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Prominent Australian senator resigns over China links

Government moves to block foreign political money as China looms larger

SYDNEY -- A proposed Australian ban on foreign political donations hints at growing concern over China's sway over lawmakers and the economy amid a series of political scandals and nonstop investment from the Asian economic heavyweight. It's a concern serious enough to pressure a prominent opposition senator to resign.

Current rules let foreign businesses and individuals donate to Australian political parties and candidates. From 2013 to 2015, businesses tied to China contributed more than 5.5 million Australian dollars ($4.12 million) -- the most of any country -- to groups including regional affiliates of major parties, according to a report by the Australian Broadcasting Corp.

Not if Prime Minister Malcolm Turnbull has his way. The leader said on Dec. 5 that legislation would soon be introduced to ban foreign political donations. "The threat of political interference by foreign intelligence services is a problem of the highest order and is getting worse," the government said in a statement. The proposed reforms "will strengthen our democracy and will ensure that decisions are made based on Australia's national interest, not anyone else's," it said.

Turnbull noted "disturbing reports about Chinese influence" in Australia. 

Those reports are fresh in Australians' memory. Outlets under Australia's Fairfax Media reported in late November that Sen. Sam Dastyari of the opposition Labor Party in October 2016 tipped off wealthy Chinese donor Huang Xiangmo that he might be under surveillance by Australian and American intelligence. Dastyari told Huang that they should leave their mobile phones and speak outside.

It had already come to light in September 2016 that Dastyari had asked for and accepted payments from Chinese companies to cover such expenses as travel. He resigned from the party leadership over the scandal after additional reports emerged suggesting he had argued that Australia should remain neutral on the issue of Chinese claims in the South China Sea, contradicting the party's official position.

After being pressured even more by Turnbull's announcement, Dastyari, once a rising opposition star, declared to resign from the parliament altogether on Dec. 12.

Drawing closer

Chinese influence on the economy Down Under is growing as well. Australia is the second-largest recipient of Chinese investment, after the U.S., according to a study by the University of Sydney and accounting firm KPMG. China overtook the U.S. as Australia's top investor in the fiscal year ended June 2014, the government in Canberra says.

Landbridge Group is part of the investment push. It signed a 99-year lease on the commercial port of Darwin in October 2015 -- much to the chagrin of the U.S., which stations Marines in Darwin every year from April to October.

The port lease is one piece of China's Belt and Road initiative, which seeks to broaden Beijing's sphere of economic influence. Washington's alarm over the transaction pushed the Australian federal government to toughen screening procedures for foreign investment, barring regional governments from selling off key infrastructure as they please.

In September 2016, Landbridge announced that it had tapped as an adviser former Trade Minister Andrew Robb, Australia's point man on the free trade agreement between Canberra and Beijing that took effect in December 2015. He had announced his retirement from politics in February 2016 and began the A$880,000-a-year advising gig on July 1, a day before the election that would determine his replacement in Parliament. The quick job change raised eyebrows. Robb has called the notion that he is engaged "in some form of treasonous activity" a "smear."

China has similarly denied any efforts to interfere in Australian affairs. A spokesperson for its embassy in Australia said in a statement on Dec. 6 that "China has no intention to interfere in Australia's internal affairs or exert influence on its political process through political donations." News reports on such influence are "fabricated," the spokesperson said, and reflect "a typical anti-China hysteria and paranoid" outlook.

Balancing act

This tension would have surprised many in September 2015, when Turnbull took office as what many saw as a pro-China prime minister. He avoided criticizing China directly over its territorial claims and militarization in the South China Sea, saying only that the country's actions were unproductive because they would make neighbors more dependent upon the U.S. But the prime minister has grown steadily more hawkish since July 2016 as China has continued its military buildup in the region, flouting an international arbitration ruling against its territorial claims.

Australia took a more definitive stance in November with its first foreign policy white paper since 2003. "In parts of the Indo-Pacific, including in Southeast Asia, China's power and influence are growing to match, and in some cases exceed, that of the United States," the document reads, but predicts that America will maintain its global and regional lead "in military and soft power," at least "for the foreseeable future." Australia intends to use its security alliance with the U.S. to strengthen ties to the "Indo-Pacific democracies of Japan, Indonesia, India and the Republic of Korea," the white paper says.

Pursuing a balanced approach of defense ties with the Americans and economic ties to the Chinese has served Australia well in the past. China's massive appetite for Australian resources kept this country from falling into recession after the 2008 global financial crisis, enabling what has since become the world's longest economic expansion.

But the "Lucky Country" now finds this balancing act harder. Wealthy Chinese have streamed in, many receiving permanent residency in exchange for millions of Australian dollars in investment. Universities have grown increasingly reliant on foreign students' tuition payments, which supplied 60% or so of the total at the University of Sydney in 2016.

If these investors and students suddenly pull up roots, the economic gap will be tough to fill. Beijing's squabbling with an unpredictable Trump administration in Washington, meanwhile, makes the geopolitical outlook harder to read.

Turnbull said on Dec. 5 that "interference is unacceptable from any country ... friend or foe" and that Australia will protect its sovereignty. The challenge is coming to terms with what Australia's national interest is and finding the foreign and security policies to realize it.

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