China’s deputy ambassador says Australia’s call for an independent inquiry into the origins of Covid-19 was like a knife in the feelings of the Chinese people.

In a speech to the National Press Club in Canberra, Wang Xining made clear the depth of frustration in Beijing that Australia had pushed for an inquiry into the virus, linking it to the parlous state of bilateral relations and the trade spat between the two countries.

Asked about the accusations of economic coercion levelled at China after Ambassador Cheng Jingye said that Chinese consumers may lose their taste for Australian wine and beef, among other things, Wang maintained the position that anti-dumping inquiries were purely technical.

Unprompted, Wang said Australia’s push for an inquiry was ‘approximately identical to Julius Caesar in his final day when he saw Brutus approaching him. “Et tu, Brute?”’

China, Wang said, was ‘singled out’ in late April by Australia at a time when the US was trying to put pressure on China to hide the US’s own failings—indicating there is at least a suspicion in Beijing that Australia and the US acted in concert.

‘We believe this proposal was targeted against China alone, because during that time Australian ministers claimed that the virus originated from Wuhan, from China. And they did not pinpoint any other places as a possible origin, possible source …

‘The Australian government never consulted the Chinese government in whatever way before the proposal came out. We don’t think it conforms to the spirit of comprehensive strategic partnership and it lacks the least courtesy and diplomacy …

‘More importantly, it hurts the feelings of the Chinese people … All of a sudden, they heard this shocking news of a proposal coming from Australia, which is supposed to be a good friend of China.’

Australia, however, was not under any obligation to consult China on the proposed investigation, which came about in cabinet discussions and was announced by Foreign Minister Marise Payne on 19 April.

Wang was emphatic that the inquiry that was ultimately agreed to by World Health Organization members bears no resemblance to the investigation proposed by Australia because it ‘is not targeted exclusively against any country, not guided towards the origin of the virus only’.

And while the virus may have first been detected in Wuhan, the deputy ambassador said ‘patient zero is not necessarily found among the first cluster of coronavirus cases’.

China has been working on nine vaccine candidates, Wang said. But there have been reports that it will seek to tie access to any vaccine it develops for the disease to reciprocal action, such as diplomatic recognition of its claims in the South China Sea. After noting there had already been cases of ‘emergency’ use of vaccine candidates in China, Wang said that while his government had committed to making any successful vaccine available globally, ‘we need to negotiate and have consultations with other countries to see how this public good will be applied to people around the world’.

In his prepared remarks, Wang was keen to emphasise the potential for continued expansion in Australia–China trade, which has grown from $10 billion to $235 billion a year in the past two decades.

He outlined the huge growth in bilateral investment and in the tourism and higher education markets, two sectors that have been under huge pressure from the effects of the Covid-19 pandemic—but that were also put in the spotlight by Wang’s boss in Canberra when he said Chinese tourists and students might have ‘second thoughts’ about coming to Australia.

A vow that China would open up further to foreign investment also came with a warning that hinted at Beijing’s ongoing displeasure with Australia’s decision to ban Huawei from its 5G network and again indicated that Beijing thinks there are external influences driving Australian policy.

‘I also hope Australia will remain high on the list [of country rankings for business openness], not to be dragged down for pushing foreign business or investment away on account of ill-founded and in many cases imported assertions of security breach, IP infringement and forced technology transfer.’

Wang denied that Australian ministers have been given the cold shoulder when trying to resolve the trade issues on barley, beef and wine that have come up since Canberra’s call for an investigation into the origins of Covid-19.

While Trade Minister Simon Birmingham has said that he has made multiple requests to speak with his Chinese counterpart, as recently as last week, Wang said that no such request had been received.

On the broader trends that have also caused tension in the bilateral relationship, Wang said several times that China does not interfere in the affairs of other countries, distinguishing between interference and influence.

He added that maintaining a good relationship means showing ‘respect’ for a country’s sovereignty, territorial integrity and legal systems—not-so-subtle nods to Australia’s recent rejection of China’s claims in the South China Sea, criticism of Beijing’s imposition of its national security law in Hong Kong, and suspension (along with a number of other countries) of the Australia–Hong Kong extradition treaty.

