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Each week China Matters collates news items about the -China relationship

Media Roundup Issue 102 (15/12/18 – 20/12/18)

1. Ties with China testify to Australia’s deft handling of foreign policy

15/12/18 John Howard The Australian

Australia should never sell short its foreign policy achievements. I reflected on this during the high-level dialogue I attended in Beijing last week. I had been invited by former foreign minister Julie Bishop to lead Australia’s delegation.

High-level dialogues, which involve a mixture of diplomats, former ministers, business figures and cultural leaders, and are conducted under Chatham House rules, facilitate much more direct discussion than is sometimes possible in the more formal exchanges between government officials.

At last week’s dialogue our team included former Labor foreign minister Stephen Smith, whose contributions reinforced to our Chinese hosts the essentially bipartisan character and continuity of Sino-Australian relations, and Jennifer Westacott of the Business Council of Australia. Journalist Rowan Callick and author Richard McGregor, who have extensive background knowledge of China, also attended. The participation of National Museum of Australia director Mathew Trinca emphasised cultural links.

Read more (Paywall): https://www.theaustralian.com.au/news/inquirer/ties-with- china-testify-to--deft-handling-of-foreign-policy/news- story/9d3dadd84c6ab64bc0ff6d813739a126

2. How the Huawei princess at the heart of the US-China trade war affects Australia

15/12/18 Jennifer Duke & David Wroe The Morning Herald

The extraordinary arrest of Chinese tech heiress in Canada, at the request of the United States, on accusations of breaching sanctions against Iran could seem a world away from Australia.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

But the action against Sabrina Meng Wanzhou has set off reactions around the world and there are real ramifications for Australia, which is geographically near to Asia, politically aligned with America and economically close to both.

Meng, the 46-year-old daughter of Huawei founder Ren Zhengfei and heiress to his corporate empire, is considered tech royalty in China and a crucial executive in one of the world’s most controversial companies.

Chinese media have railed against the arrest, describing it as a “dirty trick” that will see the US facing consequences.

Read more: https://www.smh.com.au/business/companies/how-the-huawei- princess-at-the-heart-of-the-us-china-trade-war-affects-australia-20181214- p50mb8.html

3. US-China clash a reminder of ideals lost in cyberspace

15/12/18 Alan Dupont The Australian

Welcome to the tech wars. Despite her release on bail, the arrest of senior Huawei executive Meng Wanzhou has ratcheted up simmering tensions between China and the US in a global contest for technological supremacy between the leaders of competing and increasingly incompatible systems of governance. This quest for information dominance is a driver of global cyber conflict, a shadowy undeclared war that is intensifying and becoming a serious security concern for Australia.

Control of three key enabling technologies — semiconductors, quantum computing and artificial intelligence — would give the pre-eminent cyber nation a decisive advantage in this high-stakes competition. Technological excellence has always underpinned economic and military capability and is a powerful catalyst for change in the international system. No longer is the internet dominated by the US and the West, as other states seek a more prominent role in shaping the rules of the digital age.

Two other dimensions of the emerging tech wars have equally profound consequences.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Read more (Paywall): https://www.theaustralian.com.au/news/inquirer/uschina- clash-a-reminder-of-ideals-lost-in-cyberspace/news- story/5d69066033f62431653972fbc8f56df7

4. Beijing and Taipei collide over consulate assistance

15/12/18 Primrose Riordan The Australian

China’s offer of formal consular assistance to Taiwanese citizens involved in a fatal car crash near Perth earlier this week has provoked a diplomatic stand-off with Taipei’s officials in Australia.

The move by Chinese officials has been described by diplomatic observers as “very unusual” and potentially a strategy by Beijing to assert Chinese sovereignty over Taiwan.

The Taipei Economic and Cultural Office, representing Taiwan in Australia, said one Taiwanese tourist died and two were injured in a horrific head-on accident last Sunday involving three vehicles on Western Australia’s Indian Ocean Drive north of Lancelin.

