Ideas@TheCentre
China Inc’s March debacle
March has been a terrible month for the China Inc brand in Australia and enormously annoying for Beijing.
The takeover of Oz Minerals by Chinese state-owned Minmetals was blocked on ‘national security grounds’ because the Australian company has a mine within a defence weapons testing site. This implied that Minmetals was perceived to be an extension of the government in Beijing.
Then the Australian Consumer and Competition Commission (ACCC), despite giving the go-ahead for Chinalco’s increased stake in Rio Tinto, made a hot potato even hotter for the Foreign Investment Review Board, and ultimately Treasurer Wayne Swan, by suggesting that all Chinese state-owned enterprises are controlled by a single ‘parent entity.’
Second, it also got explicitly political and conspiratorial. The Australian newspaper broke the news that Prime Minister Kevin Rudd had met Li Changchun, the Chinese chief for propaganda, media and ideology and the fifth most senior person in the Chinese Communist Party (CCP), at the Lodge without even informing Australian media. In contrast, the meeting was widely reported in China’s state-sponsored media. Then it emerged that Defence Minister Joel Fitzgibbon had failed to declare two trips to China that had been funded by Helen Liu, an Australian citizen but a businesswoman with strong connections to senior Chinese officials.
Both Mr Li and Ms Liu did nothing wrong during these episodes. Likewise, Minmetals and Chinalco are going through the correct processes and have been upfront in the way they have gone about it. But although we can point to xenophobia behind some responses, fear of all things foreign is not sufficient to account for genuine and well-considered official and private concerns.
The problem many have is with the expanding depths of Chinese state corporatism as well as opaque transparency of means and ends within its system – the extent of which far exceeds what occurred in Japan, South Korea and Taiwan as these states were rising. The hand of the Chinese state is never far from the surface when it comes to China’s largest, most successful, and prestigious organisations. The most influential Chinese individuals – even private citizens – generally become so by being well connected with senior officials in the CCP. This has been Beijing’s deliberate strategy in its pursuit of what Chinese strategists call ‘comprehensive national power.’
Mr Li, as the propaganda chief, has a huge task on his hands. As these recent events demonstrate, as China grows, so will suspicions of ‘China Inc.’
Dr John Lee is a Visiting Fellow at the CIS.