Wang may not have directly answered questions about exactly how Australia can make its way out of the diplomatic deep-freeze with China, but in describing what he called shadows over the bilateral relationship, he left less than a shadow of doubt as to why it’s ended up there.

On top of the compounding decisions that have irked Beijing on foreign interference legislation, 5G networks, Hong Kong, the US alliance and more, Australia’s push for an independent inquiry to establish the origin of the worst pandemic in a century is what’s riled China the most.

On 5 June, China’s National Ministry of Culture and Tourism issued a travel alert to visitors to Australia warning of ‘a significant increase’ in racial abuse and violence. Four days later, the Ministry of Education issued a similar warning to Chinese students planning to study in Australia. There’s been evidence of racial abuse in Australia during the pandemic, but hardly on a scale warranting international travel warnings. As Trade Minister Simon Birmingham observed, the travel advisory ‘does not stand up to scrutiny’.

Does it matter? Similar warnings in 2018 had little effect on enrolments of Chinese students, and China’s local envoys have strongly denied connections between warnings on tourism and education and import restrictions on beef and barley.

Yet there’s a common thread running through recent threats and warnings that sets them apart from earlier examples, and it has nothing to do with racism or tainted beef or underpriced barley. What draws them together is Beijing’s fury over Canberra’s call for an independent review of the origins and spread of Covid-19. That anger went far beyond any reasonable response because the mere suggestion of an independent inquiry struck at President Xi Jinping’s credibility. As far as China was concerned, this was another Mack Horton moment: a naive second-ranker appeared to be calling out the winner as a liar and a cheat.

Beijing refused to concede that the call for an inquiry was in any sense authentic. Canberra was acting not on its own initiative, but on behalf of Washington, ‘dancing to the tune of a certain country’ in the Foreign Ministry’s cynical turn of phrase. Not surprisingly, the call for an independent review drew a warning from Ambassador Cheng Jingye that education and tourism and trade in general would suffer if Australia persisted. And so they will.

A big shift is underway. Public reprimands from Beijing are hardly new, but before this incident they tended to be spontaneous and inconsistent. In December 2013, Foreign Minister Wang Yi rebuked Foreign Minister Julie Bishop to her face over the South China Sea dispute. It was an awkward moment, but it ended there. Further criticism and name-calling followed the Australian government’s decisions to limit foreign political interference in 2017 and to ban Huawei from tendering for major telecommunication contracts in 2018. On each initiative, Australia acted well ahead of the US and other countries, prompting one of China’s top Australia watchers to accuse Canberra in September 2019 of playing a ‘pioneering role’ in a global anti-China campaign. But there was little sign of coordination among the accusations.

In the wake of the call for an inquiry, however, a decision has been taken at the highest levels in Beijing to consolidate earlier random and inconsistent critiques of Australia into a common communications strategy in support of a unified approach that involves leveraging trade and investment to punish Australia for challenging Xi’s version of events and his vision for the region.

This approach is wrapped in a communications strategy branding Australia an irredeemably racist country in thrall to US hegemony—incapable of thinking independently or pioneering China policy for the world, as critics had indicated earlier, but instead tagging lamely along in the superpower’s lumbering tread. It is being implemented methodically across many arms of government, including five ministerial-level agencies that have taken action so far: Trade, Education, Tourism, Foreign Affairs, and Propaganda (the home of the People’s Daily).

Following Canberra’s call for an inquiry, Beijing notified the world of Australia’s pariah status through a strongly worded editorial in the state-run paper on 28 April under the byline Zhong Sheng, or ‘Voice of the Centre’. This byline is reserved for editorials signalling central party views on important international relations issues. It’s fair to say it is the voice of Xi, one or two steps removed. The target of the rebuke was Sydney’s Daily Telegraph, which the editorial accused of ‘evilly associating’ the pandemic with China by defacing the country’s national emblem with a graphic image of a viral crown.

Why such a fuss over the Tele? Australian media commentary on China and the Chinese Communist Party has been a source of low-grade tension between Australia and China, dating back to the early 1970s, and the Telegraph is hardly a model of civilised behaviour at the best of times. Still, someone near the top of the pyramid in Beijing decided to make an example of the rambunctious Sydney tabloid to signal an important message about Australia to every official, every business and every family in China. The charge that the People’s Daily levelled against Australia was that by associating an infectious disease with a national emblem Australians had engaged in racist behaviour.

