Hostage diplomacy is an apt name for the exquisite predicament in which Australia finds itself. An Australian citizen, Yang Hengjun, is held arbitrarily and then, in a shocking decision, sentenced to death. But with the diabolical twist that the sentence is suspended for two years dependent on good behaviour.

Whose good behaviour? Not Yang’s but ours—Australia’s. With Yang as a hostage, Australia is being blackmailed into submission and silence.

Beijing is masterful at planting self-doubt in the minds of rivals. If we speak out against Chinese bullying of neighbours in the South China Sea, will Yang be executed? If we name China as a perpetrator of cyberattacks, will Yang be executed?

If you are worried about what another party might do, they are in control. So, we need to make Beijing worry more about what we might do.

As a smaller nation that abides by rules and norms, the way to do that lies in collective action. Rather than try to walk this treacherous tightrope alone, Australia needs to work with liberal democracies to establish a coalition of nations that can respond to hostage diplomacy and impose a cost—from economic to reputational—on nations that abuse the rule of law this way.

And we are not starting from scratch. In 2021, the democratic world signed the Canada-led Declaration Against Arbitrary Detention in State-to-State Relations. Canada was driven by the experience of having two of its citizens, Michael Kovrig and Michael Spavor, detained arbitrarily because Ottawa agreed to consider an extradition request by the United States for Meng Wanzhou, chief financial officer to the telco giant, Huawei, whom US authorities accused of fraud.

Canada’s stoutness demonstrated that when a country stands up to bullying, it is standing up not just for itself but for everyone who believes in rules and norms.

The 2021 declaration was a good start, but it needs enforcement mechanisms to stop it being toothless. Australia should start with the Five Eyes group—our partnership with Britain, Canada, New Zealand and the United States—and the G7 nations, which adds France, Germany, Italy and Japan. It should also encourage participation from other countries that have citizens arbitrarily detained, such as Sweden with Hong Kong publisher Gui Minhai held since 2015. Countries that have experienced Moscow’s and Beijing’s bullying, like Lithuania and other European Union members, would also be powerful partners.

It must be clear to Beijing, and all totalitarian regimes such as Iran, that they will be held to account when they try to blackmail another country through hostage diplomacy. The only way to deter a malign actor is to convince it that its actions won’t work, and moreover there will be costs. A good recent example of such collective action was the use by Australia, Britain and the US of Magnitsky sanctions laws to target the Russian hacker behind the Medibank breach. Coordinated sanctions help tighten the net around a criminal’s assets.

No one should doubt this is a tough balancing act for Foreign Minister Penny Wong. She is rightly prioritising Yang’s welfare, and therefore the immediate step is to continue the most strenuous representations for Yang’s health and wellbeing.

That means medical care, books, contact with his family and a pathway to him being freed and returned to Australia. He should never have been jailed, and he certainly should not have been sentenced to death. His detention in reportedly harsh and even cruel conditions is a continuing abuse of a man in his late 50s with significant medical ailments who is likely not getting adequate care.

Wong responded on Monday with a clear denunciation of Yang’s sentence. She also trod carefully, saying this was a decision by the Chinese legal system. In truth, there’s no separation between the party-state and the courts in China, but Wong’s language may give the Chinese government space to step in and commute the death sentence.

Yet, this must not mean any kind of backward step by Australia on issues key to our values and long-term interests. If we let ourselves be tugged onto a slippery slope of submitting to Beijing’s coercive will, the coercion will continue. And unlike, say Iran, which has taken prisoners as bargaining chips in straight out government-to-government transactions, Beijing tends not to offer any kind of clear exchange but rather builds pressure for long-term submission to its core strategic objectives.

Hence, for Wong, short and long-term goals arise from the Yang case.

Long-term, it’s about having as many countries on our side as possible so that Beijing recognises that to execute an innocent citizen of another country is no longer just a bilateral issue with a smaller power, but a global issue. The risk-benefit calculation changes dramatically.

It’s time for Beijing to stop assuming it can worry Australia, and start worrying about what Australia might do. In this case, we can fight for Yang and our democratic sovereignty.

Last week’s Chinese embassy press conference was a further effort to corral Australia into compliance and compromise with Beijing’s views.

Remarks by Chinese ambassador Xiao Qian and other embassy officials confirm what many national security observers have been worried about for months.

