A protester from a right-wing minor political group, the Party of Freedom, dressed as a Spartan at an anti-China demonstration outside the Chinese Consulate in Camperdown, Sydney on May 30, 2015. Photo: Citizenside/Richard Ashen
A protester from a right-wing minor political group, the Party of Freedom, dressed as a Spartan at an anti-China demonstration outside the Chinese Consulate in Camperdown, Sydney on May 30, 2015. Photo: Citizenside/Richard Ashen

China-Australia relations have openly fractured amid a growing scandal that has underscored rising perceptions that Beijing has bid to buy influence over politicians and infiltrate the political process in Canberra.

New South Wales Senator Sam Dastyari announced his resignation on Tuesday after media investigations revealed allegedly dubious links to Chinese donors. The lawmaker was at the center of a similar controversy last year that raised concerns about China’s political donations.

An investigation by Australian Broadcasting Corporation’s (ABC) ‘Four Corners’ program found that Minshen Zhu, manager of the Top Education Institute, a Sydney-based education provider favored and recommended to Chinese students by China’s government, had paid a small bill on Dastyari’s behalf.

Following the revelations, the senator donated A$1,670.82 – the figure in the bill – to charity, admitted wrongdoing and stepped down from his prominent position as deputy opposition whip in the senate.

Last month, recordings of comments Dastyari made last June to Chinese media in Sydney revealed the true extent of his controversial pro-China stance in the South China Sea territorial disputes, following months of maintaining his comments had been off-the-cuff and a mistake.

Australian opposition Senator Sam Dastyari reacts as he speaks during a media conference in Sydney, Australia, December 12, 2017.  AAP/Ben Rushton/via REUTERS    ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. NO RESALES. NO ARCHIVE. AUSTRALIA OUT. NEW ZEALAND OUT.
Australian opposition Senator Sam Dastyari at a media conference in Sydney, December 12, 2017. AAP/Ben Rushton/via Reuters 

“The role that Australia should be playing as a friend is to know that we see several thousand years of history, thousands of years of history, where it is and isn’t our place to be involved,” the ABC reported him saying.

“And as a supporter of China, and a friend of China, the Australian Labor Party is playing an important role in maintaining that relationship. And the best way of maintaining that relationship is knowing when it is and isn’t our place to be involved.”

The comments ran counter to the Labor Party’s policy on the issue, which is in-line with the United Nations Convention on the Law of the Sea. Australia has taken a neutral stand on the disputes, though recent moves towards a quadrilateral strategic alignment with India, Japan and US could start to change that.

The Labor Party and Dastyari appeared determined to leave the past behind and look forward to a 2018 election polling suggests it would win until a Fairfax Media investigation revealed Dastyari had warned influential Chinese businessman Huang Xiangmo that intelligence operatives were likely tapping his phone.

Dastyari made the comments before inviting Huang to speak outside of the Mosman mansion in Sydney’s north shore region. Fairfax reported the recording was made after senior Labor figures had been notified by the Australian Security Intelligence Organization that Huang had been placed under investigation for his links to China’s Communist Party.

Domestically, the scandal has been tumultuous for the Labor Party and a boon for Prime Minister Malcolm Turnbull’s government as it looks to distract from dismal opinion polls and win a crucial by-election later this month.

Britain's Prime Minister Theresa May meets market traders with Australian Prime Minister Malcolm Turnbull during a visit to Borough Market, London, Britain July 10, 2017. REUTERS/Niklas Hallen/Pool
Australian Prime Minister Malcolm Turnbull in a July 10, 2017 file photo. Photo: Reuters/Niklas Hallen/Pool

In thinly veiled criticism of China, Turnbull vowed last week to ban foreign political donations to curb “unprecedented and increasingly attempts to influence the political process” in Australia and the world.

Australia and neighboring New Zealand are among roughly a third of countries worldwide that allow foreign donations to political parties, Reuters reported. Such donations are prohibited in the United States, Britain and several European countries.

Turnbull’s proposed new laws, seemingly modeled on the US Foreign Agents Registration Act, would criminalize foreign interference and require the registration of foreign lobbyists, Turnbull said.

It comes after Australian Attorney-General George Brandis said in June that “the threat of political interference by foreign intelligence services is a problem of the highest order and is getting worse.” At the time, he said the government had conducted a “comprehensive review” and planned to strengthen espionage and foreign interference laws.

For China-Australia watchers, the latest saga has inflamed tensions to a new diplomatic degree.

Nick Bisley, executive director at La Trobe University’s Asia program, warned the relationship had hit a low not seen even during 2009, when an Australian businessman was arrested in China on spying charges. The relationship has never been an easy one, Bisley says, but it is noteworthy it has functioned so well for so long.

Chinese people wave Chinas and Australian national flags in Canberra, Australia in a file photo. Photo: AFP
Chinese people wave Chinese and Australian national flags in Canberra, Australia in a file photo. Photo: AFP

“The relationship has not always been easy to manage, but in some respects it is surprising that it has taken this long for the underlying tensions…to come to the surface,” Bisley said.

“The public mantra of governments, from both sides of the aisle, that Australia doesn’t have to choose between Beijing and Washington was always a platitude that served more to paper over the complex reality of the Australia-China relationship.”

Bisley notes the latest kerfuffle has underlined sensitive race relations, evident in the manner Chinese media has covered the Dastyari scandal.

Both the Communist Party-owned China Daily and the People’s Daily have run scathing editorials on Turnbull, suggesting his criticisms of Dastyari’s behavior are largely motivated by racism and anti-Chinese sentiment.

“This type of hysterical paranoia had racist undertones, and is a stain on Australia’s image as a multicultural society,” the People’s Daily wrote in an editorial published on Monday. It echoes a China Daily editorial published last week which suggested Turnbull has been “pandering to anti-China bias” and had fallen for an “orchestrated media falsehood.”

“Given the racial complexion, I think governments have tried to avoid making the issue any more public than it needed to be for fear that it could rapidly get out of control,” Bisley said.

It arguably has. A Xinhua editorial posted to the Chinese Embassy in Canberra’s website in lieu of a public statement last week listed the many local industries to which China contributes, including mining, education and tourism, before concluding that “Australia seems to care little about it.”

Australia's Prime Minister Malcolm Turnbull stands with Chinese Premier Li Keqiang at Parliament House in Canberra. Photo:      Reuters/David Gray
Australia’s Prime Minister Malcolm Turnbull stands with Chinese Premier Li Keqiang at Parliament House in Canberra. Photo: Reuters/David Gray

Foreign Ministry spokesperson Geng Shuang was similarly miffed, maintaining that China has long held a policy of “non-interference” in the domestic affairs of other countries.

“That is also how we pursue our relationship with Australia. We strongly urge the relevant people in Australia to shake off their Cold War mentality and bias against China,” Geng said last Friday.

Bisley suggests the flare-up was somewhat predictable. “The relationship was always going to enter this kind of difficult terrain – the divergence in values makes that almost inevitable – but the way in which the debate about China has played out has made managing the complexities much harder.”

But if the opposition and government hope the high-profile resignation of Dastyari would alleviate some of the pressure, they are likely to be disappointed, Bisley predicts.

“I think it’s going to get worse before it improves. Both sides are clamoring for the high ground and there seems to be little interest in trying to take the heat out of the relationship,” he said.

“My biggest concern is that each side will begin to pick at the racial dimension and things could get really ugly quickly,” Bisley said. “Track II efforts to improve things don’t seem to be working, the public diplomacy is cack-handed. I hope that there are behind the scenes efforts to lower the temperature.”

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