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Victoria’s Belt and Road Initiative deal undermines cohesive national China policy


22 May 2020|

The Victorian government’s Belt and Road Initiative program is a zombie project that has its own inertia and is proceeding despite the world changing around it. It needs to be halted and comprehensively reassessed. The federal government institutions that understand foreign policy, national security and digital technology must be involved actively and comprehensively in that reassessment.

The core rationale for a state government being a party to this initiative of Beijing’s also needs to be rethought in light of the world we are now living in.

If it’s about cheap financing, the Covid-19 environment means money is as cheap for governments to borrow as it has ever been, so that reason doesn’t make much sense.

If it’s about giving Chinese firms work, there are plenty of Australian companies that are at least as qualified and available to undertake infrastructure projects.

If it’s about using Chinese digital technology in our infrastructure, that’s probably just a bad idea.

Premier Daniel Andrews has been personally pursuing Chinese involvement in Victoria’s multibillion-dollar ‘Big Build’ since at least his May 2018 visit to China. In October of that year, he signed up to the Belt and Road Initiative in a memorandum of understanding with Beijing. He refused to make the agreement public, only doing so after intense pressure during the last Victorian election campaign.

Then in October last year, Andrews signed a ‘framework agreement’ with the People’s Republic of China on ‘Jointly Promoting the Silk Road Economic Belt and the 21st Century Maritime Silk Road’. The title is boilerplate Chinese government language for the BRI, Xi Jinping’s strategy for growing Chinese power and creating a Sino-centred world.

That document was made public, which is great, because it has some clear principles. It commits China and Victoria to adhere to ‘the concept of openness, green and clean governance’ as well as ‘highlighting the importance of procedure [which is] open, transparent and non-discriminatory’.

So, it’s surprising to find that as the Victorian government prepares to sign up Chinese entities—perhaps banks, perhaps state-owned or private construction companies, perhaps a combination of these—for actual projects in Victoria, no one can be told any of the details.

There are two bigger problems here, though. The Victorian government’s BRI activities are simply out of step with the new international and economic environment, including the now openly coercive directions that Beijing is taking with Canberra over trade and in government relations.

And the Victorian political leadership’s championing of the state’s tie-up with Beijing on infrastructure is a glaring wedge that Beijing is driving into Australia—at a time when national cohesion on dealing with the Chinese state is essential.

Almost as bad has been the language used by Victorian Treasurer Tim Pallas, who accused the federal government of ‘vilifying’ China—when what Prime Minister Scott Morrison and Foreign Minister Marise Payne had actually done and said was call for a credible, independent, international inquiry into the causes of a global pandemic. In very calm language. They have since gained the support of more than 120 nations.

Unfortunately, the treasurer’s words sounded like talking points from Beijing’s foreign ministry or an article in the Chinese Communist Party’s Global Times mouthpiece.

The result is that we appear headed for an outcome in Victoria where Chinese firms are involved in building chunks of national infrastructure, perhaps with tie-ups to Chinese state banks and other entities—who knows.

So what? Infrastructure isn’t just concrete and steel now. It’s laced with digital technology controlling its critical functions. The 2018 federal decision on 5G was all about the risks in digital technology from states like China that compel companies to cooperate for state security and intelligence purposes. Those issues are relevant here too.

What Victoria is proposing has foreign policy and national security implications that the Victorian government is simply unequipped to assess.

From the beginning, the BRI program with Victoria appears to have fallen into gaps between the federal and state governments. Right at the start, the Victorians said they had consulted at the federal level with the Department of Foreign Affairs and Trade, but Canberra seemed only partly aware of the proposal and expressed what sounded like lukewarm public support.

That was then. Who now thinks it’s the time to implement Xi’s strategic agenda and work to make Australia part of a more China-centred world? Who now thinks it’s the time to enter non-public arrangements with Chinese firms—state-owned or otherwise—to build Australian infrastructure? And who now thinks it’s the right time to show that the federal and state levels of government are on divergent paths in responding to an assertive and authoritarian Beijing?

Victoria’s tender process must not be used to hinder transparency with the proposed deal. This is not a standard arrangement between a government and the private sector. This is an Australian state dealing with an authoritarian superpower that is pursuing its key strategic agenda—and using its companies, banks and technologies to do so.

There’s more to the Victorian BRI deal than infrastructure. The agreements talk about cooperation on biotechnology and life sciences, research and high-end manufacturing—all areas that also have important national security applications and implications. Again, this must all be reassessed from a national perspective.

If the national cabinet has any purposes other than helping us all manage the Covid-19 pandemic, a fundamental one must be forging a cohesive and united national policy on China. This is needed to help us navigate the increasingly sharp strategic differences between Australia and the Chinese state, while keeping the areas in which we can continue to trade and cooperate to both our national advantages. To have any meaning, that national cohesion must extend to any deals contemplated by individual states and territories.

Unlike the excuses we heard after the disastrously managed 2015 Port of Darwin deal, which led to that piece of key infrastructure being leased to a Chinese company for 99 years, we have our eyes wide open about the issues involved this time. And we have time to stop and think. Let’s do so.

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