An apparently chastened Tony Abbott ventured, at last, to north Asia this week, the epicentre of Australia’s continued prosperity. It was something of a relief to see him ratchet back the pro-Japanese rhetoric (at least in public) that has so incensed Beijing and deliver a much calmer and friendlier message to the Chinese on his first trip as Prime Minister.
In China — where apparently there were fewer in the travelling press pack than on his other stops — he wisely opted to emphasise that he was there as a friend of our largest trading partner. Clearly he’s learnt a few lessons, but insisting he was not there to “do a deal”, or at least pave the way for a few, was hard to swallow. Why else would he travel with a praetorian guard of 30 big-name chief executives and a further 500 Australian businesspeople in Shanghai with Andrew Robb, his Trade and Investment Minister?
Robb, by the way, has impressed diplomats across the region with his clear-headed, low-key approach. Abbott is lucky to have him, and Robb’s focus on investment as well as trade is timely as National Party hysteria about Chinese investment in Australia fades and reality sets in.
Despite his more measured approach, Abbott’s decision to accept Japanese PM Shinzo Abe’s invitation to be the first foreign leader to meet with the National Security Council will have riled the Chinese, already furious over Abbott’s rhetoric casting Japan as Australia’s closest friend in the region.
No amount of friendly military-to military co-operation and exercises — which have never been under threat in any case — will make up for what the Chinese army and senior officials regard as outright insults.
There were some the obviously staged “optics”, too, notably Foreign Minister Julie Bishop making nice with her counterpart Wang Yi, who only two months ago gave her an unprecedented public dressing down over Australia’s uniquely over-the-top reaction to China’s declaration of an Air Defence Identification Zone.
Abbott’s other main job in Japan was to agree to the Economic Partnership Agreement, not quite “a free-trade agreement” but better than nothing. It’s been well covered in this publication, but it’s worth noting that Australia’s former ambassador to Japan John Menadue has described the deal as “third rate” and provided some sensible analysis of the over-hyped deal his Pearls and Irritations blog.
A quick stop in South Korea for tough Tony to “eyeball” North Korean soldiers in the demilitarised zone, then onto China — really the main game of this visit and one he described as the “highlight”. Another tick.
For his first public speech in China as PM, Abbott chose, as his predecessor Julia Gillard did last year, the Boao Conference for Asia in Hainan. Boao is an odd event, pitched by the Chinese as the Asian “Davos”; it’s certainly not that, being uniquely Chinese — and it is a logistical nightmare. The “plenary session” traditionally addressed by one of China’s top two leaders is held three days into the conference.
This year it was the turn of Chinese Premier Li Keqiang. Following this a half dozen or so world leaders get a bite-sized chance — about five minutes — to say their piece.
It was here that Abbott appeared sensibly to emphasise his mission to come as a friend — reminiscent of Kevin Rudd in 2007, luckily without the controversial lecture on Tibet. He then veered off into a riff on Deng Xiaoping’s widely misquoted words on how “glorious” it is to “get rich”. No deals, huh?
Here, his office fell for the beginner’s error of lazily using the misquote. Deng in fact said that some people should get rich first. Given the Communist Party’s recent well-chronicled problems with corruption due to a surprisingly fierce campaign from leader Xi Jinping, this may have been an unintended diplomatic faux pas.
The “rich” thing is a particularly delicate issue in China right now, with Xi’s campaign centring around former security tsar Zhou Yongkang and hundreds of his closest associates, who had accumulated assets worth a reported $16 billion. Former leaders Jiang Zemin and Hu Jintao are reported to have warned Xi about the consequences of his campaign. Perhaps not so glorious after all, Tony.
One journalist travelling with the PM described the PM’s office as being “very disorganised”.
Clearly, Abbott and his team still have plenty of work to do in getting to really understanding China, but they better make quick sticks, as last year Australia ceded its status as China’s favourite investment destination to the United States. The $15.5 billion of Chinese investment approved by the Foreign Investment Review Board also hugely bolstered by two huge energy deals worth more than $3.3 billion, according to a report realised yesterday — Demystifying Chinese Investment — by KMPG and the Australia-China Council. Chinese investment Australia in 2013 fell to $9.7 billion from $10.8 billion in 2012, reflecting decline in mining and gas sectors. Mining investment halved from $6.1 billion to $2.2 billion, in gas it was down $304 million to $20 billion. This is due to a combination of slowing deal-flow and sharply increased wariness in Beijing stemming from failures like the $10.5 billion Sino Iron project by state-owned CITIC Pacific.
Those same Chinese state-owned companies that Tony Abbott said he did not want to see owning Australian assets in July 2012 accounted for $8.2 billion, or 84% of total investment. And the hysteria over China “buying the farm” has proven to be just that, with agricultural investment accounting for just 3% of the total.
Yet there are plenty more biscuits in the Chinese tin, as Li Keqiang noted at the Myanmar World Economic Forum in September last year:
“In the next five years China is expected to import US$10 trillion of goods, invest US$500 billion overseas and send over 400 million tourists abroad.”
Abbott and his team need to make sure Australia continues to get enough to keep the economy from falling into a hole, and according to the Xinhua news service Li told him Australia must “continue to provide a fair environment for Chinese inbound investment”.
And that means giving the Chinese the new $1 billion review limit that Japan and Korea now have — up from $238 million. You can bet Barnaby Joyce will have something to say about that.
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