Kevin Rudd

Sunshine diplomacy for China and Australia

PUBLISHED : Tuesday, 12 February, 2008, 12:00am
UPDATED : Tuesday, 12 February, 2008, 12:00am

Foreign Minister Yang Jiechi must have really enjoyed himself in Australia last week, and not just because he was escaping China's bitter winter for the warmth of a Canberra summer. Mr Yang has got the recently elected government of Prime Minister Kevin Rudd to withdraw from a US- and Japanese-led four-nation security dialogue, reiterate Australia's opposition to an independent Taiwan and ensure that proposed Chinese government investments in Australia are treated the same way as any private foreign investment.

No wonder, as one newspaper in Australia reported last week, that the Japanese feel a little nervous about the direction Mr Rudd and his government are heading at present.

Mr Yang was in Australia for the first of what is proposed to be an annual ministerial dialogue between the foreign ministers of both countries. Given that Stephen Smith, who holds that portfolio for Australia, was so accommodating of Mr Yang, it is clear that Australia intends to ratchet up even further the already close relationship with China.

If that means Australia's traditional friend - Japan - has its nose put out of joint, then so be it. For Mr Yang, hearing from Mr Smith that, on a recent visit to Japan, he had told his counterparts there that Australia would not attend any more of the Japan, US and India security talks, was manna from heaven.

When officials from Australia, the US, Japan and India met on the sidelines of the Asean regional forum in Manila last May, Beijing was so incensed by what it viewed as the beginnings of a China containment strategy that it sent off a diplomatic 'please explain' note to each of those countries.

Australia, it appears, has got the message. Mr Smith told the Japanese last month that 'Australia would not be proposing a dialogue of that nature'.

Japan is not the flavour of the month in Australia at the moment, given widespread community opposition to Japanese whaling in the Southern Ocean. So, Mr Smith will have done himself no domestic political harm by siding so publicly with China against the Japanese-led security talks.

Nor does it appear that Beijing has anything to worry about from the Australians when it comes to that perennial issue of Taiwan. Mr Smith must have had Mr Yang grinning from ear to ear when he said last week that any move by Taiwan to hold a referendum as part of a move to seek UN membership as an independent country was 'completely inappropriate'. That's unusually blunt language from a foreign minister.

But from Mr Yang's and Beijing's perspective, it was the attitude of Australia on foreign investment which was probably the most important outcome of the dialogue. It is no secret that China wants to use its growing financial clout to invest directly in Australia's vast reserves of natural resources.

It has been given that chance now because of the plans by the Australia-based mining giant BHP Billiton to take over its arch rival, Rio Tinto. Between them, these two companies export most of Australia's iron ore, coal and other minerals to China.

Two weeks ago, state-owned Chinalco teamed up with US aluminium company Alcoa to take a 12 per cent stake in Rio Tinto. This move created headlines around Australia, and no doubt China was watching nervously to see if Mr Rudd's government got twitchy about the prospect of a serious wad of Chinese government money being used to buy strategic mineral resources.

But so far, the Chinese can rest easy. Mr Rudd says he discussed the Chinalco move with Mr Yang last Tuesday. Australia's finance minister, Wayne Swan, said the deal would be assessed using the same criterion as any other foreign investment proposal. That is, is it in Australia's national interest?

If this year's dialogue is anything to go by, Mr Yang will already be looking forward to next year's chat with Mr Smith.

Greg Barns is a political commentator in Australia and a former Australian government adviser