Victoria is in a position to be a peacemaker and help repair the fractious relationship between Canberra and Beijing, which hit new lows after Australia pushed for an independent inquiry into the origins of the coronavirus pandemic, according to a China expert.

However, another expert says Premier Daniel Andrews defiance over the trillion dollar Belt & Road Initiative could add further tension to the China-Australia relationship, which is the most fraught since the 1970s, and be a “vehicle” for Beijing to promote its agenda.

Weihuan Zhou, International Economic Law Expert at the University of New South Wales, said Victoria’s decision to remain steadfast to its commitment to the BRI could be an opportunity to improve bilateral relations between the two countries.

But if the state government walked away from the memorandum of understanding it first signed in 2018, it could potentially send a “bad message” to Beijing, albeit without severe consequences.

“I don’t think it’s going to be as bad as the push for a COVID-19 investigation, or Australia’s intervention in the Hong Kong security law, because those things are regarded as intervening in China’s sovereignty,” Dr Zhou said.

“But this is not, this is Victoria’s Sovereign Right to walk away from the deal.

“Given the situation we’re in and the escalation in tensions between China & Australia, it may cause some reactions from the Chinese Government.”

The Asian superpower in recent weeks has slapped an 80 per cent tariff on Australian barley exports, placed bans on four beef exporters, and issued a “do not travel to Australia” advice to its citizens.

China has denied any of the sanctions were in response to Australia’s push for an independent inquiry into the COVID-19 pandemic, which started in the Chinese city of Wuhan.

Although Victoria is the only Australian state or territory to sign the MoU with Beijing, which one China expert described as “nothing but symbolic”, it has not been spared China’s wrath.

Dr Zhou said it was impossible, and unfeasible, for China to impose bans and then attempt to exclude Victoria.

“Technically and politically, you can’t exclude barley exporters in Victoria, and that applies to the travel advice as well,” he said.

“China doesn’t want to be perceived as doing economic coercion against Australia, they’re trying to avoid reputational damage but at the same time, they’re trying to send a message to Canberra.”

Professor Jane Golley, an expert on the Chinese economy at the Australian National University, said Victoria’s BRI agreement could add a layer of complexity to Australia’s hardline stance on China, because “as with all BRI projects, it could possibly be a vehicle through which Beijing can promote its agenda”.

But she said the Morrison government’s criticism of Mr Andrews and his MoU with Beijing sounded “political” because it did not make economic sense. “The economic game hasn’t changed and [Victoria’s] strategy hasn’t changed,” Professor Golley said.

“We don’t have enough capital in the country and we need to import it. And Chinese investors, a diverse range of entrepreneurs with diverse links to the Chinese government are the ones who have it.

“Over the decades of investing here, they’ve proven themselves to be like any other multinational corporation, deciding where to invest to earn the highest returns. That’s what capitalists do.”

But she also acknowledged “times have changed and China has, too”, since then Federal Trade Minister Steve Ciobo signed an MoU with China to co-operate on infrastructure projects in third-party markets. The Ciobo MoU, which the federal government has refused to release, was signed in September 2017, almost a year before Mr Andrews inked a deal with China.

In May 2018, speaking in Shanghai, Mr Ciobo supported the BRI, declaring that: “Australia and China share the common goal of improving infrastructure in the region and Australia welcomes the contribution BRI can make to regional infrastructure.”

Professor Golley said five years ago, it would have been encouraged, and expected, that states would engage with China on infrastructure deals. “But there has been a huge shift from the time when engagement with China, for our prosperity, was the focus, while now all we seem to talk about is security,” she said.

“If Victoria pulls out of the deal now, it would be a victory for the feds … but the Chinese, dare I say it, would be quite understanding. Surely they couldn’t go hard at Victoria because they know their own provinces would also have to do what they tell them to do. But in this current climate it is very difficult to predict what any of the players will do next.”

Late last month, the Victorian opposition vowed to scrap Victoria’s involvement with the BRI if it is elected to government in 2022.

The state and federal governments were contacted for comment.

Author: Sumeyya Ilanbey, State Political Reporter for The Age.
Editor’s Note: The article reflects the author’s opinion only, and not necessarily the views of the editorial opinion of Belt & Road News.