China’s consulate in Perth released a statement on Wednesday describing the “Taiwanese compatriots” as Chinese citizens, and noting an offer of formal ­assistance from Chinese consul-general Lei Kezhong.

Read more (Paywall): https://www.theaustralian.com.au/national-affairs/foreign- affairs/beijing-and-taipei-collide-over-consulate-assistance/news- story/0c36ee7c2e1bc708dc2f7c2f086c90a8

5. Australia is navigating a diplomatic course between China and the US

16/12/18 James Curran East Asia Forum

One feature of the Australian government's 2017 Foreign Policy White Paper was the balance struck between tough talk on China's challenge to US hegemony in Asia and the message that regional military modernisation posed no threat to

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Australia. Despite the dysfunction roiling Australian politics since then, this judgment still holds.

Both the current Morrison government and the Labor Party opposition are showing signs of finding a strategic path through this era of sturm und drang.

They know that keeping faith with the American alliance requires scepticism towards aspects of President Trump's foreign policy, and that the United States is being tested in Asia as never before. They know, too, that despite Trump's warmth towards Prime Minister Morrison at the recent G20 Summit — where he channelled Vietnam era rhetoric by saying that "we will be with Australia all the way" — that his words do not convey the gravitas of old. Accordingly, political leaders in Canberra have rediscovered the tradition of asserting, where necessary, greater self-reliance within the alliance.

Read more: http://www.eastasiaforum.org/2018/12/16/australias-diplomatic- course-between-china-and-the-united-states/

6. Huawei: Australia fears the Canadian Club

16/12/18 Andrew Clark Australian Financial Review

"[Australia] is in a tricky spot, worried about having to choose sides."

Apart from transposing "Australia" for "Canada", this is a quote from a recent news report about Canada – a country that has many similarities with Australia – finding itself in a dangerous position as the unwilling meat in the sandwich in growing tensions between the world's two super-powers, the US and China.

[…]

Those tensions relate to an undeclared US-China cyber war. If the Cold War, which ended about 30 years ago, was a largely undeclared, Strangelovian conflict between two nuclear-armed-to-the-teeth states, the current, also undeclared, cyber war is a battle for technological supremacy in a world of artificial intelligence, quantum computing and pilotless drones.

It's also a war where states such as Canada and Australia are vulnerable. As veteran Australian foreign policy analyst Allan Gyngell points out, Prime Minister Scott Morrison, "is saying we don't have to choose between China and the US",

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

in their escalating tensions, but "choices are being imposed upon us much more frequently."

Read more (Paywall): https://www.afr.com/news/economy/huawei-australia- fears-the-canadian-club-20181216-h196b1

7. America, China and the art of confrontation

17/12/18 Gideon Rachman Australian Financial Review

Tell me how this ends? was the despairing question attributed to American generals as they contemplated the quagmires in Vietnam and Iraq. The same question needs to be asked by US policymakers now, as they consider the escalating tensions between America and China.

The world’s two most powerful countries are locked into confrontations on a range of issues, including trade, technology, espionage and control of the South China Sea. Broadly speaking, there are two ways of interpreting these clashes. The first is that Donald Trump’s administration is determined to reset the US- China relationship. The second is that the US has now embarked on an effort to block China’s rise.

The first approach focuses on objectionable Chinese behaviour; the second objects to the very idea of China as a rival superpower.

Read more: https://amp.ft.com/content/ec5f406a-01db-11e9-9d01- cd4d49afbbe3

8. China’s terracotta warriors will visit Melbourne for National Gallery of Victoria’s Winter Masterpieces series

17/12/18 Dee Jefferson ABC News

Warriors from China's famous terracotta army will march on Melbourne next winter, as part of the National Gallery of Victoria (NGV) Winter Masterpieces series.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

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Each week China Matters collates news items about the Australia-China relationship

Terracotta Warriors: Guardians of Immortality will present key works from the vast underground necropolis surrounding the tomb of Qin Shi Huang, the first Emperor of China, which was uncovered by farmers in Shaanxi province in 1974.

