Guanxi – How to build a better relationship with China and why it matters

One day a rooster, the next day a feather duster!

By LAURIE PATTON | 20 February 2022

Labor is the ideal party to restore a balanced relationship with China – a critical element in our post-COVID recovery strategy. And it’s a longstanding relationship forged by Labor that needs to be leveraged in the process.

Fifty years ago, at the same time that the Americans recognised the pointlessness of ignoring the world’s fastest growing economy, Gough Whitlam travelled to Peking as it was still known in the West. His historic visit was soon followed by NSW premier Neville Wran. Australia was one of the first countries to formally recognise the Peoples Republic of China and to begin a long and beneficial trading relationship.

Years after Wran retired from politics he chaired, and I ran, an IT investment company with a joint venture based in Shanghai. We also had a JV in the United States and they were commercially related. One of the most memorable experiences of my corporate life was accompanying my chairman to China. On day one we did a factory tour on the outskirts of Shanghai. As we were driven up a long driveway we passed under a huge banner. It read “Welcome Premier Wran”. 

China was one of the first big trading nations of course. It invented a form of what we call mateship but they call “Guanxi” – the combining of long term friendship with business. China has also long understood the value of corporate memory.

So, when Prime Minister Albanese begins to restore the damage done by the Coalition’s reprise of its “reds under the bed” hysteria he will be walking in the footsteps of Whitlam and Wran.

China is looking to change the geo-political landscape. Despite the Coalition’s alarmist election-inspired rhetoric, it has never shown any substantive signs of wanting to harm Australia – quite the contrary in fact. There’s no proof we will be disadvantaged, provided our government is not deliberately inflammatory.

On ABC Insiders the entire panel rejected the proposition Labor was soft on China. Former Coalition advisor Nikki Savva said there was no evidence Labor was “China’s preferred candidate” – also pointing out internal Liberal party focus group research had found a backlash against their Labor-China scare campaign. Host David Speers noted that the current US government probably preferred Labor. Financial Review columnist Jennifer Hewett argued Labor in government would not act differently to the Coalition.

There’s no reason why Australia and China cannot continue to enjoy a very constructive relationship.

Thousands of young Chinese influencers have returned to the mainland after studying at our universities – and developing warm and positive relationships with Australia and Australians.

Myriad small, medium and large businesses trade with China – buying goods for sale here. For as long as Coal continues to be a marketable commodity China will be a significant customer. Chinese auto manufacturer BYD, described as “the biggest car company in the world that you’ve probably never heard of” by The Australian, is about to start selling very affordable electronic vehicles here.

Some of our most successful entrepreneurs – think of Kerry Stokes and Andrew Forrest – have done business in China for years. They, and others, have publicly (and no doubt privately) rebuked the current government for unnecessarily risking our relationship with such an important business partner.

Last week saw an unprecedented entry into the public arena by our current and past top security service chiefs. In addition to these high profile interventions, others more circumspect are privately adding their concerns at what is seen in diplomatic circles as an unwelcome injection by Scott Morrison of raw domestic politics into the subtle business of international diplomacy.

Our long-standing alliance with the US underpins our place in a global society, as it has done for the last century. It is our most important defence bulwark in an always complex and troubled international landscape. However, loyalty to the ANZUS Alliance has never restricted our ability to coexist with, and trade with, China or any other country with which the US has had a tense relationship from time to time.

‘Realpolitik’ will hopefully ensure that China and America never cross the line into open military conflict. However, as China further grows in economic strength it will continue to challenge existing structures of international power and influence. For Australia, our future independence and economic prosperity will require the ability to find a viable, balanced, place in the new order in the Asia-Pacific.

Simultaneously maintaining productive relationships with the two major world powers will test the strengths and weaknesses of the next federal government.

POSTSCRIPT. Since this article was written China’s move to establish a closer relationship with the Solomon Islands has been used to create increased fears over its global intentions. Having worked in another Pacific nation earlier in my career I agree with those who argue that Australia has in recent times shown a reduced interest in assisting countries the region.

(Laurie Patton is a public interest advocacy and marketing / communications practitioner. He is a former Labor political advisor, journalist and media executive.)