Why the Seams in Systems of Government Matter When It Comes to Managing China

Main Image Credit Parliament House Canberra, Australia. Courtesy of JJ Harrison/CC BY-SA 3.0.

Australia is an example of how to deal with Chinese attempts to bypass central governments, and engage with sub-state entities.

If Francis Fukuyama had been right back in 1992 with his ‘end of history’ thesis, nation-states would have receded into the background as we all entered a post–Cold War liberal international nirvana. But this vision got mugged by the return of national power, particularly as practised by the authoritarian People’s Republic of China (PRC). Covid-19 has further reinforced the value of cohesive national action, led by countries’ central governments.

And foreign policy used to be something that happened outside the boundary of nation-states. It had domestic implications, but it was rare that foreign policy issues complicated the internal workings of nation-states with federated systems of government. 

An All-Encompassing Embrace

That’s changed too because the Chinese state, under the leadership of the Chinese Communist Party (CCP), is pressuring stakeholders and decision-makers in other states to either adopt policies that align with CCP policy or, at least, be silent instead of critical of such policies. 

Inverting Fukuyama, powerful countries can use global connections, technology and relationships to reach into others’ domestic economies and politics to interfere with and influence national policy and to gain advantage. The PRC does this both openly and through coercive and corrupting means, and has arms of government devoted to it, led by its United Front Work Department. Beijing is exploiting the seams in others’ levels of government, while also demonstrating how to avoid this itself.

China is the textbook case of a national regime that sets foreign policy which is then implemented by its provincial governments and through its large state-owned corporations, military, security agencies and state universities. There are no seams that can be exploited there. Other states, such as Israel and Singapore, are also well organised and cohesive – to their advantage, and often to Australia’s advantage as well, because of alignment with Australian interests and values. 

A range of other states, including Australia, have been far more laissez faire in how levels of government other than the national one – such as state governments, provincial governments, city administrations or even local governments – engage with foreign state institutions. And we’re wide open to Chinese influence against our interests as a result.

So, it’s no longer just national governments that are enticed to support or pressured to be silent about Chinese government actions and directions – state, provincial or even city and local levels of government face similar pressures and enticements. And multi-state groupings face similar pressures – with EU–China interaction complicated and undermined by the Chinese approach of engaging bilaterally with individual EU member states, using its preferred 16 (or 17) plus 1 format instead of primarily engaging through EU institutional machinery. 

Participation in Chinese leader Xi Jinping’s signature ‘Belt and Road Initiative’ (BRI) is perhaps the most obvious case of this phenomenon, with Chinese authorities keen to collect increasing numbers of international participants and supporters.

This raises two policy issues for states managing interaction with China: the first is how to ensure that the national government’s foreign policy and national security decisions and directions are given effect across the different levels of their system of government. The second is how to increase the cohesion of the national response to Chinese policy directions and pressure so that a unified national response is in place, instead of allowing Chinese action with lower levels of government to undermine and perhaps overturn national policy. This way of working by Chinese institutions is analysed in a recent ASPI report by Alex Joske called ‘The Party Speaks For You’, which describes how the Party’s united front system conducts foreign interference to advance its interests and policy agenda.

The Australian Approach

The Australian experience provides an example of a potential response, with lessons and insights for others grappling with similar challenges.

Australia has been a priority for Chinese interference and influence for some years. In February, Australian security agency head Mike Burgess noted that ‘the level of threat we face from foreign espionage and activities is currently unprecedented’.

In 2018, foreign interference in Australia’s central political system – the Commonwealth Parliament and the political parties that operate in it – became a significant enough problem that the parliament enacted new laws to counter covert and corrupting action by foreign state organisations that is designed to influence decisions and debates covertly or corruptly. It added a national ‘Foreign Interests Transparency Scheme’ that requires Australians who are receiving foreign state financial support to register and disclose this if they participate in communicating ideas or public debate.

That new approach to reducing the threat from Chinese and other state actors covertly and corruptly seeking to influence national decisions is proving effective, with current investigations and potential prosecutions underway and a growing awareness changing behaviour of political actors and other influencers in Australia.