The stars of this exhibition are eight life-sized warrior figures, two life-sized horses, and two half-size chariots — part of an army of thousands created in the third century BC, to guard the tomb of the Emperor.

The elaborate public works project spanned roughly 30 years and involved the labour of 700,000 workers.

Read more: https://www.abc.net.au/news/2018-12-17/chinas-terracotta- warriors-come-to-australia-for-ngv-exhibit/10626348

9. MYEFO 2018: The budget is strengthening because China is weakening

17/12/18 Chris Richardson Australian Financial Review

Australia's decade of deficits is drawing to a close.

The government deserves some credit for that. They haven't done heaps but, given the toxic politics of budget repair, they have done a creditable job amid difficult circumstances.

[…]

The updated budget papers revealed that the current surge for surplus isn't being powered by Canberra – it comes with a big fat "made in China" stamp.

Although the government promised an extra $16 billion of spending and tax cuts over the past six months, the budget bottom line actually got better rather than worse.

That's because the stronger economy of the moment delivered a $31 billion Christmas present to the Treasurer over the same period – thereby leaving coming surpluses fatter to the tune of some $15 billion.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Read more (Paywall): https://www.afr.com/news/economy/myefo-the-budget-is- strengthening-because-china-is-weakening-20181217-h196zi

10. Trade war with China could plunge US economy into recession

17/12/2018 William McInnes Australian Financial Review

A further escalation of the trade war between the US and China could devastate the global economy and plunge the US economy into a deep recession, according to modelling by KPMG.

[…]

While Australia's economy would be hit by an escalating trade war and a slowdown in global economic growth, the effects would not be as bad as other countries.

"We still come out of this relatively better off than many other economies," said Mr Rynne. "Certainly what we've shown is the US becomes harder hit once a disorderly market takes hold and China continues to worsen for the short to medium term.

"We're talking about a shorter, sharper shot to the Australian economy on the assumption financial markets become dislocated. But our recovery is faster and more robust than the US or China. I think there’s a recognition in the markets that our exposure to all of this is indirect."

Read more (Paywall): https://www.afr.com/markets/trade-war-with-china-could- plunge-us-economy-into-recession-20181217-h196ou

11. Housing and China top risks facing economy: Treasury and RBA

18/12/18 Shane Wright The Sydney Morning Herald

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

A deteriorating domestic housing market and gyrations in China are growing as the biggest risks to the federal budget and the economy, putting a question mark over the election plans of Scott Morrison and Bill Shorten.

Both the Treasury and the Reserve Bank have raised their concerns on top of warnings there may be a broader economic fallout from the banking royal commission including further changes to the lending practices of major banks.

Mr Morrison and Mr Shorten will go to the election promising superior economic and budget management with both making major promises predicated on continuing growth in tax revenues.

Read more: https://www.smh.com.au/business/the-economy/housing-and- china-top-risks-facing-economy-treasury-and-rba-20181218-p50mx7.html

12. Xi Jinping’s year of living dangerously

18/12/18 Geoff Raby [Associate of China Matters] Australian Financial Review

This year may well go down as a defining one for President Xi Jinping's leadership – one that marks the beginning of the end for the "President for Life". Xi began the year in full command of the country, seemingly ascendant on the world stage with his signature Belt and Road Initiative and, in the face of President Donald Trump's unilateralism, a new champion of the multilateral trading system and defender of the WTO and other features of the fast-receding liberal multilateral order.

The economy continued to grow strongly. He had prevailed at the Nineteenth Party Congress towards the end of 2017, having "Xi Jinping thought" inscribed in the party's constitution, unusually while still serving in office. At the National People's Congress in March, he had the two five-year fixed terms for president abolished so he could stay in the role as long as he wished.

