By Rachel Pannett
SYDNEY--One of Australia's biggest states is pushing ahead on an
infrastructure deal with China at a time when ties between Beijing
and the federal government are at a new low, raising concerns that
Chinese money may end up funding projects that are a
Victoria joined China's Belt and Road program--a trillion-dollar
flagship foreign-policy initiative--in October. In recent days, the
state's premier, Daniel Andrews, has been touting it as a "passport
to export" and a way to create jobs in a coronavirus-afflicted
The deal is driving a wedge between the southeastern state and
the government in Canberra, where views toward Beijing are
hardening as the two countries spar over China's handling of its
coronavirus outbreak. An influential bloc of nationalist lawmakers
is calling on the government to use the pandemic as a way to
reshape the economy and reduce Australia's reliance on China.
The Victorian deal pledges cooperation on infrastructure
projects, as well as on biotechnology, advanced manufacturing and
technological innovation. Melbourne, the Victorian capital, is home
to many of Australia's biotech startups and health-care
Prime Minister Scott Morrison says that he didn't support
Victoria's decision to sign up to the program and that it is "usual
practice for states to respect and recognize the role of the
federal government in setting foreign policy." The federal
government wasn't consulted on the October framework agreement, and
the country's foreign-affairs department was advised only on the
day it was signed, an official said.
Clive Hamilton, a China expert at Charles Sturt University in
Canberra, said Beijing's strategy is "using the countryside to
surround the city," ramping up its influence efforts in state
capitals. Washington's hard-line policies on China means there has
been a strong push in the U.S., too, to find alternate channels of
engagement via local government leaders, he said.
A summit held in Lexington, Ky., in May last year is one such
example, bringing together political officials from U.S. states,
including Kentucky, Tennessee, Washington, Michigan and Colorado,
and Chinese municipal- and provincial-level governments.
In Australia, tensions with Beijing have been increasing since
2018, when Canberra tightened counterespionage and
foreign-interference laws and banned Chinese telecom companies
Huawei Technologies Co. and ZTE Corp. from its next-generation 5G
mobile network, aligning it with U.S. policy on the matter and
underscoring concerns about the possibility of cyberspying by
The relationship deteriorated further in May when Beijing
imposed tariffs on Australian barley exports and threatened a
consumer boycott of Australian meat and wine, and visits by Chinese
tourists and students, after Australian officials called for an
investigation into any missteps that contributed to the coronavirus
Beijing has denied the move was meant as economic coercion. But
some lawmakers and security experts say the Victoria deal should be
halted and reassessed in the rapidly changing geopolitical
"The Victorian government's Belt and Road activities are simply
out of step with the new international and economic environment,
including the now openly coercive directions that Beijing is taking
with Canberra over trade and in government relations," said Michael
Shoebridge, a former top defense intelligence official and China
hawk. "The Victorian political leadership's championing of the
state's tie-up with Beijing on infrastructure is a glaring wedge
that Beijing is driving into Australia--at a time when national
cohesion on dealing with the Chinese state is essential."
U.S. Secretary of State Mike Pompeo, in a television interview
on May 24, threatened to "simply disconnect" from Australia, a
defense ally and partner in the Five Eyes intelligence-sharing
network, if the deal affected the security of U.S. communications.
The U.S. ambassador later clarified that Mr. Pompeo had said that
he didn't know the exact nature of the deal and that the security
of Australia's 5G telecommunications networks was a federal matter
on which the U.S. and Australia are aligned.
A Chinese Foreign Ministry spokesman said Belt and Road is an
economic cooperation initiative that is "completely reasonable,
lawful and aboveboard."
Some Australian lawmakers say the Belt and Road program
heightens the risk of foreign interference. "Victoria needs to
explain why it is the only state in the country that has entered
into this agreement," said Peter Dutton, the home-affairs
"It's all about jobs; it is as simple as that," Mr. Andrews, the
state premier, told reporters . "I'm not going to go to the
hundreds and hundreds of businesses who send more products to China
than they ever have and say that they shouldn't."
Many countries, including France, Canada, Australia and India,
are stepping up scrutiny of foreign investment amid the economic
fallout from the coronavirus, concerned that foreign entities could
swoop on strategic assets weakened by the pandemic.
Security agencies are also ramping up their warnings about
potential malicious cyberattacks, citing critical infrastructure
facilities such as power and water-distribution networks, as well
as transport and communications grids, as potential targets.
Australia's top military cyber-defense agency, the Australian
Signals Directorate, warned recently that malicious actors are
actively targeting health-sector organizations and medical research
facilities, possibly seeking information and intellectual property
relating to vaccine development, treatments and research now of
higher value and priority globally.
The agency didn't specify, but it referred to Advanced
Persistent Threat actors--the term given to the most sophisticated
and well-resourced type of malicious cyber adversary usually
associated with nations.
Mr. Shoebridge, a director of defense, strategy and national
security at the Australian Strategic Policy Institute, a
nonpartisan security think tank, said that although they may appear
to be just concrete and steel, many new infrastructure projects are
"laced with digital technologies."
China has framed the Belt and Road initiative as a way to more
closely integrate its economy with those across Asia, Africa,
Europe, the Middle East and Latin America, primarily through
infrastructure projects. But security hawks say it is a coordinated
campaign to extend its global political and military clout.
"They're after a much deeper, much more intrusive partnership,"
said Mr. Shoebridge. "Biotechnology is part of the People's
Liberation Army's vision of a future military power. To say these
things are just science and just civilian activity is to
misunderstand the Chinese state and the breadth of activities under
the Belt and Road."
Write to Rachel Pannett at firstname.lastname@example.org
(END) Dow Jones Newswires
June 02, 2020 07:14 ET (11:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.