China Neican is a newsletter by Yun Jiang and Adam Ni from the China Policy Centre in Canberra. It is also published as a weekly column on the China Story blog. Neican 内参 or “internal reference” are limited circulation reports only for the eyes of high-ranking officials in China, dealing with topics deemed too sensitive for public consumption. Our writing, however, is open to everyone. To receive regular updates, please subscribe. You can find past issues here.

1. Beijing's grievances against Australia

The Chinese embassy listed 14 grievances as the cause of poor Australia-China relations in a document handed to Australian media last week:

Nothing on the list should come as a surprise: all have previously been mentioned by Chinese officials and/or state media. The Australian Prime Minister Scott Morrison responded firmly during an interview when asked about Beijing’s grievances:

if [the list of grievances] is the cause for tension in [the Australia-China] relationship, then it would seem that the tension is that Australia is just being Australia. And I can assure you...we will always be Australia, act in our interests and in accordance with our values.

Despite a partly nonsensical answer, one thing is made clear from his words: The Australian Government is not about to back down. Morrison’s comments earned an rebuke from Foreign Ministry Spokesperson Zhao Lijian later that day:

中方已经多次表明，澳方屡屡在涉及中国核心利益和重大关切的问题上采取错误言行，主动挑起挑衅性、对抗性行动，这才是造成当前中澳关系困难局面的根本原因。澳方应当正视两国关系受挫的症结，认真对待中方关切，采取实际行动纠正错误做法。

China has repeatedly made it clear that the root cause of the current difficult situation in Sino-Australian relations is the Australian side, which has time and again taken wrong actions and made incorrect remarks, actively provoked, and taken confrontational actions on issues that involve China's core interests and major concerns. Australia should correctly face the crux of the setback in our relations, take China's concerns seriously, and take concrete actions to correct the mistakes.

Recent history

The high point of the bilateral relationship was in late-2014 when Xi Jinping visited Australia and addressed a special joint sitting of the Australian Parliament. Xi’s address was followed by warm applause from most of the Australian politicians present. Both sides agreed to characterise the relationship as a “comprehensive strategic partnership”. In June 2015, Australia and China signed a free trade agreement.

At the time of Xi’s visit, the Hong Kong “Umbrella Movement” was in full swing. Earlier in the year, China launched an anti-terrorism crackdown in Xinjiang and arrested Uyghur professor Ilham Tohti. And Xi Jinping was in the process of consolidating power through his anti-corruption campaign.

But the turning point for bilateral relationship was in late 2017 and early 2018. In 2017, Australia introduced legislation to counter foreign interference. While the legislation itself was country-neutral, the political rhetoric from Australia made it clear that its main target was foreign interference from China. Prime Minister Turnbull used Mandarin to say that “the Australian people have stood up”, alluding to the famous quote attributed to Mao Zedong. From Beijing, this was likely perceived with a mixture of anger and confoundment.

In 2018, Australia banned Huawei from participating in the 5G network. In 2012, Australia had similarly banned Huawei from its National Broadband Network, but it caused minimal diplomatic friction then. From Beijing’s perspective, the 5G ban is different. Unlike the 2012 ban, Australia was very vocal about the national security risks stemming from the Chinese party-state’s influence/control over the company. This time, Australia was also a first mover, and was very forward-leaning in trying to other countries to follow suit.

So the bilateral relationship has been in “deep freeze” since at least 2018.

Motivation

The Australian Government has been aware of Beijing’s grievances for some time. In fact, Beijing has been pressuring Canberra, including through measures on trade, to change the direction of its China policy. If Beijing’s past attempts have failed to make Australia change direction, in fact, it had the opposite effect, then releasing a list of its grievances is unlikely to work. So, why did Beijing bother with releasing this list in such a public manner?

First, perhaps Beijing thinks it can make Canberra change course if it just imposes enough cost on Australia.

Second, listing grievances and pinning the blame on Canberra is a way for Beijing to shift the narrative. For some time now, the dominant narrative has been that while Canberra is willing to talk, it is Beijing that is not.

Third, China’s latest move may also serve as a warning to other countries in a similar position to Australia.

Domestic and foreign

The Australia-China bilateral relationship is multi-faceted; it intersects national security, foreign policy, diplomacy, economics, and domestic politics. The China issues Australia grapples with also reflects domestic politics.

