Australia begins its great China decoupling

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It’s been a long and hard-fought battle and it’s not over by any stretch. But yesterday we saw a major breakthrough in Australia’s fight to push back Communist Party of China influence when the Morrison Government shifted significantly to new legislation governing sub-national agreements:

Today we get the usual whining from interests. As always, it is led by rentier-HQ at the AFR which, after months of crushing commentary, is suddenly Dan Andrews best mate:

Victorian Premier Daniel Andrews has slammed the Morrison government’s plans to terminate agreements with foreign powers, which specifically target China, saying the move will further hamper his state’s economic recovery.

Sources confirmed on Thursday that Victoria’s memorandum of understanding over China’s Belt and Road Initiative will be one of the first to be terminated under the new powers.

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FMG-champion and regular junketeer, Jen Hewitt adds more:

Former West Australian premier Colin Barnett has accused the Morrison government of “losing the plot” in its attempt to control all agreement with foreign countries, arguing Canberra’s “provocative” move will further damage relations with China as well as federal-state co-operation.

“Australia is a federation and the states remain sovereign in their own right,” he said. “To try to stop state governments, universities and local governments having any sort of international relationship, I just find abhorrent.”

He also warned the enormous expansion in resources exports to China had been largely driven by the states, particularly WA, and by industry – in co-operation with the federal government.

My advice to the AFR and “business”, as it calls anyone with liberal leanings in some weird act of identity politics, is to wake up. This is no longer the bullshit parlour game of fantastical corporate ubermen you have hung your hat upon. The trend towards Australian and Chinese decoupling cannot be controlled by lobbying. It is the harsh strategic calculus of history and you are on the wrong side of it. The liberal US empire has awoken to its challenge. Australians will never support the CCP over ANZUS and the behaviour of the former over the past five years has been an open violation of the very sovereignty, rules-based order and liberalism that gave rise to your riches. In short, man up you sell-outs.

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The Australian is much more useful:

Victorian Premier Daniel Andrews failed to take up multiple offers from the country’s highest-ranking intelligence and security officials to provide classified briefings on Chinese interference, including general concerns about Belt and Road deals with Beijing.

Despite Mr Andrews claiming the first he heard of a proposed Morrison government crackdown on state government and university deals with foreign powers was on Wednesday night, it emerged that Scott Morrison and national security chiefs made several unsuccessful attempts to brief him over the past month on China concerns.

Mr Andrews was warned by the Prime Minister about the federal government’s concerns with the Labor Premier’s BRI deal in a letter sent in June. The Victorian Labor leader was unable to attend a classified briefing to the premiers and chief ministers from security chiefs and the Prime Minister on July 31.

Thankfully, the Morrison Government doubled down today, via the ABC:

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Foreign governments are meddling in multicultural communities, harassing and exploiting “proud Australians” to further their own causes, according to Australia’s Immigration Minister.

Alan Tudge will use his speech to the National Press Club today to raise his concern about the reach of foreign governments in Australia.

“Members of our diverse communities have been both victims of interference and used as vectors to engage in foreign interference,” he will say.

“Despite now being proud Australians, some communities are still seen by their former home countries as ‘their diaspora’ — to be harassed or exploited to further the national cause.”

The Minister doesn’t name the countries responsible for this harassment.

But the ABC has been told that the Federal Government is increasingly concerned about the way the Chinese Government has been trying to consolidate its political influence in the Chinese-Australian community.

Australian security officials have also observed the way the Chinese Government has intensified monitoring and intimidation of some Chinese students and political dissidents.

They remain concerned about the hold the Chinese Communist Party has on many Chinese-language media outlets in Australia.

It is not just China, with officials also monitoring political intimidation and harassment in the Cambodian-Australian community, among others.

Time to ban WeChat. Indeed, the Morrison Government tripled down, at Domain:

Liberal Party elder and former defence minister Kevin Andrews has launched a savage attack on the Chinese government in a private party forum, saying President Xi Jinping was running “the most complete totalitarian regime that we’ve seen probably on the face of this earth”.

In what are among the most unguarded comments yet about China by an Australian government MP, Mr Andrews, who chairs the human rights sub-committee of Australia’s joint standing committee on foreign affairs, defence and trade, accused the “regime of Xi Jinping” of “trampling on human dignity, on human rights in China”.

Andrews was speaking in an internal online forum in which he tried to encourage members of Christian church networks to sign up new Liberal party members.

He said China had an “egregious” human rights record in Hong Kong and its troubled western province of Xinjiang, and had displayed “bellicose nationalism from President Xi Jinping” in the South China Sea. He accused the Victorian government of “adding propaganda value” to the Chinese Communist Party by signing up to its contentious Belt and Road Initiative.