If we pull our punches, if we subordinate our values and long-term interests to a short-term effort to orchestrate a trouble-free diplomatic relationship, we won’t actually buy stability. Rather we’ll find ourselves on a slope where nothing we do is good enough, and we will be eternally tempted to find unilateral compromises.

The embassy press conference demonstrated Beijing is looking for Australia to keep sliding ever closer to positions that will satisfy the Chinese Communist Party.

Questions about the sonar burst that our government says injured Australian naval personnel prompted an official to warn against making trouble on China’s doorstep.

Questions about the Taiwanese election elicited further demands that Australia stay silent when Taiwan freely elects a new leader.

These would be breaches of Australia’s core values. We have every right to operate in international waters as HMAS Toowoomba was doing in support of a United Nations mission late last year. And Australia should never shrink from championing the expression of democracy through free and fair elections, as we have through statements on Taiwan’s election that were actually fairly mild.

The day we fail to celebrate people’s participation in their own government—something mainland Chinese people don’t enjoy—is the day we might as well pack our bags and go home, geopolitically speaking. Xiao stated bluntly that Beijing could show no flexibility or compromise on Taiwan, meaning any shift to smooth the waters would have to come from Australia.

Stabilisation is the stated goal of the Australian government, but Beijing has a different definition of stability. Australia wants to co-operate where we can and disagree where we must, but Beijing doesn’t accept when we disagree. This was clear from Xiao’s opening remarks, which painted an ambitious picture of an ever deepening relationship that ignored differences and sought increased co-operation, including joint defence exercises.

How could we seriously have joint exercises with a military that is bullying a democratic nation in the Philippines through steady and calculated harassment of its vessels in the South China Sea? We couldn’t speak out with a straight face the next time the Chinese navy used water cannon on a Philippines ship. But that’s the idea.

Beijing is trying to achieve its strategic objectives through aggression, coercion and threats. This is its own doing, not Australia’s. Xiao’s naked threat to Australia ahead of the Taiwan poll, warning that support for Taiwanese independence—which is not Australia’s position—would push the Australian people ‘over the edge of an abyss’ should be intolerable.

For the sake of staking out consistent positions on core issues, Canberra should make clear that such remarks are unacceptable. While unlikely to change Beijing’s malign objectives, we would send a signal that stability, to us, doesn’t mean submission, but prioritising our own security, transparently and consistently.

Sonar attacks, threatening Australians with the abyss, unfair trade sanctions—they all demand condemnation because they are breaches of rules and norms that are essential to our region’s future. Inconsistent responses only contribute to the degradation of the rules that have helped keep us secure since 1945.

Xiao also continued the recent Chinese government effort to drive divisions between Australia and Japan, hinting preposterously that the Japanese Armed Forces might have been responsible for the sonar attack.

This points to another Beijing ambition—ham fisted though its execution might seem. It would prefer that regional partnerships are weakened so that it can manage others bilaterally, giving it a sizeable advantage.

But Australia needs friends, partners with whom we co-ordinate and collaborate. We can’t have regional stability unless we work together to balance and deter China, impose costs for its transgressions and gradually persuade it that bullying and coercion will be ineffectual and detrimental to its own interests. Stabilisation can’t become code for tolerating Beijing’s destabilising activity. The UK made this mistake in the 1930s, with disarmament and appeasement policies that tolerated German rearmament and illegal land grabs.

As we start 2024 with increasingly confident authoritarian regimes, wars in Europe and the Middle East and increased tension in the Indo-Pacific, democracies like Australia are faced with two roads diverging. The pathway ahead is not a confected improvement to the bilateral relationship with Beijing that rests on our biting our tongue and entering into arrangements that only leave us more vulnerable, such as returning to an excessive and risky trade dependence.

We are no longer in a period of stability to be maintained but an era of instability that means a business-as-usual approach will be insufficient. Our approach needs extra effort ranging from greater defence investment to diplomacy that manages tensions rather than ignoring them—because whatever the rhetorical niceties, our long-term values shouldn’t be sacrificed for short-term interests. Both roads cannot be travelled.

 

As I’ve previously argued on this forum, conceptions of the virtues of a historically China-centric regional order are deeply ingrained in Chinese society, including among a new generation taught from infancy to resist external threats to China’s great rejuvenation.

