Australia-China Relations Institute 澳大利亚-中国关系研究院
Australia and the Belt and Road Initiative: A survey of developments 2013-September 2017
Elena Collinson and Simone van Nieuwenhuizen December 2017
Introduction Australia is not part of the 65 countries geographically located on the overland Belt and On September 7 2013 at Kazakhstan’s Nazarbayev the maritime Road, but this does not preclude University, Chinese President Xi Jinping for the participation. Indeed, in a speech to the Australian first time outlined a vision for an overland ‘Silk parliament on November 17 2014, President Xi Road Economic Belt’ connecting Central Asia formally invited Australia to participate in the BRI, and China’s western provinces. In an address stating, ‘Oceania is a natural extension of the to the Indonesian Parliament in October 2013, ancient maritime Silk Road and China welcomes President Xi announced the development of a Australia’s participation in the 21st century ‘New Maritime Silk Road’ spanning Southeast maritime Silk Road.’2 Asia. These two initiatives were then linked at a Chinese Communist Party Central Committee Australia has welcomed the BRI on one level, conference that same month, with President Xi and reserved engagement with it on another. delivering an address on China’s diplomacy with Moreover, the BRI has been slow to permeate the its neighbouring countries and stating that they Australian public consciousness with one former should cooperate to ‘accelerate infrastructure federal government minister commenting, ‘I find connectivity, to build [the] Silk Road Economic Belt in Australia 99 percent of people wouldn’t have a and Maritime Silk Road’.1 The Chinese government clue what you’re talking about if you said Belt and undertook a number of rebranding exercises, Road.’3 But as the initiative has gained momentum finally settling on the term ‘Belt and Road Initiative’ on the global stage, so too has domestic debate (BRI) in 2016. as to whether or not Australia should participate Note: This chapter was published in Sun Youzhong and Han Feng, eds. Blue Book of Australia: Annual report on development of Australia (2016-2017). Beijing: Social Sciences Academic Press, December 2017, pp. 193-222. 1 Ministry of Foreign Affairs of the People’s Republic of China, ‘Xi Jinping: Let the Sense of Community of Common Destiny Take Deep Root in Neighbouring Countries’, speech, Conference on the Diplomatic Work with Neighbouring Countries, Beijing, People’s Republic of China, October 25 2013
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 1 – and how. This chapter surveys the Australian advice to private-public partnerships and other response to the BRI, from its announcement infrastructure funding mechanisms.’5 in 2013 to the time of writing (September 2017). Developments in the debate across Discussions on BRI cooperation at this time largely federal government, federal opposition, state centred around aligning Australia’s Developing governments, business, academia and media will Northern Australia strategy – a nation-building be explored. initiative focused on encouraging investment throughout Australia’s north, unveiled in June 2015 Government – with the BRI. In July, then-Chinese Ambassador to Australia Ma Zhaoxu told a conference: 6 Federal Government China and Australia are…exploring cooperation While the Australian Government initially under China’s ‘One Belt One Road’ Initiative and presented a broadly positive response to the Australia’s Strategy to Develop the North. As BRI, and continues to remain notionally open these projects accommodate each other, the to involvement in some capacity, they have two countries are well positioned to share their approached the BRI with caution. To date there respective strengths in market, capital, and has been little progress in terms of policy technology and infrastructure development. development and execution. The following month, then-Australian Trade Discussions between the Australian and Chinese Minister Joe Hockey in his opening remarks to the governments about cooperation on the BRI were 2015 China-Australia Strategic Economic Dialogue not publicly evident until after Australia signed stated:7 the China-Australia Free Trade Agreement (ChAFTA) on June 17 2015, and became a founding Areas I would like to explore include how the AIIB member of the Asian Infrastructure Investment could complement the efforts of China’s One Bank (AIIB) on June 29. There seemed to be some Belt One Road initiative. initial enthusiasm on the Australian side. The … July 2015 edition of the Australian Department of Foreign Affairs and Trade’s (DFAT) Business Envoy Additionally I would like to discuss how to magazine, a briefing by DFAT for the Australian build Northern Australia through the Northern business community, included a feature on the Australia Infrastructure Facility, which will open BRI. It reflected a largely positive assessment of the North to trade opportunities with partners the initiative, and noted that ‘China’s approach such as China. is broadly in line with the focus of the G20 which recognised the importance of addressing In a rundown of the Dialogue presented to a forum shortfalls in global investment and quality hosted by the Australian National University (ANU) infrastructure to lift economic growth, job creation the next day, Ambassador Ma asserted that some and productivity’.4 The feature also outlined in progress had been made in connecting the BRI broad terms potential opportunities for Australia, and Australia’s Developing Northern Australia including stronger demand for iron ore and raw strategy. He said: 8 materials; Australian provision of project expertise; and ‘providing accounting, financial and legal 4 ‘China’s ‘One Belt, One Road’: Economic implications for Australia’, Business Envoy, Investment and Economics Branch, Department of Foreign Affairs and Trade, June 2015
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 2 The theme of the dialogue, among others, is Ministry summary of the meeting noted that how to jointly build the “One Belt, One Road”. I President Xi expressed his ‘[hope] that both sides can tell you that they [representatives of both could align China’s Belt and Road initiative with governments] had a very good discussion and the ‘Northern Development’ plan of Australia’.10 Of reached the following important consensus. this declaration, former Australian Ambassador to China Geoff Raby observed that: 11 The Australian government will hold the Northern Australia Investment Forum in Darwin For the first time, Australia has been included this November and is very keen to invite officially in one of the highest profile policy Chinese companies to participate in the forum priorities of Xi’s presidency. This initiative was and explore business opportunities on the listed ahead of the Prime Minister’s own chosen development of infrastructure in north Australia. focus for his visit which was around innovation, science and education. … In linking China’s One Belt One Road (OBOR) Both sides agreed to work closely to policies to the Australian government’s Northern accommodate China’s Maritime Silk Road and Development Strategy, Xi has given his imprimatur Australia’s Strategy of Developing the North. to China’s investing in Northern Australia’s infrastructure. Chinese Deputy Consul-General to Sydney Tong Xuejun also confirmed that linking the However, Prime Minister Turnbull did not address development of Northern Australia with the BRI this call for alignment directly. Indeed, the proposal was discussed at the Dialogue, adding, ‘If the did not feature in any of his speeches or remarks maritime silk road begins in China, then Australia during his official visit. is a major country at the other end.’ 9 President Xi repeated this proposal during a It was announced at the conclusion of the 