The former foreign affairs minister Gareth Evans has warned the Turnbull government risks adopting a cold war mindset with China, and he says clear investment ground rules are needed urgently to safeguard Australia’s long-term economic and strategic interests.
Evans was speaking at a National Press Club debate on Tuesday about the relationship between China and the United States with Hugh White, professor of strategic studies at the Australian National University.
Both men addressed the recent decision by the treasurer, Scott Morrison, to block the sale of Ausgrid, the NSW electricity company, on national security grounds.
The two bidders for the electricity infrastructure were China’s largest state-owned company, the State Grid Corporation of China, and the privately owned, Hong Kong-listed Cheung Kong Infrastructure, controlled by the billionaire Li Ka-shing.
Evans said the decision-making on the Ausgrid sale looked completely arbitrary, and people should not take the government’s invocation of national security at face value.
Evans said his experience in government suggested “whenever the spooks were united about anything, that was the time to look very, very closely at the evidence”.
He said clarity and consistency were needed. “[The government is] going to have to come up with some clear ground rules soon, or a great deal of damage will be done without any obvious reciprocal benefit that I can see from quite considerable experience operating in these sectors.”
Evans said if the government adopted a posture of reflexive suspicion about all Chinese investment propositions, “therein lies madness in terms of any relationship”.
That sort of defensive thinking lurched back into “cold war confrontation”.
In one of the few outbreaks of analytical consensus during the debate, White agreed with Evans that Australia did not have the luxury of of acting politically with foreign investment decisions given China’s economic power.
“We could be cutting ourselves off from the most important economic story of the 21st century and that will impoverish us,” White said. “This is not an area where we can just say we don’t want the Chinese to do this for us.”
White said the risk of serious confrontation between China and the US was “very, very real”. He said the buildup of tensions between the two countries had similarities to the lead-up to the first world war.
“America believes it can remain the primary power in Asia without conflict with China because it believes the Chinese will back off,” White said.
He said China had the same mindset: conflict would be avoided because the US would back off. “The risk for us is that both may be wrong.”
White reasoned the same dynamic existed in Europe before the first world war “and without wanting to overstress the analogy, there is more than a whiff of 1914 about this situation”.
Evans said that diagnosis was too apocalyptic.
He acknowledged the risks of conflict between the two countries, but he reasoned countervailing forces would prevent tensions escalating to the point of war. “The overwhelmingly likelihood is that cooler heads will in fact prevail,” Evans said.
“There’s a fine line between optimism and naivety in this respect but my general credo is that both optimism and pessimism are self-fulfilling. It really is better to live as an optimist and occasionally be wrong than to live as a pessimist and always be right.”
But Evans said Australia should reserve the right to be assertive, both in attempting to influence the US in building a more constructive relationship with Beijing and in articulating its own strategic interests, including in the South China Sea.
Evans said if China persisted with provocative actions in the contested territory in the wake of the Hague tribunal ruling, then “pushback should take the form of a freedom of navigation operation by ourselves, not in tandem with the United States”.
In mid-July, an international tribunal in The Hague overwhelmingly backed the Philippines in a case on the disputed waters of the South China Sea, ruling that rocky outcrops claimed by China could not be used as the basis of territorial claims.
