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Book review: Correspondent's account highlights mystery of explusion from Shanghai

Reporter's forced exit from the country raises key questions about deterioration of Sino-Australian ties

Michael Smith's new book, "The Last Correspondent: Dispatches from the Frontline of Xi's New China," is an important contribution to a divisive, and damaging, debate in Australia. (Nikkei Asia montage; source photo by William Hui)

SYDNEY -- It was well after midnight when the pounding began on Mike Smith's front door. Seven members of China's Public Security Bureau demanded access to his lane house in Shanghai's French Concession district. It was September 2020.

Smith knew he was in trouble. Just a month earlier, Australian journalist Cheng Lei had disappeared from her home in Beijing. And three days earlier the Australian government had revealed the news that her friends and family had feared -- the prominent television anchor was in detention. She is still in jail.

Even more ominously, the Australian ambassador in Beijing had demanded the previous day that Smith leave the country immediately. He was, he was told, in great danger.

What was going on? Smith was the China correspondent for the Australian Financial Review. His reports on the country's economy and business environment were competent, but not particularly controversial. His connections to Cheng were almost zero -- he had met her once, briefly, at a function in Beijing. Smith had thought that the ambassador's warnings were excessive. It now seemed that he was wrong. Very wrong.

It turns out that Smith knew just a fraction of the story. The Public Security Bureau officers told him that he was a "person of interest" in a national security investigation involving Cheng. He was now subject to an "exit ban" which meant that he could not leave China. "As I took stock of the situation, I was overwhelmed with a surge of dread unlike anything I had experienced before," Smith writes in his recently published book "The Last Correspondent."

Chinese Australian journalist Cheng Lei, shown here in 2019, disappeared in August 2020 was formally arrested by Chinese authorities in February 2021 on suspicion of illegally supplying state secrets. (Getty Images)

Five days later, after taking refuge in the Australian consul general's house in Shanghai while diplomats negotiated his exit from China, and after agreeing to a routine interview with the Public Security Bureau that revealed that they had no suspicions about him, he was on a flight to Sydney.

Smith's days as a China correspondent were over. He and his partner were devastated. They had loved their work and their lives in Shanghai.

While Smith's drama was unfolding in Shanghai there was a similar episode in Beijing. Bill Birtles, the China correspondent for the Australian Broadcasting Commission, also received a late-night visit from the Public Security Bureau. The message was identical -- you can't leave China; you are a person of interest in a national security investigation.

Birtles also sought refuge with Australian diplomats. He and Smith took the same China Eastern flight from Shanghai to Sydney. Their exit meant that for the first time in half a century there were no journalists reporting for Australian media organizations left in China. That is still the case today and is likely to remain the case for some time. What went wrong?

Australian Broadcasting Corp. journalist Bill Birtles speaks to the media on his arrival at Sydney airport on Sept. 8, 2020. Joining him on the flight from Shanghai was fellow Australian journalist Smith, who was also under pressure from Chinese authorities.   © AP

If Smith was the AFR's last correspondent I can claim the title of first -- or one of them. My partner Steve Wyatt, also an AFR correspondent, and I set up the newspaper's China bureau in Shanghai in 2004. We chose a five-story lane house in the old French Concession area to double as home and office. This was the house where Smith received his midnight visit. We hired an assistant, Lucy Gao, who plays a large role in Smith's book as a multitalented researcher, translator and fixer.

We spent six years in China as AFR correspondents. Our experience was the flip side of Smith's term. The Australia-China relationship was warm -- cozy, even. There was a constant stream of ministerial visits to Beijing and Shanghai by Australian politicians keen to burnish their credentials as experts on China trade. There were occasional blips -- disputes over iron ore pricing; Beijing's anger when state-owned Chinalco was blocked from taking a controlling stake in iron ore giant Rio Tinto. But, in general, the relationship was warm.

There was a sense that "Australians 'got' China," treated Chinese people with respect, and had no colonial history to overcome. Australia was rewarded with lucrative trade deals. The then-prime minister, Kevin Rudd, spoke fluent Mandarin. Back in Australia, there were over a million citizens of Chinese ethnicity and the second-most common language spoken at home, after English, was Mandarin. As China's economy grew exponentially, Australia reaped the benefits in higher export revenues, and thousands of Australians flocked to China to make their careers. Cheng was one of them.

In Shanghai in 2004 there was a sense that China was opening to the world. Expatriates were welcomed. And they were partying, as well as working. The old colonial buildings on the Bund were being extensively restored and transformed into restaurants and nightlife venues that rivaled the best that could be found in Berlin or New York.

A China Shipping Line containership sails out of Sydney's Botany Bay in June 2016. Despite their frosty relations, China remains Australia’s largest customer, accounting for more than a third of exports.   © Reuters

Back then, Cheng was a young Aussie Chinese who was trying to make her way as a reporter with the business cable channel CNBC. She was a friend. We wanted her to succeed in her career and anxiously watched CNBC promotional advertisements to see if this time she had finally made it -- had become one of the Asian reporters to get a slot spouting CNBC's expertise. She did. Years later Cheng was such an accomplished television interviewer that she was the business anchor for China's state-controlled international English-language television network CGTN.