It’s a partial response, however, because the level of discretion for other levels of government to act in ways that conflict with national foreign and security policy is wide. And these lower levels of government need not be acting in any way that comes from being coerced or corrupted as they do so and yet be taking directions that are in flat out contradiction to national policy. That’s happening in Australia over the Victoria State Government’s formal participation in the Chinese government’s BRI programme. The Victorian relationship with Beijing is driving a wedge in national policy. 

This might seem odd given Australia’s Constitution gives clear power over ‘external affairs’ and defence to the peak Commonwealth Parliament and executive government, but it’s true. It’s likely to be true in other federated systems of government globally, and in states where constitutions are either unwritten (as in the UK) or unclear.

To address this and build on the foreign interference legislation, the Australian government has just introduced new national legislation that will bind all three levels of government in the Australian system – commonwealth, state and territory, and local – to act in accordance with national policy on foreign affairs. This will also give the federal government the power to override and end decisions and agreements that lower levels of government make that are in conflict with national policy.

So, the foreign relations bill is all about closing the seams in the Australian Federation and giving practical effect to the Commonwealth’s constitutional power on foreign relations. It’s necessary primarily because other countries are exploiting the gaps between our federal, state, territory and local governments to Australia’s disadvantage.

The new law is also necessary because the current informal consultation on foreign policy matters between states and the Commonwealth just isn’t working. As mentioned, the problem is graphically illustrated with the state government of Victoria, Australia’s second most populous state. Having signed Victoria up to Xi’s controversial BRI, Victorian Premier Daniel Andrews has defended his decision by saying, ‘I’m not going to apologise for a trade policy that is all about growing Victorian jobs’. He simply says that national security and foreign policy are not his responsibilities, a position that implies that, as a result, state premiers don’t have to worry about such matters.

In contrast, the federal government recognises the national security and foreign policy danger in Australian states joining an initiative designed to build China’s strategic, technological and economic power over others. Right now, with Beijing using trade as a weapon against Australia, this concern looks well placed.

From Beijing’s perspective, the seam between governments in Australia is a perfect place to put a wedge – and work at the level of the states and territories to achieve what Beijing cannot at the federal level. Collecting a few state governments to participate in the BRI, for example, would put pressure on Canberra to change its policy. And if it doesn’t, it becomes irrelevant because of the economic heft of big states such as Victoria and New South Wales. The fact that only the Commonwealth government has the agencies and horsepower to properly assess the national security implications of such decisions makes this easier.

It’s a similar story with local governments and public universities. The partnerships they enter into with foreign governments can have deep consequences for our national security, as we see with the leaching of universities’ intellectual property to the China’s People’s Liberation Army and internal security apparatus through research partnerships and the Thousand Talents Plan.

Closing the Seams

The Chinese Ministry of Foreign Affairs may well express outrage at the proposed law, while being quietly disappointed that Australia will simply be preventing China from doing here what Beijing would never allow others to do within its jurisdiction. Provincial governments in China could not strike deals with Australia, for instance, without Beijing’s approval.

So, the protective side of the government’s foreign relations legislation would end arrangements that are against Australia’s interests. The public register proposed under it will provide the transparency to allow this. Many arrangements with many governments will simply proceed unchanged because they make sense.

There’s a less obvious but very positive side of the proposed law, which is also a consequence of this improved transparency. The register will allow Australian federal institutions to see connections and possibilities across different levels of government and universities that can be actively exploited to Australia’s and foreign partners’ advantage. It will let Australia make policy and operational connections that may otherwise have been missed, whether that’s about reinforcing a priority research partnership or seeing new economic and trade opportunities.

The new law needs to be debated in Australia’s Commonwealth parliament and may even need to withstand a legal challenge from Victoria. But there’s no doubt that closing the seams in Australia’s federation and seeing new opportunities across its myriad international partnerships are both in the national interest. 

To be effective, though, the Australian response must be met by similar new frameworks in other states who want to work together to find ways to mitigate the challenges of engaging with the empowered, assertive China we are each dealing with under Xi’s leadership. In the world we’re living in, closing the seams within systems of government turns out to be as important as having clear-eyed foreign policy.

Michael Shoebridge is Director – Defence, Strategy and National Security at the Australian Strategic Policy Institute in Canberra.

The views expressed in this Commentary are the author's, and do not represent those of RUSI or any other institution.

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