2015 meeting with Prime Minister Turnbull on the China-Australia Strategic Economic Dialogue that sidelines of the G20 summit in Hangzhou in both sides had agreed to set up a working group September 2016. Xinhua reported that he ‘called to explore the possibility of pairing up the two for the aligning of China’s Belt and Road Initiative proposals. However, no further statements were with Australia’s plan to develop its northern made in 2015 by either the Chinese or Australian region’.12 Again, Prime Minister Turnbull did not governments on progress regarding the linking of directly address this. the Developing Northern Australia strategy and the BRI. Public discussion regarding the BRI and the Developing Northern Australia strategy at a senior 2016 saw a notable lack of comment regarding the level did not arise again until February 2017, Developing Northern Australia strategy and the BRI during the Australia-China Foreign and Strategic by senior Australian government representatives Dialogue. Australian Foreign Minister Julie Bishop despite China’s public urging to link the two and Chinese Foreign Minister Wang Yi told a press initiatives. During Australian Prime Minister conference they had discussed cooperation on the Malcolm Turnbull’s meeting with President Xi on matter. Foreign Minister Wang stated:13 his first official visit to China, the Chinese Foreign
9 Greg Earl, ‘Business summit to examine modern China’, The Australian Financial Review, August 27 2015
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 3 We intend to link China’s Belt Road initiative with the Developing Northern Australia strategy with Australia’s vision for developing Northern during Premier Li’s visit, and that this was Australia rejected. According to Mr Fletcher the MOU was ‘a fairly vague piece of paper’ and this was one of Foreign Minister Bishop was less emphatic, the factors that led to its rejection.16 focusing instead on the considerations prerequisite to any Australian participation: Mr Fletcher also elaborated on Foreign Minister Bishop’s statement at the Australia-China Foreign We talked about the need for greater and Strategic Dialogue regarding Australia’s BRI infrastructure, both regionally and in our considerations. When asked what BRI ‘success’ respective countries – China’s One Belt One would look like from an Australian perspective, Mr Road initiative, Australia’s Developing Northern Fletcher replied:17 Australia initiative – and we commit to the principles of transparency, private sector We have highlighted the importance of engagement and ensuring that infrastructure international standards in any projects investment leads to strong development which get up and running, open procurement outcomes. processes, sensitivity to local laws and communities, transparency and efficiency. It was then reported by Australian press in Success for us would be those principles being March, in the days preceding a visit by Premier applied throughout Belt and Road activities and Li Keqiang – the first by a Chinese Premier in success would include Australian companies 11 years – that the Australian Government had being able to participate on a competitive declined to formally endorse the BRI by signing a footing in such activities as well. Memorandum of Understanding (MOU) on linking the BRI with the Developing Northern Australia DFAT Secretary Frances Adamson reiterated this strategy.14 According to a subsequent report on sentiment at a speech to the ANU on June 20:18 the matter, published on May 29 by The Australian newspaper, the national security committee of While we are...supportive in principle of more cabinet had debated twice prior to Premier Li’s infrastructure in this region and beyond we visit and opted to reject the proposal, despite are concerned about...transparency, about an ‘upbeat’ oral brief by Foreign Minister Bishop. rules, about open contracts and governance The Australian reported that ‘[t]he main reason arrangements. for Australia’s reluctance was that there was no On May 14-15 the Chinese Government held evidence that signing up had tangible benefits. It the ‘Belt and Road Forum for International did not appear it would lead to extra investment Cooperation’ in Beijing, a grand-scale from China beyond what would happen anyway. diplomatic showcase of the initiative. Despite The government was not satisfied with the details some speculation that Australia would not be — or lack of detail — in the China proposal.’15 On represented at the forum, an invitation was June 1 the head of DFAT’s North Asia Division, extended to Trade Minister Steven Ciobo. Graham Fletcher, confirmed to a Senate Estimates Acceptance of this invitation was communicated hearing that in February the Chinese Government to the Chinese Government around the time of proposed the signing of an MOU linking the BRI
14 Primrose Riordan, ‘China snubbed on road and port push’, The Australian, March 20 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 4 Premier Li’s visit. An invitation had, according would again consider connecting the BRI with to DFAT, not been extended to Foreign Minister the Developing Northern Australia strategy, Bishop. Minister Ciobo stated that while there are ‘complementarities’, they would continue to In a media release prior to attending the Belt and remain separate.22 He did, however, reportedly tell Road Forum Trade Minister Ciobo said, ‘Australia Xinhua that Australia was interested in putting supports the aims of initiatives such as the Belt ‘more meat on the bone’ with respect to the BRI.23 and Road that improve infrastructure development and increased opportunities in the Asia-Pacific Trade Minister Ciobo, and indeed other Australian region’. 19 government representatives, have often stated that any participation in the Belt and Road He added: 20 Initiative would be subject to Australia’s national interest.24 When directly asked by the Australian Australian companies have significant Broadcasting Corporation’s Radio National what expertise in infrastructure construction, Australia’s national interest with regards to the BRI so I will be working to identify projects for was, the Trade Minister replied:25 Australian businesses that address the serious infrastructure shortfalls across our region. I think it’s to look at ways in which we can get our business community to be involved. Minister Ciobo also supported a trade statement I think it’s opportunities around financing issued at the Belt and Road Forum, electing not of infrastructure, opportunities around the to join a protest by European officials over its design and ultimately the construction of wording. He said in a media release:21 infrastructure. As countries put forward Australia supported the “Initiative on Promoting projects, there’ll be opportunities for Unimpeded Trade Cooperation along the Belt collaboration. There, for example, will be and Road” statement issued at the end of the projects that China will be undertaking within trade session. its mainland that Australian businesses could be involved with. It might be on the financing The statement aligns with Australia’s position side, on the design side, or on the construction on resisting protectionism and increasing trade side. Over the coming months and years ahead, liberalisation. we’ll find opportunities to continue to be better engaged around this initiative and I think that While Minister Ciobo’s invitation to, and is what represents Australia’s national interest attendance of, the Belt and Road Forum indicated when it comes to the Belt Road initiative. a level of Australian openness and support of the initiative, it might also be noted that his There are some indicators that Australia may participation was limited to a partial one day of the now be slowly warming to at least a limited two-day forum. participation in the BRI.
