its establishment in a speech in April 2010. It came with an unusually large amount of funding, in the order of $55 million. Although it involved government funding, there was no opportunity for competitive bidding. Nonetheless, a new academic institution dedicated to studying contemporary China was welcomed as an important and much-needed addition to Australia’s national effort on understanding China.

The report is highly innovative and was issued in both English and Chinese. After reviewing the history and current state of the bilateral relationship, it makes a number of recommendations described as ‘Suggested Principles’ for taking the relationship forward. These call for greater effort in understanding the breadth and complexity of the relationship, the need for a shared vision about its importance to each party and about its direction, recognition of the inevitability of differences emerging, and the importance of having the depth of links and relationships to manage differences maturely. It also notes that the international system and domestic developments in each country will impinge on the relationship and will need careful management. Finally, it recommends that the relationship not be reduced to simple ‘slogans and formulas’.

These ‘Suggested Principles’ are welcome and helpful, even if it was not possible in the report to turn them into more concrete policy recommendations. More noteworthy, however, is that after forty years of bilateral relations and the tremendous growth in depth and breadth of the relationship, its writers felt the need to say these things at all.

That they did indicates the existential dilemma each side sees in the relationship: we are drawn together but the more we know each other the less we seem to understand. So after forty years we have the most informed individuals producing an excellent report that highlights the ambivalence both sides feel for the relationship. Both need to do more for the relationship through institution building, education and cultural exchanges.

© Geoff Raby 2012