The list of grievances contains some policy issues that are the responsibility of a foreign ministry. These include COVID inquiry, Xinjiang, and South China Sea. Apart from the COVID inquiry, the other grievances are not unique to China’s dealings with Australia. The bulk of the list is in fact on what people usually think of as “domestic” or national security policy. They include Huawei ban, foreign interference, revoke of visas, search of Chinese journalists etc. These are the responsibility of the powerful Minister of Home Affairs and his department and agencies. So, due to domestic politics, national security concerns may have an outsized influence on Australia’s China policy.

Both Australia and China are vocal about “sovereignty” issues. With the decline of rules-based institutions, sovereignty concerns have become more paramount. From Canberra’s perspective, China’s criticism of Australia’s policies is infringing its sovereignty, and China’s influence or coercion is threatening Australia’s sovereignty, values, and national interest. But from Beijing’s perspective, criticism of its human rights records or its actions in Hong Kong is infringing on its sovereignty, values, and national interest — international agreements or norms be damned. As both sides frame the relationship from a standpoint of sovereignty, they are less likely to back down.

Perception and effectiveness

There is a giant perception gap between Beijing and Canberra. For Beijing, Australia has become increasingly “anti-China”. For Canberra, on the other hand, Australia has been on the receiving end of Beijing’s coercion for protecting Australia’s national interest. This perception gap has been widening in recent years, and it's unclear how it can be bridged. Perhaps the first step — easier said than done — is to try and see things from the perspectives of those on the other side.

For all policy thinkers, we need to differentiate policy problem from policy response. When we identify a problem, it does not follow that any policy instrument to fix the problem is appropriate. Sometimes the cure may even be worse than the problem. So when we consider different policy responses, we must also think carefully about issues such as spillover and second-order effects. This is so the entire national interest is considered, rather than just one aspect.

Foreign policy is also different from diplomacy. Foreign policy aims can be pursued with different diplomatic tactics and approaches.

For Australia, it may wish to learn from countries that have been at the receiving end of similar treatment by China, including Japan, South Korea, and Sweden. Learning what to do and what to avoid may be helpful.

2. US State Department’s “Elements of the China Challenge”

The Policy Planning Staff, Office of the Secretary of State released a new report titled “The Elements of the China Challenge”. Overall, the tone of the report is similar to the speech made by Secretary of State Pompeo’s speech in July, “Communist China and the Free World’s Future”. It pitches the CCP against the “free countries”, similar to how the US pitched the USSR against the “free world” during the Cold War.

Compared to previous US government documents, such as White House’s Strategic Approach to the PRC released in May 2020, this report has more emphasis on the CCP’s ideology, devoting one chapter to “the intellectual sources of China’s conduct”.

Much of the “China challenge” mentioned in the report is well-known. There is no new information on this. Some characterisation of the “challenge” is a bit odd. For example, the report characterises China’s theft of intellectual property as the “greatest illegitimate transfer of wealth in human history”. One wonders how Indians thinkers would see this claim given their country’s experience with European colonisation and exploitation.

The report listed nine vulnerabilities of China. Again, the content is not new, but it’s a succinct summary of the challenges that China faces. These nine vulnerabilities are no doubt on Xi Jinping’s mind as well.

Finally, the report listed ten tasks the US must do to “secure freedom” in order to meet the China challenge. We won’t go through one by one, but just to pick out a few interesting ones.

The third task is to fortify the free, open, and rules-based international order. The specific areas mentioned are human rights and rules of law. It’s interesting that free trade, one of the pillars of the rules-based international order, is missing.

The fifth task is to strengthen the alliance system by sharing responsibilities as well as reconfigure supply chains. The current administration’s “burden-sharing” has not been popular with its allies so far, so it would be interesting to see if there are new initiatives under Biden.

The sixth task is to look for opportunities to cooperate with Beijing, constraining and deterring when circumstances require, and “supporting those in China who seek freedom”. This will no doubt be perceived as “foreign interference” from Beijing. So far, the US Government’s record of “supporting” people who seek freedom has been dismal.

The seventh and eighth tasks appear quite good. It’s about better access to English language translation of CCP major speeches and writings, as well as training public thinkers in language, culture, and history. More knowledge is good for both cooperation and competition. Let’s just hope the US does not make the same mistake it did during the Cold War and places more suspicions on those who do learn the language, culture, and history.

The ninth task is about more “patriotic education” in the US. President Trump has previously suggested this. US schools and universities have apparently “abandoned well-rounded presentation” in favour of “propaganda aimed at vilifying the nation”. It also mentions that “sinister efforts from abroad seek to sow discord in the United States”. Is it referring to the discredited conspiracy theory of CCP support for Black Lives Matter?

The question is does this document matter at all? After all, the US will have a new administration, and most likely a new China strategy, in January. That said, Axios has reported that “Trump will enact a series of hardline policies during his final weeks to cement his legacy on China”.

