Last Updated:2016-05-13
By Geoff Raby
In the blur of the Prime Minister's recent lightning-speed visit to Beijing, with its rapid-fire photo opportunities, signing of multiple memoranda of understanding, media releases and stiff crafted speeches, a most significant outcome from the visit was passed over unnoticed.
The official Xinhua report on the Malcolm Turnbull/Xi Jinping meeting – the most important event of all in the Prime Minister's China trip – highlighted Xi's call for the "alignment of China's Belt and Road initiative with Australia's northern development plan".
Despite Australia's recent shrill debate over the sale of the Port of Darwin to private investors from China, Xi still went ahead with this step forward in the Australia/China bilateral relationship.
For the first time, Australia has been included officially in one of the highest profile policy priorities of Xi's presidency. This initiative was listed ahead of the Prime Minister's own chosen focus for his visit which was around innovation, science and education.
In linking China's One Belt One Road (OBOR) policies to the Australian government's Northern Development Strategy, Xi has given his imprimatur to China's investing in Northern Australia's infrastructure.
Since becoming President, Xi has made OBOR central to his vision of China's greater standing and influence in the world and a foundation of his new, muscular, assertive foreign policy stance. Xi has cast aside Deng Xiaoping's guiding philosophy for foreign policy, "hide your brightness, bide your time". From the late 1970s, this had meant not allowing foreign policy adventures to distract from economic development and in practice came to mean that foreign policy should serve the economy.
Despite signs of obvious dissatisfaction among China's political elites with Xi because of the anti-corruption campaign and his authoritarian style of governing, most agree that China's time has come and they welcome Xi's more assertive foreign policy stance.
This goes well beyond the disputes in the South China Sea, which seem to be the sole and disproportionate focus of Australia's commentators, to playing a more active role in global issues such as the Iranian nuclear pact, anti-piracy deployment of the People's Liberation Army off the coast of Somalia, UN peace keeping activities in Africa, co-operating with the US on multilateral climate change negotiations, and the establishment of the BRICS Development Bank.
Closely related to OBOR has been the creation of the Asian Infrastructure Investment Bank as the world's newest multilateral institution. This is part of China's attempt to reshape the post-Second World War Bretton Woods' system that, as Beijing sees it, has been dominated by US interests.
OBOR, however, goes beyond recycling China's mountain of foreign exchange reserves and infrastructure-building excess capacity now that its own domestic construction has matured. It also extends China's geopolitical influence across central Asia and the Middle East to the shores of the Mediterranean, to Africa, down through south and west Asia and across southeast Asia to the Pacific.
OBOR is also of great strategic significance for Beijing as it is also intended to reduce China's major strategic vulnerability caused by so much of its seaborne trade, especially crude oil, having to go through the Strait of Malacca. Over a year ago, a Chinese-funded and built dual LNG and crude oil pipeline running across Myanmar from the Indian Ocean to Kunming, the capital of China's south-western Yunnan Province, began operating. So for the first time, China has been able to import crude oil from the Middle East without having to go through the strait.
In a recent visit to Xinjiang in China's far west, officials enthusiastically shared their plans to build a railway from Kashgar to the Pakistani port of Gwadar. While the treacherous mountain topography of northern Pakistan will be a major challenge for this project, it is seen as opening the whole of central Asia to the Indian Ocean. Kashgar, a former key oasis city on the old Silk Road, located China's borders with Kyrgyzstan, Tajikistan, Afghanistan and Pakistan, and is to be the hub of this new central Asia economic region.
Australia's exclusion from the original OBOR maps was surprising in view of the proximity of northern Australia and the significance to both countries of the resources trade from Western Australia and Queensland. Inclusion would have given greater legitimacy and priority to Australian investment proposals within the Chinese system.
Xi's linking now of OBOR to northern Australia is likely to see greater interest from potential Chinese investors in northern Australia's infrastructure. If a Chinese entity can wrap OBOR around a project, it will improve its chances of being approved for funding.
Xi's inclusion of northern Australia in OBOR can, in part, be attributed to the work of the Australia-China Senior Business Leaders' Forum. Recent meetings in China have included participants from Xi's own Central Leading Group on Economics and Finance.
The forum has actively sought to encourage Chinese participation in major water conservation projects in Northern Australia. As communications minister, Malcolm Turnbull attended part of its 2015 meeting in Sydney.
Xi himself is personally familiar with northern Australia having travelled there on his many official visits to Australia. In June 2010, during the week that former prime minister Kevin Rudd was deposed by his colleagues, then vice-President Xi, at his own request, toured Aboriginal cave painting sites in Kakadu National Park.
The long drive from Darwin and back gave Xi ample opportunity to see the countryside and reflect on its potential. We do not know if he was then thinking about OBOR, but it has now been put on the agenda for the bilateral relationship. It is now up to the Australian side to develop attractive projects to capitalise on this opportunity from the Prime Minister's visit.
Geoff Raby is Chairman and CEO of Geoff Raby & Associates and a former Australian Ambassador to China.
This article first appeared in the Australian Financial Review:
