In February, the Chinese Consul General in Sydney, Li Huaxin, asked AIIA NSW to host a discussion for Guo Yezhou, Vice Minister of the International Department of the Chinese Communist Party’s Central Committee and seven of his Deputy Directors. A two-hour round table accordingly took place at Glover Cottages on Friday morning, 18 March 2016. Australian participants included former diplomats, academics, a businessman and a banker.*

Guo said the Chinese Communist Party has recently expanded the narrow base of its international affiliations beyond fraternal parties to include 160 parties and think tanks of all political persuasions around the world. Guo and his colleagues were guests of the ALP on this visit to Australia, and his request to meet with AIIA members was part of this broadening strategy.

Guo began with a rebuttal of reported negative consequences of the slow-down in Chinese economic growth. Yes, it had been only 6.8% for the fourth quarter of 2015 and 6.9% for the year. But most countries could only dream of such growth. The fact is that China is entering a transition from labour-intensive exports to domestic consumption, and from a secondary industry-led to a tertiary-led economy. The tertiary sector now comprises 50% of production. Massive adjustments in the labour market have created thirty million new jobs, but more are needed. Domestic consumption will continue to drive the economy. China’s urbanisation is only 55%, compared to other developed countries’ 75%. And China’s growing prosperity is unevenly spread – a big disparity remained between the wealth of the east and comparative poverty of the west. But the disparity will even out. China, with 20% of the global population, is not dragging down the world’s economy. The Chinese economy is healthy and pessimism is misplaced.

Discussion followed. Guo was asked about future Chinese investment flows to Australia. He cast his response in general international terms, and thus avoided commenting on Australian public concern over leasing the Port of Darwin to Chinese interests, or the blocking of Chinese State Owned Enterprises’ (SOEs) bids for Kidman and Co and Transgrid. He merely re-affirmed that vigorous investment by Chinese SEOs in foreign resources and enterprises will continue, including to Australia, which remains one of China’s top investment targets. We are firmly within China’s silk road economic belt strategy.

Would pollution inhibit China’s coal consumption? Guo said there is little scope for a reduction in China’s utilisation of coal, but pollution is a grave concern and clean coal technology is being developed as rapidly as possible.

On reported labour unrest fomented by reform of SOEs, Guo said the focus was on improving their efficiency. Jobs will continue to be lost as much-needed structural reform continued. He repeated that 30 million new jobs had been created, but these are not enough. New skills are needed. Unemployment will grow, and this was uncomfortable, but the situation will improve.

What about China’s relations with the United States? Guo characterised this as the most important bilateral relationship in the world. As a political official, he was required to be positive. But he was not blindly so. The global environment in which the two countries existed is not positive. Xi and Obama have had good talks. There are joint military exercises, people to people exchanges and other contacts, and hundreds of civil linkages including more than 200 sister-city relationships. But the future bilateral relationship remains uncertain. The United States says it is not taking sides on conflicting claims to territory in the South China Sea. But what it does contradicts this claim. Washington is developing military alliances with Tokyo, Manila and Canberra to ‘contain’ China. But the South Sea islands have historically been part of China and will remain so. Freedom of navigation through and between them would not be a problem but for the interference of outside powers. Vietnam occupies 39 of them, Philippines eight, Malaysia five. Some countries have deployed heavy weapons on them, so China has had to do the same on the islands it occupies. China has the capacity to take other occupied islands back, but will not do so because this would foment war. Negotiations are the only way forward. China wants to work together with all concerned countries.

Would Hong Kong would continue to be able to develop its political individuality? Guo’s response was not particularly helpful. Peaceful economic growth in Hong Kong owes much to the support of the Motherland. Hong Kong offers nothing to China’s other provinces, which also have their own individual systems.

Guo was asked about the Shanghai Cooperation Council. He said it is important in maintaining stability against separatism and terrorism among its five, now six members. India and Pakistan will soon join China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan to make it eight. It is seen as an important regional platform for dialogue and more countries wanted to join. It does not target other countries.

He was asked to comment on the development of China’s independent internet network. Wouldn’t this encourage other countries to do the same, creating communications confusion and chaos around the globe? Guo recalled that in 2015 China held an internet conference. He could only repeat what Xi Jinping had then said: China wanted to promote international cooperation with the internet.

During the session’s wind-up Dick Woolcott offered his perspective on the South China Sea dispute. He thought China had the same rights as the US to protect its maritime approaches and that Australia should avoid provocative statements and actions at sea or in the air. When we talk about ‘a rules based global order’ we overlook that this order was framed mainly by the US after World War II. Now, rising countries such as China, India, Indonesia, Russia and Brazil want to be involved in reshaping an updated international order. The Australian government and the Australian Labor Party, Guo’s hosts, need to acknowledge this, or Australia will find itself left behind.

Discussions concluded with the suggestion that this round table created an opportunity for more of them between the AIIA and equivalent Chinese think tanks. Guo reacted positively to the suggestion.

Report prepared by Richard Broinowski

* Guo’s party comprised eight members of the International Department of the CPC Central Committee plus the Chinese Consul General . The Australians included retired diplomats Dick Woolcott AC, Geoff Miller AO, Cavan Hogue, Richard Broinowski, Jocelyn Chey AM, Peter Rowe, Ian Lincoln, businessman Peter Phillips, banker Tony Cripps (CEO HSBC), academic Bates Gill (US Studies Centre, USYD), and DFAT Sydney rep Brendan Bolton.