by John Howard
As time went by the effective relationship established with China began to be noticed by others, including the Americans. In mid-1999 I saw Bill Clinton in Washington. It was not long after a particularly unsuccessful visit to the United States by the Chinese Premier Zhu Rongji. Through whatever combination of poor preparation and misunderstood agendas, the visit had been a public relations disaster. Zhu had got the impression that the Americans remained hostile to China’s application for membership of the WTO. This bothered Clinton, and he asked me, during our meeting at the White House, to tell the Chinese that America really wanted them in the WTO. He said, ‘They will listen to you because you get on well with them.’ I was only too happy to respond to the President’s request. It was Australian policy to welcome China into the WTO.
I tracked the Premier down in London and had a 30-minute conversation with him, entirely in English. His English was particularly fluent and it struck me at the time just how globalised our world had become. Here was the Australian Prime Minister conducting a 30-minute conversation with the Chinese Premier, fluent in English, he himself being in London. I think I conveyed the message to him. The significance of this incident was that the Australian way of dealing with the Chinese had won attention.
Jiang Zemin himself visited Australia in 1999. It was a visit which consolidated earlier gains and included a luncheon at Admiralty House to which I invited all of the state premiers. In different ways, they all had interests in Chinese investment and trade. It was a further sign of the strengthening of the relationship.
The November 2000 APEC meeting held in Brunei was Bill Clinton’s last participation, as President, in that gathering. The meeting took place whilst the outcome of the presidential election between George Bush and Al Gore was still being contested. That impasse was a topic of constant social discussion amongst leaders.
At the formal luncheon, I felt that something should be said about Clinton’s contribution to APEC. I had acquired some years of seniority, even though I had only been attending since 1996. I therefore presumed to speak on behalf of all the leaders in thanking Clinton and his country for its contribution to APEC and wishing him well for the future. Quite spontaneously, my remarks were seconded by Jiang Zemin, who spoke with equal warmth about Clinton’s contribution. For those who are interested in symbolism, there was an element of that in what I have just described. There was acceptance of Australia as an appropriate spokesman for APEC participants, recognition of the American contribution, and a willingness by the Chinese to be associated with it. The Taiwan Straits tensions of early 1996 seemed a long time ago.
I felt pleased that this was the case. Whilst I always knew that, come a showdown between China and the United States, Australia would align itself with the United States, it was overwhelmingly in our interests to prevent any such occurrence in the future. As Prime Minister I used every opportunity to encourage the Americans, the Chinese and the Taiwanese to keep the temperature as low as possible over Taiwan.
In the end some pragmatic accommodation will be reached between the People’s Republic and Taiwan. The passage of time has seen a growing rapprochement. The return of the Kuomintang as the government party in Taiwan means calmer relations with Beijing. I believe that at some time in the next 10 or 20 years, an understanding akin to that now existing between the People’s Republic and Hong Kong will be arrived at with Taiwan. I was strengthened in that belief after a visit to Taiwan early in 2010, which included a lengthy meeting with President Ma.
In 2002 the prospect of Australia participating in a huge natural gas sale contract with Guangdong Province in China emerged. The North West Shelf Consortium was in competition with a number of other suppliers for a $25 billion contract over more than 20 years. It was a very valuable potential contract in its own right. It was also a precursor to other contracts. Hitherto China had tended to source its natural gas from the Middle East. It was now on the lookout for alternative sources of supply. Australian companies had to be in there. At that time it was still a buyers’ market for LNG.
Discussions had been going on for some time. Ultimately the real competition was between the North West Shelf Consortium and a ‘green fields’ partnership between BP and the Indonesian Government in relation to the Tangguh fields, in Indonesia.
It was a commercial negotiation. In the end it would be driven by price, reliability and all the other factors that normally influenced decisions of this kind. Yet given that it was a sale of a large, natural resource commodity to a Chinese province, government involvement, on both sides, could not be ignored. No matter what our own culture on these things was, Asian governments expected governments of other countries to be actively involved in advocating the cause of their nation’s enterprises.
Towards the end of the negotiations I thought that it was important to lobby personally on behalf of the Australian consortium.
I had kept in close contact with both the consortium and the Australian embassy in Beijing. Our ambassador, David Irvine, had done an excellent job in assisting the North West Shelf Consortium and liaising with the Chinese authorities. At a time seen as propitious by both the consortium and the embassy, I went to China to discuss the issue with both Zhu Rongji and Jiang Zemin. Although Premier Zhu had a more hands-on involvement, Jiang’s opinions would be quite crucial in the end.
I had a lengthy and detailed discussion with Zhu and gained the distinct impression that he wanted the Australian group to get the contract. The Chinese valued our reliability. To buy from an Australian consortium would represent a quite significant diversification of supply sources. That is what the Chinese wanted. I suspect that they regarded the alternative as potentially less predictable than would be the case with the Australian offer.
