Charm Offensive: China and US relations | Insiders On Background

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For an Australian Prime Minister, balancing your most important economic relationship with China alongside your most important security alliance with the United States is akin akin to walking a high wire.

Or as some have put it, it's like a mouse dancing beneath two elephants.

Anthony Albanese was reminded of that this week.

At the same time as Donald Trump was announcing another round of tariffs that sent shockwaves through global markets, China too was saying it wanted a closer relationship with Australia, particularly around AI and the digital economy.

It comes as the Prime Minister flies to Beijing for a six-day visit to China.

He's taking with him some of the nation's most important business people, but he'll also have to contend with some of the more fraught elements of the relationship.

The government had hoped that this meeting would happen after an in-person meeting with Donald Trump.

It's why this trip will be so closely monitored in the United States.

I'm Brett Worthington on Ngunnawal Country at Parliament House in Canberra.

And this is Insiders on Background.

Well, Jeff Raby is an economist and a former diplomat.

He was Australia's ambassador to China between 2007 and 2011, and he served on the Australian board of a Chinese subsidiary.

Jeff Raby, welcome.

Pleasure to be here.

How are you assessing the stakes of this trip for Anthony Albanese?

They're very important,

extremely important really, because

there is so much uncertainty in the international system and China being by far our largest economic partner.

an emerging dominant power in the region,

central to our security in terms terms of regional stability.

All of these issues come together at this particular time.

And so I think it's very timely and helpful that the Prime Minister is going to China to meet the senior leadership.

It's a three-city trip across six days.

It's going to be the Prime Minister's longest trip to one single country.

What do you take from that?

Well, as a former ambassador and someone who spent a lot of time in China, I'm delighted to see it.

This was a pattern of previous Prime Ministers in the past.

China is a huge country with great regional variation and differences.

And that's why it's so important to have feet on the ground in China.

As an aside, I think it's very disappointing that the Australian media is not permanently based in China these days

because you need to come to grips with the complexity and the diversity to understand really what's driving the senior leadership of the country.

And I think the cities he's going to, Shanghai, Chengdu, as well as Beijing, of course, are well judged.

And it's going to give him an incredible insight into the rapid change and dynamism that one finds in China these days.

You know, one of the hardest things with China I always found as an ambassador and as someone who's spent 30-odd years writing and briefing people about China is helping people understand who are not there the contemporary reality of China.

And it doesn't conform to many of the stereotypes that are

widely circulating in the West.

How do you perceive that difference between the stereotype and what you see as a modern China?

Yeah, well the stereotypes see it as, which it is, a one-party, authoritarian

at times, not always, but at times repressive state.

The stereotype tends to be of a draconian

state that has basically the country under its boot.

The reality is much different to that.

As I said, there's enormous diversity, there's enormous creativity, there's great energy in the country.

And all of that helps to explain why the Chinese economy has been utterly transformed in the past 30 years.

Part of this trip will see Anthony Albanese hold meetings with three of the top officials in the Chinese government.

Chief among them will be his meeting with Xi Jinping.

The last time the two men met was on the sidelines of the G20 when both men were in South America.

It comes at an interesting time for both Xi Jinping and for Anthony Albanese.

This is the fourth meeting, the second in Beijing.

How important is that direct relationship between Anthony Albanese and Xi Jinping?

Yeah, it's an interesting thing in diplomacy that personal relationships do matter.

And leaders need to have an understanding face to face and they need to have what we call a feel for each other.

And I think this is enormously important.

And it's an opportunity for each leader to really express clearly and privately the things that really matter to them in terms of their leadership of their respective countries and their respective ambitions for their countries.

And look, I go back to the early 80s when all of this sort of began and Prime Minister Bob Hooke on also a long trip to China had very important discussions with the leadership then, the party general secretary, Hu Yaoban, the Premier Zhao Xiang, and they laid out to him their vision of reform and opening up China and allowing markets to play a much greater role in the economy.

And Bob Hawke understood what they were talking about.

He actually believed that they were very serious.

And that shaped our policy for the 80s and 90s, how we dealt with China.

They're the sorts of discussions that can and should happen between leaders.

When Anthony Albanese and Xi Jinping last met, it was at the the hotel that the Chinese delegation had taken over in Brazil.

It followed a meeting in which Keir Starmer, the British Prime Minister, had just met with Xi Jinping.

And the optics from afar were kind of like these two naughty schoolboys going to see the headmaster.

The Chinese delegation was so much bigger than either the British one or the Australian one.

To what extent is the Chinese government successful at using the scale of both the country and its power to leverage influence in those meetings?

Well, I don't think it matters so much for the meetings.

I think the general context, though, is as you correctly describe it.

It's size, its power.

