Tuesday, June 27, 2017

In Australia, backlash takes hold over Chinese money infecting politics, business

A Chinese national flag flies in front of residential buildings in the Lujiazui district of Shanghai, China, on June 30, 2013. (Tomohiro Ohsumi/Bloomberg)

In Australia, backlash takes hold over Chinese money infecting politics, business

A heated new debate about Beijing’s influence has raised calls in Australia for greater vigilance toward Chinese money, as countries around the world grapple with a rising appetite in China for overseas infrastructure and sensitive technology.
Australia has stood at the forefront of Western countries in building economic links with China. In the decade leading to 2015, only the United States received more Chinese investment; Australia’s tally nearly doubled that of Canada over that period. China is Australia’s largest trading partner and the destination for a third of its exports.
But as Canada under Prime Minister Justin Trudeau has sought warmer ties with China, approving a series of controversial investments and beginning exploratory talks on a free-trade agreement, Australia and others have begun to ask hard questions about the cost of doing business with Beijing.
“We’ve reached the point now where there is almost a consensus forming among the political class; that Australia has to stand up to China,” said Rory Medcalf, a former diplomat and intelligence analyst who now heads the National Security College at Australian National University. Fighting back will require strong measures, some in Australia now say.
What’s needed is “an investment approach which is actually quite similar to how China manages foreign investment into its own country, which is to say there are entire sectors which will be off-limits for the purposes of investment,” said Peter Jennings, a former high-level defence adviser and strategist who is now executive director of the Australian Strategic Policy Institute, a think tank.
And government should take a far more cautious approach even to investments in allowed sectors, tossing out thresholds for more extensive review, he said. Currently deals over a certain value are scrutinized. “You wouldn’t have a dollar threshold, because in some cases even quite small investments can have a strategic impact,” he said.
Worry in Australia has simmered as Chinese money has bought up critical infrastructure, including a port and large stakes in the country’s electrical industry, and poured into homes and farms.
But the public and political agenda has been galvanized by a series of local media revelations that have trained new attention on ways China has used money and influence to press its agenda at the highest political levels in Australia.
Lax contribution laws have allowed Chinese money to flood into local politics – two Chinese billionaires alone, with their associates, contributed about $6.7-million to the country’s leading political parties over the course of 10 years, a according to a joint investigation by Fairfax Media and investigative television show Four Corners.
The uncertain motives of those billionaires, property developers Huang Xiangmo and Chau Chak Wing, led the Australian Security Intelligence Organization in 2015 to warn political parties against accepting donations from the two men, saying their intention may be to exert influence on behalf of the Chinese Communist Party.
The parties did little to change course, providing the billionaires leverage. In one striking instance, Mr. Huang threatened to cancel a $400,000 Australian ($402,000) donation to the federal Labor Party. A day later, Labor Senator Sam Dastyari publicly supported China’s controversial policies in the South China Sea.
Further revelations showed that well-connected Australians have sought to obtain passports for wealthy Chinese donors, while security forces discovered classified documents in the home of a woman believed to be a Chinese spy.
Canadian federal law places far tighter restrictions on foreign political donations, banning most of them outright.
But there are signs of similar problems in Canada. Prime Minister Justin Trudeau has been criticized for attending a series of private fundraising dinners attended by wealthy members of the ethnic Chinese community in Canada, some of whom have close ties to the Communist Party apparatus in China.
In 2010, Richard Fadden, then director of the Canadian Security Intelligence Service, also warned that at least two Canadian provincial cabinet ministers had fallen under foreign sway. He pointed to China as one of the countries interested in political influence.
Amid the dislocations of the Donald Trump administration in the United States, China has sought to present itself as a responsible rising power whose interests align with the Western world, a fighter of climate change and champion of globalization.
“My only advice would be, don’t be fooled,” said the Australian Strategic Policy Institute’s Mr. Jennings. China “very clearly is not like us in terms of values.”
In Germany, similar concerns have sparked a broad public re-evaluation of China, whose protectionist tendencies are sparking anger as its companies buy German firms. The two countries are moving away from complementary roles and taking on “a much more competitive relationship,” Michael Clauss, Germany’s ambassador to China, said recently.
“We feel it’s not fair. There is no level playing field.”
At the same time, other countries have looked with worry at Beijing’s repeated willingness to use economic punishment to press its political agenda. China most recently devastated domestic sales of South Korean cars and other products out of anger over a U.S. anti-missile defence system installed near Seoul.
Backlash against such hard-nosed tactics has grown in Australia. In May, recently retired defence secretary Dennis Richardson called for Australia to send a naval ship through South China Sea waters China claims as its own.
Then, earlier this month, Prime Minister Malcolm Turnbull delivered a stinging rebuke, warning that “a coercive China would find its neighbours resenting demands they cede their autonomy and strategic space.”
Ottawa may want to take note, said Prof. Medcalf. The Australian Prime Minister bears a political resemblance to Mr. Trudeau, and “it is an important signal and lesson to Canada if someone like Malcolm Turnbull is shifting on China,” he said.
“Australia is trying quite hard to push back. Australia is focusing on vigilance and transparency and review of laws around espionage and political donations and so on. The signal there is that there’s clearly something wrong.”
Australia has for years provided a template for profiting from China. Its free-trade deal with China, which came into force in 2015, is regularly cited as a starting point for Canada’s own trade talks.
The country also has signed an extradition treaty with China; Canada has similarly agreed to discuss such a deal. Earlier this year, however, the Australian Parliament rejected ratification of the extradition treaty.
Still, even critics in Australia acknowledge the value in doing business with Beijing.
“To highlight the risks is not to say don’t go there. It’s to say, set up management structures to deal with it and move forward,” said John Fitzgerald, a China scholar at Swinburne University of Technology in Melbourne, who previously led the Ford Foundation’s China operations in Beijing.
That means, he said, questioning the risk of dealing with China — not just at the federal level, but also among boards and management at universities, in the tourism sector, at business councils and in lower levels of government.
Those groups, he said, should ask questions like “Who are we? What do we stand for? And where do we draw the line?”