China on his mind

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As Malcolm Turnbull jetted off to China for the G20 meeting this weekend after the debacle of Labor taking over the House of Representatives, he would have had much to think about in terms of our relations with China. Apart from the South China Sea, there had been knocking back investments such as Ausgrid and the Kidman property. Until the Sam Dastyari incident blew up, paying politicians bills had been business as usual for the Chinese. Now they’ve found “disease-causing bacteria” including E. coli and stahpyloccocuss in milk shipments and have put the whole industry on notice.

The Camperdown Dairy Company say whatever the problem is, it’s not the presence of “disease-causing bacteria”. Such incidents tend to have a different meaning when dealing with the Chinese.

    Australian dairy exports to China are up 46 per cent over the last five years with fresh milk being the fastest growing category, according to Dairy Australia.

    Mark Tanner, the managing director of marketing consultancy China Skinny, said fast growing imported categories are often targeted by authorities in China.

    “We often see this type of propaganda being used against countries which are doing well in a particularly category,” he said via phone from Shanghai.

The Chinese are concerned about their local suppliers, and that may be the extent of it. Maybe, maybe not.

Recently the Chinese found fungus in imported Kiwi fruit. Turns out Chinese officials had hinted there may be some problems if Wellington pursued anti-dumping proceedings against Chinese steel producers.

Would such problems occur if China owned the dairy company in Australia?

Paying Sam Dastyari was absolutely business as usual for the Chinese. In fact one Chinese donor, property developer Huang Xiangmo had paid out over $1 million to Australian politicians since 2012, and he’d given $1.8 million to set up Bob Carr’s pro-China outfit, the Australia China Relations Institute.

Peter Hartcher tells us that Chinese expect a return for their gifts, and Huang has been complaining that he’s not getting a good return.

Hartcher says:

    Total disclosed payments to the major parties by Chinese corporate and business interests in the two years to June 30 last year was $5.89 million.

    An informed official tells me: “There is very high level concern inside ASIO about the use of donations to purchase access and influence.

    “It’s concern about systematic behaviour by people connected to the Chinese state apparatus. It’s centrally directed by Chinese intelligence.”

I heard Turnbull saying on the box that if we cut off the Chinese, then we could end up with the whole show being even more unbalanced, with Getup and the unions funding Labor. Hartcher thinks a line needs to be drawn:

    Labor is calling for a ban on foreign political donations. The Turnbull government needs to join it and change the law.

    But the main parties have to go further. Rather than being the jurisdiction most open to corruption, the federal parliament and government should be the one with greatest integrity.

    The Turnbull government and the Shorten opposition are afraid of what a federal anti-corruption agency might find if they set one up. They should be more worried about what is about to happen to our country if they do not.

Meanwhile Turnbull seems to have confused our security agencies as to his attitude to China, according to Aaron Patrick in the AFR. The intelligence establishment appears staunchly anti-Chinese and pro-American. Turnbull seems more sympathetic to China and appears to be taking independent advice. The agencies can’t work him out.

A government contractor with close links to the intelligence services said:

    “He is probably the first time since [Gough] Whitlam where we have had a prime minister where we don’t know where he stands on national security grounds.”

Angus Grigg, who is based in Shanghai, has a thoughtful article on Turnbull’s views on China.

He goes back to 2012 to when Turnbull wrote a review of Hugh White’s book, The China Challenge:

    “There is a lot of merit in Australia being seen to have a mind of its own, while remaining a staunch ally of America,” Turnbull wrote.

    “Whether in Beijing or Washington, great powers see deference as their due.”

Turnbull favoured developing an independent foreign policy, not siding with either hegemon. Grigg says that this is known in the business as “independence within the alliance”, a posture favoured by former Labor prime ministers Gough Whitlam and Paul Keating.

Grigg says Turnbull was said to be influenced by:

    the views of Richard Fontaine, a former foreign policy adviser to Senator John McCain, and most particularly a 2015 article he penned titled “Salvaging Global Order”.

Fontaine thinks the global rules-based order is under threat by newbies like China and Russia, who weren’t there when the house was built. He thinks we need to look at issues as they arise, and have the choice of supporting China, opposing it, or staying silent and neutral.

To me Turnbull’s stance on TV, after meeting with the Chinese leaders, was commendably more nuanced and independent. China, he said, wants fairness over issues like Ausgrid and the Kidman cattle station. They’ll get fairness, Turnbull said, but sometimes the answer will be “no”.