That's the sort of relationship you're dealing with.

I mean, there's

a view that

it's almost unpatriotic as an Australian if you say that the relationship is asymmetrical.

But it is asymmetrical.

China is a vastly bigger, greater power than Australia, just as the relationship between Australia and the United States is asymmetrical.

So that is just the context in which we have to operate.

But historically and

most typically, our diplomacy has been adroit and adept, and we can manage those differences.

But yes, that's the reality.

China is a big, powerful state.

Anthony Almanese himself would concede that he wasn't necessarily born on the world stage.

It's something that he's grown into over the course of his prime ministership.

As a former diplomat, take us into those meetings.

What happens when you've got that leader-to-leader meeting happening behind closed doors?

Well,

they're what we say in the formal meetings where there are officials lined up on each side,

the meeting is very structured.

Each leader will have their talking points, and they will work through the talking points one after another

and respond at the appropriate time.

And so

that's how these meetings will be conducted.

And the Chinese are are very strict about protocol and form.

And so there can be a tendency to feel that the meetings are, if you like, pro forma.

They're too structured.

There's not a free exchange.

But that is the process of clearing away, if you like, each side's respective agendas and issues that they want to get on the table.

But there's also...

less formal occasions.

There will be dinners.

I think

the Prime Minister will probably have a private dinner or meeting with Xi Jinping outside the formal structures.

And if that were to occur, that's when you get a fairly free exchange.

Now, when I was ambassador, happened to be for just luck, really,

having spent quite a bit of time with Xi Jinping.

He was vice president.

And as the Australian ambassador, we used to see the vice president more often than we'd see the president at the time.

And so

I've sat in meetings with, say, governor generals of Australia, with Xi Jinping, where the dinner conversation or the lunch conversation has become very free-flowing

and you can feel a good rapport building between

the leaders on each side.

And I expect something like that will happen.

I think the Prime Minister has shown very good instincts in how he's approached

China and indeed how he's approaching international relations more broadly.

I think his instincts are very sound in terms of wanting to avoid megaphone diplomacy and to deal with difficult issues that we have in the relationship like human rights or

Professor Hung, who's in prison, to deal with those privately, directly and deliberately, and not to use megaphone diplomacy.

And that's on the Chinese side very much appreciated.

And that's how you get positive responses.

And so some of those contentious issues, like you say, are expected that both sides would have to meet.

So from the Australian side, it is about the Australian writer Yang Heng Jung, who's in 18 months into that two-year reprieve of the death sentence that he's been sentenced to.

There's the Australian concern about military build-up and actions throughout the South China Sea and broader efforts throughout the Pacific.

On the Chinese side, the port of Darwin, foreign investment within Australia are issues that both sides will raise.

To what extent, though, is it you expect that to get that question and each then expects to be politely rebuffed?

Yep, well each side will be expecting those difficult issues to be raised.

And if the respective ambassadors have been doing their jobs in terms of helping with the preparation for these meetings,

then those issues will be made, it'll be made very clear that those issues will be raised.

But it's important to do that.

because it gets it into the system, but particularly on the Chinese side, where the system is so hierarchical, you really do need to get these messages through at the most senior levels, and then they do filter down through the rest of the system.

And people will be throughout the system in China reading the reports of these discussions.

If we go to some of those issues, take the port of Darwin.

How are you assessing frustration within the Chinese government at Australia's push to return that port to Australian hands?

Well, I'd put it the other way around.

I think it's a big issue for Australia in terms of sovereign risk.

And I think that

is a factor that really does need to be discussed.

And the whole FERB process in Australia is something that I think raises matters of sovereign risk.

And from the Chinese perspective,

they find Australia a much

less congenial place to invest in than perhaps they did a decade or so ago.

And Chinese investment in Australia has virtually collapsed.

So the Chinese side is unhappy, not only about the port of Darwin and the fact that that contract may be reversed, but also about the operation of our Foreign Investment Review Board more generally.

And I think that will be quite a contentious issue to be discussed between the leaders.

Signals that we got from the Treasurer about that this week suggest, though, there's not a lot of appetite within the Australian government side to make any changes to the Foreign Investment Review Board structure.

Well, that's a formal structure, but ultimately

the FERB, the Foreign Investment Review Board, is a political process.

You have the board that

investigates a case, it then makes a recommendation to the Treasurer, but it ultimately rests with the treasurer.

And we've had some crazy decisions by previous treasurers.

For example, my old friend Josh Frydenberg, when he was treasurer, blocked the acquisition by a Chinese dairy company of beager cheese on national security grounds.

I mean, this is just bizarre and affronting to the Chinese and very damaging to Australia's national interests.

The former coalition government also blocked a US investment into Grain Corps.

