Finding a new China policy equilibrium

China policy must be pragmatic. The PRC and its influence and power cannot be wished away, and some kind of accommodation of Chinese interests will have to be negotiated.

Professor Nick Bisley (Head of Humanities and Social Sciences, La Trobe University)
First published in The La Trobe Asia Brief Issue 2 on 1 July, 2019.

From the late 1990s until the early 2010s, Australia’s approach to the People’s Republic of China (PRC) followed a pattern established by the Howard government. This entailed a form of policy compartmentalisation in which the two countries would focus on their shared economic interests and bracket out the challenging political issues, such as questions of human rights, democratisation and Australia’s fidelity to the US-centred strategic order.

Compartmentalisation allowed China and Australia to forge a mutually beneficial trade relationship while Canberra deepened its security ties with the United States and Japan. And when pressed Australian governments of both persuasions would declare that they did not have to choose between Beijing and Washington.

Of course, both the PRC and Australia knew that Canberra had long made a geopolitical choice in its relationship with the US, but compartmentalisation meant neither side needed to talk about or confront that reality.

In 2009, Kevin Rudd tried to do things differently– criticising China’s human rights record in Beijing and raising concerns about the strategic implications of the country’s return to power in the 2009 Defence White Paper. It did not work and the status quo returned.

By 2017 Malcolm Turnbull’s government reflected the growing influence of those who viewed China more as a threat than an opportunity, and tried to pull the complex political issues out of their box.

But the government could not match its tougher rhetoric with policy substance, and it beat a retreat in 2018, after a period in the PRC diplomatic deep freeze and some symbolically significant market access problems.

Clearly, compartmentalisation is no longer viable. The economic relationship is too complex. Engagement with China is now politically and strategically challenging and, as China is contesting US primacy, keeping the political and economic separate is impossible. But as Rudd and Turnbull’s efforts showed, developing a new policy approach is extremely challenging.

For one thing, both appeared not to have thought through the complexity of the task. Neither had established a clear set of larger objectives or begun to align the ends and means of Australia’s China policy.

So what are the forces with which a more effective China policy must grapple? First, the assertive, confident and at times abrasive face of Chinese power is not likely to disappear.

Equally, the PRC is not going to liberalise, and while it may not always be as sharply authoritarian as it has become recently, its political system is unlikely to moderate in any meaningful sense.

This newly resurgent country is also going to play a much greater role in the region, not just in terms of economic weight or market scale, but it will be a political and diplomatic leader, which creates institutions, makes rules and sets standards.

Third, the United States’ relative influence in the region will decline, both politically and economically, and the unpredictable tendencies of recent years are likely to persist over the near term.

Finally, Australia’s economic relationship with China will become more complex as PRC-origin investment grows and as more parts of the Australian economy engage with China. Equally, Australia will not significantly diversify its trade partners as there is no market quite like China.

For Australia, the policy challenges that these trends pose are very significant. While they do not call for a fundamental recasting of its approach, they do demand a decisive break with the compartmentalisation of years past. To do this I suggest a number of principles as the starting point for a new China policy equilibrium.

Most importantly, it must be interest-driven. Perhaps the biggest challenge Australia faces is reconciling its values as a liberal democratic society with its economic interest in an authoritarian great power.

While interests must drive the policy the country should establish realistic and clearly communicated red lines about conduct that is beyond the pale. These should be in line with international norms and most importantly should be managed and prosecuted collaboratively.

China policy must be pragmatic. The PRC and its influence and power cannot be wished away, and some kind of accommodation of Chinese interests will have to be negotiated.

The idea that the regional order would require no substantive changes to incorporate the PRC’s interest is plainly absurd. The challenge lies in reducing the transaction costs of the move to a new dispensation.

China policy should also be reinforced by an active strategy to work with countries across the region to shape China’s choices. Bilaterally, Australia will find it hard to be heard in Beijing, let alone shape PRC behaviour. But as part of a larger group of states, whether in ad hoc or institutional form, the country can shape China’s choices.

The PRC’s growth has helped fuel a remarkable period of prosperity for Australia, but this growth is also creating a very different geoeconomic and geopolitical environment. China represents both threats and opportunities for Australia. In the past we ignored the difficulties and focused on the shared economic interests.

This is no longer possible. But equally we cannot see everything China says and does as an act of malevolence and threat. A new approach to the world’s most influential country is needed to ensure Australia is best positioned to secure its core interests in a world in which Western powers will have less influence than in the past. Neither hoping for the best nor assuming the worst will do.

Photo: A crowd watches a Chinese dragon dance during Chinese Lunar New Year celebrations in Federation Square, Melbourne, 1 February 2014 (Chris Phutully/Flickr).

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