As we enter something of a new and perhaps less consistently hostile phase in our bilateral relationship with China, it’s worth taking stock of how we think ideological considerations practically impact China’s international relationships, including China’s views and actions with respect to Australia.

We should have lots of questions about this, even if we know the answers are going to be hard to find.

While it’s healthy (and a practical necessity in busy times) for policy practitioners in Canberra to avoid hovering too long over the black box of Chinese decision-making visa-vis Australia, those of in the peanut gallery have more leeway to do so and should have a guess at its contents from time to time.

The extent to which China’s statecraft is shaped by Beijing’s belief in the superiority of China’s political model is one question we could probably tackle more earnestly.

Does this belief meaningfully shape China’s day-to-day assessments of its external environment? Or is it for the most part an artificial construct designed to be occasionally exaggerated by China’s leaders for domestic-political purposes, meaning we can safely discount it as a serious vector in our relations with China?

It has always seemed to me that China’s belief that its political model will eventually prevail over all others, certainly the liberal democratic alternative, is a real and enduring source of Beijing’s self-confidence in China as an international actor.

China’s leaders believe it and need to because it helps them deal with everything going on around them.

For this group of Chinese leaders, all serious questions about power and cooperation should, and often need to be framed in terms of an existential struggle. It is a struggle not just against external powers seeking to prevent China from assuming its historically dominant position in the region, but also a struggle against those standing in the way of China exporting its political model to the region and beyond.

Because we don’t have a long history of conflict with China, as many other regional actors do, it is the latter consideration that Beijing would care about most with respect to Australia. Being able to easily influence a middle-sized liberal democratic country with an open society and ideological alignment with its major rival proves to China that’s its model is indeed the best.

And not being able to impose such influence undermines that confidence.

If this is something akin to China’s current mindset with respect to Australia, which I suspect it is, it follows that China’s leaders’ views of us are more heavily influenced by ideological factors than we had previously thought.

Some of our analytical frameworks and assumptions with respect to China that overstate tactical and material motivations may need to be requestioned.

One of those is the view that China’s leaders don’t care about what we say or do because we are a benign middle power with no real means to shape the current regional security environment. If only we had more power to project we could get more attention from Beijing, so the logic goes.

Until then we are hemmed into the economic and trade lane.

This view is misguided because it presupposes that hard power is the only way to threaten China’s interests and demonstrate our resolve.

This is clearly not the case.

If you think about it, and particularly in the terms set out above, what could be more threatening to China at this stage of its development than a middle power with limited power projection capabilities withstanding a prolonged campaign of economic coercion from the dominant power in the region, and emerging pretty much unscathed?

This is exactly what we did.

No acquisition of military hardware could have sent a clearer message to China than that about Australian resolve, and that is something to hang our hat on.

More recently, sharply pointed warnings from China’s Ambassador to Australia about the level of acceptable Australian engagement with Taiwan’s newly elected president provide further evidence that ideological considerations influence Beijing’s perceptions of us in serious ways.

Australia is fundamentally adaptable and resilient. We’ve already demonstrated that we can more appropriately balance economic and national security considerations vis-a-vis China, and we are more than capable of adding an ideological layer to our assessments of China’s international behaviour and whatever is going on inside China itself.

We need to though, because being able to assess China from multiple angles at once will give us an important additional tool to help us deal with whatever challenges emerge in an increasingly contested Asia.

And, let’s face it, we’re probably going to need the whole kit.

The hack into the systems of ports operator DP World at the weekend exposes Australia’s high dependence on containerised imports for manufactured goods.

Walk into any Bunnings, Harvey Norman, Officeworks, Myers or K-Mart store, and nearly everything you see has been imported in a container.

Australia’s own manufacturing sector, which still employs just under a million people and accounts for about 5.5% of the economy, similarly depends on imports packed into containers for a large share of its inputs, from the nuts and bolts to the pumps, motors and fabricated-metal products.

The Australian Financial Review cited estimates that the forced shutdown of the system managing DP World’s interface with trucking carriers resulted in about 30,000 containers being stranded, with trucks unable to get containers into its parks or out.

While the container shipping industry is crucial to Australia, we are a relatively unimportant to it, representing a small share of the global trade. Almost half of the containers that arrive in Australia full are returned empty.