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Its own deal-greasers are under the pump:

A South Australian Liberal MP has had close and frequent contact with a Beijing-backed organisation that denies any persecution of China’s Uighur ethnic minority and that security experts have linked to the Chinese Communist Party’s international propaganda arm, the United Front Work Department.

Liberal MLC Jing Lee, who serves as Assistant Minister to Premier Steven Marshall, has enraged SA’s Uighur community by championing the Xinjiang Association of SA, whose operations are closely intertwined with the Chinese consulate-general in Adelaide.

Ms Lee has emerged as a major supporter of Beijing within the SA parliament, warning fellow Liberal MPs against meeting with the banned group Falun Gong for fear of offending China and also speaking at a consulate-general function in Adelaide in 2017 promoting China’s One Belt, One Road initiative, where she urged SA to do as Victoria has done and sign on to the controversial infrastructure program.

Buzzfeed also dumped major new evidence of Uighur prison camps:

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China has secretly built scores of massive new prison and internment camps in the past three years, dramatically escalating its campaign against Muslim minorities even as it publicly claimed the detainees had all been set free. The construction of these purpose-built, high-security camps — some capable of housing tens of thousands of people — signals a radical shift away from the country’s previous makeshift use of public buildings, like schools and retirement homes, to a vast and permanent infrastructure for mass detention.

In the most extensive investigation of China’s internment camp system ever done using publicly available satellite images, coupled with dozens of interviews with former detainees, BuzzFeed News identified more than 260 structures built since 2017 and bearing the hallmarks of fortified detention compounds. There is at least one in nearly every county in the far-west region of Xinjiang. During that time, the investigation shows, China has established a sprawling system to detain and incarcerate hundreds of thousands of Uighurs, Kazakhs, and other Muslim minorities, in what is already the largest-scale detention of ethnic and religious minorities since World War II.

As Australia pivots away from China, there is no more egregious response than that coming from the fake left and our disgraced universities. Labor was virtually silent beyond a few squeaks from Tany Plibersek. Why wouldn’t it be? It has horribly miscalculated on this issue and is so structurally wedded to the CCP via its greybeards that it is now in for an interminable electoral hiding on this one issue.

But taking the cake was the universities who have entirely lost the faith of the community. All they can think of is the money, at The Australian:

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In a statement, the Group of Eight — which includes tertiary education institutions such as the University of Sydney and the University of Melbourne — blasted the government for not consulting them, claiming the scheme could damage the foreign interference work done by universities.

“The Go8 … is concerned that the proposed Australian Foreign Relations Bill as it relates to universities may not be proportionate to risk, could lead to over regulation and undermine the good work that has been undertaken between universities and the government in this area to date,” the Go8 statement said.

“As the universities that conduct 70 per cent of the nation’s higher-education-based research — the very research that the federal government will rely on to rebuild the post-COVID economy — the Go8 is genuinely confused as to why the government has proceeded in the way that it has, with no consultation to date.

“The Go8 urges the government to use its world leading Foreign Interference Taskforce — comprised of the sector and government agencies — to work through any gaps it feels remain in Australia’s security landscape, while not damaging our essential research sector.”

The very same Foreign Interference Taskforce that the universities fought tooth and nail against. Our numero uno tertiary voice of unreason is China super-bull James Laurenceson of UTS, of course at the AFR, who writes:

In the end, if the Morrison government has its way and the legislation proceeds, much will depend on whether Canberra is able to exercise balance and restraint in the face of what will no doubt be well-connected and louder calls to exercise its authority.

Treasurer Josh Frydenberg’s recent decision to stop a Chinese company acquiring a dairy and drinks manufacturer from a Japanese owner, without explaining why it was deemed contrary to the national interest, doesn’t inspire confidence.

Meanwhile, yesterday China’s deputy head of mission offered a mostly conciliatory speech at the National Press Club in Canberra. Such olive branches ought to be seized.

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Propaganda to the end. Get off the China tit, is all Australia says in response.

And that’s the rub now. I do not expect a rash of agreements to be explicitly expunged. Dan Andrews is going to see his egregious deal erased and maybe we’ll see a few more.

But that will be enough. The point is that no deal is safe on either side of the border now so they will never be struck and existing deals will whither on the vine. Therefore, expect:

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  • falling Chinese students and tourists henceforth;
  • crashing inflows of Chinese capital;
  • increasingly intense Chinese pushback on all exports;
  • long term pressure on commodities where alternatives to Australia can be sourced.

We will be fine without any and all of these. It will simply mean that the Australian dollar and house prices will be lower than otherwise over the longer-term as we rebuild alternative trade markets and repatriate some industrial base.

We should all rejoice. The fact is Chinese integration under the CCP stopped improving Australia around the time of the GFC. After that, it systematically marginalised a generation of young Australians, advanced corruption in our business and politics to an extent that threatened our very liberal system, and lowered living standards for most to the benefit of the very few.

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Thank god it is over.

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.