When she disappeared, in August 2020, all mention of her was removed from the CGTN website. And, when last seen on videoconference by Australian Embassy staff, she was handcuffed, hooded and accompanied by four security staff as she was forcibly placed in a chair with wooden restraints. Cheng was formally arrested in February 2021 on suspicion of illegally supplying state secrets. She is yet to be charged. She has two small children. Her friends and family hold grave fears for her safety.

As Smith writes, by 2020, "relations between Australia and China had become so bad that journalists were now political pawns in a wider diplomatic game."

Smith writes in his book that after learning he was a “person of interest” in a national security investigation and was subject to an “exit ban,” which meant he could not leave China, "I was overwhelmed with a surge of dread unlike anything I had experienced before. (Photo by William Hui)

We may never know the real reason for Cheng's arrest or why Smith and Birtles were forced to leave their journalistic posts in Shanghai and Beijing. But we do know that Australian security agents raided the Sydney homes of four Chinese journalists at dawn on June 26, 2020 -- seizing their mobile phones and laptops. It was part of an investigation under Australia's new "foreign influence" legislation aimed at stopping foreign intervention in Australian politics. These were very heavy-handed tactics by ASIO, the Australian security service. No charges were laid in relation to this investigation and the four journalists decided to return to China.

It is highly likely that these events in Australia in June and China in August were linked in a form of tit-for-tat diplomacy. Smith certainly believes this is the case, although he was unaware of it at the time.

Smith claims in his book that he has since discovered that the Ministry of State Security had been monitoring him since July, weeks before Cheng's detention on Aug. 14. Several of his Shanghai acquaintances received telephone calls from Chinese intelligence authorities in July. They were Chinese citizens. Neighbors have since told Smith that his house had been under surveillance for weeks. Smith concludes that these actions suggest "the authorities in China had been planning to take action against Australian journalists for some time. It was not a spontaneous decision made overnight."

The deterioration in Australia's relationship with China dates to at least 2016 when there was a noticeable change in policy -- from courting Beijing to pushing back against Chinese influence in Australia. It was an abrupt U-turn that is now highly controversial in Australian policy circles. Supporters of the change point to China's activities in the South China Sea, to Chinese President Xi Jinping's increasing authoritarianism and to a new level of aggression in its diplomatic overtures. Australia, they claim, has no choice but to push back.

Chinese President Xi Jinping's increasing authoritarianism, and the country's new level of aggression in its diplomatic overtures, have sparked a policy U-turn in Australia from courting Beijing to pushing back against Chinese influence.   © Reuters

To critics, there is a sense that "national security cowboys" have hijacked the Australia-China relationship. It is the security services and not the diplomatic or trade branches of the government that are driving the relationship. If that is indeed the case, the security agencies appear to have done so with the politicians' support. Business executives, many of them horrified by the turn of events and the potential impact on their bottom lines, have been effectively silenced. Criticism of government policy is seen as a form of betrayal.

What has Australia done? It was the first country in the world to ban Huawei Technologies from its telecommunications infrastructure in 2018. It was the first to call publicly for a full investigation into the source of the COVID-19 virus in Wuhan, calling for the World Health Organization to be given powers like those of weapons inspectors. It has introduced wide-ranging legislation to combat foreign interference, with criminal penalties attached.

In May, Australian Defense Minister Peter Dutton cautioned that the possibility of war with China over Taiwan should not be discounted, a warning backed up that same month by Home Affairs Secretary Mike Pezzullo. The government also toughened foreign investment approvals, including rejecting a Chinese company's proposed acquisition of a dairy business then owned by Japanese interests.

China has retaliated by either blocking or hampering Australian exports of beef, barley, wine, coal, timber, cotton, lobsters and sugar. There have been no ministerial visits to Beijing for three years. Australian ministers cannot get their phone calls returned. Even communication at the bureaucratic level has been blocked. All of this at a time when China remains Australia's largest customer, accounting for more than a third of exports.

A Huawei Technologies employee at the company's flagship store in Beijing in August 2020. Australia was the first country to ban the Chinese tech giant from its telecommunications infrastructure in 2018.   © AP

This is the China-Australia relationship that Smith was reporting on during his three years in Shanghai. He also covered the crackdown in Hong Kong, the widespread detention of the Uyghur population in Xinjiang, and Xi's successful move to abolish presidential term limits potentially making him president for life.

Smith avoids the hysteria that has marked so many of the tomes on China that have been published recently in Australia. And, unlike most Australian commentators and authors on China, he has lived in the country and likes and understands its people. "The Last Correspondent" is an important contribution to a very divisive, and damaging, debate in Australia.

Underlying Smith's tale are three key questions that are likely to dominate Australian foreign policy debate for some time: Has the government gone too far in pushing back on China? Is it catering to domestic political advantage rather than to key national interests? And could Australia learn from countries such as Japan and New Zealand, which manage to navigate the China relationship with a softer and less damaging touch?

Colleen Ryan was editor of the Australian Financial Review from 1998 to 2002, and is author of "Fairfax: The Rise and Fall" (2014, Miegunyah Press)

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