Internally Chinese leaders are not used to opposition and it seems their approach can lack subtlety. In hosting a B20 business forum many stayed away because China expects a rubber stamp for whatever it proposes. Apparently that is what happened.

When Back Obama arrived there was no red carpet and no staircase ramp for him to step out of the plane. Obama had to exit from ‘ass’ of Air Force One and find his own way to the terminal.

They say such things are not accidents, they are meant to have meaning.

Grigg said recent tensions between Australia and China in everything from the highly publicised spat between Australian and Chinese swimmers at the Olympics, to growing concerns over Chinese political donations and soft power and hostility towards investment from Beijing-backed companies have been met with increasingly personal editorials in state-run newspapers like The Global Times:

    It famously labelled Australia a “paper cat” for its position on the South China Sea.

    “Australia is a unique country with an inglorious history,” it said on July 30.

    “It was at first an offshore prison of the UK and then became its colony … this country was established through uncivilised means, in a process filled with the tears of the Aboriginals.”

Probably we are not important enough to merit the treatment Obama got, but we live in interesting times.

By the way, Stephen Conroy’s ravings about taking on the Chinese in the South China Sea is thought to have cost Labor $450,000 in donations before the elections.

44 thoughts on “China on his mind”

  1. Sam Dastyari did Australia a favour when his open acceptance of small amounts of Chinese money resulted in a stream of events that highlighted just how much Chinese businesses were donating to mainstream Australian and that they expected better value for money than they were getting.
    It was even more telling when Conroy’s comments on the South China Sea led to a significant drop in donations to the naughty ALP. It all makes you wonder about the free trade agreement with China.
    However, it would be a shame if the result of all this is a fuss about China.
    Australia has a political “donation for influence problem” that includes internal as well as foreign donations.
    It also has a problem with an unfettered free market globalization on our economy which says that it is OK for foreign countries to buy control of key infrastructure as well as excessive shares of our agriculture and manufacturing capacity.
    We need a thoughtful conversation on these issues.

  2. John, I forgot to point out that Dastyari in 2014 also got Huang Xiangmo to pay a legal bill for him worth $40,000. Sam is lucky to still keep his job.

    Professor Rory Medcalf, Head of the National Security College at the Australian National University and a nonresident fellow at the Lowy Institute for International Policy, has a good article in today’s AFR.

    He says that the Dastyari incident provides a ‘teachable moment’, basically a wake-up call. We can’t afford to be seen as in China’s pocket if we want to build a diversified economy that can engage with the rest of Asia beyond the mining and dining booms.

  3. Brian: Yep, we have had a few “teachable moments” on donations in general and China over the last few weeks. Hope this leads to thoughtful discussion rather than an excuse for one nation to play the xenophobia card.

  4. Couple of bottles of Plonk too apparently, only took one to bring down a Premier.
    And why couldn’t these Gifts be ” philanthropic ” like the biggest political donation in Australian history to the greenies ?

  5. Do tell, Jumpy, what was it?

    $ 1,600,000.00 is reported.

    The trouble with political donations is a ” chicken and egg ” situation, which comes first.
    It’s either;
    A- The donation was made by X entity to Y Party to get a certain outcome, furthering Xs interests ( and the Parties interests ) regardless of the National interests = Corrupt
    or
    B- The donation was made by X entity to Y Party because of past and future outcomes, furthering Xs interests ( and the Parties interests ) for the National interest = Philanthropy.

    All Parties ( and supporters of ) say B of themselves and A of opponents.

    In Sams case the donations weren’t made to the Party, just him. So was it a version of A or B ?

  6. I think Senator Sam has lit a fire that not even Fireman Sam could put out.

    Possibly we should ban all foreign donations. What then about domestic donations by entities with strong foreign links? Chinese donors in WA?

    What about purchases of key assets by foreign multinationals? That’s been going on since before Federation, I suppose.

    St Gough was badly burnt by an attempt in late 1975 to obtain a donation from the Baath Party (Iraq). Shocking then, shocking to recall now. Is Senator Sam unaware of that history? Does NSW Labor still operate on Graham Richardson’s Principle: “whatever it takes? Cue loud chuckle in the inimitable tones of RJL Hawke.

    A good thing they cleaned up NSW after that sorry business of the Rum Corps, eh?

    ***
    Here’s a question for the panel: in the light of the impeachment of President Dilma Roussef for allegedly shuffling govt funds to paper over economic deterioration…. what of a State Govt in Australia which sells a State asset to a foreign buyer, thereby improving its budget figures??

    Corrupt? Or just stupid and shortsighted?

