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International relations

China hits back as Australia alleges domestic meddling

Foreign infrastructure investment down under faces national security restrictions

Chinese Foreign Minister Wang Yi, left, called on Australia to take a friendlier outlook on China after meeting with counterpart Julie Bishop on Monday.   © Reuters

SYDNEY/BEIJING -- Sino-Australian relations have hit a low point as Beijing threatens to retaliate against Canberra's attempt to limit Chinese influence in domestic politics and infrastructure development.

Though China is Australia's biggest trading partner, public sentiment has turned against Beijing because of the perception of widespread Chinese influence in the political and business spheres.

Chinese Foreign Minister Wang Yi squarely blamed Australia for strained relations in a Monday meeting with his counterpart Julie Bishop. If Canberra hopes to improve ties, it will need to "remove its colored glasses" and take a more neutral perspective on China's development, Wang told the Australian foreign minister on the sidelines of the Group of 20 foreign ministers' meeting in Argentina. 

Bishop called the meeting "warm and candid and constructive," posting a picture on Twitter of herself smiling next to Wang. But Australian media report that she used the talks to criticize China's military expansion in the South China Sea.

Prime Minister Malcolm Turnbull was viewed as pro-China when he came to power in 2015, raising hopes for friendly relations between Australia and its largest trading partner. But his stance changed in late 2017, when it came to light that a lawmaker made statements supporting Beijing's position on the South China Sea, in defiance of his party, after getting contributions from a major Chinese political donor. In December, Turnbull declared the "the Australian people stand up" when their sovereignty is threatened, echoing Mao Zedong's declaration at the founding of the people's republic in 1949.

The Australian government introduced legislation in December to ban foreign political donations and require those who have held public office to report any work they do for foreign organizations, measures seen as targeted at China in particular.

Separately, at the end of June, a law will take effect giving the government the power to mitigate national security risks related to investments in critical infrastructure such as ports, natural gas operations and power companies. The bill, seen as targeting Chinese investment, passed in March after only 45 minutes of discussion, without any significant pushback from opposition lawmakers.

Cheng Jingye, China's ambassador to Australia, said in an April interview that a period of "systematic, irresponsible, negative remarks" about China had begun in the second half of 2017, warning that fraying ties could have an "undesirable impact" on trade. In May, Treasury Wine Estates, Australia's top wine producer, reported that some China-bound shipments were delayed at customs, though it is unclear whether this is related to broader bilateral tensions.

Andrew Forrest, chairman of Fortescue Metals Group, has said the government's antagonistic attitude toward Beijing "fuels distrust, paranoia and a loss of respect." It was reported last week that Turnbull will visit China later this year to mend trade relations.

Leeriness of China is not a new phenomenon in Australia. Chinese property developer Landbridge Group's appointment of Andrew Robb, a former trade and investment minister, as a senior economic consultant drew outrage in 2016. Landbridge won a 99-year lease on the strategically important Darwin Port in 2015.

Chinese investment is also accused of driving up Australian housing prices in recent years, which have seen public opinion harden against Asia's economic powerhouse.

Australia-U.S. relations have also been rocky ever since Turnbull's contentious first phone call with President Donald Trump after the American leader took office in January 2017. When the two met in person in May of that year, Trump labeled reports of the call "a little bit of fake news." But other reports of friction have continued to emerge.

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