Xi dealt China back into the centre of North Korean affairs, after the unpredictable and disruptive Trump stole a march on China by re-establishing direct contact and agreeing to a head-of-state meeting. Kim Jong-Un made two visits to Beijing in quick succession. China was again the key influencer of the pace and direction of change on the Korean Peninsula.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Read more (Paywall): https://www.afr.com/news/economy/xi-jinpings-year-of- living-dangerously-20181218-h198g4

13. ‘Beyond Australian shores’: plans rapid China expansion

18/12/18 Jennifer Duke The Sydney Morning Herald

Telstra head of enterprise Michael Ebeid is planning a significant expansion in China to help local businesses grow internationally as part of his push to bolster the telco's $8.2 billion business division.

In the last few weeks since starting with Australia's biggest telco on October 8, the former SBS managing director has travelled to some of the 20 countries in which Telstra operates to determine where the opportunities are for the mobile and internet provider.

“The domestic market is somewhat limited being a pretty small country that we are. Domestically, we enjoy pretty high market share in consumer but also in enterprise ... with all the big corporates,” he said.

Because Telstra is a household name locally with a substantial presence, Mr Ebeid thinks local growth will come from providing additional services like cybersecurity and cloud-based networks rather than being just "a connectivity player" fighting for a limited pool of customers.

Read more: https://www.smh.com.au/business/companies/beyond-australian- shores-telstra-plans-rapid-china-expansion-20181217-p50mpb.html

14. Huawei calls on Australia, US to show proof it’s a security risk

19/12/18 AP The Australian

The chairman of Huawei called on the Australian, United States and other governments to provide evidence to back up claims the Chinese tech giant is a security risk, as it launched a public relations effort to defuse fears that threaten its role in next-generation communications.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Accusations against the biggest global supplier of network gear stem from “ideology and geopolitics,” Ken Hu said.

He warned excluding Huawei from the rollout of fifth-generation telecoms would raise costs and hamper innovation.

Mr Hu talked to American, European and Asian reporters who were invited to Huawei headquarters in southern China as part of efforts to tamp down concerns the company says are unfounded.

Read more (Paywall): https://bit.ly/2QFO3CG

15. tabloid with China links tails visiting US-Australian academic

19/12/2018 Kate Lyons The Guardian

When Kevin Carrico landed back in Australia on Monday after spending a week in Hong Kong, his friend sent him a link to the front page of a Hong Kong tabloid.

It was covered with pictures of Carrico and details of his trip.

It seems reporters for the paper, Wen Wei Po, which is believed to have close ties to Beijing, had been following him all week, reporting details of who he met, where he went, even when he returned to his hotel to change his shirt.

There were photographs of the US-Australian academic, who works for Macquarie University in Sydney where he researches Chinese history and society, standing in the street. Another shows him at the airport about to leave the country and a third shows him in conversation with a friend in a restaurant, that was clearly taken by someone sitting a few tables away.

Read more: https://www.theguardian.com/australia-news/2018/dec/18/hong- kong-tabloid-with-china-links-tails-visiting-us-australian-academic

16. Bill Shorten at Chinese fundraiser behind NSW ICAC’s raid

19/12/2018 Brad Norington

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

The Australian

Bill Shorten was present with other senior party leaders at a Chinese Friends of Labor fundraising dinner in Sydney that is believed to be the focus of a raid on the NSW ALP’s headquarters by the Independent Commission Against Corruption.

Officials from the NSW corruption body swooped on the ALP Sussex Street offices early yesterday in search of financial records related to an investigation into allegedly undisclosed or illegal party donations in 2015.

The raid took place while Labor officials were out of Sydney, attending the party’s national conference in Adelaide. Its timing, three months before the NSW election, also caused internal consternation about possible damage as the state party seeks to make itself electable after two terms in opposition.

The ALP’s head office said yesterday the investigation triggering the raid was linked to “historical” political donations received in 2015, but claimed the NSW Electoral Commission had already fully investigated the matter with the full co- operation of NSW Labor.

Read more (Paywall): https://www.theaustralian.com.au/national-affairs/state- politics/bill-shorten-at-chinese-fundraiser-behind-nsw-icacs-raid/news- story/32ff73081dce501e6feb848ee789b470

17. Rio Tinto in talks to extend Pilbara joint venture

19/12/18 Nick Toscano The Sydney Morning Herald

Mining giant will negotiate a possible extension of an iron-ore joint venture with the China Baowu Steel Group in Australia’s minerals-rich Pilbara region, the company announced on Wednesday.

