Asialink Milestones: Alexander Downer on China and ‘Playing the Long Game’

By Donald Greenlees, Senior Adviser, Asialink

Faced with the worst crisis in relations with China since the launch of formal diplomatic relations in 1972, Alexander Downer has some advice for managing the China relationship: Take a leaf out of the traditional playbook of Chinese diplomacy and “play the long game”.

The message delivered in the latest podcast in the Asialink Milestones series with senior adviser Donald Greenlees is directed especially at the Australian business community amid China’s imposition of barriers to billions of dollars in Australian exports.

“It’s not going to be much help if Australian business leaders who deal with China are going up to China or meeting with their Chinese counterparts in Australia and tut-tutting about the naughty Australian government,” says Downer. “Little do they realise that that is extremely damaging to their own interests because in the end that will make it harder for this wave to break.”

Downer is someone who has been around diplomacy all his life. The son of a former High Commissioner to the United Kingdom, he joined the Department of Foreign Affairs soon after university, eventually entered parliament for the Liberal Party, became Australia’s longest serving foreign minister—in office from 1996 to 2007—and then followed in his father’s footsteps in 2014, going as Australia’s representative to the Court of King James. That record gives him special status in Coalition circles and in the annals of Australian foreign policy.

But Downer also has experience of dealing directly with China on business matters. He served on the Australian board of Chinese telecommunications giant Huawei after leaving politics. Huawei has since been banned from participating in Australia’s 5G network.

Once a defender of Chinese technology investment in Australia, Downer now says China’s “wolf warrior” diplomacy and “cyber offensive activities” have seen Huawei become “victims of a regime which could use Huawei for malicious purposes”.

Still, he says, in international relations, “money isn’t everything”. More important is to make sure the system of international rules work.

In an extensive interview, Downer also reflects on years of building and managing Australia’s ties to Asia.  He joins Paul Keating in declaring there is no relationship more important to Australia than that with Indonesia.

And he cites one of his greatest accomplishments the campaign to ensure Australia became a founding member of the East Asia Summit in 2005.

Highlights of the interview with Alexander Downer

On the state of relations with China:

It’s as bad as it's been in decades. I think our relationship with China is extremely bad. And I attribute most of the blame for that to China. I think there has been a substantial change in the management of China’s foreign policy under Xi Jinping. They have become aggressive; they have become arrogant.

On the outlook for Australian trade with China:

I think it could get somewhat worse. It’s just impossible to say. I think they would like to reduce as much as they possibly can their dependence on Australia. They haven’t got any choice but to buy huge quantities of iron ore from Australia, they can’t redirect that trade.

They do have options with coal as you can see, but the price they are paying for redirecting coal imports away from Australia is pretty high in dollar terms, so it’s going to prove to be very expensive for them. So, I expect that strategy isn’t sustainable for the medium term.

[I]f China just closed down, and we had zero exports to China, that would be one thing, but that’s not going to happen. China can’t afford to do that. If that were happen that would be extremely damaging but what you are going to see is a drift away from the Chinese market and I don’t think in the medium term that’s a bad thing. I don’t think we should allow ourselves to be too dependent on one market.

On Australia’s calls for an investigation into the origins of coronavirus in China:

[T]hey are unhappy about there being an international investigation into the causes of the coronavirus crisis, well its killed millions of people, it’s decimated economies all around the world in the developed and the developing world and it would be passing strange if nobody wanted to know how it happened and whether there were lessons for the future.

No one is saying China deliberately did it. So maybe if they were prepared to listen and talk about this, they would find themselves in a better place.

On Australia’s diplomatic strategy for China:

[T]here is nothing much Australia can do about it except ride it out, which is what the government is doing.

What China has done is abandon its great traditions of diplomacy and has become undiplomatic, intemperate and short-term and I think Australia could perhaps take a leaf out of the more traditional playbook of Chinese diplomacy which is to play the long game.

On lessons for the Australian business community:

What was interesting when the Japanese had (a) major row with China… There was the Diaoyu-Senkaku islands dispute and all sorts of problems they had. When they went through that period, Japanese business supported the Japanese government. The Japanese business (community) didn’t run around saying you had better cave in here. Japanese business, which has huge business in China and whose factories… temporarily had to close, they just rode it out and eventually things calmed down.