Following his participation in the Belt and Road On September 29 Minister Ciobo told The Forum, when pressed on whether Australia Australian Financial Review that the Australian Government had signed an MOU with China on 19 Steven Ciobo, ‘China’s Belt and Road Forum’, media release, May 14 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 5 cooperation with Australian companies on BRI complementarity rather than reflexive negativity’.28 infrastructure projects in third countries earlier Senator Wong later penned an opinion piece for in the month, and that ‘the level of economic The Australian, which argued that Australia’s cooperation continues to broaden’.26 ‘reluctance to join the Asian Infrastructure Investment Bank was timorous and self-defeating.’ Federal Opposition – the Australian Labor Party She asserted, ‘We need to display much greater confidence in harnessing the opportunities of The Opposition Australian Labor Party has the BRI’.29 Speaking at the ANU in August 2017, notionally positioned itself as receptive to the BRI, Senator Wong stated, ‘We should be prepared to subject to national security and national interest look at individual initiatives under the BRI and, qualifications. where determined on a case by case basis, pursue 30 In an interview at the Boao Forum for Asia on those that accord with our national interests.’ March 27 2017, Jason Clare, Shadow Minister for Australia’s Shadow Minister for Defence Richard Trade, Resources and Investment encouraged Marles has also publicly supported the ‘case-by- Australian businesses to look for opportunities to case’ approach, stating: involve themselves in the BRI:27 Certainly it’s not about rejecting China’s In simple terms, One Belt, One Road means initiative out of hand. That makes no sense more roads, more railways, more ports and at all. There are going to be important more airport infrastructure…The next step infrastructure projects and desire from China to is whether other parts of the Australian invest in them which may well be in our national economy can benefit from this big investment interest that we should ultimately support. in infrastructure as well; whether it is becoming involved in the engineering side, the He added, ‘Clearly though, we do need to be construction side, the design side. bearing in mind our national security when we engage in these and we need to be looking at It’s going to be a challenge but it is a great things through that lens.’31 challenge to have. The Labor Party has thus far refrained from The challenge is for Australian industry to get to supporting an alignment of the BRI with the grips with this enormous infrastructure plan and Developing Northern Australia strategy, but has the opportunities they might have to tap into it. not ruled it out, either. Shadow Treasurer Chris On March 29 Australia’s Shadow Foreign Affairs Bowen in a speech outlining the Labor Party’s Asia 32 Minister Penny Wong said in a speech to Australian strategy on September 29 said: ambassadors, high commissioners and consul- We will come to office if we win the next election generals that Australia needs ‘a policy that with an open mind as to how Australia and looks at the Belt and Road Initiative (BRI) with an China can best collaborate on the Belt and eye to identifying points of mutual interest and Road Initiative, with a clear eyed approach to 26 Andrew Tillett, ‘Labor’s Asia plan called naïve and hypocritical’, The Australian Financial Review, September 28 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 6 our respective national interests. The ACT government has a strong commitment to strengthening ties with China, consistent We will examine proposals on a case by case with the intent of the one belt, one road basis including considering how the Northern initiative—to connect the future of China’s Australia Infrastructure Facility and the Belt and neighbours with China’s own future. Road Initiative can best complement each other. Noticeably conspicuous, however, from expressing Australian state governments public interest – or at least curiosity – in the BRI is Australia’s largest state, New South Wales (NSW). Some Australian state governments have also NSW Premier Gladys Berejiklian has thus far made shown interest in the BRI. Victorian Premier Daniel no public comment on the BRI. NSW Opposition Andrews – the only Australian premier to be invited leader Luke Foley on September 29 2017 told a to the Belt and Road Forum33 – stated, ‘There’s press conference that NSW and Australia would always an option’, when asked whether he was be signing an ‘economic suicide note’ if it did not receptive to Victorian projects being funded under engage with the BRI. He advocated for Australian the auspices of the BRI. He went on to say, ‘We consideration of a BRI MOU in the same vein as the very much welcome international partners and document New Zealand signed earlier in the year:39 direct foreign investment to get the job done’.34 …New Zealand has signed a memorandum of The Northern Territory government has understanding with the PRC around One Belt characterised its 2015 decision to lease the One Road cooperation, I mean Australia should Port of Darwin to a Chinese company in terms of be doing this. securing its ‘place on China’s ‘Maritime Silk Road’ trade route’.35 Moreover, the Northern Territory Why are we leaving it to our friends in New constituted the only official Australian government Zealand to sign up to the One Belt One Road representation at a Silk Road Expo in Xi’an in partnership? We’re sending a message we’re June 2017, sponsoring a trade stand promoting not convinced about this. business-to-business connections and investment opportunities for the NT.36 Media and other commentators
In March 2016, Queensland Treasurer Curtis Pitt Australian press, analysts and other stated in a media release that while in China he commentators were generally slow to focus on the would be meeting with the National Development BRI. This helps to explain, in part, why the BRI is a and Reform Commission to ‘to gain a stronger concept that most Australians are unfamiliar with. understanding of China’s foreign direct investment This slow pace can be partly attributed to the BRI’s policy and notably the ‘One Belt, One Road’ amorphous nature, which meant that few specifics strategic initiative.’37 such as a pipeline of project proposals were available. In turn, this made it hard to contemplate In September 2016, Chris Bourke, an Australian how seriously Australia should take the initiative Capital Territory (ACT) government minister, told and confusion about how Australian business the ACT’s Legislative Assembly:38
33 Office of the Premier of Victoria, ‘Victoria on the world stage at meeting of global leaders’, media release, May 15 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 7 might get involved. Veteran Australian journalist become a member of the AIIB, which was launched Andrew Clark made the observation:40 in October 2014.