Notwithstanding his broadly favourable disposition towards Australia, Zhu was a tough bargainer. He made it plain at our meeting that some further movement on price was needed. I took away the impression that if that were forthcoming then the contract would be ours. I directly and immediately conveyed this to the consortium. Acknowledging that it was a commercial decision, I ensured that they were aware of my assessment that the Chinese wanted the contract to go to Australia and that, provided some attempt were made to meet their further requirements regarding price, it could fall the right way.
Zhu had a good sense of humour. He said that John Prescott, Deputy PM of Britain, had been in town lobbying for BP. Zhu had joked that Prescott was bound to lose as Britain had only sent the Deputy PM, whereas Australia had sent its PM. Prescott had retorted that Tony Blair would be on the next flight if necessary.
I saw Zhu Rongji in Beijing. I then flew to Chongqing in central-western China to see Jiang Zemin. He was impressed by the fact that I had made the effort to follow him to another part of China. Both Jiang Zemin and Zhu Rongji made great play of the fact that in the end it was a matter for the local authorities to decide. I knew that was theoretically the case. I also knew that their favourable disposition would in the end be quite crucial. That turned out to be so and the consortium won the contract. It was an historic resource win for Australia. It was worth $20–25 billion in export income and was then Australia’s largest-ever export deal. It was for the supply of 3 million tonnes of LNG per year for 25 years.
Winning the LNG contract was the culmination of a remarkable transformation in a relationship in just five years. In early 1997 it would not have been thought likely that such a deal could have been clinched. It had been a whole-of-government effort aided by the professionalism of two fine ambassadors to Beijing, Ric Smith and David Irvine. In the process we had established a method of dealing with the Chinese, and a government-to-government relationship that was qualitatively different from that of the Americans. In the process we had not alienated Washington. Indeed, the special depth of our Washington links had meant that differentiating the product in dealing with China had not raised any hackles.
Although trade between China and Australia had grown exponentially over a short period of
time, it seemed the logical next step to commence negotiations for a free trade agreement (FTA). Bilateral FTAs had become the flavour of the month as a result of the totally failed multilateral trade talks in Seattle in 2002, followed by the tortuous and slow progress in reviving multilateral trade talks in the so-called Doha Round.
I understood why it was the next thing to do, but I always had a nagging suspicion that, by embarking down the path of such a negotiation, we were creating an objective which we did not really need to realise. It was always going to be hard to get agricultural concessions from the Chinese. They in turn would want more manufacturing concessions than Australian industry would want its government to make. Negotiations continue to this day.
This was a good example of when process and form displace substance. The truth was, and remains, that Australian and Chinese trade relations will be quite remarkable whether or not there is an FTA. If the negotiations ceased tomorrow and were never resumed, China would remain the most valuable customer imaginable.
Despite the enormous strides made on the trade front and the very pragmatic government-to-government relations of the past decade, there were periodic examples not only of Chinese naïvety in dealing with Australia, but also examples of the vast cultural gap between the two nations. The latter served to remind us of the limitations in the relationship.
The Dalai Lama came to Australia in 1996. I had not met him before and naturally was pleased when he called on me. He is a colourful, charismatic religious leader. There is worldwide sympathy for the people of Tibet, and it was unthinkable that I should do other than see him. Beijing was most put out that I saw him. He came again to Australia in 2007. On this occasion I was less committed to seeing him, but all of that changed as a result of the attitude of the Chinese.
A spokesman for the Chinese Foreign Ministry made it clear that relations between our two countries would be damaged if I saw the Dalai Lama. That meant, of course, that I would have to see him and I did. The Chinese did not seem to understand the impact of such a clumsy threat, and just how counterproductive it could really be.
The same insensitivity was on display when a Mr Chen Yonglin, an employee of the Chinese consulate in Sydney, sought political asylum in Australia. The Chinese Foreign Ministry and China’s most capable ambassador to Canberra, Madame Fu, made strenuous representations to the effect that Mr Chen should be returned to China. The Government carefully pointed out that we had a well-established procedure for dealing with applications for political asylum and that Mr Chen was entitled to the potential benefits of this procedure. Once again the Chinese rather clumsily made it known that relations would be affected if Mr Chen were granted political asylum.
He was granted political asylum. We heard no more from the Chinese on the subject, and there was no visible impact on relations between our two countries.
Both of these incidents illustrated a sharply different cultural approach to what could be described as the national dignity or sense of propriety of a nation. Perhaps the Chinese way is that it is part of the preservation of national self-respect that the desired outcome must be stated, irrespective of whether stating that outcome will have a counterproductive impact.
I had experienced an earlier example of Chinese attitudes on such issues in May 2002. In Beijing for the visit principally bound up with the LNG negotiations, I was invited to address a meeting of the cadres of the Chinese Communist Party, having been told that I was the first-ever leader of a Western political party to have received such an invitation.
