While the dust of Australian Prime Minister Scott Morrison’s overreaction to a satirical image tweeted by a Chinese diplomat – and subsequent rhetorical clashes with Beijing – has yet to settle, another much more pressing challenge has been put on Morrison’s desk.
The passage of the Foreign Relations Bill has given Canberra the power to scrap Victoria’s Belt and Road Initiative (BRI) deal. Will Morrison act on his long-felt and justifiable wish now to ensure a consistent national foreign policy? Beijing is watching, and Canberra is thinking. However, I argue that Canberra needs to keep the BRI deal, at least for now.
Even though the BRI sounds ambitious, with its extensive geographic scope and colossal investment, Victoria’s deal is a vague and non-legally binding document that expresses bilateral cordial wishes without committing the state government to any specific projects. Even before the Foreign Relations Bill was approved, any individual project undertaken in Victoria by China would necessitate Foreign Investment Review Board consideration and federal government approval, according to Colin Heseltin, the former Australian ambassador to South Korea.
Meanwhile, after seven years’ implementation, the full picture of the BRI is much clearer. A plethora of researchers such as Lee Jones, Shahar Hameiri, and myself have shown that the BRI is an economically-motivated program, and China’s financing system is too disjointed and easily influenced to conclude that the BRI is a well-prepared strategy. Due to the impact of the Sino-American trade war, lending by the China Development Bank and the Export-Import Bank of China, the primary overseas loan sources, plummeted from a peak of $75 billion in 2016 to just $4 billion in 2019, according to the Financial Times. A June report by the Chinese Ministry of Foreign Affairs noted that COVID-19 had seriously affected nearly a fifth of projects along the BRI.
Furthermore, China’s so-called debt diplomacy has been massively exaggerated and overseas asset seizures have rarely occurred, based on findings from Jones and Hameiri, the China Africa Research Initiative, the Lowy Institute and Rhodium Group. In fact, the piecemeal realization of the BRI projects is determined by local governments and their related political and economic interests via diverse and time-consuming bilateral interaction with Beijing. Regarding the BRI’s sensitive military influence, even hawkish former American diplomats and scholars like Daniel Russel and Blake Berger admit that some of the BRI ports are only commercially designed and almost impossible to be employed militarily. Even after the headline-grabbing lease of Hambantota port in Sri Lanka to a Chinese company, there is has been no documentation of any Chinese military operation in or around Hambantota, as indicated by Jones and Hameiri.
So, why couldn’t Canberra give the BRI a chance in just one state, Victoria?
The chance for Australia’s engagement in the BRI has unfortunately passed as bilateral relations enter their lowest ebb yet. But even so, what is the danger of keeping a piece of paper on the Victorian shelf to please Beijing and Melbourne? There seems to be little cost to simply letting the MoU be. Since there has been no progress thus far, I doubt any new BRI projects will emerge under this political atmosphere – which may be what Canberra really wants anyway.
On the flip side, revoking Victoria’s BRI deal will potentially cause a much tougher response from China, as the Chinese embassy in Australia has crystallized its opposition against any such cancellation. More significantly, the BRI is linked strongly with the personal brand of Chinese President Xi Jinping, saving or enhancing face has been widely acknowledged as an imperative of China’s foreign-policy doctrines and culture. An all-out Sino-Australian trade war may lead to the catastrophic loss of 6 percent of Australian GDP, as researched by Rod Tyers and Yixiao Zhou. Why risk it?
As for showing allegiance to the United States, Australia’s most important ally, the Trump administration, which has all but declared war on the BRI, will leave the White House soon. As President-elect Joe Biden’s BRI policy is still foggy, patience may be required in Canberra during a period of geopolitical volatility.