The advent of the shipping container was one of the driving forces of globalisation, vastly increasing the ease of loading and unloading ships and integrating maritime and land transport. In 1990, about 200 million tonnes of goods were carried globally by container. By 2021, that had risen to just under 2 billion tonnes.

China is the behemoth of container shipping. Of the world’s top 100 container ports, according to a list compiled by Lloyd’s List in London, 24 are Chinese. Combined, they handle the equivalent of 260 million 20-foot containers a year.

Ports in the North Asian manufacturing centres of Japan, South Korea, Taiwan and Hong Kong handle 80 million containers a year, while the Southeast Asian ports are responsible for a further 100 million.

Although Australia is highly dependent on containerised shipping, it is ports are small by global standards. In 2022, Melbourne ranked 62nd on the global list, handling 3.3 million containers, and Sydney, ranking 76th, handled 2.8 million. According to the UN Conference on Trade and Development (UNCTAD), Australia accounts for 1.1% of global container throughput.

The shipping navigation website VesselFinder shows that, at present, there are about 70 container ships either heading for Australia or berthed in one of our container ports. Most are coming from North Asia—China, South Korea, Japan, Taiwan and Hong Kong; the other main originating ports are in Singapore and Malaysia.

Container ships do regular rotations through the Australian ports. In 2020–21, there were 311 container ships doing the Australian run, making a total of 1,484 visits to country with 3,705 port calls, according to data compiled by the Bureau of Infrastructure and Transport Research Economics. The average ship carries about 4,600 containers (based on the standard 20-foot container measure).

The port operators provide the link between the shipping and land transport. Ships book a slot at one of their wharves, the containers are moved to parks, and trucking carriers book to collect their containers once they have been cleared by customs. It is a technology-intensive business, with systems to manage the physical booking of wharf and crane slots, container park storage and trucks, as well as the documentation of container contents.

DP World and Patrick Terminals both operate container terminals in Brisbane, Sydney, Melbourne and Fremantle. Hutchison Ports has terminals in Brisbane and Sydney, Victoria International Container Terminal has one in Melbourne and Flinders Adelaide has the monopoly in Adelaide. The five capital city container ports handle about 92% of container throughput, with small volumes at Darwin, Townsville and Bell Bay.

An insight into the extent of Australia’s reliance on shipped manufactured imports is given by the database of port-to-port trade compiled by the Australian Border Force. Just in the month of July 2023, 113,000 consignments were imported to Australia by sea at a cost of $27.8 billion.

Of those, 31,100 came from China, with a total cost (including freight) of $7.3 billion. There were 4,720 consignments from Japan, worth $2.5 billion, and 2,180 from South Korea, worth $1.4 billion. They cover a vast variety of industrial inputs and consumer goods that find their way into every nook and cranny of the economy.

The Productivity Commission’s recent inquiry into Australia’s maritime logistics system noted that cargo flows involved almost 3,000 uniquely identified commodities. More than 40% of them involve the trade each year of less than 1,000 tonnes, equivalent to about 70 container loads.

While Australia’s imports mainly arrive in containers, bulk carriers are used to ship most of our exports, whether that’s resources like iron ore or agricultural commodities like barley and wheat. The same trade database shows 27,800 export consignments in July, of which 10,000 represented mineral or agricultural commodities most likely to be shipped in bulk. Together they represented almost 90% of the value of exports.

Some export agricultural commodities, like wool and cotton, are packed in containers, while meat and dairy products are shipped in refrigerated containers. Resource commodities like aluminium ingot can also shipped by container. However, Australia’s containerised manufactured goods are small relative to imports.

Australia and New Zealand are a special run for the shipping lines—they’re not on the way to anywhere. A central feature of globalisation is the manufacture of goods across several nations, but Australia has little participation in these global supply lines. Parts made in Australia for the F-35 fighters and for Boeing are an exception.

UNCTAD measures how connected a country’s container shipping is to other nations and compiles an index based on the number of ship calls, their carrying capacity, the number of liner companies servicing the country and the number of other countries connected through direct liner shipping services.

China tops the ranking, followed by South Korea, Singapore, Malaysia and the United States. Australia’s score has been improving, but it ranks a lowly 57th, just ahead of Argentina and the Congo, but below Togo, Chile and the Ivory Coast.