  7. Former LNP fundraiser calls for for strict new donation laws with jail for offenders.

    The former honourary treasurer of the federal Liberal Party wants major changes to the laws around political fundraising, saying contributions should be capped at $500, foreign donations should be banned and donors and recipients caught breaking the rules should be sent to jail.

    Michael Yabsley, a former minister in the NSW Greiner government and a major fundraiser for the party from 2008 to 2010, told 7.30 that political parties need to accept that there have been too many scandals linked to political donations.

    He wants the Government to ban all donations made from entities, including unions, companies and third parties.

    “You should only be allowed to make a political donation if you are an Australia citizen and on the electoral roll. End of story, it should be as straightforward as that,” he said.

    We need something like this to really cut back on the inherent corruption behind too many donations.

  8. I think Senator sam should just go, so we, and the pollies and journos, won’t continue to be distracted by him and the focus might come on the underlying problem. Certainly his position as leader of opposition business in the senate is untenable.

    Laura Tingle thinks he should be dumped, and wasn’t impressed with his explanations today. Her bottom line:

    So we need a new regime for political donations. The upside of the “Shanghai Sam” affair may be that enough politicians see a self-interest in political donation reform, particularly foreign donations. Not just from China. And addressing all forms of largesse

    It is too much hope that we get a new regime of politicians not being dopes?

    But the whole episode only increases the legitimacy of calls for a federal corruption regulator.

    A new regime for political donations and a federal corruption regulator.

  9. Yabsley’s suggestion seems workable.
    Should donors also be required to affirm they are not simply passing on cash received from a larger entity?

    (Thinking of an analogue of branch-stacking using unwitting persons)

  10. The tactic of conflating Political Party Donations/bribes and Personal donations/bribes has been effective by Sammys side.
    The $1640 travel, $40,000 legal and two bottles of Grange were personal.
    He must have the goods on Shorten to still be in his job.
    Or maybe Shorten fears an unfair dismissal charge, that of course would not be unfair.

  11. Jumpy, to be honest, I’ve been wondering why Shorten decided to hang onto Sam.

    AFAIK Dastyari was a politcal activist from way back, who progressed through the NSW Right.

    I recall that when Rudd was in his last (2013) campaign and was having troubles communiocating with the Labor campaign office, he sent Sam down there to sort things out.

    During Shorten’s campaign he had Sam tag a long as a pollie to bounce stuff off, just as John Falkner did for Julia Gillard.

    So he must have been seen as a fixer with political smarts.

    That’s why doing something so dumb explodes his reputation and I think renders him useless for anything at all, unless he serves time and comes back the way Sinodinis has for the LNP.

  12. Both Sam and Barnaby Joyce looked bad on the 6/9 7.30 report.
    Barnaby was all bluster when confronted about the funds he was receiving from Gina Reinhardt and his public support for her.
    Sam should do a Sinodinis and resign from his official Senate position on the grounds that he is becoming a distraction.
    Barnaby and the National party should be put under pressure over the funds they are accepting.

  13. Senator D has seen himself as an attack dog in Senate committee hearings, and afterwards in TV and radio interviews.

    Now that he is a national laughing stock, the Labor Party needs to give his roles to others. Let him languish awhile.

    I agree with you Brian. Let Senator D go.
    It’s not even like PM Gillard and Speaker Slipper or the delightful HSUperson, Craig T.
    Mr Shorten doesn’t require Senator D.
    Mr Shorten is not PM, and it’d be terrific if he behaved accordingly.

  14. Dastyari has resigned:

    Embattled Labor senator Sam Dastyari has fallen on his sword, resigning from his frontbench roles as the donation scandal that engulfed him over the past week reached a crescendo.

    The 33-year-old NSW senator quit as manager of opposition business in the Senate and shadow spokesman for consumer affairs

    We may find out whether he volunteered or was pushed, but Sam and Bill had a chat.

  15. So we now understand the delineation, good.
    Donations to Political Parties = philanthropy.
    Asking for money to pay off a personal debt = dodgy as.

    Not a lot of mention about the $40,000 legal debt payed by another ” Chinese entity ” on the ABC, that’s curios.

  16. I’ve been having a real belly-laugh at this Senator Dastyari circus.

    1st.: He was unwise or downright stupid – but he is quite talented and more useful in the Parliament than a lot of the oxygen-wasters infesting the place.

