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27 March 2019

With Jonathan Pearlman

Is China cutting Australia out?

Earlier this year, customs officers at five harbours in northern China suddenly blocked the passage of Australian coal. Yet they waved through shipments from other countries such as Russia and Indonesia. The block later spread to other Chinese ports, apparently to allow Chinese officials to conduct “radioactivity tests”. Australian coal typically takes two to four weeks to clear customs but this process is now taking up to three months.

There is still no obvious explanation for China’s move. It could be payback for Australia’s foreign interference laws or its ban on involving Chinese firm Huawei from rolling out its 5G network. Or it could be an attempt to meddle with international coal supplies, perhaps to support China’s domestic market. It might be the prelude to boosting American coal imports as part of a deal to end the trade war with the United States. Or it could be a genuine response to environmental concerns, albeit poorly explained. Nobody knows.

As with so much of China’s conduct – including the extent of its military and foreign policy ambitions – the reasons for the coal block remain opaque. This highlights a serious challenge for Australia, whose prosperity is now dependent on a country that can be unpredictable, and whose motivations are often difficult to fathom. Australian exports to China were worth $123 billion last year, almost a third of the nation’s exports, and more than the entire amount sold to Japan, South Korea, the United States and India. Coal supply to China was worth $13 billion, more than 3 per cent of total exports. But this booming trade is leaving Australia exposed. The coal block demonstrates that Canberra needs to prepare for future hurdles.

One option is to try to diversify the economy. But this is difficult for Australia, which happens to be rich in assets – from resources to quality education – that are particularly well suited to China’s needs as it transitions from being an economic backwater to a global giant.

Another approach is for Australia to develop closer diplomatic ties with China. No Australian prime minister has visited China for bilateral meetings in almost three years. This is partly due to a freeze by China on high-level visits following Malcolm Turnbull’s curbs on foreign interference in December 2017. It was exacerbated by the toppling of Turnbull, who was reportedly planning to visit China late last year.

In contrast, New Zealand’s prime minister, Jacinda Ardern, is due in China on Sunday to meet with president Xi Jinping and premier Li Keqiang. Like Australia, New Zealand has suffered apparent retaliation from China following its move to bar Huawei from involvement in its 5G network. Beijing reportedly postponed Ardern’s visit but has now agreed to this week’s trip. Ardern will go despite the recent attacks in Christchurch but has cut her visit to just twenty-four hours. Australia should seek similar opportunities, though this year’s election timetable will make it unlikely a prime minister will visit before mid-year.

China’s method of retaliation reveals much about its approach to global trade. Slowing imports by imposing strict testing requirements allows Beijing to block the coal without introducing tariffs. This suggests that China fears, rightly, that it could face action from Australia and others at the World Trade Organization if it adopts overtly protectionist methods. Clearly, China wants to be seen as a compliant global actor that supports trade and the rule of law.

The coal block follows similar moves against Australian wine sales to China. It will probably not be the last time that Australia falls victim to ambiguous Chinese conduct. The lesson is that although the country lacks the clout to retaliate unilaterally against China, it can potentially call on collective international responses. Unfortunately, Donald Trump has been hostile to the WTO – so Australia should make it clear to the United States that it supports the organisation, and should continue to work with countries such as Japan in defending unfettered global trade. Canberra’s best hope for unblocking the harbours is to press Chinese leaders in person, or to work with other countries to strengthen an international umpiring system that treats all players equally.


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Reset required for DFAT–AusAID integration

“Former foreign minister Julie Bishop was right – research and experience show that outside of the poorest countries, old style aid projects and passive service delivery financing yield less and less for all concerned.” Richard Moore, The Interpreter (Lowy Institute)

The polarisation paradox in Indonesia’s 2019 election

“Despite all the concerns about division, disinformation and hoax news, the polls haven’t changed. Jokowi still leads around 57 per cent to Prabowo’s 32 per cent . . . [The] two online armies are largely fighting each other, while younger Indonesians increasingly move away from tense political discourse on Twitter and Facebook . . . towards the more apolitical platform of Instagram.” Ross Tapsell, NEW MANDALA

Kashmir – the issue that doesn’t normally feature in Indian elections

“Across the political spectrum in India – outside the Kashmir Valley, that is – there is a broad consensus that Kashmir is an integral part of India. That’s not how many Kashmiris see it.” Andrew Whitehead, The Asia Dialogue

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How China is outmanoeuvring Trump on trade

“The point of these visits was for Xi to demonstrate that he’s willing to work with the EU, and equally willing [to] approach member states one by one with specially tailored bilateral deals.” Sam Bresnick, The New Republic

Thailand’s election mired in controversy as rival parties each claim upper hand

“What the junta had billed as a return to elected government instead brought more political turmoil to a Southeast Asian kingdom with a long history of weak governments, military takeovers and fitful experiments with democracy.” Shashank Bengali and Poypiti AmatathamLos Angeles Times

Free from Australian Foreign Affairs

Dreamers – How Young Indians Are Changing the World, book review by Aarti Betigeri

“India right now is in the grip of a demographic opportunity/crisis. The median age is twenty-five, and 600 million Indians – half the country’s population – are younger than that. Six hundred million: just let that figure sink in. It is almost twice the population of the United States, almost ten times the population of the United Kingdom, and twenty-four times the population of Australia.” Aarti BetigeriHERE

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ITALY’S CHINA
DEAL

We want to . . . better share the fruits of humanity’s progress.

Xi Jinping, president (China)

No need for Italian government to lend legitimacy to China’s infrastructure vanity project.

Garrett Marquis, National Security Council spokesperson (United States)

‘Italy first’ in commercial relations.

Luigi Di Maio, deputy prime minister (Italy)

Sources: Reuters, Twitter, The New York Times [$] 



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