Initiative for U.S.-China Dialogue on Global Issues

Eleanor M. Albert: Today our guest is Mark Watson. He is the director of the Washington, DC office of the Australian Strategic Policy Institute (ASPI). You are a trained Chinese linguist and have had a career as a diplomat and national security official with postings in Port Moresby, Hong Kong, Singapore, London, and most recently, at the Australian Embassy in Washington, DC. Mark, welcome to the show.

Mark Watson: Thank you very much indeed, thanks for having me.

Eleanor M. Albert: Before we get into the meat and potatoes of everything, I wanted to ask you to give us a little taste of how you entered this space and how does China factor into your work on Australia and its
foreign policy?

Mark Watson: Well, it really started with an interest in Chinese language. I studied Chinese at what was then the Australian Royal Australian Air Force School of Languages at Point Cook in Victoria and subsequently at the National University in Singapore. Out of that, I went on a posting in Hong Kong. And while I didn't have direct engagement in my career with Foreign Affairs and Trade, the U.S. State Department equivalent in Australia, for a number of years, when I joined the SES [State Emergency Service] in the 2000s, pretty much everything to do with Australia's foreign and trade policy somewhere had something to do with China, and a lot of my work one way or another touched on China ever since.

Eleanor M. Albert: 2022, the year we are in now, it's the fiftieth anniversary of formal China-Australia ties. Trade and economics definitely used to ground the relationship, but these seem to be increasingly at the heart of what is souring relations between Canberra and Beijing. How has this come about?

Mark Watson: For a long time, Australian policymakers recognized that we had this unusual new relationship with China, which was that our largest trading partner, for the first time in our history, wasn't a political or military ally. Australia's history started really with allegiance to the British and the British Empire, and then Commonwealth. [The] Second World War changed our perspective in many ways, including a closer alliance with the United States. And at those times, trade and politics, if you like, were in harmony. When it came to the twenty-first century, suddenly we had this massive source of Australia's wealth, which was China, who was not one of our close allies and partners.

The way I categorize the shift has been: Australia, like the United States, from the time of the establishment of the People's Republic [of China] in 1949, the first period was marked by strategic isolation, everyone pretending that the government in exile in Taipei actually was the government for the whole of China.

Then the visit by [U.S.] President Nixon, off the back of Henry Kissinger's visit the previous year in 1971, created a period of strategic engagement and that really lasted through to, I would suggest sometime around 2010, 2012, maybe a bit later, probably in the mid-teens, when it morphed into a period of strategic competition. I think now that has morphed into period of strategic deterrence. Australia has been in the middle of all those changing fortunes.

The trade relationship really underpinned Australia's wealth in the twenty-first century from around the year 2000 through to present day in many ways. But we were caught up in this period of strategic competition. Australia is a staunch ally of the United States; it was inevitable that we would be caught up in it. But the real shift came in 2020 when, in the wake of the COVID-19 epidemic, our prime minister of the day, Scott Morrison, called for an independent inquiry into the origins of COVID and thereby really casting doubt on the Chinese government's own version of events. That triggered a rolling cascade of trade embargos and trade sanctions that Australia's still living under today.

Eleanor M. Albert: What are those industries that are most hit by some of these measures?

Mark Watson: The coal trade, beef, grains, wine exports, live seafood exports, all have effectively dried up. The one that has survived of course is iron ore exports to China because China simply needs Australian iron ore. The other two industries that were very important that dried up were education and tourism, but that of course coincided with the COVID pandemic, and so it's very hard to pull apart which part of that was related to the pandemic and what would've happened absent the pandemic in relation to Chinese students in Australia and Chinese tourists coming to Australia. We'll start to see that probably in the next 12 months.

But interestingly, it really hasn't had the effect that everybody feared. Everyone thought the Australian economy would fall off a cliff; it simply hasn't happened. I mean, there's been some impact, but the swelling value of Australia's iron ore exports to China has really made up for the loss of other areas. And as I say, it's simply because China can't do without Australia's iron ore. It's forced Australian industries to diversify their export markets. It's forced Australia and its partners and allies to rethink how we will all react to future examples of economic coercion. So I'm not sure that it's worked out quite as China had imagined.

