Australia and Chinas Belt and Road

Initiative: Economic Opportunities

and Geo-Strategic Concerns
Emeritus Professor Carlyle A. Thayer
Presentation to Conference on Chinas Belt and Road Initiative
VNU University of Social Sciences and Humanities
And the Konrad Adenauer Stiftung
Hanoi, October 6, 2017
 Overview

1. Background
2. Australia-China Economic Relations
3. Developing Northern Australia
4. Australia and Chinas Belt and Road Initiative
5. Conclusion
 1. Background
Xi Jinping proposes Silk Road
Economic Belt in Kazakhstan,
September 2013

Xi Jinping addresses Indonesian

Parliament on 21st Century
Maritme Silk Road, October 2013

Chinese Communist Party Central

Committee approves One Belt,
One Road (OBOR), November
2013

Belt and Road Initiative Australia was not on the One Belt, One Road Map
 Background: One Belt, One Road
Asian Development Bank estimates Asia-Pacific Region
requires nearly US$1 trillion a year by 2020 for needed
infrastructure
OBOR aimed at funding massive infrastructure projects
Roads, high-speed rail, airports, ports, communications
China contributed US $50 million to the Asian Infrastructure
Investment Bank
China pledged US $40 billion to its Silk Road Fund
China also pledged US $25 billion to the Maritime Silk Road
 Background
China capitalized BRICS New Development Bank with US $41 billion
China Development Bank and Export-Import Bank of China have
loaned US $200 billion to BRI projects
China Development Bank tracks more than 900 projects in 60
countries valued at US $890 billion
Bank of China pledged US $100 billion (2016-18)
Industrial and Commercial Bank of China reviewing 130 projects
valued at US $159 billion; it will invest US $337.2 billion in 412
projects (as of May 2017)
 2. Australia-China Relations
Joint Ministers Economic Commission 1986 (15th held Sept 2017)
Australia-China Comprehensive Strategic Partnership (Nov 2014)
Foreign Affairs and Strategic Dialogue (4th held Feb 2017)
Strategic Economic Dialogue
Bilateral Defence Relationship
Senior-level dialogues, educational exchanges, reciprocal naval ship visits,
humanitarian assistance and disaster relief exercises
Australia-China Free Trade Agreement (ChAFTA), 20 Dec 2015
Australia delays ratification of extradition treaty with China aimed at
corrupt Chinese officials in Australia
Australian Merchandise Exports to China

Bilateral two-way trade $150 billion in 2015-16

 Asian Infrastructure Investment Bank

In 2014 Australia initially declined to join AIIB following lobbying from

US and Japan. Australia joined in June 2015, contributing $930 million.
Australia-China Free Trade Agreement
Foreign Direct
Investment,
Australia, 2015,
(A$ million)
 Darwin

Port of Darwin
Leased to Chinese
Landbridge Group
in October 2015
 Chinese Landbridge Group
Acquires 99-Year Lease for Port of Darwin

Fort Hill Wharf (above) and East

Arm Wharf and Marine Supply
Base (left)
President Obama and other U.S.
Administration officials protested to Australia
U.S. military regularly use
the facilities at the Port of
Darwin

USS Bonhomme Richard

(LHD-6), Wasp-class
amphibious assault ship
in Darwin harbor, August
2013
3. Developing Northern Australia
 Northern Australia
Infrastructure Facility (NAIF)
Treasurer (Joe Hockey) announces Northern Australia Infrastructure
Facility in Budget speech 2015-16
$5 billion in concessional loans for private sector investment
Cattle supply chains (roads) $101.3 million over four years
Infrastructure projects pipeline priority list $3.7 million
Taskforce into insurance premium reduction measures $2.1 million
Tropical health research into threats from exotic diseases $15.3 million
Our North, Our Future White Paper on Developing Northern Australia
$916.3 million over four years ($600m on roads program)
Northern Australia Infrastructure Facility Act (May 3, 2016)
 4. Australia and
Chinas Belt and Road Initiative