The sheer enormity of the plan bamboozles Around this time, commentary by the academic many. This is partly because, according to never and think tank community also started to quite extinguished stereotypes, the Chinese gain momentum, albeit slowly, with increased are still partly viewed in the West as inscrutable discussion of the BRI’s strategic importance and Orientals. But with [BRI], the Chinese are in its implications for Australia and other countries fact projecting what they’re going to do, and in the Asia Pacific region. Observations were then doing it. However, it’s so stupefying in its initially presented in sweeping terms. Security ambition that few in the West can focus on it. analyst Rory Medcalf briefly touched on the BRI in an opinion piece written following President A survey by this chapter’s authors of major Xi’s parliamentary address, stating that his Australian media from September 2013 to simultaneous visit with Indian Prime Minister December 31 2015 reveals that substantive Narendra Modi ‘underscored how much we discussion of the BRI (then known as the ‘One Belt [Australia] matter to them’. On President Xi’s One Road’ or ‘New Silk Road’ initiative) was not speech, Mr Medcalf wrote: 46 apparent until September 2014, a full year after Xi Jinping’s address to Nazarbayev University.41 Xi brings a new tone of reassurance about The term ‘Maritime Silk Road’ first appeared in China’s strategic intentions, which relentlessly an editorial in The Australian on October 7 2013, accentuates the positives about working with following President Xi’s speech to the Indonesian Australia as a security partner, and reimagines Parliament on October 2.42 This was the only Australia as part of the ‘new maritime Silk instance of this term in major media outlets until Road’ that will enrich the wider region through almost twelve months later on September 17 2014, connectivity and commerce. when The Australian reported on the China-ASEAN trade expo, for which ‘jointly building the 21st- A year of Australia’s independent-minded century maritime silk road’ was a theme.43 diplomacy about standing up for principles of non-coercion and a rules-based regional order Australian media coverage of the ‘New Silk Road’ have not jeopardised this outcome. was amplified somewhat following President Xi’s parliamentary address on November 17 2014 in In March 2015 Mark Beeson, Professor of which he welcomed Australian participation in the International Politics at the University of Western BRI44 but it nevertheless remained sparse. For Australia, penned an article exploring the example, between November 17 2014 and January geopolitics and geoeconomics behind the AIIB for 31 2015 only seven articles in the mainstream academic blog The Conversation. He discussed the Australian press mentioned the ‘New Silk Road’ connection between the AIIB and the BRI, stating:47 or ‘Maritime Silk Road’.45 This coincided with The creation of a new ‘Silk Road’, linking Beijing increased debate about whether Australia should to its immediate neighbours, will not just 40 Andrew Clark, ‘China: it’s got so big it changes everything’, The Australian Financial Review, August 19 2016
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 8 dramatically increase regional productivity and came under media scrutiny in the second half trade. It will stand as an enduring, very tangible of 2015. These included the 99-year lease of the expression of China’s material centrality in Asia Port of Darwin to Chinese company Landbridge and beyond. in October, and a joint bid for control of NSW TransGrid by Macquarie Group and the State Grid In March 2015 the Chinese Government released Corporation of China in November. In this context, an action plan articulating the BRI’s principles, the infrastructure-focused BRI was perceived by framework and priorities.48 This coincided with some as a threat to Australia’s national security, increased activity under the BRI, including with a potential to erode Australian decision- agreements with Russia and a number of Middle making sovereignty. On November 13 2015 an East states. The availability of more information Australian Financial Review article asserted: 50 and tangible outcomes resulted in Australian commentators starting to scrutinise the [W]hat appears on the surface as a conflict initiative in greater detail, exploring the potential between national security and foreign opportunities it might generate, both in overall investment has actually revealed itself as a terms and in specific sectors, and the challenges more profound realisation of Australia’s small it might present. role in China’s grand, multi-generational plan known as ‘One Belt, One Road’. Some outlets expressed concerns about the lack of transparency in financing and governance Nonetheless, this was also balanced by a focus frameworks in China’s promotion of cross-border on the potential benefits that could be derived infrastructure projects, in addition to concerns from Australian participation in the BRI, and about mid to long-term strategic implications. encouragement levelled at Australian business to get a foot in the door. Ross Gittins, Economics For example, while recognising the potential Editor of The Sydney Morning Herald, wrote, for benefits the BRI presented to developing example:51 countries, including expansion of trade and economic opportunities through improved There is scope…for Australian banks and other infrastructure, an Australian Financial Review financial institutions to help facilitate the article on March 27 2015 stated: 49 funding of infrastructure projects.
