The China Shock May Provide a Much-Needed Catalyst for Change

In an opinion poll published in the Guardian online an astonishing 2/3 of voters either approved or strongly approved of the Prime Minister’s conduct of the nation’s affairs. While this may in part be a reflection of the abysmal performance of the official Labor “opposition” there must be a deeper reason for the Prime Minister’s support. It cannot be that a substantial majority of Australians think that he is doing a good job. He manifestly is not. This can be illustrated by reference to the greatest problem currently facing the Australian government.

I am not referring to the Covid-19 coronavirus. That was never more than one would expect from a season of bad colds. Rather, the existential threat facing Australia is the steadily growing collapse of its trade with China. Here, the current Prime Minister does not take all the blame. The rot actually began under the Prime Ministership of his predecessor Malcolm Turnbull. Certainly, however, the rot has accelerated this year, and for that the current Prime Minister is solely to blame.

In March 2020 the Prime Minister called for an inquiry into the Covid-19 virus that he clearly attributed to China. In the knowledge available to the public at that time it was widely believed, incessantly in the western media, that China may well have been the epicentre of the disease. Only Morrison was stupid enough to publicly express that view.

The Chinese were furious, a fury made more candescent by the systematic misrepresenting in the western media of steps China had taken with regard to the outbreak. At the time of Morrison’s ill-considered remarks there was some evidence that the virus had first appeared in China in the city of Wuhan in October 2019, although it was not identified as such at the time.

The location of Wuhan is significant. In October 2019 it was the location of the World Military Games, a phenomenon rarely mentioned in the Australian media. The hotel where the United States participants in the Games were staying was an epicentre of the disease. A significant number of the United States participants fell ill to flu like symptoms. This was not reported in the Australian media at the time, and neither was the fact that for the first time the United States failed to win a single gold medal.

We now know that the virus first appeared in Europe, specifically in Italy and Spain even earlier in 2019, and well before the first cases were detected in Wuhan. One might have thought that the new evidence would be widely published in Australia. The Prime Minister, not known for ever saying worry, could at least have made some moves to assuage Chinese anger over his attribution of the viruses’ origins to them.

The Chinese noticed the silence. The pressure on Australian exports to that country began to be ramped up. At the time of writing hundreds of millions of dollars of Australian exports to China have effectively been wiped out. The Australian government’s response has been to make a complaint to the World Trade Organisation. Good luck with that. When it finally reports, most likely several months down the track, it may well find that China’s actions were arbitrary and contrary to the rules.

That will be, if it happens, a pyrrhic victory for Australia, which in the meantime would have seen the collapse of its trade with a country that takes nearly 40% of all of Australia’s exports. The damage does not stop there. In 2019 more than 1 million Chinese citizens visited Australia as tourists. They were the largest single source of foreign tourists. That has now disappeared. The Chinese government is openly advising their citizens to go somewhere else to spend their yuan when travel resumes. That will be devastating to the local tourist industry.

It is not just tourists that have been advised to stay away. China was also the largest single source of foreign students in Australian schools and universities. That also has disappeared, and the chances of the numbers resuming in anywhere near the previous numbers are virtually zero. Thousands of academic jobs will be lost as a consequence.

When one looks at Australian government policy towards China it is difficult to know which of the multiple forces at play actually predominates. At the same time that China was firmly closing the door on Australia, the two countries were two of 15 nations (the ASEAN group, plus Japan, New Zealand, Australia and China) that signed a wide-ranging trade deal that had an eight-year gestation. Did the right-hand know what the left hand was doing?

Part of the problem is that Australia does not accept the reality of its geography. When one looks at a map, Australia is a large landmass perched at the southern end of the Asian landmass. That geographic reality has long been recognised in trading relationships. For the past three decades at least, the balance of Australian trade has swung increasingly north.

The vast bulk of Australian trade is in the Asian region, not just China, but also Japan and other Asian nations. China and Japan alone account for approximately 60% of Australia’s foreign trade. Yet mentally, Australia remains a Western nation, attaching its military strings to the United States bow, although the latter is of minor importance in terms of trade. One of the ironies of the current fight with China is that a likely major beneficiary will be the United States.

It will be a cold day in hell before the Americans do more than offer sympathetic noises to the Australians whose business with China they are replacing. What can be done by Australia to remedy the plight in which it finds itself? To be brutally frank, not a lot unless, of course, Canberra has a radical change of policy orientation. The chances of that happening are close to zero.

Knowledgeable and experienced China watchers such as Hugh White and Geoff Raby have been arguing for some time that a fundamental shift in Australian attitudes and behaviour toward its most important trading partner is long overdue. With no disrespect to either of them, the message has largely fallen on deaf ears. The one good thing that may come of the present breakdown in relations between Australia and China is that the former undergoes a radical change in policy and treats China and the world as it really is rather than how it would wish it to be.

One would be unwise to hold one’s breath waiting for that change, but the bucket of ice China has thrown over Australia may just be the catalyst for a long overdue change of direction.

James O'Neill is a retired Barrister at Law and geopolitical analyst. He can be contacted at Read other articles by James.