PEDDLING OR PERSUADING: CHINA'S ECONOMIC STATECRAFT IN AUSTRALIA

Audrye Wong

doi:10.1017/jea.2021.19

Abstract

AbstractWith the globalization of Chinese capital, economic statecraft has become an increasingly prominent component of China's foreign policy. In this article, I examine China's use of economic inducements in developed democracies, a topic of growing concern for policymakers, focusing on the case of Australia. I show how Beijing's attempts to coopt public voices and influence Australia's foreign policy using non-transparent political donations and academic funding generated a strong backlash. At the same time, economic interdependence has provided a buffering effect, with key domestic actors in Australia advocating for cooperative relations, although this effect can in turn be limited by Beijing's coercive economic tactics. My findings underline the reputational costs of certain approaches to economic statecraft, the value of building supportive coalitions, and the challenges faced by China's authoritarian state capitalist model. They also highlight the impacts of globalized Chinese capital in developed democracies, including the resilience and vulnerabilities inherent in democratic political processes.

Highlights

With the globalization of Chinese capital, there has been increasing attention among scholars and policymakers to the political and security implications for growing economic interdependence with China
This article tackles a key question raised in this special issue: What are the impacts of Chinese capital abroad, and how have recipient countries responded? My findings underline the reputational costs of certain approaches to economic statecraft—when inducements are employed in non-transparent ways that do not conform with political norms and processes (Wong 2019, 2021)
Surveys have found that Chinese investors view Australian business leaders, state governments, and local councils as highly supportive compared with other actors such as the federal government, the Foreign Investment Review Board (FIRB), and the media

Summary

INTRODUCTION

With the globalization of Chinese capital, there has been increasing attention among scholars and policymakers to the political and security implications for growing economic interdependence with China. 284 Audrye Wong perceived attempts to use non-transparent economic inducements through CCP-linked proxies to increase political involvement in Australia’s domestic politics, coopt public voices, and shape the direction of foreign policy discourse about China. These efforts have generated strong public backlash against China, along with greater political scrutiny of China’s overseas economic activities. Surveys have found that Chinese investors view Australian business leaders, state governments, and local councils as highly supportive compared with other actors such as the federal government, the Foreign Investment Review Board (FIRB), and the media.84 Many of these divisions stem from perceptions of, and actual gains in, economic benefits from China. In late 2018, New South Wales (which is apparently the largest state recipient of PRC investment) signed a Memorandum of Understanding (MoU) with a major Chinese airline to boost tourism. Even more contentiously, the state government of Victoria signed an MoU on China’s BRI, to the surprise of the federal government. This went against Canberra’s previous decision not to formally sign onto the initiative due to strategic concerns, it had signed a MoU on cooperating with BRI projects in third countries. While the MoU is not a legally binding agreement, its political symbolism points to strong elite interest in the economic opportunities provided by Chinese capital

A BALANCING ACT

Findings

CONCLUSION