    2nd.: I am amazed that the LNP are kicking up any sort of a stink over the affair. That is political suicide in anyone’s language. People might start remembering all sorts of dodgy deals and cash-for-influence that were orders of magnitude larger than a mere $48K or so (you can’t even get a fairly ordinary hefty 4WD vehicle for that these days) – or remembering why a certain true-blue, free-enterprise-&-democracy, anti-communist pollie got the rather apt nickname of “Chopsticks”. 🙂

    3rd.: The willful ignorance of supposedly intelligent and sophisticated businessmen, politicians, senior public servants ans journalists about China and the Chinese would be as funny as a troop of monkeys – except for the destructive effects that such ignorance are having on all of us.

  17. B- The donation was made by X entity to Y Party because of past and future outcomes, furthering Xs interests ( and the Parties interests ) for the National interest = Philanthropy.

    I only skimmed your link, sorry, did i miss a personal payment he made ?
    And Sam and the Obeids have any relationships we should know about?

    “Everyone is rewriting history about Eddie,” says Sam Dastyari, the former NSW party boss turned federal senator. “He had fantastic relationships with everybody. He was very charming, very witty, very likeable.”

    Not from Murdoch666.

  18. Funnily enough I think Dastyari did what he did because it was within the rules, and he probably thought it was the norm.

    Beranard Keane has found eight pollies worth sacking (paywalled), some not sackable because they are no longer there. They are Kevin Rudd, Tony Abbott, Stuart Robert, Ian Macfarlane, Andrew Robb, Brian Loughnane (not a pollie as such), Bill Shorten, Tony Abbott again, and Arthur Sinodinos. Here’s Andrew Robb:

    Robb led the charge against Rudd over Beijing Aust-China in 2008, but his fundraising body accepted $100,000 from Chinese businessman Xiangmo Huang while Robb, as trade minister, was negotiating Australia’s trade deal with China. Hypocrisy, much?

    Mark Dreyfus was sensible on the 7.30 Report tonight. He says you can’t exclude corporations and unions because of the High Court recognition of the implied freedom of speech provision in the Constitution. That’s done and dusted. He says over 100 countries have banned foreign donations. It can’t be too hard!

  19. I only skimmed your link, sorry, did i miss a personal payment he made ?

    Only the million in bribes donations to the Liberal Party mentioned in the first paragraph. Details here.

  20. Laura Tingle points out that Dastyari wasn’t sacked because he’d broken any rules, or whether what he did was wrong, but because the affair had become a distraction. That is, he was damaging the team.

    She points out that this was exactly the same criterion John Howard used. He said earlier on the day Dastari gave up:

    “Well, you just try to apply the true Westminster principle about a faltering frontbencher, which is that he or she goes if their continued presence is damaging to the team.”

    And:

    “It is not a question of the law, or ‘this, that and the other’ rule and so forth. Is his continued presence on the frontbench of the Labor Party damaging to Mr Shorten’s team?

    I think gracing it with the “true Westminster principle” is a bit much.

    Tingle points out that Abbott received Rolex watches worth a total of $250,000, Robb’s electorate campaign recieved a huge boost from the Chinese. New rules, she says, will almost certainly be capable of subversion. She feels that quick disclosure and a federal anti-corruption body should be part of any new regime.

    But we need to understand that people are attempting to play by new rules:

    It is now also about foreign interests and foreign policy at a time when Australia is being asked to make some big decisions, and there are government players on the stage who play by a different set of rules to the ones we are used to.

    John Quiggin said when we signed the ‘free’ trade deal with the US that there would be a tendency for the junior partner to move closer in the way we do business, and indeed culturally through ‘soft power’, to the norms of the dominant partner.

    Perhaps we should have thought about that a bit earlier.

  21. Ok zoot, ill give it one more try..
    Let’s say William Hill, a betting agency, sponsors The Mighty Broncos. They want the Mighty Broncos to win.
    Let’s say an Indian bookmaker pays of a debt of a player. The chances of this occurring to motivate the player to do his utmost for the team, and indeed the entire Competition, are Buckleys.

    Brian
    Tariffs like bribes are equally corruptive of free trade, and as such, should be condemned in the most vocal fashion.

  22. Jumpy: Your business doesn’t need tariff protection because it does not have to compete against imports. It is also an industry that is good at dealing with variable demand.
    Businesses that do have to compete against imports can be put out of business because of dumping, temporary changes in the value of the $aus or subsidies foreign importers receive from their countries.

  23. Sorry Jumpy, I don’t understand your analogy.
    It seems the Liberal Party is represented by the Broncos (Y Party) and the Indian bookmaker is probably the Lord Ashcroft surrogate (X entity), but who the hell does William Hill represent?