Eleanor M. Albert: I want to shift to digging into some of the domestic and regional components. Pew Research came out with some new data that includes some inkling of how Australians are thinking about China. The main topics were talking about China's political system, human rights issues, and viewing China, in fact, as a security threat. China, it's not just a player vis-a-vis Australia, there's a regional component to Australia and greater Oceania. So how is this regional presence that China plays viewed in Australia?

Mark Watson: It's viewed with great concern. China is a player now in the Pacific, we've seen it with the security agreement announced with the Solomon Islands. But even on softer levels, if you like, I think China has now overtaken Australia as the largest source of foreign investment in Papua New Guinea, which of course is Australia's nearest, northern neighbor.

For many, many years, China and Taiwan were in competition in the Pacific for the votes of Pacific Island countries in the UN [United Nations], in other words for recognition. The Taiwanese would be fighting to get Pacific Island countries to recognize the government in Taipei. And at that point, Australia, to be honest, probably wasn't terribly concerned. But that has now shifted to China taking a much more active role in direct investment in countries like the Solomon Islands, and others, in a broader Belt and Road Initiative, economic front, if you like, that it's pushing out soft loans, aid, construction works, security agreements… They all add up to a significant or potentially significant shift in the security balance in the Pacific, and of course that is alarming for Australia and indeed, the United States.

Eleanor M. Albert: Obviously the Solomon Islands announcement seemed to have triggered some type of shift, but are there other issues beyond economic repercussions from China starting in 2020 that trigger a shift in Australia's thinking towards China? Are there domestic issues? What are the calculations that go into reorienting Australia's position towards China?

Mark Watson: There absolutely were domestic considerations that have changed Australian's views of China. There's been a reversal. It wasn't that long ago that China was seen as a benign and friendly trading partner. Now, research shows that Australians are far more worried about China as a security threat, not least because Chinese interference in Australian domestic politics was revealed quite clearly.

Some very public cases of seemingly Chinese money being used to be paid directly to an Australian politician. The head of our domestic security service, ASIO (Australian Security Intelligence Organisation), came out and described the threats posed as an existential threat to Australia in the sense that undermining of Australia's political institutions through Chinese practices and attempts at coercion, he said posed a greater threat than terrorism to Australia. There's been a lot more publicity around interference by China in Australia's domestic, political affairs.

There's been a lot more publicity around Chinese hacking. There was a famous leak of hacks by the Shenzhen Zhenhua company that contained, I think, something like the names of 35,000 Australians, from prime ministers down, with all their personal data, classified into categories like special interest or politically exposed. It was a very odd leak. But again, it kept China in the news for all the wrong reasons.

And then to see the actions in the Pacific on top of that, it's led to a certain sense of insecurity around China's intentions in, not just Australia, but in the region. So yes, there's definitely a domestic political element to it, not party political because there's bipartisan support for the broad approach, but there's definitely a sense in Australia that China isn't the benign, friendly trading partner that we imagined maybe 10 years ago even.

Eleanor M. Albert: You just mentioned this consensus on Australian domestic politics. Forgive me for not knowing the ins and outs of Australian party politics, but there has been a lot of turnover in Australian leadership, and has there been continuity across leaders in how they approach China?

Mark Watson: You would not be alone in scratching your head at some of the changes at the top of Australian politics. The good news is that for the past three and a half years, we have had stability. We had a single prime minister see out a full term of government for the first time in a very long time.  

We had a change of government earlier this year from a conservative coalition to the Australian Labor Party that looks a lot more like the Democratic Party in the United States, sort of a center-left party with close affiliation with organized labor. But on the China issue, I don't see a lot of shift, other than in tone. In substance, I don't see a lot of shift.