[M]any of China’s neighbours and near Much of the construction of projects will be neighbours are apprehensive about the done by big Chinese state-owned enterprises. potential strategic hooks accompanying such We could, of course, sit back and hope this close Chinese involvement and integration of leads to restored demand for our coal and iron key infrastructure…Some are cautious about ore. the risk of being drawn into Chinese power plays via their need for funding – or the potential to But the SOEs will often need to partner with end up with ports that effectively double as foreign firms able to provide the specialist Chinese naval bases. expertise they lack in in such things as engineering and major construction. Concerns grew more acute in 2015-2017, fuelled, in part, by a number of controversial projects Many Australian companies are well equipped involving Chinese investors in Australia that to supply such consulting services, but to date 48 Xinhua, ‘Chronology of China’s Belt and Road Initiative’, Xinhua, June 6 2016
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 9 our firms have shown limited appetite for the a huge consequent benefit for Australians, on higher risks involved in developing country the doorstep of such propulsion. This is a world projects. desperately short of initiatives that will truly change it.’54 … But he also added the caveat:55 But not to worry. There are Japanese and South Korean firms who’ll be happy to eat the Chinese We can work alongside China, we can become lunch we don’t fancy. closer friends, we can seek mutual advantage; this is already happening. Good. But all-or- Rowan Callick, The Australian’s Beijing nothing is not a smart approach — whether with correspondent, noted the initiative had been China or with the US…Belt, yes. Road, yes. Let’s welcomed internationally, and that it may continue back efforts to boost our neighbours’ growth to be provided it took into account and respected and productivity. Initiative, yes, we can display input from potential partners and participants:52 some of that, too. But let’s not kid ourselves that others will significantly help shape this President Xi Jinping’s “one belt, one road” show, except within their own borders. strategy, incomplete though it remains, has been widely welcomed internationally, as The Northern Territory News, a typically right- has the Beijing-based Asian Infrastructure aligned tabloid, editorialised strongly in favour of Investment Bank. business engagement with the BRI, with support from the Northern Territory Government:56 So where China is perceived to be working closely with others, its leadership is received There is much merit in the Belt and Road warmly — by Australia and many others. Initiative for the Territory. By chipping away at the coal face a lot of opportunities for Mr Callick in a separate article also encouraged Territory businesses to be involved in China’s Australian business participation in the BRI:53 new initiatives can be realised. It is critical the It makes sense for Australian corporations not Territory Government works proactively with only to watch this space closely but also to private enterprise to help facilitate this. align themselves with likely Chinese projects Paul Kelly, Editor-at-Large of The Australian and players, since the rewards for participating favoured a pragmatic, middle-of-the-road in such schemes might be substantial, and approach to the BRI, writing:57 could lead to a stream of similar deals with joint venture partners, in the BRI region, in Australia It is absurd to say Australia cannot be involved or within China itself. for strategic reasons and equally absurd to say we should blindly sign any memorandum China Mr Callick went on to say in 2017 that ‘the BRI is a wants, regardless of its abuse of economic big-picture proposal that would, if realised, propel principles. much of the world towards greater productivity, prosperity and connectivity. This would provide
52 Rowan Callick, ‘China diplomacy: special treatment no way to go’, The Australian, August 11 2016
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 10 Both the anti-China nay-sayers and pro-China will begin to be sympathetic to the [People’s gladhanders are wrong. Australia is biding its Republic]. time on Belt and Road, and that is sensible. This line of analysis on underlying intent has been In parallel with increased media scrutiny and concurred with by a number of Australian security engagement, a growing divide slowly became analysts and commentators. For example, the apparent between economic commentators and Director of the International Security Program security analysts in the academic sector and at the Lowy Institute, writing for an online cyber its peripheries over the BRI and what Australia’s security forum, warned:61 response to it should be, although there were some who straddled the divide. China’s ‘smile diplomacy’ towards Southeast Asia in the first decade of this century has been Peter Jennings, head of the Australian Strategic replaced by a rictus grin. China’s confidence in Policy Institute, a defence and strategic policy the allure of its economic statecraft, through think tank, said in a TV interview: 58 the Asian Infrastructure Investment Bank and One Belt One Road initiative for example, is now It’s all part of a broader Chinese strategy of such that Beijing feels much less compunction strengthening their influence throughout the about pressing its maritime claims, even to the Asia-Pacific and really can’t just be seen as extent of aggressive paramilitary actions at sea simply a commercial investment. There’s more level and diplomatic strong-arming. to the strategy than that. In early 2017, a policy options paper on ‘Chinese In August 2016 an Australian parliamentary library money and Australia’s security’ prepared by researcher prepared a report that was included the National Security College at the Australian in the Parliamentary Library Briefing Book, a National University stated:62 short volume of snapshots of issues expected to affect Australia in the early months of each new Beijing wants to strengthen China’s position at parliament. The paper focused rather more heavily the centre of an economic – and increasingly on the criticisms of the initiative than on pathways strategic – system across the Indo-Pacific for constructive engagement. It concluded:59 and Eurasia. To this end it’s using a range of initiatives, increasingly under the Belt and Road Australia needs to adopt a more economically branding, and including direct investment, and strategically prudent attitude in bilateral financing deals and aid. determining how the Australia-China economic relationship is to further develop. …
