Australia’s China blind spot is a national liability

Australia’s China problem isn’t just geopolitical - it’s intellectual. For a nation that calls China its most complex strategic challenge and its largest trading partner, our capacity to understand it has fallen into serious disrepair. We are at risk of becoming China illiterate.

In the past decade, Australia’s China literacy has hollowed out. Chinese, Japanese, Korean language enrolments have fallen by nearly 40%. The Australian Academy of Humanities warned that the field is “fragmented and depleted”. The Varghese review of strategic policy work found that across forty universities, we now produce no more than five honours graduates in Chinese studies. In the name of “research security”, the Government funding for China-related research is also in decline – a trend that threatens national interest itself. Understanding China is not a security risk - it is a security necessity.

Yet despite repeated calls for a national strategy to rebuild our China expertise, no such plan exists.

It’s time to change that. The Government’s recently announced Parliamentary Inquiry into Building Asia Capability is a welcome sign that Canberra recognises Asia literacy as a competitiveness issue, on par with STEM education. Both should be treated as twin pillars of national capability - one powering innovation, the other ensuring Australia can apply that innovation intelligently in its regional context. But there’s a risk the Inquiry ends up like past reports - gathering dust. Australia needs an Asia Capability Summit, akin to the recent Productivity Summit, to turn rhetoric into reform and bring government, business, schools and universities around one goal: rebuilding Australia’s intellectual capacity to engage with the region, including China. It should also sit on the National Cabinet agenda as a matter of national resilience and economic strategy.

Rebuilding it will take political will and policy innovation. Governments can use targeted funding and incentives to lower structural barriers to China literacy in education system. Universities should be encouraged - through funding mechanisms linked to their China-related revenue - to see China studies as a national priority, not a reputational risk. Prioritising China- and Asia-focused research in the Australian Research Council’s grants would also stimulate home-grown expertise. Within the public sector, China capability should be built into recruitment, promotion and training for public service and national security leaders.

The case for business is equally clear. Australian companies are more exposed to China than ever - through supply chains, capital, talent and markets. Yet fewer executives visit China, engage in policy debates or invest in their corporate China expertise. In a global economy shaped by China’s transformation, China literacy is no longer a soft skill. It’s a competitive edge.

Our understanding of China is also shaped by our public and policy discourse. Yet efforts to establish serious, policy-relevant centres on China have floundered. China Matters, once a rare independent voice, was sunk by partisan crossfire. The Australian National University’s Centre for China in the World, launched with fanfare and unprecedently generous public funding under Kevin Rudd’s first government, has largely retreated into academic work and executive education for the Commonwealth.

The result is a vacuum - filled by two excellent but often polarising institutions: the Australian Strategic Policy Institute (ASPI) and the Australia-China Relations Institute (ACRI). ASPI’s China team is formidable, its research sharp and policy-relevant, but it is often dismissed as hawkish. ACRI produces serious analysis of China’s economy and bilateral ties, yet is routinely criticised for being too accommodating. Both have advanced the debate; yet together they have reinforced its bipolar character. Between the poles of threat and engagement, little space remains for informed, balanced analysis of risks and rewards of living with China.

Meanwhile, the United States, UK and Europe are re-assessing and investing in their China expertise. Kevin Rudd built one of America’s largest China research hubs at Asia Society.  Johns Hopkins has launched a new Institute for America, China and the Future of Global Affairs. The Council for Foreign Relations, Hudson Institute and RAND are investing in their China bench. Australia, once respected for its deep pool of China scholars - Wang Gungwu, John Fitzgerald, Louise Edwards - now risks losing that intellectual capital altogether.

Canberra has recognised the capability gap. Agencies from DFAT to ASIO and Defence are investing in China training programs. But these efforts remain confined to the capital. Beyond Canberra - in boardrooms, universities and state governments - the deficit remains acute.

That matters because China engagement today isn’t confined to diplomats or intelligence officers. Every university vice-chancellor balancing research ties, every company board managing supply chain risks, every state government designing a trade diversification strategy needs a basic level of China literacy. Yet our education system is producing fewer China-capable professionals than at any time in decades.

Australia once prided itself on pragmatic, informed policymaking in Asia. That depended on expertise - linguists, historians, economists and strategists who could interpret China’s complex realities for policymakers and the public. We cannot afford to lose that capacity now. Those who dismiss the importance of China competency for Australia’s strategic and economic resilience need to look no further than the Cold War - won as much by Western scholars of Kremlin politics, as by diplomats, spies and generals.

If Australia wants to coexist, compete and cooperate with China intelligently, we must first relearn how to understand it. Otherwise, we will keep talking about China - without ever really knowing what we are talking about.

Philipp Ivanov is the Founder and CEO of GRASP (Geopolitical Risks and Strategy Practice). He was a Global Chief Programming Officer of Asia Society (New York) and CEO of Asia Society Australia from 2015 to 2023.

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