3. Shi Yinhong on US-China relations

Now, let’s have a look at things from a Chinese perspective...

Shi Yinhong 时殷弘 is a top international relations scholar in China, who has served as an adviser to the State Council since 2011. He is currently a professor of International Relations, and Director of the Center on American Studies at Renmin University in Beijing.

Shi has just written an article in the latest issue of Journal of International Security Studies 国际安全研究, a prestigious journal published by the University Of International Relations 国际关系学院 in Beijing. His article, Policies of the US and Other Major Countries Towards China and the Future of the World Landscape 美国及其他主要国家对华政策与未来世界格局, appeared as part of an anthology titled Trends in China-US Relations and the Changing International Landscape (A Written Conversation by Prominent Experts) 中美关系走向与国际格局之变 (名家笔谈). This anthology, featuring the writings of 11 prominent Chinese thinkers, is worth reading for those wanting to better understand Chinese perspectives.

Assessing US’ China policy

Shi starts his article with an overall assessment of the Trump administration’s China policy:

当前，由特朗普政府自 2018 年年初发动的历史性对华超 强硬政策，正被迫悄悄地在战略和经贸阵线上收缩。战略阵线上，形势复杂，有时甚至自相矛盾。

Currently, the Trump administration's historic ultra-hardened policy toward China, launched in early 2018, is forced into a quiet retrenchment on strategic and economic fronts. On the strategic front, the situation is complex and sometimes even contradictory.

On the military-strategic front, Shi highlights the US activities targeted at China, including increasing cooperation with Taiwan, and marked rise in regional military activities in 2020. At the same time, COVID is slowing the pace of US military cooperation and activities.

On the economic front, while the signing of Phase One trade deal in January put a brake on the escalating trade war, Shi sees downsides for China:

剧增从美进口的承诺超过中国经济在增长率持续降低情况的实际需求，潜在抬升两年期 过后美国继续对华强卖的“参考水准”，加重了中国持续减少的外汇储备负担，并且非常显著地缩小中国大量增购其余发达国家及若干发展中大国的产品的需求和 能力，从而给中国增添外交和战略困难。

The promise of a sharp increase in imports from the U.S. [from the Phase One trade deal] exceeds the actual needs of the Chinese economy in the face of continued lower growth rates, potentially raising the "reference level" for continued U.S. forceful selling to China beyond the agreed two-year period. This adds to the burden on China's dwindling foreign reserves. It also very significantly reduces China's need and ability to increase its purchases of products from the rest of the developed world and from a number of large developing countries, thereby adding to China's diplomatic and strategic difficulties.

On the political and ideological front, Shi highlights Trump administration’s efforts to impede China’s “soft power” projection (e.g., actions against Chinese state media). Shi characterises speeches by senior administration officials (Mike Pompeo, Robert O’Brien, and David Stilwell) as “ideological clarion calls” echoing the Cold War.

China’s strategy

How should China respond?

First, Shi argues against the over-use of reciprocal retaliation by China. This is because their usage reduces future leverage, flexibility, and international sympathy for China. In addition, he argues that reciprocal retaliation only serves to strengthen the hands of US hawks, and propels them to push for policies that are even more hardline.

Second, Shi argues that in order to stabilise US-China relations, both China and the US needs to stop condemning each other and their respective political systems from their “moral highgrounds”. For the US, this means stop challenging the legitimacy of the CCP as the ruling power in China.

Third, he argues that both countries have an interest in avoiding military clash. China should “take the initiative” to engage in pragmatic dialogue to stave off war. Presumably, Shi believes that war is no longer a remote possibility against the background of worsening relations. To do this, Shi advocates that China should:

将一切可能的较小或微小的彼此妥协当做分支性努力，服务于维持这个根本的共同利益。

use all possible small or micro mutual compromises [on different issues] as different streams of efforts to serve the maintenance of [peace], the fundamental common interest.

To put it another way, China should be willing to make small compromises in order to ensure that war doesn't occur.