The Australian business community needs to be careful too because they don’t want to alienate the Australian population. They don’t want to alienate their own workers by sticking up for China just for pecuniary interests, so they can push up their share prices. Seriously, they have to think this through. And that’s what the Japanese business community did. It thought it through. It was if you like quietly patriotic.

On the role of unofficial (Track II) diplomacy of civil society, academics and former officials:

I have always thought Second Track contacts are much more important than governments often realise. I think DFAT probably does understand that. I don’t think our politicians always do; (that) our ministers always do. I made extensive use of those sorts of lines of communication. It’s another way of getting messages across… without having to make public statements or leaving yourself in a position of honest deniability. But Second Track can be extremely important.

On the future strategic role of the United States in our region:

I don’t think the Australian public would even begin to understand us or understand the Australian government if we started to take the view that… (and) some academics make this argument… (we should) throw our lot in with China and abandon the ANZUS treaty or relationship with the United States. I find that almost completely incomprehensible. It comes from people who say on the other hand we should have a more independent foreign policy. Well, that’s not showing an independent foreign policy – that’s just adopting China’s foreign policy.

Here is the way I like to get people to think about the region – like it or not, in the Asia-Pacific region and the Indo-Pacific region there has to be a balance of power. As there was in Europe in the 19th Century. When that balance of power broke down at the end of the 19th Century and the early part of the 20th Century, we know what happened.

On the financial decline of Hong Kong:

Money isn’t everything. Making the rules-based international system works, making sure that there is an appropriate balance of power in the Indo-Pacific region… making sure that Australia maintains its networks around the world with countries which are its natural friends and allies. All these things are more important than just money. To think that Hong Kong isn’t as important financially as it once was. Well, that’s true. But it still is important and there still are a lot of Australians who live in Hong Kong.

On Chinese investment and the treatment of Huawei:

What China has done by this wolf warrior aggressive diplomacy and cyber offensive activities is to change people’s minds about Chinese investment, particularly in critical national infrastructure.

It’s not the executives in Huawei – I think they are the victims of a regime which could use Huawei for malicious purposes.

On the possibility of the US re-joining the Trans-Pacific Partnership trade agreement:

I would love to get the Americans into the TPP.  (But) my friends in the Democratic Party though tell me it’s a long shot… The problem for the Democrats is that the labour unions in particularly are quite opposed to the TPP. For America to come into it there would have to be quite a lot of changes made and that would be quite difficult.

[I] would have thought it would be worth the Australian government’s while—not to do this alone by the way—but sit down with our mates in Japan and see if we couldn’t, with the Japanese, persuade the Americans to look at coming back into the TPP. But it would be a big negotiation… It was a tragedy that they left the TPP. It was the single worst decision in the Indo-Pacific region that the Trump administration made.

On building Australia’s links to Asia and campaign to join the East Asia Summit:

We had to make a supreme effort to get into the East Asia Summit at the ground floor. China opposed us to being in the East Asia Summit by the way… and I had two countries that really, really went out of their way for us. One of them was Japan—and that won’t come as a surprise to you—and the other was Indonesia, and in particular Hassan Wirajuda, the then foreign minister of Indonesia, absolutely went out of his way for us and it was an amazing thing because the then, and still, prime minister of Singapore told John Howard when John Howard asked him about Australia being in the East Asia Summit, that Australia shouldn’t bother because it wouldn’t get in initially and it was something to think about later on.

And John Howard said to me, maybe we shouldn’t push too hard on this because we will get rejected and that would be humiliating for us. And I said to him, ‘no, we should just go all out to try to get into it, even if we run the risk of being rejected and humiliated’... So, I made a massive effort and I would regard it as one of my most enduring achievements.

On relations with Indonesia:

This was a huge relationship for us. I don’t read so much about our relationship with Indonesia now. But I’m with Paul Keating. I think there is barely a relationship in the world more important for Australia than its relationship with Jakarta.

The Keating security agreement was with Suharto. It was ok as an idea. But it was incredibly badly handled. It was clumsily dealt with and handled and in any case the Indonesians suspended it. Terminated it over the East Timor events in 1999. They abrogated it so that was the end of that.

Banner image: Former Foreign Minister Alexander Downer. Credit: @AusHCUK, Twitter.