Diplomacy warning for Australia in China spat

Australia should speak its mind “in private” with China as it flexes its muscles and fills the superpower vacuum left by the decline of the US, a global business leader has warned.

Andrew Liveris, the former chief executive of The Dow Chemical Company, made the comments at Canberra’s National Press Club on Wednesday after months if not years of rising tensions between Australia and its largest trading partner.

The political spat has seen China slap tariffs on Australian barley and beef and anti-dumping measures on Australian wine this year.

Many have blamed the Morrison Government backing international calls for an inquiry into the origins and handling of the COVID-19 pandemic, but Chinese technology giant Huawei says the rot started in 2018 when the Turnbull administration banned the company from Australia’s 5G rollout.

Mr Liveris, a Hong Kong resident of 13 years, suggested to reporters Australia needed to tread carefully in its relationship with the Asian giant.

“The acceleration of China’s march up the economic ladder, relying less on exports to other nations and more on its own goods that are produced and that it consumes itself, is irreversible,” he said.

“The acceleration on building a barrier around themselves, both economically and militarily, is the China we will see for the next many decades.

“China has realised it will have to exert its own power. And it has a lot to exert.”

As a near neighbour, responding to China’s rise wisely was critical, he said.

“I don’t think that China is going to particularly go out there and pick fights or start wars, but it is going to flex its muscles.

“That, I’m afraid, likely means more Hong Kongs.

“As a result, our moral code is going to be tested … on how do we respond.”

China would remain a big consumer of Australian goods, but it was important to diversify our “one trick pony” economy beyond exports into local manufacturing while ensuing economic interests were not confused with security interests, Mr Liveris said.

“We’ve got to keep developing that relationship for our own mercantile benefit and, frankly, for theirs,” Mr Liveris said.

“When we confuse mercantile interests with what are the issues of principle, that’s when we get into trouble.

“We need to keep the diplomatic channels wide open, to speak frankly and to speak our mind in private with China’s government about what we believe, what our standards are, what our values are.

“But at the same time we need to keep the flow of trade moving between our two countries. Both of these things can and must be kept in balance.”

Asked if he was suggesting Australia should temper its public commentary towards China, Mr Liveris said “saving face matters”.

“You don’t want to embarrass cultures, and I think you’ve got to be very careful with how you say things and what you say,” he said.

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