With all that’s going on in the world, you could be forgiven for missing that the 10th anniversary forum of Xi Jinping’s flagship foreign policy and trade program, the Belt and Road Initiative (BRI), was held in Beijing in the middle of last week. Some saw the West’s involvement in conflicts in the Middle East and Ukraine as creating a strategic opening for Chinese diplomacy at the forum. But that’s a misreading of China’s public diplomacy goals and a far too rosy view of how last week’s event actually went.

China wants the world to value the BRI and to view China as a legitimate leader of nations in global development. As an initiative that Xi himself proposed in 2013, its success is directly linked to his power as a leader.

Beijing saw this forum as a crucial chance to advocate for its ‘global community of shared future’ proposal. In the run-up, it released a white paper outlining how this proposal could lead to a new type of international relations that rejects the Western-led multilateral order and its emphasis on ‘universal values’. It also published a white paper on the BRI, positioning it as a core pillar of the ‘global community of shared future’ proposal. Xi’s keynote address at the conference focused on lauding the achievements of the first 10 years of the BRI and how following China’s development path through the ‘global community of shared future’ was the best way towards world peace and prosperity.

This message fell on deaf ears. Chinese state media reported that representatives from more than 140 countries attended the event, but, in fact, only 21 countries sent representatives at the head-of-state level. That’s the lowest ever attendance of heads of state at a BRI forum. Notably, the leaders of Brazil, India and South Africa—which, along with Russia and China, comprise BRICS—were absent.

In a telling contrast, Fiji’s Prime Minister Sitiveni Rabuka chose to make a state visit to Australia last week rather than attend the forum, sending his deputy to China instead. No bilateral BRI projects between China and Fiji were announced at the forum, whereas Australia announced a new pathway to permanent residency for citizens of the Pacific island countries and Timor-Leste. This is something China would never be able to offer the Pacific and addresses a genuine policy want from countries in the region.

China also made a public diplomacy blunder in giving Russian President Vladmir Putin top billing at the forum. Putin appeared next to Xi in the leader’s photo and was given the most important position after Xi as a keynote speaker. While we should worry about the strengthening Sino-Russian ‘no limits’ partnership, Russia isn’t even formally part of the BRI. Rather than emphasising strength and unity, giving Putin such a prominent role instead undercut China’s claims to multilateralism and anti-hegemony. That’s not to mention the image problems China has from its support of another rogue actor, the Taliban, who were invited to attend the forum and have been encouraged to join the BRI.

Many countries may have sent representatives to the forum as a way to maintain good relations with China, but not to further deepen their engagement with the BRI. With many Chinese development banks and financing institutions in attendance, countries with large BRI projects may have also used it as an opportunity to negotiate their existing financial agreements with China, rather than sign on to new deals. Indeed, Sri Lanka, which owes Chinese lenders more than US$7 billion, had its president advocating that a lack of debt relief for low-income countries posed an existential risk to the BRI.

In analysing where the BRI is going, we should look at what China does, not what it says. Major BRI projects are typically announced in an outcomes document from the forum, and an analysis of this year’s outcomes show a gap between what China says its new vision for the BRI is and what it is actually funding. Most projects in the list are not new deals and had already been announced prior to the forum. For example, the document announced that China would build the Solomon Islands’ national broadband network, although the deal was already signed more than a year ago. Similarly, China said it would construct the Kaduna–Kano railway in Nigeria, but ground was already broken on the project in mid-2021.

At the forum, Xi announced that ‘green development’ in the BRI would be a major step in the initiative, and early analysis has noted that the BRI will now be ‘smaller and greener’. While several renewable energy projects were announced, analysis of the outcomes document shows that the dominant type of project in the BRI still appears to be infrastructure, such as railways, ports, airports and sports stadiums. And as much as Xi’s speeches at the conference repeatedly emphasised his new focus on ‘high-quality’ Belt and Road cooperation, China will still have to manage a hefty legacy portfolio of large and not-so-high-quality projects like the Hambantota Port in Sri Lanka and the China–Pakistan Economic Corridor.

With close to US$1 trillion in funding granted over the years, the BRI remains a formidable tool of economic statecraft for China to pursue its foreign policy and security ambitions. But the poor attendance of world leaders at last week’s forum and the lack of international attention paid to it would be far from what Xi feels his initiative deserves.