To To what extent?

Was it more about any country rather than being necessarily about one country?

No,

it's a very good point, Brad.

I think that would be almost an exception on the US side.

And it was a case of monopoly business.

So it's very different than the nationality.

And I think that's the key point.

The dairy industry is much more competitive, much more open, and is desperately in need of foreign investment.

Dr.

Young's case typically does come up whenever we see a meeting between, say, Penny Wong and her counterpart or Anthony Albanese and his counterparts.

Are you expecting any progress on that matter?

I don't know.

I really can't say.

I do know they will raise the, or the Prime Minister will raise the issue.

The Chinese will be expecting it.

I think the Prime Minister and Penny Wong were very successful in how they managed the case of Chang Lei.

and

secured her return to Australia and reuniting her with her family.

That was, was, I think, very skillfully handled.

And what it required, and particularly from the foreign minister, persistent, continuous pressure in raising this issue to the point where the Chinese didn't want this to be the first talking point every time the foreign ministers met.

Whether that works with the

Professor Young's case, I don't know because I don't know the details of it.

And each case is different because the actual factual circumstances are different.

I really just don't know

what the issues are in

Professor Young's case.

You've praised the Prime Minister and the Foreign Minister in their dealing with China.

We've seen Australia get taken out of the diplomatic freeze, the resumption of trade, and then this week a call from China for more.

Essentially, forget what happened in 2020 to 2022.

You've been complimentary, like I say.

What do you see then as the task before both the Prime Minister and the Foreign Minister to maintain this success, as you're putting it?

Well, I think

it's more of the same.

I think they've got the approach basically right.

They avoid megaphone diplomacy.

The other point I'd make also, stark contrast with the Morrison government, is the cabinet seems to be extremely disciplined around these issues.

I mean, in the Morrison government, there were ministers freewheeling, criticising China over any number of matters

without any coordination.

What's really remarkable with the Albanese Wong management of the relationship is just the internal discipline inside this government.

So I think all of that's to the good.

The question really is, where does this relation go to?

And I think we can see some difference between the foreign minister and their statements and the prime minister.

The foreign minister is ultra-cautious on China.

During the last election, I was interviewed by someone on the ABC

and I made the point that it would seem that China is the name no one dares mention during the election campaign.

I think the Prime Minister has continued that, and she's continued it with her recent speech this week at the ASEAN meeting.

The Prime Minister has taken a slightly different approach.

He always emphasises...

whenever he mentions China, that China is our largest export market and that Australian jobs, prosperity, taxation all depend on us continuing to build that trade with China.

And I think that attitude is the correct attitude to bring to the relationship, to put the relationship on a more positive, forward-looking basis.

And what I'd be looking for from this visit is more discussion about what the future of the relationship might look like, that the leaders come to an understanding of where our interests

align and how we can pursue that in a more

cooperative and productive way.

We saw China's ambassador to Australia

marking the 10 years since the free trade agreement with China has come into force and talking about where he wants to see growth.

This is things like around artificial intelligence, the digital economy.

It's probably a little surprise that China wants closer relationships and the opening up of the free trade deal, given the tensions that we've seen in the past in Australia blocking China from being involved in some of our big teleco rollouts.

The Prime Minister, though, and Penny Wong to some extent, seem to be rebuffing that suggestion of either reopening the trade deal or this possibility of AI in the digital economy.

How are you assessing that?

Yeah, Brett.

Well, first of all, it's not reopening the deal.

The FTA we have negotiated with China or between ourselves is a very, very good FTA.

It's very liberalising, and it has a big area of services in that.

What it has is a continuation clause as well.

So every few years, both sides should get together and look at what's new, what new areas we can be working on.

And that's the continuation clause, keeping the liberalization process between us going.

So

any discussion of doing more in the FTA is completely foreshadowed and within the framework of the FTA.

Whether AI fits there or not, or whether we find it too sensitive for security reasons,

that's a conversation we need to have there's no point not having the conversation

don't forget that china is one of the world's leaders in ai and in some areas of open systems possibly the world leader

we need much of the technology and investment china has ai is such a broad area i'm sure there are sensitive areas in ai on security grounds which could be comfortably ring fenced and protected.

There are probably other areas which have minimal or no security value.

My point being is we shouldn't treat this with such a broad brush.

It is necessary to really

pass these issues and find out exactly what we're talking about.

But one other area which I would have liked to have seen the ambassador include, because China is the world leader in the green transition and the transition to electric vehicles and renewable energy.

And I would hope we could see coming out of the Prime Minister's visit some

basis for future expanded cooperation between Australia and China in the green energy, the green transition,

green hydrogen and producing green steel so that we can start to turn our iron ore into steel through green processing that can be done in Australia based on our renewable energy capacity.