  24. John

    Jumpy: Your business doesn’t need tariff protection because it does not have to compete against imports.

    Perhaps not International but Interstate we do.
    Large southern Companies that outbid for large Local contracts even at a loss, bring up their contractors leaving the Locals without work. They can afford this due to their large margin contracts ( mostly Govt/union ” negotiated ” [ wink wink ]). That would be dumping too right ?
    Or when a boom occurs and a floods of interstate economic migrants ” steal our jobs “.
    What do you think of Interstate tariffs and border controls to protect local jobs?
    Or is your prejudice of a nationalist socialist nature where ” us and them ” is defined by our coast line ?

  25. ….. subsidies foreign importers receive from their countries.

    So a foreign Government taxes their own people to supply cheaper goods to our people, is so bad, we should apply a tax on our consumers, pushing the price up again ?

    Both subsidies and tariff corrupt free trade, two wrongs don’t make a right.

  26. Workers are consumers too Jumpy. A country can’t grow if we keep screwing the consumers.
    You are right. Competition in the construction industry can be harsh when things are tough with companies bidding low and hoping they can make a profit by screwing their suppliers, coming up with something smart or getting their profits out of variances.
    The situation isn’t helped by construction businesses being measured by the size of the order book instead of profits. The person who got the order will often be long gone before the loss making job is finished.

  27. A country can’t grow if we keep screwing the consumers.

    Absolutely. Tariffs screw the consumer and subsidies screw the consumer through a higher taxation.
    Why anyone wants a tariff/subsidy war is beyond me.
    Trump in the US want exactly that.
    The unions want it here.
    It’s crazy.

  28. Jumpy, tariffs and subsidies are tools that governments can use, in moderation, to establish and support important industries. There’s nothing intrinsically bad about them.

  29. We live in a society. Many policies are worth following on balance
    Benefits outweigh disadvantages.
    Very few changes uniformly benefit all persons.

    To take the focus away from governments for a moment: the spread of PCs and use of the Internet. No losers? Some unevenness in benefits? Some businesses benefitting more than others? Some individuals left behind?

    So …… should those changes have been strangled at birth ???

    What do you think, Jumpy. This is an invitation to apply your general principles and methods of reasoning.

    Cheerio

  30. Totally different argument.
    PCs and the internet innovations thrived despite interventionism by Governments not because of it.

  31. Perhaps tariffs to nurture a PC and mobile phone manufacturing base in Australia ?
    Im sure we would all happily pay $16000 for the latest Australian made laptop, sales would boom……

  32. Jumpy, I didn’t say that there would be no disadvantages to anyone. In general terms I agree with Ambigulous. In trade and industry policy governments need to balance the foreseen outcomes.

    As a possible analogy, you can’t fight a just war and expect that no-one will die.

  33. In trade and industry policy governments need to balance the foreseen outcomes.

    Ok, let’s go down that road.
    Car industry subsidies and import tariffs/levies, who won and who lost, in your mind ?
    We can look in hindsight and not crap Treasury modelling.

  34. Jumpy, I really don’t have time to play, but you could start by thinking about South Korea, where they built their car and shipbuilding industies behing tariff walls and with government subsidies. Yes, it hurt industries and workers in other countries, but should they have just stuck with feeding themselves?

    We did the same and then progressively dismantled the regime and the industries at the same time.

    The car industry was a keystone industry which enabled and supported capacity to make other things. A key part of an industry cluster which could be and to a surprising extent was the mother of many things. I guess we’ll find out, but my contention is that there was a middle path, or do we just want to sell minerals, food, holidays and education?

    And build houses, offices, roads and such.

    That was the LNPs explicit vision when in last power in Qld.

  35. The Australian car industry became an unaffordable, wasteful, uncompetitive, union/alp, vote buying boondoggle. Nothing more.
    We sell what is saleable to those that determine superior value.
    Trying to change individual perspective of value costs on both sides.
    It’s fairly simple to find market control failures, free market failures are very very few.

  36. Jumpy, I’ve got a 2006 Ford ute, bought second hand in 2009. It’s actually a good vehicle, and after they go, there’ll be nothing amongst the foreign stuff that really suits me.

    Some years ago I heard a motoring expert say our 6-cylinder cars were actually world class.

    One of our problems was we weren’t achieving critical mass in volumes. The Americans would have solved that in a heart-beat with quotas, but we and the Kiwis are the only ones in the world who actually swallowed the whole dose of the ‘free trade’ doctrine con. So we’ll live with the consequences.

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