Australia is now
on the Belt and
Road Initiative
Map
 Australia and
Chinas Belt and Road Initiative Timeline
In June 2010, then Vice President Xi Jinping visited Australia and the
Northern Territory (one of several visits)
Xi requested to visit Aboriginal cave paintings in Kakadu National Park
Long drive from Darwin provided opportunity to see countryside and reflect
on its potential
President Xi visits Australia, addresses Parliament, and welcomed
Australias participation in the Maritime Silk Road (November 2014)
Australia-China Senior Business Leaders Forum in 2015
Attended by the then Minister of Communications and now Prime Minister
Malcolm Turnbull
 Australia and
Chinas Belt and Road Initiative Timeline
Foreign Minister Wang Yi announces China-Australia Working Group to
study BRI and Developing Northern Australia Initiative
Joint press conference with Foreign Minister Julie Bishop, February 2016
President Xi calls on Australia to align OBOR and Northern Territory
Development, April 2016
Australia-China Belt & Road Initiative launched by the Government in May
2016
Australia and China commence discussions on MOU on Belt & Road
Initiative, October 2016
Andrew Robb, former Trade Minister and chairman of Landbridge, leads
delegation of Australian banks and services companies, October 2016 to
Beijing
Australia-China Belt & Road Initiative
ACBRI was established
under the Australia-China
Council funded by the
Department of Foreign
Affairs and Trade on May
27, 2016
Chaired by former Trade
Minister Hon. Andrew
Robb, AO
 Australia and
Chinas Belt and Road Initiative 2017
Obviously Australia has a high degree of expertise both in relation to
execution but also financing of infrastructure. So there will be scope
for Australian businesses in the future to be involved in belt-road
initiative projects
Trade Minister Steve Ciobo (23 March)
Premier Li Keqiang visits Canberra (24-28 March)
High-level dialogue under Comprehensive Strategic Partnership
Australia declines to link BRI with NAIF
Prime Minister Malcolm Turnbull meets President Xi in Beijing, April
In Beijing Prime Minister Malcolm Turnbull wanted to focus on
innovation, but President Xi Jinping wanted to talk about One Belt One
Road policies and investment in Northern Australia (April 15, 2017)
 Belt and Road Forum for
International Cooperation, May 14-15, 2017
 Australia and
Chinas Belt and Road Initiative 2017
BRI Forum in Beijing, May 14
attended by Trade Minister Steve Ciobo, Andrew Robb (former Minister for
Trade and Investment) and Daniel Andrews (Premier of Victoria)
No Australian companies invited
the Northern Australian Initiative is separate to the Belt and Road
Initiatives, there are clearly complimentarities
Weve seen much merit in the BRI Initiative. We see opportunities
for collaboration. But we take decisions about initiatives in Australia
on the basis of whats in Australias national interest and I think we
dont need to view everything through one lense.
Steve Ciobo, Australian Trade Minister (May 14, 2017)
 Australia and
Chinas Belt and Road Initiative 2017
BRI Forum in Beijing, May 14 continued
Australia supported the Initiative on Promoting Unimpeded Trade
Cooperation along the Belt and Road statement issued at the end of the
trade session despite European protests over lack of clauses on transparency
and tendering standards
BRI Summit in Beijing, May 15
President Xi announces further US $124 billion for BRI initiatives
Attended by 29 heads of government
Attended by 70 representatives from other countries, United Nations, World
Bank and International Monetary Fund
Australia not represented
 Issues in Australia-China Relations
Chinese donations to political parties and Members of Parliament
Chinese ownership of critical infrastructure
Foreign Investment Review Board states must now receive Government
approval before selling critical infrastructure to offshore buyers
Headed by David Irvine, former head of Australian Security Intelligence
Organisation (ASIO) and former Ambassador to China
Chinese industrial hacking and extensive espionage
Chinese public security covert operations in Australia
Chinese consolidation of control over local Chinese-language media
Chinese control over Chinese student community in Australia
5. Conclusion
 Australian Domestic Politics
We will come to office if we win the next election with an open mind
as to how Australia and China can best collaborate on the Belt and
Road Initiative with a clear eyed approach to our respective national
interests.
We will examine proposals on a case by case basis including
considering how the Northern Australia Infrastructure Facility and the
Belt and Road Initiative can best complement each other.
FutureAsia: Labors Deeper Asian Engagement Policy Chris Bowen, Shadow
Treasurer, Australian Labor Party (ALP), September 29, 2017.
 Economic Opportunity v- National Interest
Opportunities
Attract Chinese partners in
Australian based projects
Partner with Chinese business
beyond Australia in China and
Belt and Road countries
Infrastructure, banking, finance,
resources, tourism, education,
healthcare professional services
Opportunities
Partnerships to develop roads,
bridges, schools, hospitals,
Improved connectivity and
market access and integration
across BRI network
BRI supported by some
Australian industries and state
leaders (NT, Victoria)
 Economic Opportunity v- National Interest
Opportunities
Australias public-private
partnership development
experience, legal services,
professional management
consulting, technical trade-
related businesses, agriculture,
engineering, energy
Boost to Australian standing and
influence in region
Opportunities
More regional infrastructure will
mean more demand for
Australian iron ore and coal
Policy coordination, financial
integration, infrastructure
connectivity, unimpeded trade,
and people-to-people networks
Signing up early Australia can
help shape BRI
 Economic Opportunity v- National Interest

Concerns
Foreign ownership of critical
infrastructure
Ports, power grids, roads
Weakening Bretton Woods
financial institutions
Strategic and economic
domination
Concerns
Undermining US leadership role
in the region by extending
Chinese influence at expense of
the US
Chinas use of BRI projects as
economic leverage to influence
Australias decision-making
 Economic Opportunity v- National Interest

Concerns
Feasibility of projects
Investment risks
Lack of Chinese reciprocity in
investment access
Preference for Chinese
companies
Lack of two way trade flow
Concerns
Impact on human rights and
environment
China wants formal state-to-
state MOU on BRI Cooperation
North Korean attendance at May
BRI Forum and Summit
 Conclusion
It is absurd to say Australia cannot be involved for strategic reasons
and equally absurd to say we should blindly sign any memorandum
China wants, regardless of its abuse of economic principles. Both the
anti-China nay-sayers and pro-China gladhanders are wrong. Australia
is biding its time on Belt and Road, and that is sensible.
it is far better that Chinas investment proposals for Australia be
assessed on merit alone, and not be branded as part of a grand
scheme to enhance Chinas regional interests. Such branding would
only be counter-productive.
Paul Kelly, The Australian, May 24, 2017 (highly respected senior analyst)
Australia and Chinas Belt and Road
Initiative: Economic Opportunities
and Geo-Strategic Concerns
Emeritus Professor Carlyle A. Thayer
Presentation to Conference on Chinas Belt and Road Initiative
VNU University of Social Sciences and Humanities
And the Konrad Adenauer Stiftung
Hanoi, October 6, 2017