The current government, in fact, the current deputy prime minister and defense minister, very kindly opened ASPI's new office here in Washington, DC, earlier this year and made very clear that the new government, the labor government, completely supports the Australian alliance with the United States, supports the Quad [Australia, India, Japan and the United States], supports the AUKUS [Australia, the United Kingdom, and the United States] arrangements, and so the really big, building blocks are unchanged.

Where there is a change of emphasis is in two areas. One is relations with Pacific Island countries. The current government, particularly Senator Penny Wong, who is the new foreign minister, has been incredibly active in getting out into the Pacific, meeting Pacific leaders, listening to what they have to say, listening to their concerns, and trying to build a narrative that Australia is here in the Pacific, we're a long-term partner, we and the U.S.—and the West—present a better proposition for small countries in the Pacific than cutting deals with China, which will be highly transactional. And that really is an obligation on Australia and the United States to make that case.

These small countries are perfectly entitled as sovereign nations to try and find their own best path with China and with others. But it's up to us to explain why it's in the long-term best interest of those nations to recognize the value that Australia, New Zealand, the United States can bring.

The other area is in, and it's related, which is in environmental issues. The new Australian government's policies are much more closely aligned with the Biden Administration’s policies. That is well received in the Pacific, who consistently rank climate change as their number one concern. So, all in all, I think the basic building blocks remain the same, but the emphasis has changed, a renewed emphasis on building relationships in the Pacific and on environmental issues.

Eleanor M. Albert: To piggyback off of that a little bit, this has been the looming, the umbrella framework for talking about this relationship… you can't talk about Australia and China without questioning what the U.S.'s relationship to Australia is and how the broader Indo-Pacific framework shapes regional dynamics. We've talked about the immediacy of the Pacific Islands surrounding Australia and Oceania, but the region is much broader than that. I was wondering if you could talk a little bit about broader regional dynamics, how the U.S.'s relationship to Australia fits into this? How does Australia view its role in either supporting, or complimenting, U.S. activity in the region?

Mark Watson: Australia's a longstanding and staunch ally and partner of the United States, but I think where there is a renewed emphasis on mini-lateralism, obviously the Quad: Australia, the U.S., India, Japan. Trilateralism: there's an Australia, U.S., Japan strategic dialogue. Australia, and it starts with the previous government under Scott Morrison, really went out of its way in the face of Chinese economic coercion to try and build an interlocking geometry of relationships. There's the longstanding Five Eyes partnership: Australia, the U.S., the UK, Canada, and New Zealand. Then we have the Quad, which builds out an Indo-Pacific element, and India of course is absolutely critical to an Indo-Pacific strategy. Then we have these trilateral arrangements, we have bilateral arrangements, obviously with the U.S. but also with our regional partners.

What we're finding is that, in the wake of the AUKUS agreement in particular, there is a renewed emphasis on, and requirement for, Australia to ensure that it has its regional partnerships in order, that we are able to explain what we do and why we do it.

The AUKUS announcement was not universally welcomed in our part of the world. Malaysia was quite outspoken. Indonesia expressed very significant concerns. So Australia really has an obligation to get out into the region and explain what we're doing, why we're doing it, and how ultimately it would be a good thing for the region. And certainly the Australian government would argue, and the U.S. government, that it's about stabilizing the region, restoring some balance as a counterweight to Chinese expansionism, not to contain China, but to recognize that the strategic balance had been disrupted in recent times.

When it comes to direct action, yes, Australia does conduct freedom of navigation operations already. It was able to convince NATO to make a statement in 2020 that the Indo-Pacific was part of NATO's strategic security concern. It got strong statements from the prime minister of the UK, and indeed from the president of France, really building that network of like-minded countries who recognize that Australia had been subject to very serious economic coercion from China, it was pushing back, was trying to take a stand and to build a coalition of like-minded countries, as I say, not to contain China, but simply to say the weak isn't crumbling in the face of this kind of action.

