The Curious Strategy Behind Beijing’s Belt and Road Initiative MoU With Victoria

Although the Australia federal government has politely refused to join China’s Belt and Road Initiative (BRI), the Victorian government has signed up to two non-legally binding Memorandums of Understanding (MoUs) on the BRI. Currently it is well known that defense hawks, or the “security-intelligence-military establishment,” dominate the Liberal Party coalition-led government and they are acutely aware of security issues related to the BRI. By comparison, the Labor Party, the Australian opposition, is more open to the BRI and has regarded it as an economic opportunity. Thus, it is very reasonable that the Victorian government, led by Labor Party member Daniel Andrews, supports the BRI. Another Labor Party-led state, the Northern Territory, has spoken welcomingly of the initiative in recent years as well. Arguably, the Chinese government prefers to cooperate with the Labor Party, as China has invited Andrews to Beijing several times, but as of yet no official visit has been extended to current Prime Minister Scott Morrison.

Given the divergent views of local and central governments, the security-intelligence-military establishment must try their best to figure out Beijing’s “strategy” in terms of the BRI in Australia. There are three strategies that China may follow regarding the BRI in Australia.

First, China has realized that it is difficult to persuade the federal government to accept the BRI, and is choosing to lobby state governments instead. The Chinese government has a history of, and abundant experience in, “beating each enemy in turn” and “encircling the cities from the rural areas” since Chinese Civil War. Thus, China may start by persuading Victoria first, then maybe shift its focus to other state governments. As more state governments sign up to the BRI, the federal government will face increasing pressure to also participate in the initiative. Meanwhile, Canberra could blame the decisions of local governments to avoid criticism from its biggest ally, the United States. I believe some of the defense hawks in Canberra favor this explanation; they are inclined to see invisible, unknown, and ambitious plans behind Beijing’s every action.

A second explanation is that Beijing deliberately adopts a flexible and ambiguous position toward BRI cooperation with Victoria, with an eye to assessing its outcome and adopting a path forward as Beijing sees fit. The BRI is neither well defined nor well designed. There are various provincial interpretations in China and overall BRI governance lacks transparent information, a clear leadership structure, and a unified implementation strategy. Concerning the BRI cooperation in Victoria, Daniel Flitton at Lowy Institute argues that the two MoUs are “so vague [as] to be practically meaningless.”

However, the signing of two MoUs has played a positive role in the public perception of the BRI. In fact, the majority of Australian experts and politicians have viewed the BRI as only an infrastructure-centered proposal and thus neglect its full meaning. In turn, the public too has a very deficient understanding of the BRI. Essentially, there is another goal of the BRI: To promote people-to-people bonds, facilitating extensive cultural, media, and academic exchanges, therefore attempting to win public support for deepening cooperation. Although Victoria’s MoUs may not be legally binding agreements, this may signal positive intentions to Chinese investors, increasing investment into particular state territories. This may then facilitate the adoption of similar agreements by other states into the future.

A third explanation is that the MoUs are seen as “part of the job” for Chinese diplomats. The BRI is strongly branded by President Xi Jinping, who put forward the two separate legs of the initiative in Kazakhstan and Indonesia in 2013. Thus, the BRI has been regarded as one of Xi’s most important foreign policies, and the number of agreements works as a sort of key performance indicator. Peter Cai from the Lowy Institute says that “Someone can wave a piece of paper saying ‘Yes, we have just signed another country to our initiative’ — I mean that’s kind of what a Chinese diplomat would be saying... it is at least a symbolic concession that a country is actually supporting this initiative; whether anything concrete comes out of it is perhaps another story.”

The second and third strategies are more appealing to Beijing, but the current cabinet in Canberra subscribes to the first perception. Maybe this is endemic of populist rhetoric to boost their approval ratings and maintain their political power. Former Prime Minister Kevin Rudd sums this up by suggesting: “The Liberal party has a very bad history of using core foreign policy questions for domestic political gain or internal party management… the best way to make a name for yourself within the raging beast of Australian conservatism is to whack the Chinese on the head again every second Thursday.”