Defacing a national symbol may be juvenile and offensive but it’s not generally regarded as racist. China’s communist party-state is not a race. For Beijing’s purpose, the distinction is immaterial as the CCP regards itself as the people of China and interprets mockery of the party-state as an act of racism. So a Foreign Ministry official explained, when justifying the issue of a travel warning on grounds of racism, that ‘some Australian politicians and media called the coronavirus a “Chinese virus” and maliciously tampered with the Chinese national flag and national emblem’. To drive the point home, central party authorities selected a local tabloid with little claim to prudence to signal to everyone in China that Australia is racist.

The American connection wasn’t left out either. China’s own Daily Telegraph, the Global Times, answered Birmingham’s response to the travel warning with a claim that Australian politicians are not to be trusted because they are ‘too easily swayed by US political attitude and too eager to win US favors’. In light of this alleged American connivance, the paper went on to point out that the travel warnings were just the ‘tip of the iceberg’ of punishments in store if Australia failed to mend its ways.

Evidence that Canberra is easily swayed by American attitudes is as thin as the claim that poking fun at flags and emblems is racist. Recent polls show that Australian misgivings about US President Donald Trump run even deeper than their concerns about Xi—although Australians continue to favour closer ties with the US than with China—and Canberra has consistently distanced itself from Washington during Trump’s term on issues ranging from multilateral trade to climate change and the role of international institutions such as the World Trade Organization and World Health Organization.

On matters related to China, Australian governments have never endorsed the US-led trade war, and Australia’s national intelligence agencies and Prime Minister Scott Morrison conspicuously declined to endorse claims by Trump and Secretary of State Mike Pompeo tracing the spread of the coronavirus to an experimental laboratory in Wuhan.

Australia’s record of independent foreign policy thinking makes little impression in China because, if I read Zhong Sheng correctly, a decision has been taken at the highest levels of the party to brand Australia a racist country that takes its orders from the US. This is a game-changing decision that doesn’t require evidence to support it and that can happily contradict earlier claims that Australia is in fact a pioneering leader on China issues globally.

The Zhong Sheng editorial signalled a high-level central party decision concerning Australia to every government ministry and to officials running China’s state-owned enterprises at home and abroad, along with tourism and education agents in China, that people around Xi have adopted a hostile approach towards Australia. All need to fall into line.

While Xi is running things, we can expect to hear much more about Australian racism, about Australian lapdogs dancing to American tunes, and about steering clear of Australia. The latest travel and education warnings over racism don’t stand up to scrutiny because they don’t have to. Our problem is not racism, it is Xi. It’s worth remembering that Mack Horton and his family had to put up with many years of vitriol and bullying before he was eventually vindicated.

The Covid-19 crisis has exposed serious international fault lines and inflamed tensions between China and the United States. It has also revealed the vulnerability of Australia and other middle powers to the fragility of global supply chains.

In Australia, Covid-19 will have a profound impact on our relationship with China—now at its lowest point in years. The pandemic is forcing us to confront the reality that Australia must build sovereign capability across a range of sectors and industries.

It’s impossible to say what the world will look like after the pandemic passes. Indeed, we may have to learn to live with Covid-19 for years. But what’s certain is that things won’t be ‘snapping back’ to how they were.

That’s not only because the pandemic has created new circumstances to adapt to, but because it has amplified and accelerated a number of trends that were already underway before the disease first emerged in Wuhan late last year.

These trends include a swing towards protectionism and away from the view that globalisation is necessarily a positive thing, the stepping away from global leadership roles by the US under Donald Trump’s presidency and an increasingly assertive and sometimes aggressive China under Xi Jinping.

All of these things are related. While they haven’t sped up at the same rate, they have all intensified.

Tensions between the US and China have been heightened by perceptions in Washington that Beijing covered up details of, or even engineered, the virus that has now hit the US worse than any other country.

China, for its part, appears to see the US response as that of a superpower seeking to blame someone else for its own deficiencies, something that highlights Beijing’s perceptions of Western democracies as weak.

This narrative, and the apparently successful attempt to stop Covid-19 running rampant across China after the initial Wuhan outbreak, also fits what the Chinese Communist Party tells its citizens—that it is the best option for ensuring their security and economic wellbeing.

