MANAGING THE AUSTRALIA-CHINA RELATIONSHIP

The China relationship is a critical relationship for Australia – it is both complex and consequential.

When considering how to best manage our ties, we need to bear in mind three realities that shape the relationship.

First, China’s importance to our current and future prosperity. It is well known that China has been central to over a quarter of a century of economic growth in Australia. That has been to the benefit of both Australia and China. But this mutual economic benefit is not just a feature of the past. China is now Australia's largest source of overseas students, and our highest spending inbound tourism market.

Indeed, according to the RBA, our service exports to China are now greater than those to the United States and the United Kingdom combined, and China has become the largest single export market for a range of Australia’s manufactured food items. As RBA Governor Philip Lowe noted: ‘what happens in China is now directly relevant to a broad spectrum of Australian industries’.

The second is the reality of China’s weight in our region. China is increasingly critical to the shape and character of the entire region in which we live. A region that has already changed – and will continue to do so – in great part as a consequence of China’s economic growth and the commensurate shift to Asia as the centre of the global economy.

The third reality is the inevitability of both the divergence and convergence of our interests.

Politically and economically, China and Australia are very different countries.

Unlike Australia, China is not a democracy nor does it share our commitment to the rule of law. This is the reality with which we deal.

It is therefore unsurprising that differences of approach, objective and opinion will inevitably arise.

These differences have become more apparent as China has become more confident in asserting its interests under President Xi.

But there’s convergence in our interests too. The complementarity of our economies, our strong people-to-people ties, and our shared desire for stability and prosperity in our region all lend themselves to seeking mutual benefit in our relationship.

Over the last year there has been much focus on the current challenges in the relationship. Certainly there have been times when the Abbott/Turnbull/Morrison Government has made it harder than necessary – something governments should seek to avoid.

But we should assume the possibility that the relationship will get harder to manage in the future, not easier.

Similarly, we should also not assume that these ‘bumps in the road’ will resolve by themselves. Dealing with differences and disagreements requires governments – on both sides of the relationship – to actively seek to manage them.

If Labor forms government following the next election, we understand that many of the current pressures will persist. We understand that, at times, our interests will differ. We understand that challenges in the relationship may intensify.

So what are the principles that will help us to manage the relationship?

We need a China policy that begins with what China actually is, not as others might perceive China to be or as China wishes to represent itself.

We need a China policy that is clear about where our interests come together and where they differ.

We need a sophisticated and consistent approach to managing differences, while working together where we can.

And we need to deal with China on the basis of respect, not fear. As US National Security Council Senior Director for Asian Affairs Matt Pottinger noted recently, our approach should be grounded in a deep respect for the Chinese people, for China’s many accomplishments, and for its vast potential.

And what does this mean in practice?

In our China relationship, as in all foreign relations, we should have a clear understanding and articulation of our interests. As I have said elsewhere, contrary to some views, the management of our relationship with China is not premised on some kind of binary choice represented by Washington on the one hand and Beijing on the other. Labor’s starting point is our national interests.

We consider there are four core interests that underpin the framing and delivery of Labor’s foreign policy: the security of the nation and its people; the economic prosperity of the nation and its people; a stable, co-operative strategic system in our region anchored in the rule of law; and constructive internationalism.

Australia is entitled to assert our national interests, just as China asserts what it sees as its interests.

Our national interests are firmly grounded in our values – and we will always seek to protect them.

This includes defending and promoting democracy, free speech, the rule of law, and protection of rights, including freedom from intimidation.

The Australian people legitimately expect that their government works to protect the nation’s economic and strategic interests, which are, of course, linked.

The size and characteristics of our domestic economy compel us to prioritise trade and engagement with other markets. And, as mentioned earlier, Australian prosperity is dependent on open trade and investment, including with China.

Second, we intend to pursue a coordinated and integrated approach to the many strands of our relationship with China — better synthesising the variously competing and convergent objectives and perspectives.

We need to ensure that our economic, education, trade, defence and diplomatic engagement with China is consistent, disciplined and co-ordinated. That demands both clear objectives and fit-for-purpose institutional arrangements.

Government and business also need to engage frequently, to understand the full spectrum of Australian interests when it comes to China. Too often in the public discussion, key stakeholders appear to be talking past each other.

It is also incumbent upon political, business and industry leaders to ensure they handle discussion and debate with a degree of sensitivity and sophistication. 

We must assert our interests and safeguard our sovereignty.  But we can do this without being offensive or inflammatory.

Issues and challenges need to be articulated clearly and purposefully, both to the Australian people and to China.

Australia’s diversity and multiculturalism is an integral part of our contemporary identity. It is one of our greatest strengths. In managing our relationship with China, we must guard against racial fault lines from our past being allowed to resonate today. This would not only have consequences for our national cohesion and national identity, but also diminish our national power and influence.

And third, we will work constructively with China in a regional framework, recognising that this is the region in which we both live, and the importance of the rules-based order that has underpinned stability and prosperity to the benefit of both our nations, and the region.

In recent years, China has evinced increasing assertiveness in pressing its interests. It has also demonstrated its claim to a greater role in the region.

None of this is particularly surprising. As China’s relative economic weight increased, it was both logical and predictable for it to seek a greater say in its region. The question is on what terms.

To that end, we can, and should, focus on the kind of region we want.

Australia wants a region which retains a system of institutions, rules and norms to guide behaviour, to enable collective action and to resolve disputes. A region in which those seeking to make or shape the rules do so through negotiation not imposition. A region with an open trading system and investment transparency to maximise opportunity. A region where outcomes are not determined only by power.

And we intend to work with countries, including China, to help support, build and maintain this region.

As the Secretary of DFAT Frances Adamson said recently, the relationship between China and the United States is the most significant for the future, and its condition will colour the regional strategic landscape.

There’s no doubt that the US-China relationship has become one of more explicit competition. How this competition is managed will have implications for Australia, for our engagement with China, and for the region more broadly.

This dynamic combines with other current challenges in managing our relationship with China, such as Beijing’s regional ambitions, the implementation of foreign interference legislation, and the tightening environment inside China.

None of these are simple to respond to.

But in line with the approach described earlier:

In recent weeks we’ve seen some indications from Beijing of a desire to improve ties with Australia. This is a positive sign and one we welcome. It’s also, perhaps, a recognition by Beijing that it’s also in its interests to have a strong and productive relationship with Australia.

Engagement and cooperation are vital even within a context of difference, disagreement, or competition.

We approach the relationship confidently.

In closing, I make this point. The focus on the bilateral relationship should not overshadow our primary interest - the nature of the region in which we live. Our bilateral relationships, including with China, should reflect Australia’s interest in a stable and prosperous region.

This is the focus of Labor’s foreign policy. And it’s the focus of Labor’s FutureAsia plan.

Thank you.