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Australia’s China Syndrome

eye on the news

Australia’s China Syndrome

Increasing dependence on Beijing imperils the nation’s future. December 5, 2019
Economy, finance, and budgets
Politics and law

Australia continues to benefit from China’s rise, though few countries are more threatened by its expanding power. Once closely tied to the British Commonwealth, and later to the United States, the Australian subcontinent, with only 24 million people, now relies on China for one-third of its trade—more than with Japan and the U.S. combined. Australia’s major economic sectors rely on Chinese support; investors poured in $17.4 billion in 2017. 

Australians increasingly understand the implicit danger of this dependency. Unlike the U.S., which possesses the market size, military capacity, and technological power to resist Chinese expansionism, Australia is far more vulnerable to the Communist regime’s efforts to shape its economy, cities, and political system. Australians aren’t as threatened as Hong Kong’s democracy activists, but China’s influence has intensified. China has refused visas to two critical Liberal MPs in Australia, for example, unless they “repent and redress their mistakes”; scholars, meantime, have faced considerable pressure to toe the party line.

China’s defenders insist that criticism of the Middle Kingdom reflects deep-seated racial animosity, and Australia has a history of overt discrimination. In the late nineteenth century, large numbers of Chinese arrived in Australia to work in the gold mines, and their presence was resented. Through the late 1960s, a “white Australia” program, protecting against “Asian invaders,” was the foundation of immigration policy, its effects lingering long after it was formally discontinued. Despite the hostility, many Chinese stayed in Australia, though they remained a small, isolated community outside the mainstream, predominantly white society.

Australia long sought to maintain its distinctly British character. Before World War II, the country discriminated against Asian immigrants but also against those from eastern and southern Europe. A low birth rate and consistent postwar labor shortages ultimately forced Australia to open itself up to newcomers. Following the war in Vietnam, where Australians fought alongside Americans, the country permitted entry of 80,000 Vietnamese; today, the nation’s Vietnamese community surpasses 200,000 people. As the country abandoned its restrictionist policy, other Asians, along with Middle Easterners, arrived en masse. Last year, for the first time, Chinese immigrants outnumbered British arrivals. Today, roughly 500,000 Chinese-born people make their homes in Australia, with about 300,000 having arrived after 1980.

To a large extent, Asian immigration redefined Australia’s identity, giving hope that the country, as former prime minister Paul Keating remarked in 1992, would no longer be dragged down by “Anglophilia and torpor.” Australia’s demographic transformation was paralleled by an economic one, shifting the country toward engagement with Asia.  In short, Australia, which hasn’t experienced a recession for almost 30 years, found a comfortable niche supplying commodities like natural gas, iron, and coal to China, which leads the globe in raw material consumption. But this is a mixed blessing, since Australia now follows a classic mercantilist pattern of resource dependence on the “imperial” seat. As a result, according to a recent Australian Parliament study, Australia now imports Chinese-made manufactured goods, once produced “down under.”

Many Australians have expressed concern that the country’s intense integration with an authoritarian superpower presages a new life as a “vassal” state. Unlike the British or Roman Empires, though, China’s imperium isn’t focused on territorial expansion outside its home areas. Instead, it cultivated vassal states that pay tribute to Beijing with products and fealty. And so, industries like tourism are now highly dependent on China, with one in four tourist dollars coming from the Chinese—equal to the combined expenditures by Americans, Japanese, British, and New Zealander visitors. It’s no surprise, then, that many Australian hotels now use Chinese as a second language. 

Australia’s increasing economic dependence on China is perhaps clearest in its education sector. In Sydney, three universities—the University of Sydney, the University of New South Wales, and the University of Technology at Sydney—enroll 36,500 Chinese students, more than double the population of central Sydney. Each enrolls more Chinese students than any American school, with the University of Sydney alone depending on foreign students for one-fifth of its annual revenue. A reversal in China’s fortunes, or worsening diplomatic relations, would devastate a sector responsible for roughly 8 percent of the nation’s annual exports. The entire university system, through its reliance on China, is “taking massive financial risks in pursuit of this pot of gold,” said Salvatore Babones, an adjunct scholar at the Centre for Independent Studies.

Of course, many in the business community eagerly seek to preserve the status quo with China, regardless of the cost to Australia’s political and economic independence. “Our whole standard of living is virtually tied to our exports to China,” noted billionaire businessman Kerry Stokes in The Australian. At least one state, Victoria, home to Melbourne, has even signed onto China’s Belt and Road initiative.

There is, however, increasing concern about Australia’s reliance on an authoritarian regime. In 2018, Australia’s intelligence chief identified two prominent Chinese businessmen, who had donated millions in Australian politics, as possible agents for the Communist government in Beijing. In addition, an Australian Broadcasting Corporation report concluded that businesses and individuals “with Chinese connections” had donated more than $5.5 million to Australia’s main political parties between 2013 and 2015, “making them easily the largest source of foreign-linked donations.”