China’s recent actions in the South and East China Seas, as well as the expansion of its military base in Djibouti, show Xi has not shelved his geopolitical ambitions either.

That, combined with the Trump administration’s increasingly hard line on Beijing—which has been attributed at least in part to the president wanting to paint Democrat Joe Biden as ‘soft’ on China ahead of the election in November—means the prospect of a conflagration cannot be dismissed.

So what does this mean for Australia? In just the past few weeks we’ve seen a worsening of already frosty relations with China to what the Global Times described as the ‘worst moment in bilateral ties in the last two decades’.

The state media outlet neatly summed up why relations have sunk to such a level: ‘This latest spat started with Australia’s proposal for an independent global inquiry on the origins and spread of COVID-19. This week, China suspended imports from major Australian beef suppliers.’

The suspension came after warnings of a ‘consumer boycott’ by China’s ambassador to Australia and at the same time as threats of a tariff of 80% on Australian barley exports to China.

Beijing maintains that these measures aren’t connected to Australia’s push for an investigation into the origins of the coronavirus. China’s opposition to calls for an inquiry (though this stance has softened), refusal to allow World Health Organization investigators into the country and reported demands for praise of its international response to the virus have helped lay bare the nature of the CCP and its increasingly coercive tactics.

A European Union motion to be put to the World Health Assembly this week was originally only set to call for a ‘plan for an evaluation’ of the response to Covid-19 and will instead now propose an independent, international review of the sort Australia has been calling for. So far, 116 countries have signed up.

International cooperation of this sort is exactly what Australia and other middle powers should strive for in the face of what are likely to be continued—and escalating—attempts from China to use its economic clout to silence criticism.

Some business leaders and politicians will continue to call for governments to ‘fix’ relations with China, an approach that ASPI’s Peter Jennings has described as ‘just shut up and take [the] money’.

But silence, and the tacit acquiescence that comes with it, has economic costs as well as moral and national security ones, and those costs only go up whenever we fail to stand up for our interests.

Rolling over on threats now will only result in increased trade dependence in future, and hand more sway to Beijing next time it has an issue with policies adopted in Australia’s national interest.

That’s why it’s important, as Trade Minister Simon Birmingham said yesterday, for businesses to consider their risk profiles and for the government to encourage the diversification of Australian trade and ensure the resilience of supply chains.

We won’t stop trading with China in a post-pandemic world. It will probably still help drive Australia’s and the world’s economic recovery. Reducing our dependence, though, means that there will be less risk to our economy in future disputes.

This crisis has helped create a more dangerous and fractious world, but it has also given us the chance to remake our economy and relations with other countries. Australia should take that opportunity and run with it.

As a participant in and observer of Australia’s China debate, I’m sometimes taken aback at the strategic fatalism on display. For a country so optimistic in other respects, Australia’s strategic community harbours a strangely defeatist streak. It’s an interesting contrast.

I find it easier to understand pragmatism, strategic fatalism’s smiley extrovert relative, in the Australian context. Pragmatism is an appealing foreign policy concept for Australia, because it promises unfettered agency to a middling liberal democracy within an increasingly illiberal international environment.

That’s why politicians instinctively reach for it. But pragmatism lacks a moral compass. Without a corresponding set of values, it risks drawing us into unprincipled ‘transactionalism’. The 2017 foreign policy white paper says that ‘Australia is pragmatic’, but avers a principled course for Canberra as a ‘determined advocate of liberal institutions, universal values and human rights’.

If pragmatism is raised to a guiding principle, it poses particular hazards in the China relationship, because the Chinese Communist Party aims to condition other countries into a posture of subordination to its fundamental interests, from the South China Sea to Xinjiang and Hong Kong.

Australia’s roustabout China policy debate is intense and polarising, but largely exogenously framed. Beyond former prime minister Tony Abbott’s celebrated ‘fear and greed’ aphorism, not a lot of thought seems to be directed at why some Australians—and here I’m excluding those solely in it for the money—appear willing to resign themselves to falling within China’s orbit.

Theirs may be the more durable wisdom for all I know. But it leads me to wonder whether a predisposition towards fatalism and pragmatism may be cultural in origin—a trait shaped by Australia’s geographic isolation and colonial past.

