When Australia started standing up to Chinese authoritarianism, many analysts were predicting that Canberra wouldn’t be able to withstand trade wars or another economic backlash from its biggest trade partner – China. But after almost a year of Sino-Australia tensions, it is Canberra, which is decoupling from China. And Beijing cannot do anything but look on helplessly.
Australian PM Scott Morrison wants to completely detach his country from China. In fact, over the past one year, Australian investments in China have gone down by a whopping 25 per cent, even though the paper dragon has been liberalising its financial markets in order to ramp up foreign investments. China, on the other hand, has walked straight into the trap set up by Canberra and has escalated the decoupling process with more economic aggression.
To be very precise, Canberra doesn’t have anything to do with the Chinese economy. Morrison neither wants Chinese investments in Australia nor does he want Australian investors to choose China as a destination for parking their investments. In fact, Australian PM Scott Morrison’s decision to cancel Victoria state’s Belt and Road Initiative (BRI) deal with China was also a step in this direction only.
However, decoupling from your adversary is also an art in the present-day world order of bilateral Free Trade Agreements (FTAs) and investment deals. In Australia’s case also, China could have many options to block Morrison’s attempts at decoupling the Australian economy from China.
In July 1988, former Australian PM Bob Hawke had even inked a bilateral investment treaty with China. The investment deal was supposed to ensure the “reciprocal encouragement and protection of investments”.
Article VIII (1) of the 1988 Treaty even read, “A contracting party shall not take measures of expropriation or nationalisation or other measures having a similar effect relating to any investment unless the measures are in the public interest, non-discriminatory, in accordance with the law of the contracting party which has admitted the investment and against reasonable compensation.”
Later, in 2015, then Prime Minister Malcolm Turnbull went on to sign a Free Trade Agreement with China. In this Agreement, an Investor-State Dispute Settlement (ISDS) provision was also created. An investor aggrieved by discriminatory practices can invoke the ISDS provisions.
However, China got entrapped way too soon. It thought that Canberra is afraid of Chinese economic retaliation and “wolf-warrior” diplomacy. When Canberra started criticising Chinese aggression, Beijing started to badmouth Australia apart from starting a trade war with tariff on Australian products like barley, wine and coal.
However, China’s actions allowed the Morrison government to expose Beijing and start the process of decoupling the Australian economy from China.
Even now when Australia decided to cancel Victoria state’s BRI deal, China sought to settle scores with more aggression. Rattled by Canberra’s actions, the paper dragon suspended all activity under a China-Australia Strategic Economic Dialogue.
Instead of stopping Morrison’s plan to decouple the Australian economy from China, Beijing only escalated the entire issue. By imposing trade tariffs and suspending activity under the strategic economic dialogue, China has only exposed its own assertive nature. Beijing has been doing much of Australia’s work by expediting the process of decoupling between the two economies.
Now, the paper dragon has no political capital or economic leverage left to halt the process of Australian divestment from China. Morrison has set up a big trap and it seems that Chinese President Xi Jinping walked straight into it.
Great work, we need all the media to be showing how bad china is, talking about regime change hopefully sparks change.
Good job on spinning the truth. I would hire the writer to spin defeat into victory. 10/10.
I agree, Nobody. A load of nonsensence article with no substance. Australia is making a grave error alienating itself from the very nation which carried us unsullied through two global recessions. China is the future. The US is a jealous licentious conniving nation ultimately destroying economies all around it, ultimately interested in noone but itself. Australia will find itself in a hard place holding on to too tenaciously to its anglo roots.
China is certainly not the future. It is poor country with too many people. When the global economy falters due to manufacturing elsewhere, China becomes second rate.
the funny part is chinas refusing australian coal,which for a few weeks hurt australia,but now china cant keep its lights on,or produce steal,or much of anything else. they shot themselves in the foot just to teach australia a lesson !
Good articles. China is a big bully that too an authoritarian bully. It needs concerted actions of leading nations to show China its place. This may require some sacrifices both by the govts. and freedom loving people. Else be prepared for a ugly monster dragon breathing fire on your face.
I don’t follow China’s strategy, surely Australia will sell its coal elsewhere and if anything a contraction in the market will push up the coal price. China’s 14 demands on Australia fell totally flat, so it goes on. It is probably not government policy in Australia but decoupling with China is happening anyway, and nobody in Australia seems to mind.
China will be buying Coal from Indonesia, and going green is their main priority.China’s economy is keeping the rest of Asia afloat.
May be China is just too kind…it should behave and act like US…using all ways to bring down nations who are not your cronies ……