This year, the defection of a Chinese spy, Wang “William” Liqiang, revealed what is alleged to be a widespread Communist effort to influence Australian politics, similar to the approach employed in Taiwan and Hong Kong. Duncan Lewis, former head of the Australian Security Intelligence Organisation, the country’s counterintelligence agency, claims that the Chinese government was seeking to “take over” Australia’s political system through its “insidious” foreign interference operations.

The Chinese have certainly made friends among Australia’s political class. The former trade minister, Andrew Robb, who negotiated a trade pact with China, reportedly received a part-time consulting contract worth more than $650,000 annually from a Chinese billionaire. Meantime, Sam Dastyari, a key leader of the center-left Labor Party and supporter of Chinese expansion in Southeast Asia, recently resigned after “tipping off” a Chinese businessman and political donor, Huang Xiangmo, that Australian intelligence authorities were likely monitoring his phone. Chinese influence has reached the highest levels of power, particularly under former Australian prime minister  Kevin Rudd. A Mandarin-speaker, Rudd has run interference for Beijing on numerous matters, accusing former prime minister Malcolm Turnbull of conducting an “anti-Chinese jihad for highlighting Beijing’s intelligence breaches. 

On Australia’s political left, particularly in the largely Chinese-funded universities, it’s commonplace to label anyone questioning Chinese influence as racist. According to the Lowy Institute, the younger population holds China in high regard, despite the country’s repressive politics and massive greenhouse emissions, due in part to widespread dislike for U.S. President Donald Trump. Australia’s China critics feel isolated, threatened, and outnumbered. “Even my freedom in Australia is increasingly under threat from China’s ‘soft power,’” said Feng Chongyi, an associate professor at the University of Technology Sydney, when noting that Australia’s civil society organizations, Chinese-backed newspapers, and its four Confucius Institutes largely follow the party line. Clive Hamilton, a professor of public ethics at Charles Sturt University in Canberra and author of the 2018 book Silent Invasion: China’s Influence in Australia, has described support for China’s regime among the Greens and Socialist Alternative party as “bizarre” and reflecting “a real paucity of analysis,” or “a kind of identity politics on steroids.”

Besides political concerns, some Australians worry about the impact of Chinese money on their way of life. The massive shift of funds into the country’s real estate markets, particularly in big cities like Sydney, has underpinned the densification of the country’s cities. Today, parts of Sydney, once among the world’s most picturesque and human-scaled cities, look increasingly like something from China, with closely packed high-rise apartment towers, a substantial number of which are unoccupied and held as investments. “Direct Chinese investment flows into speculative off-plan apartment projects have slowed relative to the recent boom years, but the legacy of this investment is still to be understood,” said market observer Ross Elliott.

Massive Chinese investment has tilted the real estate market toward density and more expensive housing in ways that Australia’s market wouldn’t have produced on its own. According to Elliott, reports of the presale to foreign buyers of entire towers, comprising more than 150 or 200 apartments, were commonplace only a few years ago. He doubts that some projects—many still under construction—will be fully occupied upon completion. But Chinese investment has been hailed by Australia’s planners and density advocates as proof of a large market for such construction.

In part because of pro-density planning policies and Chinese investment in inner-city real estate, Sydney’s housing prices are now higher, relative to incomes, than those in San Francisco, Los Angeles, New York, and London—all larger, richer, and more established global cities. Property ownership, once widespread and considered part of the very idea of Australia, has become increasingly rare, particularly for new immigrants and millennials. Australia’s property-ownership rates among 25- to 34-year-olds dropped from more than 60 percent in 1981 to 45 percent in 2016.

Unlike the U.S., Australia cannot hope to resist Chinese domination without allies, a sign that the country should strengthen its economic ties with “the Anglosphere,” or an extended British Commonwealth of democratic Asian countries, notably India and Japan, both worried about Chinese expansionism. The current shifts in post-Brexit Britain could get the ball rolling, and U.K. Prime Minister Boris Johnson has long been enamored of such an alliance with the U.S. Reaffirming its ties to the West could help Australia find a way out of its current predicament, described in a Australian Security College report as “so comprehensively dependent on China that [it] cannot afford to cause China much difficulty on security and political issues, even when our interests diverge.”

Linked to the Anglosphere, to Japan and India, and maybe to the EU, Australia can forge new markets and relationships that don’t compromise the country’s democratic institutions and egalitarian culture. By contrast, placing one’s fate in the hands of a country that scorns human rights—and operates its own concentration camps—is, in the long run, incompatible with democracy and what being an Australian is all about. More Australians need to understand that too close a link to China imperils their economic and political system. The only way to resist devolving toward vassalage lies in creating a sensible alternative, one that preserves a cherished democracy—before it’s too late.

Photo: Feng-Li/Getty Images

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