Asian countries are learning to cope with Chinese bullying

IF YOU ARE Australian and love lobster, it is the time to indulge. Fishermen are almost giving lobsters away off the back of their boats. High-class restaurants and banqueting halls in China once provided by far the biggest market for lucrative live exports, until the Chinese authorities instituted a sudden and unofficial ban in November. Shipments of crustaceans to China have since collapsed by nine-tenths. Desperate lobstermen say they are hanging up their pots. And lobsters are just one of several Australian exports clobbered by unexpected Chinese restrictions, including wine, coal, barley, sugar, timber and copper ore.

China often sends countries that cross it to the doghouse in some form. Sweden is there at the moment, for criticising China’s kidnapping and jailing of a Chinese-born Swedish citizen, Gui Minhai, a publisher of scurrilous books about China’s leaders. So, too, is Canada, after it arrested Meng Wanzhou, a senior Huawei executive (and daughter of its founder), at the request of America, which seeks her extradition on charges of evading sanctions against Iran. Norway was hit after the Dalai Lama, the spiritual (and once temporal) leader of Tibet, won the Nobel peace prize, which is awarded by a Norwegian jury.

But it is Asian countries with strong commercial ties to China that are most vulnerable to such punishment. In 2017 South Korea found itself in China’s bad books after allowing America to deploy anti-missile batteries. These were intended as a defence against nuclear North Korea, but China objected on the grounds that their radar could peer deep into China. Suddenly, Chinese tour groups were forbidden to travel to South Korea. K-pop groups were barred from performing. Lotte, a South Korean conglomerate with department stores across China, faced a consumer boycott (it had provided the land on which one of the anti-missile batteries was installed). In all, the boycotts are thought to have trimmed 0.5% off South Korea’s GDP that year.

Australia, for its part, has been charged by China with 14 offences, enumerated to the local media by the Chinese embassy in November. These include the government’s condemnation of China’s human-rights abuses in Xinjiang and Hong Kong, its rejection of various Chinese firms’ proposed investments and the supposedly anti-Chinese bias of Australia’s media and think-tanks.

How times change. Barely five years ago, a landmark free-trade deal came into force between China and Australia. Xi Jinping, China’s president, once boasted of having visited every Australian state—and praised the thriving seafood trade. Since then, trouble has been building. Australia angered China by excluding Huawei, a telecoms giant with close ties to the Chinese government and its security services, from its 5G network. China also fumed when Australia passed a law against foreign interference in politics, following an influence-buying scandal involving a senator. The switch seems finally to have flipped in April, when Scott Morrison, the prime minister, called for an independent inquiry into the origins of covid-19, about which China is sensitive.

Mr Morrison, argues Richard McGregor of the Lowy Institute, a think-tank in Sydney, made an “unforced error”. Although he was right to call for an inquiry, he was foolish to do so alone rather than as part of a wider grouping of countries. But you would think, to judge by the stridency of China’s response, that Australia had offended the cosmic order. In a way, says a former diplomat, it has. In the imperial past, countries were expected to acknowledge China’s paramountcy. Now its leaders once again want its paramount standing to be recognised, as they seek to recreate an expanding Sinosphere.

That is the neo-Confucian strand in China’s treatment of countries that offend it. There is also a realist strand, informed by China’s size. America standing up to it is one thing, but how dare smaller countries do the same? A South-East Asian policymaker says China wants other countries not simply to take its interests into account but actively to defer to it. It bullies those that show insufficient deference until they “correct” their behaviour.

It is hard to say whether China’s efforts at re-education succeed, since it is not obvious how to measure success. South Korea did not remove the anti-missile batteries, although it did make clear it did not intend to install any more. Soon after, China relented, and the boycotts melted away.

A more clear-cut case of victory over doghouse diplomacy came with Japan. In 2012 China blocked exports to it of rare-earth minerals critical to many of its technology firms. Japan responded by lodging a complaint against China at the WTO. Crucially, it persuaded America and the European Union to join its challenge. China backed down.

Mr Morrison, for his part, has said that Australia will not compromise on its fundamental values. His government has taken China to the WTO over barley. Small beer, China probably thinks. The case could totter on for years. Meanwhile, far from showing solidarity, American farmers and winemakers are happy to sell extra to China to make up for the banned Australian goods.

Peace overtures made by Mr Morrison and his new trade minister, Dan Tehan, have been rebuffed. Yet if China thinks Australia will easily buckle, it may be disappointed. The pain inflicted on exporters has in part been concealed by the upheaval of the pandemic. Just as in South Korea and Japan, the boycott has caused ordinary people’s opinions of China to plummet. Those running businesses hurt by the sanctions do not blame their government.

What is more, much of Australia is managing surprisingly well. Not least, Australian iron ore is far too crucial for China to boycott. Demand is rising, and prices with it. Meanwhile, Peter Varghese, the chancellor of the University of Queensland, says heartening numbers of new Chinese students are enrolling for online courses, despite threats of a boycott in that area too. The government in Beijing may calculate that hurting Chinese lobster-lovers is one thing, but harming students and industry quite another. Mr Tehan says he is ready for “the long game”.

Have lessons emerged from being at the receiving end of China’s coercive diplomacy? Han Suk-hee, a former South Korean diplomat at Yonsei University, points out that businesses susceptible to economic pressure are diversifying away from China. By the same token, many Japanese firms have established alternative, non-Chinese suppliers of rare earths since that spat. Meanwhile, China’s need for South Korea’s high-end chips suggests that pressure is “not a one-way street”.

Above all, says Mr McGregor, like-minded countries acting together provide both safety in numbers and leverage against Chinese bullying. But it is also impossible to imagine that the Australian and South Korean governments will not, at the very least, think carefully before embarking on any course likely to displease China. And smaller, poorer countries, with less sophisticated firms that might have more trouble adjusting to any Chinese blockade, may think more carefully still. ■