There is a whole regional architecture, an interlocking geometry of multilateral, mini-lateral arrangements that has really forced China to pause and to think, "Hmmm, maybe this isn't as easy we thought it was going to be." And if I could just add one more thing, added to that has been two major strategic surprises for China. One was of course the botched Russian invasion of Ukraine and the other was the AUKUS announcement. I think both of those things have really set China back on its heels a little bit to say, "Okay, maybe we need to do some recalculation of these strategic calculus here."

Eleanor M. Albert: Building off of conversations about AUKUS. The formation, you touched on, some regional partners weren't exactly pleased with it. Could you explain what some of those concerns were? And then as it relates to China, was AUKUS fully developed with China in mind? And how do Australians think about the announcement of this?

Mark Watson: Australians have always sought a larger partner. There's been a history of feeling kind of exposed. While we're a large continent sitting at the hinge of the Indo-Pacific, we have a relatively small population, only around 25 million, it's less than Texas, I think. So a huge country, roughly the size of the United States, but the population of Texas. Large, obviously coastlines are hugely, dependent on maritime trade. I think 99% by weight of Australia's trade goes on by sea, and about 76% by value. So hugely important to be able to protect and guard maritime approaches and sea lanes. And frankly, we are not big enough to do that alone. That's why, initially, Great Britain, and then the United States, have always been seen, I think by the great majority of Australians, as kind of a guarantor of our security in this part of the world. So I think that's why AUKUS is quite popular.

As for our regional partners, Australia, under the AUKUS agreement, aims to acquire nuclear propelled, but conventionally armed, submarines. That is a strategic game changer. It would enable Australian submarines to patrol much further away from Australia for much longer periods of time, to remain submerged for much longer periods of time than its current submarine fleet, which is an aging diesel electric fleet. So it is a strategic game changer, plus it has that word nuclear. That inevitably will raise questions about is this in somehow in breach of nonproliferation protocols? Is it introducing something into the region that we don't want? Remember, we have a Pacific nuclear free zone. New Zealand, for example, has a no nukes policy, which would mean that if Australia is able to acquire nuclear propelled submarines, they wouldn't be able to enter New Zealand waters.

These are legitimate questions that people raise. There are very good answers for them. And the IAEA report really found that these issues around nonproliferation had been addressed and was quite satisfied. But China's been very active at the IAEA in trying to have that overturned and to continue to raise doubts. Indonesia raised doubts about nuclear proliferation. I think regional partners further north of there are probably a little more accepting that this could be a good thing to counter Chinese expansionism. But, the other element was no one was told about it in advance, so there was kind of a shock factor as well. And I suspect that some U.S. key allies, particularly in North Asia, would be saying, "What was that about and why didn't you feel you could tell us?"

Eleanor M. Albert: I want to move into thinking to the future a little bit. In the short or medium term, where do you see the China-Australia relationship going?

Mark Watson: The good news for Australia, and for China frankly, is that with a change of government, the new Labor government has been willing to engage China in a way that is probably more acceptable to China. They are maintaining a principled stance on the big issues, the human rights issues, and don't forget, China still has imprisoned a number of Australians who remain imprisoned, a journalist by the name of Cheng Lei. There were two other Australian journalists who were arrested and interviewed by security police, but subsequently released. But there are a number of Australians in detention under what looks a lot to Australia like hostage diplomacy. There are a lot of very real issues that aren't resolved, including obviously the trade situation.

But, the new government has adopted, I think, an attempt at least to say, "We're happy to raise these behind closed doors.” We will maintain a principled stance. They've repeated the one China policy of the Australian government. They've repeated the fact that they are opposed to Taiwanese independence, but they maintain the status quo, which is a nonviolent or military solution to whatever issues there are between the government in Beijing and Taipei.

So the principles remain the same, but there is a change of tone. And that has led to at least some meetings for a start, which hadn't happened for two years. So our foreign minister was able to meet counterparts in New York, [at] the UN, and there are some more conciliatory statements coming out of the Chinese side as well, suggesting that there is at least a possibility for a thawing of this very, very icy relationship. 