I admit to being out of my depth here, and perhaps confused. For Australia has also recently provided like-minded countries with a textbook example of how to balance an economic embrace of authoritarian China, while laying down basic safeguards to protect critical national infrastructure and counter political interference. The foreign interference legislation introduced in 2018 has yet to be tested in court, but the Australian government has nonetheless ‘pushed back’ pluckily in the face of challenges to its sovereignty.

Still, the vectors of Australia’s economic opportunity have now waxed towards China for a full generation. That has had an inevitable gravitational effect. An established China lobby has taken root, tied to the ‘pragmatic’ notion that Australia’s relationship with China demands special succour, regardless of political differences, because our future prosperity is hostage to it.

I would argue that the business of buying influence and selling access becomes corrupting in its own right when the CCP is ultimately at the end of every transaction in the People’s Republic. But that problem is hardly unique to Australia.

It would be grossly unfair to impute greed as the base motivation for all those who wish to nurture a closer relationship with China. Many no doubt feel they are acting in Australia’s long-term interests, because they judge that the economic and strategic winds are blowing decisively in Beijing’s direction. By this logic, the most pragmatic course for Australia is to engineer as soft a landing as possible, while steering clear of a US–China dust-up. For some on the left, reflex anti-Americanism is the subconscious handmaiden of a pro-China orientation. That’s a different story, and not peculiar to Australia either.

I suspect that the drivers behind fatalism and pragmatism go beyond Abbott’s binary reduction, tapping into deeper, historical currents running through the national psyche that also inform Australia’s ‘strategic personality’. It may be a stretch to draw a colonial connection, and as a wandering Brit who has pitched his tent here, I probably shouldn’t go there.

But my gut feeling is that there are enduring habits of deference (less kindly, the ‘cultural cringe’), and an associated tendency to ‘go with the strength’, which hark back to the early period of European settlement, when the governor was the absolute authority of all that he surveyed, and paths to opportunity meant being on good terms with the power of the day.

This jars with that more easy-going depiction of national character: the anti-authoritarian, non-rule-abiding ‘larrikin’. Yet one of Australia’s best-kept secrets is how extraordinarily rule-bound and subtly hierarchical it is as a society. As a celebrated Australian cartoonist wryly observed, try taking eight items through the seven-items-or-less checkout in the supermarket.

As much as Australians celebrate their libertarian lifestyles and justly venerate the democracy sausage, they are acutely attuned to shifts in authority and power. Lachlan Macquarie, Australia’s last autocratic governor, from 1810 to 1824 in New South Wales, was an accomplished builder and reformer, but implacably opposed to ‘the infernal and destructive principles of democracy’.

Two centuries on, it seems anachronistic to evoke Macquarie’s memory in Australia’s contemporary China debate. Yet there’s something of him still about the place. Some of it comes down to relative isolation, and Australia’s dependence on ‘great and powerful friends’—ergo Allan Gyngell’s nice turn of phrase, the ‘fear of abandonment’.

In Australia’s Asian neighbourhood, compromises and trade-offs are unavoidable between the promotion of liberal values and the necessity of forging security partnerships with one-party regimes like Vietnam or lapsed democracies like Thailand. Such ‘pragmatic’ partnerships are indispensable in order to maintain a favourable regional balance vis-à-vis China.

But there’s only a short spin-cycle separating the ‘rules-based order’ from the much less wholesome ‘order-based rules’ setting. There’s the risk that the compromises we are willing to make internationally will reflect back on us domestically, over time. And I think that China has split Australia more deeply on values than we care to admit, or than public opinion polls suggest. Especially among the well educated.

Richard Maude’s first commentary since leaving his post as deputy secretary of the Indo-Pacific group at the Department of Foreign Affairs and Trade, was conspicuously upbeat in its assessment that like-minded countries in the Indo-Pacific are converging in ways that are favourable to Australia’s interests.

Maude, who was the chief drafter of the 2017 foreign policy white paper, also struck a tail-end cautionary note: ‘[A] foreign policy in Asia that does not encompass a continuing commitment to freedom and human rights is one that forgets who we are as a nation and what we believe in. It is not, ultimately, sustainable.’