An agreement was signed in Shanghai to “reinforce” the so-called Bao-HI joint venture, which controls the Eastern Ranges and Western Range mines and has delivered sales of more than 180 million tonnes of iron ore since it was created in 2002.

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

“The signing of this agreement is a significant milestone in the partnership between Rio Tinto and Baowu that extends back more than four decades and was enhanced with the creation of the Bao-HI JV,” Rio Tinto iron ore chief executive Chris Salisbury said.

“The success of this relationship has contributed to the growth of both our organisations over many years and is one which continues to develop and strengthen over time.”

Read more: https://www.smh.com.au/business/companies/rio-tinto-in-talks-to- extend-pilbara-joint-venture-20181219-p50n9k.html

18. How does Australia navigate a new era of trade warfare?

19/12/18 Shiro Armstrong and Peter Drysdale Australian Financial Review

The United States under President Donald Trump is on a mission to add economic policy to the armoury of national security policy to deal with a rising China. The approach holds the global economic order hostage to the attempt to put China back in its box.

The stakes are as high as they get. But how should middle powers like Australia and its neighbours such as Japan or Indonesia respond to the hard choices they now confront?

Using economic instruments for geopolitical objectives is nothing new. Between the two world wars the practice ended in wholesale military conflict. But the US- inspired post-war rules-based international regime extended US political influence through the spread of open markets at the same time as it constrained the use of trade sanctions for political security objectives (although not completely, as United Nations-based economic sanctions became a feature of the geopolitical action).

Read more (Paywall): https://www.afr.com/news/economy/how-does-australia- navigate-a-new-era-of-trade-warfare-20181219-h199rw

19. Commonwealth Bank opens path to Chinese riches by tapping into Ant Financial’s Alipay

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

20/12/18 AAP The Australian

Commonwealth Bank has signed up with Alipay in a move that will allow Chinese tourists to make purchases in Australia via the world’s largest mobile payment platform.

CBA says local businesses will from Thursday be able to add the Alipay app to the bank’s so-called Albert payment terminals, allowing them to better tap the $10.9 billion Chinese tourist market. There are 94,000 of the wireless devices in Australia.

“This is a game changer and we are thrilled to be the first major bank to provide Alipay as a payment option for customers,” CBA business customer solutions boss Clive Van Horen said.

With 900 million users worldwide, Alipay is the world’s largest mobile and online payment platform.

Read more (Paywall): https://www.theaustralian.com.au/business/financial- services/commonwealth-bank-opens-path-to-chinese-riches-by-tapping-onto- ant-financials-alipay/news-story/664e591a89b43205001f572387b41557

20. We are indeed exceptional, but it’s no accident

20/12/18 David Uren The Australian

US Federal Reserve chairman Jerome Powell recently has warned that the long run of economic growth the world has enjoyed since the global financial crisis eventually will end. “Business cycles don’t last forever, unless you’re Australia,” he said. He noted that Australia was up to its 27th year of economic growth, which he said “feels like forever”.

Josh Frydenberg’s budget update predicts Australia’s economy will race to its 30th recession-free year in 2021-22, with the best run of 3 per cent growth since the early 2000s.

[…]

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)

relationship

Each week China Matters collates news items about the Australia-China relationship

Australian exceptionalism is based above all on its unique role as the supplier of the raw materials feeding the transformation of the Chinese economy. It also has drawn on rapid population growth, improvements in education and on a sound institutional and financial structure.

China was only Australia’s 10th largest export market at the time of the last recession. We now sell about as much to China every week as we did in a year then.

Read more (Paywall): https://www.theaustralian.com.au/opinion/we-are-indeed- exceptional-but-its-no-accident/news- story/4c28249436b6d68745ed0176f41701b9

China Matters Media Roundup Issue 102 (15/12/18 - 20/12/18)