Also, thinking longer term, Victoria will hold a state election in 2022. If the Liberal coalition wins, the new Victorian premier will likely dump the BRI deal, as the current opposition leader Michael O’Brien has openly declared. This would be more acceptable to Beijing, since Canberra could simply blame the BRI termination on the decision of a state government. More importantly, between now and 2022, who knows what the global geopolitical landscape will look like? But in the meantime, Australia can focus more on its COVID-wrecked economy in general and quietly diversify its trade from China in particular, as Canberra has planned, thus avoding unnecessary economic losses.
Ultimately, Australians can always be proud of their values, but Canberra should carefully balance its ideological perspectives with economic interests, rather than exploiting them as a rhetorical shield. There’s little harm in Australia keeping Victoria’s BRI deal, at least for now – and steep potential costs for scrapping it.
This article has been republished from The Diplomat 18 December 2020
Jon (Yuan) Jiang is a Chinese PhD student in the Digital Media Research Centre at the Queensland University of Technology, focusing on the Belt and Road Initiative. He completed his master’s degree of political science at Moscow State Institute of International Relations, and bachelor’s degree of law at Shanghai University. As a Russian speaker, he worked with ZTE Corporation as an account manager, and as a special correspondent with Asia Weekly and Pengpai News, all in Moscow. He tweets at @jiangyuan528
Comments
10 responses to “The case for Australia keeping Victoria’s Belt and Road deal”
Outstanding article. Thank you for the research.
Mountains and molehills. The Victorian “deal” is essentially a Memorandum of Understanding between two governments to discuss a range of issues that will be of mutual benefit. It just happens to be under the umbrella of the BRI initiative. It could have been called any number of things.
The really sad thing about the Morrison government’s bill is that it is simply a political stunt, and attempts to shut the gate after the horse has well and truly bolted. All over Australia, China has invested in Australia from the Darwin port to the Milmerran coal fired power station in Queensland and beyond.
Per capita, Australia is one of the richest in the World, but our economy is one of the least complex, relying largely on the export of simple products, and over the last three decades or so, the economy has come to rely on very few simple products, hastening the complexity decline. Hence Australia’s capability for economic growth is thus quite constrained.
To reduce Australia’s reliance on China, Australia has to engage and diversify into new products of increasing complexity. It will not be easy, particularly under the current Morrison government, who favour existing business over new ventures.
Diversification is decline. We have firmly been hitched to a declining (perhaps rapidly) US empire. But boof head has a medal. Innit it just luverly.
who manages/manipulates NewsPoll ?
seems to me we should be quite wary of statements such as majority of Australians believe:
Scumo is not a Pentacostal idiot
and
Australian voters believe Murdoch and the LNP with its other donors can sensibly manage Australian diplomacy especially with people that are not white anglo-saxon background
With a Guardian poll showing that two thirds of Australians think Morrison is doing a good job killing off the BRI just before the next election would be a smart move politically and may win him the next election. And that’s all he cares about. Discussion over.
Morrison will essentially see the Victoria MOU with the Chinese BRI as a very useful political button, or more precisely a very useful dog whistling tool, to be used when the time is ripe. The majority of Australians will love him for protecting us from the Huns. Why would Morrison care what the Chinese think or what the Chinese would do as a result? Completely irrelevant! (The author needs to appreciate a little more our uniquely Aussie politicians…)
I agree. I think you mean the Hans? I dont think we are threatened by the Glasgow Rangers football club.
I agree. Relations with China are being decided on how it plays out internally and to hell with any other consequences.
‘Keep your friends close, and your enemies closer’. And old adage, possibly Sun Tzu. Possibly somebody else. It doesnt matter. The idea itself is sound advice.
Keeping the Victorian BRI initiative active means we can watch it and observe how it plays out. Surely a better idea than deliberately chucking it in the bin.
Great perspective from a young writer – many thanks to Jon Jiang for giving us a different point of view about the BRI. In my humble view, the Victorian BRI should be left along for future use when the government is ready to have diplomatic talks with the Chinese government on trade. Closing the Victorian BRI is like sealing the last exit door to economic survival. Save it for a rainy day.