The Chinese dictator punishes Australian democracy

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Via Domainfax:

Relations with China have taken another backward step after one of Australia’s biggest exporters, Treasury Wine Estates, was among several companies whose products were being stalled because of new customs rules targeting Australian companies and industries.

Australian diplomats in China have been mobilised to assist Treasury as the worsening relationship sparked a warning from respected business leader Graham Kraehe that Prime Minister Malcolm Turnbull would need to personally intervene to address concerns.

…The news from Treasury came as the former Reserve Bank Board member Mr Kraehe became the latest to voice concerns about the state of the relationship with China saying that Mr Turnbull had to make its improvement a key priority.

“My observation would be we need to really put some time and priority into improving the relationship with China, because although the US is our major ally, it’s not our biggest trading partner and it’s probably, over time, going to be – slowly hopefully, but slowly – less important to us than China already is and will become.

Hopefully? Oligarchs are the same the world over. It’s all about freedom until the money is jeopardised.

We shouldn’t jump at shadows. There is also this:

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Treasury Wine Estates is facing a supply glut of its own making in China, raising doubts over the sustainability of its rapid growth on the mainland as distributors report they are sitting on up to three years’ worth of low-end stock.

The over-supply issues are mainly around Rawson’s Retreat, Wolf Blass and some of the cheaper Berringer products, resulting in deep discounting among wholesalers and retailers in China.

Rawson’s is now cheaper on the mainland than in Australia, despite higher taxes and shipping charges, while some distributors are even giving it away for free, when bundled with premium Penfolds labels, in an effort to clear stock.

And this:

Sinosteel Australia managing director David Sun acknowledged there was considerable tension between Canberra and Beijing but rejected claims the relationship is at its lowest ebb in decades.

Mr Sun said that at a political level the relationship had been worse at times during Sinosteel’s landmark joint venture with Rio Tinto in a West Australia iron ore mine.

“We have experienced worse situations in the past 31 years (the life of the joint venture) so I’m sure these are just temporary issues,” he said.

Mr Sun urged Australia’s political leaders to listen to the public and business community on the relationship with China.

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The Australian turns marginal drivel from the Trade Minister into some kind of triumph:

The Turnbull government has ­extended an olive branch to President Xi Jinping in an attempt to ­repair the China-Australia bilateral relationship, with Trade Minister Steve Ciobo urging both sides to “bring our boats together and help each other to find a way to the other shore of the ocean”.

In a milestone speech in Shanghai last night, Mr Ciobo, the first Australian minister to visit the communist nation this year amid a diplomatic freeze, described China as a “true global giant”. He said its relationship with Australia had developed into “something more”.

Speaking to business leaders at the AustCham Westpac Australia-China Awards, Mr Ciobo referenced Mr Xi as he lavished praise on China.

Kowtowing is not what Dictator Xi wants. He’s after the end of US hegemony in the Western Pacific. If it means killing Australian democracy along the way then so be it.

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Let’s not forget the source of recent tensions came from China not Australia:

  • It began with the corruption of Sam Dastayari which unleashed a whole gamut of revelations about dodgy dealings in various parliaments.
  • It was pushed forward with the release of Silent Invasion which chronicled all kinds of unhealthy influence permeating everything from education to business.
  • Now it is moving forward again with reassessments of our strategic roles in the Pacific and Asia, plus whatever direction the US is taking under Donald Trump.

For too long the China debate has been dominated by apologists like Twiggy Forrest, Bob Carr, Geoff Raby and James Laurenceson. Tensions between Australia and China are long overdue. For years we’ve been sailing blindly into its sphere of influence and now, suddenly, we’re waking up. It’s a magnificent debate that should rise in volume and breadth until we settle, as a nation, on a much more considered course than hitherto’s grasping for trade riches.

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My own contribution is straight forward. China is not what we hoped it would become when we took the trade handshake a dozen years ago. It is not liberalising. It is going to other way, into dictatorship. Yet it is still growing in eminence and power projection, so we are forced to construct a new way to deal with it.

China sees its role in the world as manifest destiny with a total claim over the ethnic Chinese imagination without borders. It must therefore be dealt with equally comprehensively. Our response should have three dimensions to it. The astute among you will see that these three steps actually work hand-in-glove with one another.

First, our economy must seek balance. To achieve that we will need a raft of new policies that aim to improve Australian competitiveness and get us out from under the commodity dependence. This is necessary anyway as China slows and changes and wants less dirt. We must reform energy, banking, and real estate to lower the currency, boost productivity and move from urbanisation growth drivers to tradables.

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Second, we must engage strategically and diplomatically across our entire region. ASEAN is a natural partner to hedge Chinese influence. The Quadrilateral is also useful in bringing together allies. The US alliance must be constantly tended and revitalised. The Pacific must be treated as the good friend and partner that it is with significant aid and bilateral economic exchange, not the usual afterthought.

Third, Australian politics and society must be prepared and shielded to contain excessive Chinese Communist Party influence. This can easily be achieved via bans on foreign (or all) donations to political parties and the introduction of a federal ICAC. Society, too, is easy enough to protect if we have the will. There is no need, nor desire, for discrimination. We simply cut the permanent migration intake in half. It needs to be done anyway to take pressure off the east coast crush-loading. We should eschew both the cultural chauvinists of the Coalition and the “Asianising” influences within Labor. We are a multicultural democracy with liberal Anglophone roots. Let’s accept and protect it.

Thus, the state of affairs between Australia and China as they are is naturally one of tension. That doesn’t mean we can’t be pragmatic and friendly trading partners. Of course we can. But the period of calm we’ve enjoyed for a decade was a paid-for illusion during which we took the bribe and pretended it wouldn’t come with costs. It does. It jeopardises our democracy. It is finished. Let’s not bring it back.

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Instead, let’s deal with things as they are so we don’t wake in fright one day to find the myriad children of the Lucky Country are born into something altogether less young and free.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.