So this is a huge area for the two countries to be working on and cooperating on.

And these are the things that Prime Ministers can put on the agenda, just as Prime Minister Bob Hawke and General Secretary Hui Yeobang in 1984 put the development of the iron ore trade between Australia and China on the agenda.

What do you see as what governments and then the business sector have learned from that period in the diplomatic freezer with dealing with China?

Well, I think my view is I think in Australia we've become ultra cautious cautious

and have taken much harder line perhaps than is justified in terms of our own interests.

And we're not thinking about the opportunities we've missed.

Now,

fault lies on both sides with that difficult period, absolutely.

And the Chinese, I think, recognize that their behavior was counterproductive.

So rather than achieve, achieve nothing for China, harm China, not only in in terms of the commercial dimensions of it, but very much in terms of China's standing in the world.

And I think we're seeing a revision or review in China of those policies.

And it's not just that

Prime Minister Albanese and Penny Wong are now leading on foreign policy in Australia.

It's that China itself

changed its policies to get rid of what we used to call wolf warrior diplomacy because they came to the conclusion that wolf warrior diplomacy was utterly counterproductive for them.

So we have a China on a charm offensive.

Donald Trump's created a great space for China to move into on a charm offensive.

We have a leadership in Australia with Albanese and Wong, which, as I said, has a very disciplined and practical approach to managing the relationship.

But I think we need to lift our sights.

And this is this visit, is the moment in which we can lift our sights and start to realize greater opportunities from this relationship and not be held back by those dreadful years

of the trade disputes.

How do you view it?

Is it walking a high wire act?

Is it a mouse dancing underneath elephants?

Is it like being caught in a vice when you've got China on one side and the United States on the other?

No,

I don't see it so much in those terms.

Of course,

every Australian government has to square the circle, as it were, between our security relationship with the United States and our enormous economic opportunities with China.

And

that is a challenge.

But that's a question for diplomacy.

And

I think what we need to do is

be very careful that we are open to the very rapid changes that are occurring in China, alert to them and make sure that we can realize those opportunities.

But of course, we've made it very clear through our commitment to AUKUS, through elevating the Quad dialogue to a summit level, that we see our primary security interests being aligned with the United States.

China knows that.

We know that.

Sometimes it seems the hardest place to convince people of is Washington of that point of view.

But that is the case.

And we have very clearly made a choice with those big security and foreign policy decisions that have been made.

Am I right in interpreting then?

And whether or not Anthony Albanese had met with Donald Trump in advance of this trip or not wouldn't necessarily affect the nature of this trip then?

No, no, not at all.

And again, I think the Prime Minister has handled this very well because why should a sovereign leader make their foreign and security policies subject to the vagaries of another person's diary?

I mean, that's what you're dealing with.

It's a matter of Trump's diary.

And this visit came at this particular time.

So

I think the media is making far too much of does he go to Washington first or Beijing first?

And after all, it's not without precedent.

Malcolm Fraser went to Beijing before Washington.

Kevin Radd went to Beijing before Washington.

And Tony Abbott went to Beijing before Washington.

So

I just don't think it's such a,

from a diplomatic point of view, a big issue.

Just lastly, Jeff Rabie, we've heard a lot this week from both speeches from the Prime Minister and from the Foreign Minister.

This reasserting Australian independence, it's being viewed as saying Australia is not necessarily tethered to the United States.

As we go into this trip with the Prime Minister, we'll spend six days in China.

How are you viewing this rhetoric around independence?

Well,

I think that the Prime Minister and the Foreign Minister are reflecting a growing debate within Australia and growing concern within Australia about the extent to which

we have

may have compromised our independence with AUKUS,

with

permitting America to base B-52 long-range bombers in Tyndall

and opening

Sterling Naval Base to nuclear-armed, nuclear-powered submarines, in addition to Pine Gap and all the other things we do.

I think that there's a greater awareness in Australia that these

seemingly

separate decisions made in the defence area actually amount collectively to a big question about our independence.

And I think that's what the Prime Minister and the Foreign Minister are really responding to with those comments.

Jeffrey Rabbi, you're one of Australia's foremost experts on China.

We really appreciate you sharing your time with us.

Thanks, Brett.

My pleasure.

If you have any thoughts on this podcast or want to share your ideas, you can send them our way.

Insiders at ABC.net.au.

There will, of course, be more on this on Insiders this Sunday, 9 a.m.

on ABC TV and on iView at any time.

Patricia Carvelis will be our host, and she'll be interviewing the Defence Industry Minister, Pat Conroy.

Speezy will be back next week.

I'm Brett Worthington.

Bye for now.

You're making us all feel very excited about being here.