The author of the report told The Sydney Morning China wants to lock in its perceived advantages Herald:60 as the rising regional and global power. To achieve this, it’s leveraging economic [The BRI] is an economic strategy by the engagement with countries into influence Chinese state to get themselves and their in support of its broader policy goals. These [state-owned enterprises] and their major can range from China receiving preferential corporations economically engaged with commercial treatment, to countries keeping Australia so that Australian policy decisions quiet on a range of issues related to maritime
58 Jason Om, Interviews on the Port of Darwin lease, Lateline ABC, June 1 2016
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 11 sovereignty disputes, human rights, democracy In August 2016, the East Asian Bureau of and international law. Economic Research at the ANU and the China Center for International Economic Exchanges Essentially, Beijing wants from its commercial based in Beijing published the Australia-China partners the same deal that it has with its Joint Economic Report. The report identified some own people – economic benefits in return for specific areas in which Australia and China could acquiescence on politics and security. explore BRI cooperation:66
Concerns were also expressed about the viability Both countries should work to build a bilateral of the BRI, and its touted benefits for Australia. In financial infrastructure focus into regional December 2015 David Brewster, a visiting fellow initiatives such as One Belt, One Road…to at the ANU, expressed scepticism about the improve payment systems, credit information likelihood of the initiative’s vision being realised. bureaus, collateral registries and financial He wrote: 63 intermediaries and institutions throughout the Asia Pacific. The OBOR initiative requires cooperation among many countries that are politically OBOR represents an opportunity to unstable, corrupt or experience high levels of further strengthen financial integration by civil conflict. This creates considerable risks for complementing its trade networks and physical the implementation and operation of integrated infrastructure investments with greater infrastructure projects. investment in financial infrastructure. Along with infrastructure investment in Northern Ben Herscovitch, research manager of consultancy Australia, this represents another key way in China Policy, opined that Australia was unlikely to which Australia and China can collaborate on garner significant benefits from the BRI. This was OBOR. Investment in financial infrastructure partly due to the fact, he argued, that Australia such as financial institutions, financial would not be considered a key country on the BRI intermediaries, payment systems, credit map: ‘it’s unclear whether Australia’s status as information bureaus and collateral registries a ‘major country at the end of the Maritime Silk should be seen as critical complements to Road’ is anything more than symbolic.’64 the broader OBOR objectives of deepening Economists and academics with a business trade and commercial links, and thus should focus have, generally speaking, tended to focus receive the same level of attention and financial more on the economic impacts of the BRI and support. how the BRI might be harnessed to Australia’s Peter Drysdale, the report’s Australian lead, again economic and business advantage. For example, vocalised support for the initiative in May 2017, Hans Hendrischke, Professor of Chinese Business stating:67 and Management at the University of Sydney, commented that on BRI ‘[t]he focus should be on The world should welcome the Initiative as the commercial benefits, that provide benefits for China steps up its leadership role in upholding both sides’.65 free trade principles and deepening economic integration. This is needed as the world is
63 David Brewster, ‘China’s rocky Silk Road’, East Asia Forum, December 9 2015
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 12 seeing slow growth and a rising tide of anti- involving China, opinion on BRI is torn between globalisation. apprehension regarding China’s leading role and appreciation of the huge business opportunities Professor Drysdale noted that Australian on the other.’ He nominated, however, ‘a potential participation could be beneficial in helping shape, role for Australia in BRI focused on PPPs’ stating in some way, the development of the BRI. He that conditions are ripe for Australia to take on further observed:68 a thought-leader role in the area: 70
The success or failure of this Initiative will be What is clear, however, is that PPPs can provide critical for the development of China’s external a natural niche for Australia. Australia can economic relations as well as the global contribute to BRI by helping ensure that PPPs economic regime. But the outcome will depend live up to their potential to deliver higher quality critically on whether countries like Australia and and lower cost services faster. By promoting other western countries make the choice to good PPP practices, Australia can help avoid sign on in the spirit of multilateral engagement. a free-for-all of unconstrained strategic or commercial interests. The alternative is a world of transactional bilateral deals that threaten to corrode the However, Paul Dibb, an academic at the ANU’s openness of the global economic regime, which Strategic and Defence Studies Centre, in a May will be detrimental to Australia’s interest. 2017 opinion piece characterised economic commentators in Australia as ‘naïve’ for failing to Alice de Jonge, a senior lecturer in the Department ‘explore the geopolitical imperatives’ of the BRI, of Business Law and Taxation at Monash University stating: wrote in an opinion piece:69 I am not arguing here that we should reject There are two key reasons why Australia needs out of hand participation in One Belt, but I am to remain involved in both the AIIB and OBOR. suggesting that we need to be sceptical about The first is the risk of missing out if Australian China’s motives and to proceed with great businesses don’t take advantage of the caution until we gain a better understanding of opportunities available. its geostrategic implications. … This characterisation of failing to take into The second reason why Australian businesses account all angles may be levelled at both ends of need to remain actively engaged, is to ensure the spectrum – security and defence on the one that the country is in a position to influence hand, economics and business on the other. Yet the longer-term future of the region. Australia some analyses attempt to take into account both should be using its influence to emphasise the sides of the equation. potential for OBOR initiatives to help achieve Saul Eslake, former Chief Economist at the the sustainable development goals including Australia & New Zealand Banking Group (ANZ), reducing hunger, poverty and inequality, to cautioned against knee-jerk reactions to the name a few. BRI, advocating a considered approach that puts Craig Sugden, a senior public-private partnerships Australian interests ahead of other considerations. (PPP) specialist at the World Bank, observed that While noting that the BRI is of ‘considerable 71 on the BRI ‘[a]s is the case with many other issues potential interest to Australia’, he advised: 68 Ibid. 69 Alice de Jonge, ‘Australia risks missing out on China’s One Belt One Road’, The Conversation, May 16 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 13 Australia’s response should not be influenced executive of HSBC Australia, argued in favour by fear – either of China’s purposes in of involvement in the BRI due to the potential promoting the ‘Belt and Road’ Initiative, or business opportunities it could offer: 74 ‘fear of missing out’ (FOMO) on business opportunities in China, and Chinese investment One Belt, One Road may seem far-removed in Australia. from our shores, but its business opportunities for Australia should not be missed. Given the Jane Golley, an economist and Deputy Director future growth of this region, developing stronger of the China in the World centre at the ANU, trade and investment ties with the countries noted in a podcast with the Australia-China covered by One Belt, One Road should be a key Relations Institute at the University of Technology priority for Australian businesses. Sydney that as China is one of the world’s largest economies, its economic tools, such as the BRI, Mr Cripps repeated his call for proactive Australian are likely to have geopolitical consequences, engagement with the BRI in October 2015, arguing regardless of intention. She recommended that Australia would need to develop strategies Australia be more proactive in information to make itself relevant to China in the context of gathering, observing that the global market for China’s evolving economy: 75 Chinese capital is competitive and that it will be There are many other economies trying to hook difficult for Australia to compete if it does not seek onto the Chinese locomotive, so we need to the information necessary to become engaged ensure we don’t get pushed to the back of the with the initiative.72 queue. Despite differences in opinion on the BRI, how it Australia must clearly articulate its value to might play out, and its potential ramifications for China’s decision-makers in a changing world — Australia, commentators are now largely unified in effectively, why Australia and why now? the notion that the initiative is something Australia needs to take seriously. Hugh White, Professor of Mr Cripps went on to note that the BRI, as an Strategic Studies at the ANU, pointed this out in infrastructure-focused program, would create late 2015: ‘One Belt, One Road sounds daggy to us greater demand for Australian commodities, 73 but it’s deadly bloody serious’. especially iron ore. 76
Business community Similarly, in November 2015 Managing Director of Fortescue Metals Group, Nev Power, pointed Shortly after the signing of ChAFTA and the out that BRI projects would boost demand for announcement of Australia’s membership of the Australian steel, and that Chinese economic AIIB in June 2015, Australia’s business community policies such as the BRI would be the determinant began to consider what the BRI might mean for of iron prices, rather than excess supply.77 their business interests. For example, writing in The Australian in August 2015, Tony Cripps, chief
Relations Institute, University of Technology Sydney and the Chinese Academy of International Trade and Economic Cooperation, Beijing, People’s Republic of China, June 18 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 14 Andrew Lumsden, a partner at law firm Corrs delegation included three of Australia’s ‘big four’ Chambers Westgarth, offered a different banks, law firms King & Wood Mallesons and Minter perspective on how Australian business might Ellison, and engineering, construction, energy be able to participate in the BRI in an article in and infrastructure companies BHP Billiton, Orica, July 2015. He described Australia’s potential SMEC, Norman Disney & Young and WorleyParsons. contribution as not being limited to commodities alone, but extending to practical expertise Of Australian business proactiveness in pursuing in delivering complex construction projects. BRI discussions Rowan Callick observed: 82 Therefore, he argued that despite the end of the Australian firms have been late to identify commodities boom, Australian experience in opportunities in China in the past, with few project planning, financial forecasting, talent and investing or opening offices there even today… risk management could ‘now be redeployed in the But with [BRI], they have taken a little lead, One Belt One Road.’78 becoming the first private sector group to come Furthermore, Mr Lumsden noted that ‘[a]cquisition to Beijing to chase up openings. is not the only option for China in securing the A poll of Australian companies conducted by HSBC skills of Australian construction firms. The One and published in October 2016 indicated that Belt One Road Initiative, together with ChAFTA, few had plans to engage with the BRI.83 But there presents opportunities for Australian companies to have been indications that for some Australian joint venture with Chinese companies in providing companies the benefits of the BRI are already construction services.’79 worthy of serious consideration. In May 2017 In early 2016, a BRI advisory group – the Australia- Bloomberg reported that Australian engineering China Belt & Road Initiative – was launched to company WorleyParsons was actively seeking ‘help Australian business gain clarity on Belt and out ‘more than $10 billion in contracts related to Road opportunities’ through an annual bilateral China’s Belt and Road spending plan, leveraging engagement program and boardroom briefings.80 its technical expertise from existing relationships Malcolm Broomhead, chair of the advisory group with Chinese construction firms in Asia and and director of BHP Billiton, in an interview with Africa.’84 The Australian vocalised support for Australian Additionally, the withdrawal of the US from the business engagement with the BRI stating that Trans-Pacific Partnership in January 2017 seemed President Xi’s invitation to Australia to participate to see renewed business interest in further provided ‘an opportunity to get onto tender lists exploration of the BRI. Former Australia and New and to gain funding that is only available to certain Zealand Banking Group chief executive Mike Smith countries, of which we are one.’ 81 commented:85 In October 2016 the advisory group led a With the death of TPP, there is a vacuum delegation of Australian business and industry in terms of some of the multilateral trade bodies to Beijing to meet with Chinese government initiatives. This is possibly a nice way for officials involved with BRI policy formulation and Australia to really get into where the action is. Chinese companies involved in the initiative. The 78 Andrew Lumsden, ‘Chinese One Belt One Road initiative - A new opportunity for Australian expertise?’, ‘Insights’ – Corrs Chambers Westgarth, July 20 2015