The last of Shi’s suggestions is worth quoting in full:

中国应坚决、足够和较持久地实施战略和军事收缩，特别是在南海、台湾和军备竞争方面，以此作为促使美国新一届政府迟早相应的收缩的基本谈判条件，谋求减抑中美战略前沿碰撞的危险，促成中美之间新的战略稳定，并且争取分化美国政界的对华态度。总的来说，一段时期里坚决不将美英以外的其余发达国家和任何发展中大国推到中国的对立面，对其反华、斥华行为一般需坚毅地忍耐，以利目前时期里特别重要的战略集中，减少一二线对手，争取较多的中立者和同情者，特别是经足够和及时 的彼此妥协和具体安排，切实地维持和发展与欧盟、东盟及韩国的合作互利关系。

China should resolutely, adequately and sustainably pursue strategic and military retrenchment, especially with respect to the South China Sea, Taiwan, and arms race. This retrenchment would serve as the basic negotiating condition for the new US administration to make a corresponding retrenchment, at some point in time, in order to mitigate the risk of a collision on the US-China strategic frontier, promote new strategic stability between China and the US, and seek to divide the US political establishment's attitude towards China.

With the exception of the US and UK, China should not antagonise the rest of the developed countries and any large developing countries. For a period of time, it is necessary to be resolute and patient with their anti-China behaviour. This course of action benefits the immediate and critical concentration of strategic focus; and the reduction in the number of first- and second-tier rivals. China also needs to gain the support of more neutrals and sympathisers, including by effectively maintaining and developing cooperative and mutually beneficial relations with the European Union, ASEAN and South Korea, especially through adequate and timely mutual compromises and concrete arrangements.

In simpler words, China should reduce its strategic ambitions and activities for the time being, and use this retrenchment as a bargaining chip with Biden. China should also try to reduce the number of opponents or improve its foreign relations while confronting its US challenge.

Quotes of the week

吾生也有涯，而知也无涯。以有涯隨无涯，殆已；已而為知者，殆而已矣。

There is a limit to our life, but to knowledge there is no limit. With what is limited to pursue after what is unlimited is a perilous thing; and when, knowing this, we still seek the increase of our knowledge, the peril cannot be averted.

From Zhuangzi, Nourishing the Lord of Life  (translated by James Legge via ctext)

書山有路勤為徑 學海無涯苦作舟
The mountain of books has a road and the path is diligence. The sea of learning has no end and the boat is hardship.
From 韩愈 Han Yu (Tang)

君子曰：學不可以已
The gentleman says: Learning must never stop.
From 荀子 Xunzi

Chinoiserie

• The story of how Steve Bannon and Guo Wengui created Dr Yan into a right-wing coronavirus media sensation: For the diaspora, Dr. Yan and her unfounded claims provided a cudgel for those intent on bringing down China’s government. For American conservatives, they played to rising anti-Chinese sentiment and were distracted from the Trump administration’s bungled handling of the outbreak.
• Chenchen Zhang’s journal article on right-wing populism with Chinese characteristics: In debating global political events such as the European refugee crisis and the American presidential election, well-educated and well-informed Chinese Internet users appropriate the rhetoric of ‘Western-style’ right-wing populism to paradoxically criticise Western hegemony and discursively construct China’s ethno-racial and political identities. By criticising Western ‘liberal elites’, the discourse constructs China’s ethno-racial identity against the ‘inferior’ non-Western other, exemplified by non-white immigrants and Muslims, with racial nationalism on the one hand; and formulates China’s political identity against the ‘declining’ Western other with realist authoritarianism on the other.

This week on China Story:

• Holmes Chan, End of the road for Hong Kong’s opposition camp?Beijing’s disqualification of the four lawmakers have brought about the end of an era: Hong Kong’s Legislative Council is no longer a viable space for meaningful resistance. For the pan-democrats, often faulted for lagging behind public sentiment, it was a moment of hard truths and disillusionment. They had loudly announced their intent to leave the dinner party – only to find out they were the last ones still there.
• Jeffrey Gil, Can Confucius Institutes survive on Australian university campuses?Confucius Institutes have always been controversial because of their links to the Chinese government...Academics, the media and the general public have raised concerns that they could restrict academic freedom, spread propaganda and allow the Chinese government to influence universities. In the context of increasing apprehension about China in general, and the recent deterioration in Australia-China relations in particular, Confucius Institutes will likely come under heavy scrutiny with the introduction of the Australian government’s foreign relations bill, which extends to the investigation into foreign interference in the university sector. The Australian government should use this as an opportunity to decide whether, and on what terms, Confucius Institutes are acceptable, while universities should use it as an opportunity to reflect on the purpose and operation of Confucius Institutes on their campuses.
• Greg McCarthy, The rise of populism in Australia’s China policy: The growing tensions between Australia and China are often attributed to external factors. But Australia’s policy towards China is also an expression of the Liberal–National coalition government’s domestic politics. It is the connection between domestic and foreign affairs that provides the political ballast for the government’s China policy. In both, ‘national sovereignty’ is invoked to enhance and defend the power of the government while closing off debates over liberal democratic rights.