Eleanor M. Albert: I want to pull out a little bit beyond the executive government to government relationship. Australia is also home to a diaspora community. I was just curious how society in Australia has responded, given these souring ties at the top level, how are communities in Australia feeling the repercussions of this? In the U.S., there's been so much discussion about how to combat what we've labeled broadly as AAPI [Asian American Pacific Islander] hate and some anti-Asian, anti-China sentiment. I'm sure Australia is also not immune to some of this.

Mark Watson: It's a really good question. The numbers may not be as large as the United States, but as a percentage of population, I think currently it's around 5% of our population is Chinese-born or Chinese origin. Australia, like the United States, actually has a very, very long history of Chinese migration. The gold fields in Australia were a great draw and unfortunately there was a lot of very serious anti-Chinese racial violence, in the nineteenth century in particular. There was a very strong protectionist movement in Australia led by organized labor to keep Chinese nationals out, along with a whole range of other countries, under what was known as the “White Australia Policy.”

But interestingly, what really changed was in 1989 with the Tiananmen Square massacre, and the prime minister of the day made a statement that any mainland Chinese people in Australia studying or working or whatever would be allowed to stay and not be forced to return. And that led to a much larger migration from what I would call northern China (whereas historically, most Chinese migration to Australia had been from the southern provinces of Guangzhou and Fujian). And what came then was we now have a very large percentage of population, a Chinese community.

Going to your point about what impact the geopolitics has had, unfortunately, in any community, there are always going to be racist incidents. But in Australia, to be honest, it's not reflective of what I've seen anyway here in the U.S. on some of that just wanton violence against Asian people.

But, at the last election, one of the things that we saw was the criticism of China and calling out of China, and what some people considered to be drumming up opposition or a demonizing of China, actually led seemingly to Chinese voters in Australia, in some electorates, kind of reacting against that and voting, not for the conservative coalition government, which they might otherwise have supported. And so we had a number of what I’d call independents—they're known in Australia as the Teals, for the color—and they were elected in electorates that had very large Chinese communities. It was the constant drumbeat of criticism of China that may have led some Chinese voters to actually change their vote and to not go for the conservative government, which was seen as very hawkish on China.

Eleanor M. Albert: Any concluding thoughts that you want to share?

Mark Watson: The only thing I'd say is how quickly relations soured between Australia and China I think is a surprise. We, like the United States and others, had thought that the liberalization of the Chinese economy or the part liberalization would lead to a liberalization of politics, at least some felt that. But in 2014, Xi Jinping was given the singular honor of addressing a joint sitting of both houses of Australian parliament. He's visited Australian many times; in fact, I think he's been to every state and territory in Australia. And when he was there in 2014, he said that there was these vast oceans of goodwill between Australia and China. He'd seen firsthand the goodwill towards the Chinese people from the Australian people and he referred to an old Chinese saying along the lines of, "The ocean is vast because it admits so many rivers and it's the steady streams of mutual understanding and goodwill and friendship between our two peoples that created the vast ocean of goodwill between China and Australia."

Well, almost immediately, that vast ocean of goodwill was beset with storms and those streams of mutual understanding and friendship began to run dry to the point where, six years later, the editor of the Global Times said that, "Australia was like a piece of chewing gum stuck to China's foot and sometimes you have to scrape it off with a stone." So it just is indicative that the best of strategic projections don't always work out. But there are green shoots and I'm very hopeful that we can try and at least get back to some kind of realpolitik arrangement with China that recognizes the principled stance that we have on human rights, but also enables people-to-people and trade relations to get back to normal.

The views and opinions expressed are those of the speakers and do not necessarily reflect the position of Georgetown University.

Outro

The U.S.-China Nexus is created, produced, and edited by me, Eleanor M. Albert. Our music is from Universal Production Music. Special thanks to Shimeng Tong, Tuoya Wulan, and Amy Vander Vliet. For more initiative programming, videos, and links to events, visit our website at uschinadialogue.georgetown.edu. And don’t forget to subscribe to our podcast on Apple podcasts, Spotify, or your preferred podcast platform.