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 15 As the BRI gains steam, there seems to be a level Conclusion of concern in the Australian business community that there is a lack of a concerted push in To date, the Australian Government has adopted Australia to, if not support or harness the BRI more an interested but cautious approach to the BRI. fully to its advantage, at least develop a better While the initiative was generally welcomed understanding of how it may want to participate, following Xi Jinping’s speech to Australian if at all. Martin Tricaud, chief executive of HSBC Parliament in November 2014, and potential Australia, wrote in an opinion piece in May 2017:86 cooperation on development projects in Northern Australia was discussed at the 2015 Strategic Debate in Australia about Belt and Road risks Economic Dialogue, there has been little progress becoming one-dimensional. A more robust in terms of concrete policy outcomes. The only discussion would recognise the potential for the reported result has been the signature of an initiative to enhance the economic integration MOU on bilateral cooperation in third countries of Australia with the Asia-Pacific region, and in September 2017, for which little information is also its capacity to boost growth in developing available. nations and to invigorate global capital markets. From 2013 to 2015, coverage of the BRI in John Denton, chief executive of law firm Corrs Australian media was limited. Indeed, while Chambers Westgarth, stated in an interview that coverage is gaining momentum, it continues to Australia needs to ‘sort out’ its position on the BRI remain an issue that does not necessarily receive and ‘grasp the opportunities it has in terms of the sustained airtime. Consequently, it has taken economic relationship’.87 time for the Australian public to begin to grapple with the question of the country’s participation. Business representatives seem to harbour less Along with the signing of ChAFTA, debate over apprehensions than other sectors regarding any joining the AIIB, and growing sensitivity regarding geopolitical dimensions to the BRI, with some Chinese investment in Australia, awareness of ruling out the concern entirely. Mr Denton in the the BRI gradually increased. The Belt and Road same interview asserted, ‘We have to understand Forum for International Cooperation, held in that BRI is not a foreign policy of the Chinese Beijing in May 2017, also led to wider coverage. government, it is an economic development Australian media, commentators, the business 88 play’. community express different views about how and National Australia China Business Council to what extent Australia should engage with the President John Brumby posited:89 initiative. Some scholars highlight the economic and strategic opportunities presented by the BRI, China wants to promote, encourage, support while others warn that China’s geostrategic intent and part-finance infrastructure projects poses a threat to Australian national interests. throughout the region to accelerate economic However, generally speaking, the business growth and open up trading opportunities. I community welcomes constructive discussion don’t think it’s any more complex than that. of how companies could benefit from the BRI, and demonstrates concern that Australia may … fall behind if more informed dialogue and policy approaches are not forthcoming. [T]he language in Australia needs to be more supportive. 86 Martin Tricaud, ‘Forum: Belt and Road needs all sources of capital’, The Australian, May 12 2017
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 16 While the BRI is likely to become a defining feature of China’s international relations in the coming years, Australia has yet to present a coherent response. The BRI is a nascent initiative for which many details are still to be developed, and therefore debate about Australia’s participation among policymakers, media, academia and the business community is likely to continue.
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 17 About ACRI
For the first time in its history, Australia’s most important economic relationship is with a nation very different in governance, politics and values. In the past, Australia’s dominating economic relationships have been with the British Empire, the United States and Japan.
Today our most important economic partner is China.
China contributes now more to world economic growth than any other country. China absorbs 34 percent of Australian goods exports. By 2030, 70 percent of the Chinese population is likely to enjoy middle class status: that’s 850 million more middle class Chinese than today.
In 2014 the University of Technology Sydney established the Australia-China Relations Institute (ACRI) as a think tank to illuminate the Australia-China relationship.
Chinese studies centres exist in other universities. ACRI, however, is the first think tank devoted to the study of the relationship of these two countries.
The Prime Minister who opened diplomatic relations with China, Gough Whitlam, wrote in 1973: ‘We seek a relationship with China based on friendship, cooperation and mutual trust, comparable with that which we have, or seek, with other major powers.’ This spirit was captured by the 2014 commitments by both countries to a Comprehensive Strategic Partnership and the 2015 signing of a Free Trade Agreement.
W: australiachinarelations.org @acri_uts Australia and the Belt and Road Initiative: A survey of developments 18 About the authors
Elena Collinson
Elena Collinson is Senior Project and Research Officer at the Australia-China Relations Institute, University of Technology Sydney.
Elena holds a Bachelor of Laws and a Bachelor of International Studies with a major in Government from the University of Sydney. She has previously held research and project positions in Australian departmental, ministerial and Senate offices, at state and federal levels. Her research interests include Australia’s China policy, the US-China-Australia relationship, the South China Sea and Chinese investment in Australia. Her opinion pieces have been published in The Sydney Morning Herald, The Diplomat, South China Morning Post and The Interpreter, amongst others. @elenacollinson
Simone van Nieuwenhuizen
Simone van Nieuwenhuizen is Project and Research Support Officer at the Australia-China Relations Institute, University of Technology Sydney.
Simone holds a Master of International Relations (Diplomacy) from Peking University and a Bachelor of Arts (Languages) from the University of Sydney. Simone has held research and project roles at the University of Sydney China Studies Centre, the Carnegie-Tsinghua Center for Global Policy and the Lowy Institute for International Policy. She is co-author of China and the New Maoists (2016, Zed Books). Her research interests include Chinese foreign policy and diplomacy, and China-Middle East relations. Simone speaks Mandarin Chinese and Arabic. Her articles have appeared in The Diplomat, The Interpreter and Sino-NK. @simoneyvan
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