China’s crackdown makes Beijing dealings an even riskier business

Trade Minister Don Farrell has finally travelled to Beijing to meet his counterpart, Wang Wentao. Yet people and companies wanting to do business in China are finding it increasingly difficult after a fresh crackdown by the ruling Chinese Communist Party.

Australian businesspeople returning from China are also being targeted under foreign interference laws, and Chinese tourists have complained about a struggle to get visas.

Farrell’s visit is the Albanese government’s latest effort to have Chinese sanctions lifted on Australian minerals, barley, wine, lobster and other agricultural products during the long years of the Morrison LNP government.

China’s crackdown comes as something of a conundrum. In late March, a glittering list of global business leaders attended the high-profile annual China Development Forum in Beijing, including Apple CEO Tim Cook, BHP CEO Mike Henry and Rio Tinto CEO Jakob Stausholm among dozens of others.

Newly installed Premier Li Qiang, China’s second-in-command, appeared at the event to welcome foreign companies — the nation is trying to resuscitate its economy battered by three years of COVID lockdowns and a largely closed border.

“China will open its door wider and wider,” Li told the executives, asking them to “invest in China and take root in China”.

“No matter how the international situation changes, China will unswervingly expand its opening up to the outside world,” he said. “China’s economy has been deeply integrated into the global division of labour.”

Two days later, Li delivered the same message to Chinese and foreign business leaders, including Fortescue Metals Group CEO Andrew Forrest, at the Boao Forum for Asia Annual Conference 2023 in Hainan province.

But within six weeks, Beijing’s fresh embrace of foreign business had been turned on its head. Last week, China’s powerful Ministry of State Security raided the offices of US consulting and research group Capvision in Beijing, Shanghai, Shenzhen and other cities.

“Over recent years, in order to realise the strategy of containing and suppressing China, certain Western countries have become increasingly rampant in stealing intelligence and information pertaining to our country’s military industry, economy and finance,” state broadcaster CCTV reported after the raid.

“Some domestic consulting companies have weak awareness of national security and seek to benefit financially by straddling the legal barriers.”

The Beijing office of US law firm Mintz was raided in March and Chinese staff were detained. Police also visited US consultancy Bain & Co’s Shanghai office. This means Australian businesspeople are getting it at both ends. Crikey has learnt that those returning from China are being targeted by security officials across customs, ASIO and the AFP as part of the growing concern in Canberra of security threats from China, especially in since the AUKUS alliance.

Alexander Csergo, an Australian businessman, has been arrested and charged with foreign interference under a section of the Commonwealth criminal code. Csergo spent many years in China and is now locked up in maximum security as his lawyers try to get him out on bail. 

Csergo’s lawyer, Bernard Collaery, has said the charges are under foreign interference laws introduced by the Turnbull government in 2018, which were criticised by the legal sector at the time for being vague.

“The Law Council’s greatest concern is with the depth and breadth of the provisions and the unintended consequences that flow from them,” president Morry Bailes said in February 2018.

Collaery told Crikey: “At the margin of the influence laws is the non-deliberate but reckless assistance by any person in relation to any foreign power. No espionage, no breach of secrecy, no disclosure of protected information, no intent to influence any role of government in Australia is required. You only have to be ‘a person’ who is reckless in helping a foreign power with information of a kind that may influence.”

In Collaery’s view, journalists could also be captured by the law.

Csergo’s case is understood to be part of a bigger campaign by Australian security authorities targeting businesspeople coming back from China that has been under way for some time, according to people familiar with the program. This has included taking electronic devices that may contain legitimately confidential company information.

Csergo’s arrest underscores worrying implications for anyone doing legitimate work for foreign states or companies, the national criminal justice spokesman for the Australian Lawyers Alliance Greg Barns has said: “It is a broad offence which could capture innocent conduct, because it criminalises private actions by Australians acting on behalf of foreign clients in, for example, information gathering for lobbying purposes. A person who is commissioned by a Chinese company to scope the market for their product in Australia might be caught by this law.”

Collaery and others fear more arrests could be in the pipeline, effectively doubling the risk — now a live issue both in China and on return to Australia — for people in the services sector doing business in China. Turnbull recently called for the laws to be reviewed, admitting they were aimed at the Chinese and saying they are not working.

It’s worth noting Attorney-General Mark Dreyfus’ consent is needed for Csergo’s prosecution to proceed, so the ball is in his court.

While Farrell did not come away with anything official or concrete from China, the official line was that the two were “very pleased to confirm that we agreed to step up dialogue under our free trade agreement” and he had been assured the recent deal to review China’s tariffs on barley remained “on track”.

Still, barley farmers have found new markets and switched crops. Shipments of coal, the biggest ticket export item affected by the Chinese trade freeze, have begun landing in China. The wine sector — hardest hit due to its outsized dependence on China, which had previously taken 37% of Australia’s exports in trade worth $1.1 billion — is confident the situation will improve.

It’s clear China is still keen on Australia’s mineral and agricultural resources. However, for others in the services sector looking to do business there it doesn’t appear to be a friendly environment and the once-ballyhooed free trade agreement is starting to look redundant.