I agree. Australia can be pragmatic in its pursuit of national interests and even values, but should be wary of ‘pragmatism’ as a diplomatic lodestone lest it lead us astray. Not unless you really want to turn back the clock.

Australia’s discussion of China is less of a debate than two important schools of thought talking past each other.

The values school is predominant, especially in government and the media. It stresses the challenge China poses to Australian and Western values. Rightly, it highlights the increasingly authoritarian nature of the Chinese Communist Party leadership, human rights abuses in China, and the interference and coercion practised by Beijing around the world.

This group believes that dealing with China requires sustaining core values in almost any area where they’re under siege. As such, the focus is on supporting third parties on China’s periphery such as Japan, Taiwan and, to an extent, Hong Kong.

The power school, though smaller, helped to initiate the conversation and has a number of influential contributors. This group stresses that the most important factor is the changing power balance, not just in abstract ‘West versus China’ terms, but between the US$14 trillion Chinese economy and the US$1.3 trillion Australian economy. This group is more circumspect about values, worrying about our capacity to support them abroad without being drawn into a war—a conflict they believe would be determined on the basis of power.

What the values school gets right is that the conflict is about values. The strategic logic of geography and economics do not necessitate war, particularly between the US and China. Beijing doesn’t seek an empire à la the 20th-century troika of imperial Japan, Nazi Germany and the USSR. Instead, it demands a region that helps preserve the rule of the CCP and the security, stability and prosperity of the Chinese state. Western values such as free speech, the rule of law and democracy are seen to threaten those goals.

What the power school gets right is that, until we recognise the difficulty and scope of the challenge and base our choices on questions of interests and capacity, much of the talk of values is cheap. China wasn’t a threat to Western values when it was weak, and to the extent it has power, we can’t do much about many of its actions and choices—such as the detention camps in Xinjiang.

Where the values school has erred in the last decade is two-fold. First, too many of its members downplay the significance of the challenge posed by China. In documents such as the 2016 defence white paper there’s an implicit assumption that at some point China will realise the error of its ways and accept a subordinate position in the global order. As if all the West has to do is regain the initiative, add some confidence and stir.

Those who now ring the bell in alarm tend to point to things that are not strategically significant or even directly threatening to Australia. Former Prime Minister Tony Abbott explains his new position by invoking Xinjiang, the social credit system, Xi’s failure to announce a successor, and the South China Sea. Only the last of those poses a strategic threat to Australia, suggesting a worrying lack of clarity in thinking about the nature and scope of the problem we face.

Second and relatedly, when the proponents of the values school have talked about the challenge, they have conflated Western interests with the status quo. This assumption has guided Western policy over the past decade with pitiful results. In the South China Sea—an area meaningful to China but marginal to the West—Beijing has called our bluff and won. The so-called grey-zone crisis is little more than the pricking of Western hubris, demonstrating that where there’s a lack of genuine strategic interest, there won’t be a serious effort to defend or protect the status quo.

The power school has its own flaws. It is often a narrowly economic view of power, yet if this was all that mattered, the US wouldn’t be in such a poor position as it is today.  Power matters, but power is always mediated. Leaders don’t exist without followers, and Beijing, if it is to achieve its goals, needs to have its power and position accepted. In many areas, China has negotiated, compromised and recognised the limits of its capacity. Its efforts to punish have been few and often ineffective. Values, narratives and ideas will matter just as much as money.

Second, the slippery slope is too easily invoked, as if nuclear war lurks behind every contest. Though there are real risks, there’s far more scope for a genuine renegotiation of the order rather than simply choosing between subservience or war.

Both the values and the power schools offer important points, even if both are limited. To a degree, they are rhetorical poses; their advocates are more circumspect and thoughtful when engaged in private. What we need is a way to triangulate the discussion.

I believe that begins with better establishing our priorities. As Australia shifts from a strategically wandering middle power to a concerned regional power, we need to do much better at clearly distinguishing what matters to us and why. That means not only understanding the regional crises and their separate trends, but also better understanding our allies and their sometimes diverging interests as well.

Values matter, and so does power. By recognising the strengths and weaknesses of both schools of thought, and moving the dialogue onto the terrain of specific Australian priorities, we may finally have the debate about China that we so clearly need.