Comment: Julia Gillard and China

How do Prime Minister Julia Gillard’s two recent days in Beijing affect the relationship between China and Australia, two disparate countries whose fortunes are so deeply enmeshed? Asks Rowan Callick from Beijing.

It was the first Australian prime ministerial visit to China since relations between the countries started to take a tumble in late 2008, only recovering some equilibrium with the important visit to Australia of Vice Premier Li Keqiang a year later.

Gillard succeeded in further stabilizing the relationship with her brief visit at the end of April. It did not achieve any startling breakthroughs, but in the very modesty of its intentions, it fulfilled Chinese hopes – for which predictability was at or near the top of the list – rather more than any flamboyant surprise gesture might have done.

Kevin Rudd had delivered his main speech on his first visit to China as prime minister, to a student audience at Beijing University, Beida. This was where he first revealed his ambitious concept of becoming China’s “zhengyou” or true friend, someone able to speak frankly and openly about all manner of problems and issues.

This conceit never, however, took on with the Chinese leadership, which soon began to register concern about the direction of the relationship with the first Chinese speaking Western leader.

Almost since Gillard seized the leadership from Rudd, China has been urging her to visit. She went to Washington first, where she made a speech to Congress that was either touching or gushing depending on your taste, and immediately before Beijing, to Japan and South Korea.

Much is often made of the order in which leaders visit countries after reaching the top. But often circumstances – such as the availability of counterparts – dictate as much as perceived pecking orders. And Rudd’s coming, as had been expected on his election, to China first, hardly triggered a positive transformation in the relationship.

In marked contrast, Gillard delivered her first main speech in China to a business audience, at the Beijing Hotel, near the great centres of Chinese power at the heart of the city.

There were other elements to the visit of course, including the welcome announcement of a chair in Australian studies at Beida. And Gillard mentioned, as the Chinese leaders would have thoroughly expected, human rights – but chiefly in their private discussions, when she raised appropriately the fates of jailed former Rio Tinto executive Stern Hu, and of the businessman Matthew Ng, held in Guangzhou over a tangled business deal in which he appears to have been the innocent party.

But the economic relationship formed the heart of Gillard’s visit.

The high level of representation at the succession of meetings which she attended and spoke at over the two days was a tribute to the long-term commitment and preparation by the core organizations determined to drive the Australia-China relationship towards even greater economic success, including the Australia China Business Council, the Business Council of Australia, and the Australian chambers of commerce in China – especially of course that in Beijing.

Strangely, this appears to have been the first occasion on which any Australian prime minister had participated in a top level business conference in China.

The set-up echoed that which was used during the visit to Canberra last June of China’s top-leader-in-waiting, Vice President Xi Jinping: an intimate chief executives’ roundtable, and a broader forum, held in the great hall of the federal parliament.

In Beijing, the Premier-in-waiting, Li Keqiang, gave a speech, as did Commerce Minister Chen Deming.

Paul Glasson, the chief representative in China of the ACBC – who is also a leading deal-maker bringing Chinese companies to Australia – played a major role in the core forum, especially ensuring that leading Chinese figures participated.

He presented a speech in which he stressed the strategic interdependence of the resource relationship. And he anticipated broadening this beyond the current focus on Western Australia, to incorporate greater Chinese investment in a big range of resources in South Australia, the Northern Territory, Queensland and Victoria.

He reminded the gathered business leaders that production would soon come on stream from some of the earliest of the new wave of Chinese investments in Western Australia – like Gindalbie-Ansteel, Citic-Pacific’s Sino Iron, Midwest and others. Much can be learned from these trail-blazers, and of course from the very first joint ventures more than 20 years ago, by Citic at Portland aluminium smelter and at Channar in the Pilbara by Rio Tinto and Sinosteel.

The Chinese chief executives who talked with Gillard found her attentive. They raised three principal issues: speeding up and making more transparent, ratifications by the Foreign Investment Review Board; the high Australian dollar, reducing their earnings; and labour – they want to be entrusted to do more training of locals so they can fit in more smoothly with the Chinese way of working, and they want to be able to import more Chinese workers for infrastructure and mining projects.

Only modest progress was made in raising the profile in the relationship of other sectors – including the massive education services sector, which is facing falling numbers.

Disappointingly, the free trade agreement that has been under negotiation for almost six years was only mentioned in passing, and now more than ever appears fated to fade away into a netherworld, neither abandoned nor completed. Australia’s Trade Minister Craig Emerson, has in his recent policy paper indicated, as expected, his low regard for the value of such deals.

But the overall success of the Gillard visit must remain underlined. It reinforced the process already under way since that ice-breaking visit to Australia by Li Keqiang 18 months ago – of rebuilding from a base of patently common interests, chiefly in providing stable access to strategic resources.

It will not be easy for Gillard, however attentive she becomes to the relationship, to shift it to a new level any time soon, because China’s leadership will become increasingly focused on the shift to a new generation of rulers at the next five-yearly congress of the ruling communist party, in October 2012. They will meantime have little capacity for striking new paths in the international arena.

For now, the relationship has been restored to as calm a level as might have been hoped for by those involved – in a realistic way – on both sides.

*Rowan Callick is the Asia-Pacific editor of The Australian.

**Pictured above: Australian Prime Minister Gillard, left, shakes hands with Chinese President Hu Jintao at the Great Hall of the People in Beijing during her April visit to China. (AP Photo/Minoru Iwasaki)

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