It was an enthralling experience to address hundreds of dyed-in-the-wool party people. I spoke forcefully about the mutual respect between our two societies despite our different political systems. During question time I was told by a questioner that visits to Australia by the Dalai Lama were bad news for the bilateral relationship, because the Dalai Lama was engaged in wicked activities under the cover of religion.
In my reply I referred to the result of the referendum in Australia in 1951, when the Menzies Government proposal to amend the Constitution to ban the Communist Party was defeated. My argument was that this was a splendid example of how a democratic nation such as Australia was tolerant enough to allow the continued legal operation of a political party totally opposed to the democratic order.
If it was good enough for Australians to tolerate the continuation of the Communist Party as a legal entity, it ought to be good enough for the Chinese to tolerate the leader of a friendly country not only allowing the Dalai Lama to visit but also seeing him. The audience reaction was cold, so my analogy did not work. The criterion brought by the Chinese to behaviour of this kind was quite different from ours and no amount of arguing by Western analogy would get me anywhere.
Following the Rudd Government’s Defence White Paper, which dwelt heavily on China’s military growth, there has been much debate about the extent to which China constitutes a military threat to Australia. In the short-to-medium term there is no feasible threat to Australia or indeed to other countries in the region — except, of course, Taiwan — from China. That country’s preoccupation is economic growth and social stabilisation. It has a strong sense of its own importance in the region, but does not harbour territorial ambitions, at present.
The Chinese know that they can influence outcomes in the Asia-Pacific region. When Chinese interests are not directly affected, they are more than likely to display pragmatic indifference. This was the case with Chinese attitudes to Iraq, detailed in Chapter 34.
Increasingly there were differences in the character of Australia’s responses to China and those of the United States. In a major speech in New York, when attending a special session of the United Nations in September 2005, I said that China’s growth was not only good for China but also good for the world. These remarks were warmly received by the Chinese and from time to time played back to me in subsequent discussions with Chinese leaders. From about this stage onwards, Chinese leaders began to omit the previously obligatory references to a One China policy during discussions with me.
On a bilateral visit to the United States in July 2005, President Bush and I were asked the same question about China at our joint news conference, and gave noticeably different responses. The President observed that Australia effectively had its own way of handling the Chinese. I agreed with this assessment and pointed out that one of the bases of our links with China was a fundamental understanding by the Chinese of just how important the American alliance was to Australia.
None of these comments should be taken to mean that I have a gentle and benign attitude towards China’s great power ambitions. I am sure that Beijing will get to them at some point. That is why I believed that one of the shrewdest foreign policy thrusts of the Bush Administration was to encourage the development of the trilateral security dialogue between the United States, Japan and Australia. The possibility of extending it to include India, thus creating a quadrilateral dialogue, was raised during the Bush presidency.
The real impact of that strategic dialogue was that it was an unexceptionable way of providing a democratic counterbalance to China. I experienced sensitivity towards China amongst nations in Southeast Asia. Therefore anything which represented a democratic riposte would be, however quietly, welcomed by some of the smaller nations in our region.
It was a mistake for the Rudd Government, so early in its term of government, to rule out the inclusion of India in an expanded and quadrilateral security dialogue. The clumsiness of this was intensified by the Foreign Minister, Stephen Smith, making the announcement ruling out Indian participation whilst standing side by side with the Chinese Foreign Minister.
China can exercise a mesmerising effect on some, distorting their judgement. Bob Hawke has described Deng’s decision in 1978 to open up China to the outside world and move it towards a market economy as the single most important decision taken by any national leader in the 20th century — a big call — and a sign of the hypnotic effect that can be exerted by the Middle Kingdom. In A
ugust 1980, as Treasurer, I instructed that Australia’s vote on the Interim Committee of the International Monetary Fund (IMF) be cast against an attempt then under way to credit Taiwan’s gold deposits at the fund to the Beijing Government. Almost all of Taiwan’s gold had been accumulated since the Communist takeover in 1949, and Beijing had no right to it. I thought the proposal was international financial brigandry. I saw no need to consult the PM about my decision, but when he learned of it, Fraser rang in anger and said that he would investigate having the decision reversed. It was too late for that — the IMF vote had already been taken and came out narrowly in Taiwan’s favour. This was another case of an Australian leader being just a little too enthralled by China.
39
ASIA FIRST, NOT ASIA ONLY
For more than 40 years, every serious political leader in Australia has been committed to the belief that close engagement and collaboration with our Asian neighbours was critical to Australia’s future. The difference which Paul Keating brought to this bipartisan understanding was his laboured, and contentious, narrative about the Australian identity which implied that, in some way, Australia had to show an overt preference for our links with Asia over our ties with traditional allies such as the United States and Britain, especially the latter.
In a phrase which I would use frequently as Prime Minister, I did not believe that Australia had to choose between her geography and her history. It was one of the signal triumphs of Australian foreign policy under the Howard Government that simultaneously, over a period of more than a decade, Australia built even closer relations with our Asian neighbours whilst reasserting the traditional intimacy of our links with Washington and London. It was always possible to do both, if one wished to.