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Australia’s tricky China problem

Australia’s tricky China problem

"China is angry. If you make China the enemy, China will be the enemy." This was the message recently conveyed by a Chinese government official on the intensifying row with its Asia-Pacific neighbor, Australia.

China-Australia relations, steadily deteriorating in recent months over a range of political disputes, reached a new low this week when Beijing posted a doctored image on Twitter of an Australian soldier holding a knife to an Afghan child's throat. Beijing's decision to post the fake image at a hypersensitive time for Australia's military establishment was a deliberate political provocation: beat Canberra while it's down.

Indeed, ongoing bilateral frictions are particularly worrisome for Australia, whose export-reliant economy depends on trade with China more than any country in the world. China buys $120 billion of Australia's annual exports (30 percent), and the relationship accounts for around 1 in 13 Australian jobs.

What's the dispute actually about? Well, just ask China. Last month, the Chinese government publicly released a 14-point list that outlines its grievances with the Australian government. It included gripes as varied as Australia's decision to ban Chinese telecommunications giant Huawei from its 5G network, "spreading disinformation imported from the US around China's efforts of containing COVID-19," as well as general "antagonistic" reporting on China by the Australian press.

Beijing was particularly peeved by Australian Prime Minister Scott Morrison's call earlier this year for a global investigation into China's handling of the coronavirus pandemic, and it hit back with a series of tariffs on Australian goods like wine, beef, barley, and coal that threaten about $20 billion worth of Australian exports.

A particular spat with universal resonance. The bilateral dispute that's increasingly keeping Australian economists and government officials up at night is being closely watched by governments around the world — including in Japan, South Korea, and New Zealand — whose economies are heavily reliant on China, yet like Australia, also pursue a values-based foreign policy.

And there is definitely reason to be cautious. China has increasingly used its growing economic clout as a weapon, punishing states that criticize its bellicose behavior or human-rights violations.

In 2010, for example, after the Norwegian-based Nobel Peace Prize committee honored Liu Xiaobo — a Chinese writer, dissident, and critic of the Chinese Communist Party — China, the world's largest consumer of seafood, blocked salmon imports from Norway, costing the Nordic country hundreds of millions in lost revenue. (Upon lifting the blockade several years later, China said Norway had "deeply reflected upon the reasons bilateral mutual trust was harmed.")

While the Australian government has not backed down in criticizing China on a range of political issues, including Beijing's meddling in Australia's internal government affairs, its spying activities, and its crackdown in Hong Kong, other countries may be less inclined to push Beijing's buttons in ways that could send their own economies spiraling.

Cost-benefit analysis. In recent years, as the Trump administration has prioritized an anti-China geopolitical agenda, US allies like Australia have been forced into an even trickier position as they try to keep economic lines open with Beijing while maintaining security ties with Washington.

China has been particularly perturbed by actions taken by the "Five Eyes" intelligence-sharing pact made up of the US, Australia, Canada, New Zealand and Britain. After the group criticized China's recent targeting of Hong Kong's pro-democracy lawmakers, a Chinese spokesperson warned that China might "gouge and blind" the Five Eyes nations in retaliation. The Morrison government has said that it wants to "reset" the Australia-China relationship but that Beijing won't return its calls.

Don't put all your eggs in one basket. A debate is currently raging in Australia about the need to diversify trade partners so as to protect the country from economic blackmail from China that could deepen Australia's pandemic-induced recession. "There's a basic rule in finance: don't put all your eggs in one basket," one Australian academic recently said. But others argue that it's too late and China is too big.

Khant Thaw Htoo is a young engineer who works in Eni's Sakura Tower office in the heart of Yangon. As an HSE engineer, he monitors the safety and environmental impact of onshore and offshore operations. He also looks out for his parents' well-being, in keeping with Myanmar's traditions.

Learn more about Khant in the final episode of the Faces of Eni series, which focuses on Eni's employees around the world.

On his first day as president, Joe Biden signed a remarkable series of executive orders. Boom! The US rejoins the Paris Climate Accord. Bang! The United States rejoins the World Health Organization. Pow! No more ban on immigration from many Muslim-majority countries. Biden's press secretary reminded reporters later in the day that all these orders merely begin complex processes that take time, but the impact is still dramatic.

If you lead a country allied with the US, or you're simply hoping for some specific commitment or clear and credible statement of purpose from the US government, you might feel a little dizzy today. The sight of an American president (Barack Obama) signing his name, of the next president (Donald Trump) erasing that name from the same legislation/bill, and then the following president (Biden) signing it back into law again will raise deep concerns over the long-term reliability of the world's still-most-powerful nation.

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Ian Bremmer discusses the World In (more than) 60 Seconds:

Biden's first scheduled call with a world leader will be with Canada's Justin Trudeau. What's going on with the Keystone Pipeline?

Well, Biden said that that's it. Executive order, one of the first is that he will stop any construction or development of the Keystone Pipeline. This is of course an oil pipeline that would allow further oil sands oil to come to the United States. The infrastructure is significantly overstretched, it's led to backlogs, inefficiency, accidents, all the rest, but it also facilitates more energy development and keeps prices comparatively down if you get it done. So, there are lots of reasons why the energy sector in Canada wants it. Having said all of that, Trudeau, even though he's been a supporter of Keystone XL, let's keep in mind that he did not win support in Alberta, which is where the big energy patch in Canada is located. This is a real problem for the government of Alberta, Canada is a very decentralized federal government, even more so than the United States. The premier of Alberta is immensely unhappy with Biden right now, they've taken a $1.5 billion equity stake in the project. I expect there will actually be litigation against the United States by the government of Alberta. But Trudeau is quite happy with Biden, his relationship was Trump was always walking on eggshells. The USMCA in negotiations ultimately successful but were very challenging for the Canadians, so too with the way Trump engaged in relations on China. All of this, the fact that Trump left the nuclear agreement with Iran, the Paris Climate Accords, WHO, all of that is stuff that Trudeau strongly opposed. He's going to be much more comfortable with this relationship. He's delighted that the first call from Biden is to him. And it certainly creates a level of normalcy in the US-Canada relationship that is very much appreciated by our neighbors to the North.

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Kevin Sneader, Global Managing Partner at McKinsey & Company, provides perspective on what corporate business leaders are thinking during the global coronavirus crisis:

Should businesses be pessimistic or optimistic about 2021?

It's easy to be gloomy about the year ahead when faced with the realities of a cold, bleak winter in much of the world. Add to that lockdowns across Europe, surging case numbers and hospitalizations, and dreadful events in the Capitol in the US to name a few reasons for pessimism. But I think there is a case for optimism when it comes to this year. After all, it's true to say that it's always darkest before the dawn, and my conversations with business leaders suggest there are reasons to be positive by 2021.

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Renowned tech journalist Kara Swisher has no qualms about saying that many of the country's social media companies need to be held accountable for their negative role in our current national discourse. Swisher calls for "a less friendly relationship with tech" by the Biden administration, an "internet bill of rights" around privacy, and an investigation into antitrust issues.

Swisher, who hosts the New York Times podcast Sway, joins Ian Bremmer for the latest episode of GZERO World, airing on public television nationwide beginning this Friday, January 22th. Check local listings.

The GZERO World Podcast with Ian Bremmer. Listen now.


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