Scott Morrison canceled Huawei deal hits China expanding Australia influence
TOOWOOMBA, Australia With a hawkish architect of anti-foreign interference laws taking over as prime minister, uncertainty over Australia’s critical but increasingly troubled relations with China is brewing as hot as ever.
Although many in this Queensland town in eastern Australia back Scott Morrison’s promises to mitigate the “national security risks” posed by China’s expanding regional ambitions, they are also keenly aware of the ever-tightening interdependency that ties even Australia’s agricultural heartland to Chinese markets.
So when, in his final days as treasurer, Mr. Morrison cited “extrajudicial directions from a foreign government” to nix Chinese tech giant Huawei’s hopes to build a 5G cellphone network, the decision which predictably triggered outrage in Beijing also did not go unnoticed in Toowoomba.
The fears that U.S. strategists harbor over an emerging China in the region can be felt in spades Down Under, where a prosperous, modern nation of 24 million people tries to calculate on a nearly daily basis how much influence and investment from China a still nominally communist one-party state with 1.4 billion people is acceptable to keep the economy humming without surrendering too much autonomy.
As they browsed for phones at the city’s Grand Central mall, shoppers Felicity Lack and Tina Clunes neatly encapsulated the two sides of the local debate over just how tough a line Canberra needs to adopt.
“I don’t like the idea of foreign countries coming in and taking over things here in Australia,” said Ms. Lack, a 32-year-old window tinter, adding that she would be willing to pay a bonus if a local company could be found to build the network.
But Ms. Clunes, a 49-year-old hairdresser, countered that panicky leaders needed to “get over” themselves. “Do they really think the Chinese find us that interesting to read our texts?” she wondered.
Whether fascinating or dull, though, the flow of information could be a target as Chinese law compels companies to help in intelligence matters, Canberra contended.
China has expressed repeated exasperation at the anti-Beijing suspicions in Australia and resistance to Chinese investment yuan.
Chinese government officials said the Huawei ban amounts to “excuses to artificially erect barriers” based on “ideological prejudices.” Huawei said in a statement that the move was “extremely disappointing” for Australian consumers seeking better services and competitive prices.
To Richard Sampson Genest, director of sales and marketing at Toowoomba-based Stahmann Farms, though, such minor trade battles and rhetorical tit for tat seem largely inconsequential. Australia, he said, is in no place to be making any demands in a vastly unequal relationship.
“The Chinese see it for what it is, I’m sure,” Mr. Sampson Genest said. “China knows absolutely that Australia is dependent on China. Australia [won’t] do anything to sever ties with the odd offense given here and there.”
Stahmann, a Toowoomba-based pecan and macadamia nut producer employing some 140, maintains an office in Shanghai and is one of dozens of local farm and food businesses increasingly reliant on access to Chinese retail and online markets.
Given these markets’ size and frequently explosive growth, it’s a race they can’t help but enter. Mr. Sampson Genest discovered this more than a decade ago when Chinese consumers first widened their tastes beyond walnuts and pistachios.
“Prior to that, the Chinese didn’t recognize a pecan nut,” he said. “Within two or three years, they were buying 20, 25 percent of the global crop.”
Changing the rules
To make the cross-cultural trade work, though, Australians had to learn and learn to accept the Chinese rules of the game, said Mr. Sampson Genest, whose business card comes with a Mandarin translation on the back.
“We might say ‘WTO’; China says ‘Belt and Road,’” he quipped, contrasting the Western-backed World Trade Organization with the massive state-run Belt and Road Initiative global financing program pushed by Chinese President Xi Jinping.
“If we [expect] only to be dealing in terms of Western approaches to business, then we could spend many, many years and millions of dollars frustrating ourselves endlessly.”
Some even suggest that inching closer to a Chinese worldview might also be a viable political strategy for Australia if the U.S. appears to be pulling back from its presence in the region.
Although proximity and economic ties may draw Canberra closer to Beijing, common heritage and identity and feared Chinese “hegemony” sustain its long-standing alliance with Washington, the University of Queensland’s Jacinta O’Hagan said.
This “triangular” challenge continues to dominate debate among “policy wonks,” said Ms. O’Hagan, who heads the school’s Governance and International Affairs graduate center in Brisbane.
“One of the ways in which it’s sometimes being encapsulated is: Does Australia ... have to choose between China and the United States?” she said. “Or can it continue to balance this?”
Particularly tricky seems to be the volatile crisscrossing interests and sovereignty claims in the South China Sea, where Beijing is increasingly flexing its military muscle to strengthen its territorial claims.
“Will it actually get to a situation of aircraft carriers facing off against aircraft carriers in the South China Sea? I certainly hope not,” she said. “It’s not something anybody wants to see.”
But many in Australia worry that Beijing is trying to expand its clout less by force and more but by winning over hearts, minds and properties here.
In Queensland alone, Chinese interests bought up more than $1 billion worth of land in 2016 and 2017 about twice the amount snatched up by the second-ranked U.S. investors, according to statistics from the state government.
In response, Mr. Morrison’s federal treasury this year moved to limit foreign acquisitions of prime agricultural farmland, requiring that Australians be given first dibs on the parcels.
Now, the Huawei move suggests mega-investments such as China’s much-criticized 99-year lease of the strategic Darwin port backed by the just-ousted prime minister, Malcolm Turnbull might not get such smooth sailing.
That is the kind of toughness Chinese-born Yan Zhao, who teaches Mandarin at Toowoomba’s University of Southern Queensland, applauds as she worries that her fellow Australians have been naive too often about Beijing’s true intentions.
“In the past, they would have said, ‘Oh, good, money. We welcome investment,’” Ms. Zhao said. “Now they’re beginning to realize: ‘Our land is being bought, our mines are being bought, our ports are being taken; what’s going on?’”
Some in China are also taking the long view.
Dong Di and Luo Zhen, researchers at the Beijing-based Pangoal Institution think tank, wrote last week in the state-owned Global Times newspaper that “being tough with China to some extent has become political correctness” for many Australian politicians.
“We shouldn’t push Australia too hard to make it confrontational,” they wrote. “Our enterprises and country will encounter setbacks and hurdles in the process of going global. We should draw lessons from it, accumulate experiences and ensure bilateral relations develop in keeping with mutual benefits.”
But Ms. Zhao one of an estimated 1.2 million people of Chinese descent living in Australia counters that Mr. Morrison, the new prime minister, should “stand up” for her adopted homeland and its values.
In the long run and in a country that’s more and more culturally and ethnically diverse though, Australians might just have to accept that China’s power here will only continue to expand, Mr. Sampson Genest countered.
“It doesn’t frighten me,” he said. “I just think it will be the tide of history.”