China Down Under

Insecure line

Canberra bans Huawei from 5G

Australia

Are Australia and China friends again? So it appeared just a few days ago in early August after the then prime minister, Malcolm Turnbull, delivered a speech in praise of the bilateral relationship at a university in Sydney. Outwardly, it seemed like an impressive diplomatic pas de deux. Turnbull’s speech at the University of New South Wales was attended by the Chinese ambassador, which was significant by itself.

Following its delivery, the Foreign Ministry in Beijing issued a statement welcoming the speech. As if to seal the case, the Party’s attack dog, The Global Times, offered rare praise as well.

After a year of antagonism over a range of issues – allegations of Chinese interference in Australian politics, the South China Sea and so forth – the two sides seemed to recognise that they had an interest to start talking again.

But life comes at you fast in Australian politics.

By August 22, Turnbull had been ousted as leader of the Liberal Party in an internal coup that had little to do with China, and a lot to do with his right-wing colleagues thinking he was not conservative enough.

Amidst the upheaval, Turnbull’s Treasurer, Scott Morrison, won the ballot to take over leadership of the government and become the new prime minister.

In the midst of the intra-mural tussle, Morrison had rushed out an announcement about planning for Australia’s new 5G telecommunications network, effectively banning participation by Chinese telcos, Huawei and ZTE.

So, it seemed, as far as relations with China were concerned, it was two steps forward, and at least one step back.

Government officials explained the strangely rushed manner of the announcement of what was a highly contentious decision, saying that the Chinese had been informed of the government’s ruling and that it was in danger of leaking out.

The announcement did not name Huawei or ZTE, nor did it give any reason for excluding them. But it wasn’t hard to read between the lines. No matter how much Huawei and ZTE defend themselves as autonomous commercial entities, countries like Australia are convinced that they are at the beck and call of the Chinese state, and thus pose a security risk. Morrison raised the issue of national security when commenting on the decision.

China’s anger at Australia over the last year has not resulted in any overt economic retribution from Beijing. But the Huawei decision may change that.

It is not the loss of market share that would worry Huawei, and, by extension, Beijing. Australia’s market, relatively speaking, is small compared to the rest of the world.

But the Australian decision sets a precedent for other larger, US-aligned markets, such as Canada and the UK. Just as Australia was, other US allies will be under pressure to keep Huawei out of their markets as well.

The Huawei decision was symbolic of a larger truth about the relationships that many countries will have in the future with China. Like Australia, they will all have to deal with a different China from the good old days. China is richer, more powerful and assertive in the region and across the world, and there’s no going back.

For now the Chinese government has kept its annoyance contained in fairly formulaic complaints. In Beijing, foreign ministry spokesman Lu Kang said China expressed “serious concern” over the 5G decision, adding that Australia should not “use various excuses to artificially erect barriers”.

“We urge the Australian government to abandon ideological prejudices and provide a fair competitive environment for Chinese companies’ operations in Australia,” Lu added.

The Huawei decision will come with more than just a political cost. Huawei’s absence as a supplier also means that the network will be more expensive, a cost that will passed onto consumers. Already, the decision is ricocheting around the market, with Vodafone and TPG, two local providers, proposing a merger to better compete in 5G against the market giants, Telstra and Optus.

 

­­Richard McGregor is a senior fellow at the Lowy Institute and the author of books on Chinese politics and foreign policy, ‘The Party’ and ‘Asia’s Reckoning’.


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