Briefing MONTHLY #39 | June 2021
NO BAMBOO CEILING
Illustration by Rocco Fazzari.
Australians of Asian origin are making more progress into the ranks of the country’s most wealthy people than they are into the average company boardroom or parliament.
They now comprise about seven per cent of the people listed in the latest Rich 200 published annually by The Australian Financial Review. But while political parties and companies say they are paying heed to cultural diversity, that is a larger Asian proportion of the country’s wealthy people than can be found in Federal Parliament or amongst large company directors.
The Asian Rich Listers range from a Malaysian mining engineer Sam Chong who came to the country in the 1967 to the children of established Chinese businesspeople such as Shangjin Lin who established Aqualand after studying at Macquarie University.
The 2016 census found people claiming full or part Asian ancestry comprised 16 per cent of the population which was more than twice the proportion in the Rich List, lending weight to the idea of a bamboo ceiling.
But at the 2019 federal election just three people of Asian ancestry were elected to the 151 seat House of Representatives which was only two per cent of the chamber. And a 2020 survey of ASX300 companies found that only five per cent of directors came from non-Anglo-Celtic backgrounds, which is a wider group than just Asian Australians. So, in the less regulated environment of personal wealth creation, Asian immigrants seem to be doing better than in more institutionalised and rules-bound settings.
While people with a Chinese national origin dominate the list, immigrants from Malaysia stand out in proportionate terms, possibly reflecting longer and deeper connections to that country. The list requires Australian citizenship to be eligible for inclusion.
Source: The Australian Financial Review Rich 200
The success Asian immigrants have had creating new personal wealth in the Australian economy contrasts with the limited appetite for investment risk in Asia by Australian businesses during the pandemic revealed in the latest foreign investment statistics.
See: DEALS AND DOLLARS below.
CCP AT 100
Xi Jinping chose 29 “ordinary heroes” out of his party’s 92 million increasingly elite members to receive commemorative medals on Monday, kicking off this week’s celebration of the Chinese Communist Party centenary.
“The July 1 Medal recipients come from the people and are rooted in the people,” he said as he told the other members to “keep the spirit of daring to make sun and moon shine in new skies.”
But with that orchestrated nod to the grassroots of the world’s biggest political party, the real attention will turn to how the President uses the centenary to burnish his own legacy as a successor and even peer of Mao Zedong.
While the Party’s survival for a hundred years through many upheavals is a particularly symbolic occasion, the events over the next two years will be more historically important.
Next year Xi seems set to claim a third term as the Party’s general secretary (and thus the country’s president) breaking with the two-term limit that has been a key stabilising force in China’s opaque authoritarian system for decades.
And then in 2023 the Party is set to overtake the time in office of its mentor communist party in the now defunct Soviet Union, elevating its stature in world history.
- At Foreign Affairs, Orville Schell examines three new books on the party and concludes “Chinese communism has given rise to a surprising diversity of viewpoints and leadership styles. Although the country’s leaders have all shared a commitment to a one-party Leninist government, this fact masks deeper uncertainty.”
- The tension over whether the domineering party will now sustain or undermine China’s development is nicely captured in this Financial Times piece on the centenary.
- As China celebrates its one-party state, Peter Varghese says in The Australian Financial Review that Australia needs to accept China as it is and understand that it is “the strategic competitor of the US but that does not automatically make it the strategic competitor of Australia.”
- For a more personal insight into how the engagement landscape has changed, this piece from ChinaFile draws on a survey of whether once-committed Sinophiles feel comfortable returning to the country.
COVID: INDIA v INDONESIA
They have been yin and yang of managing a pandemic in sprawling multi-ethnic Asian democracies, casting a cloud over the outlook for recovery in their smaller surrounding neighbours.
When India’s Prime Minister Narendra Modi imposed what was arguably the most sudden and harsh lockdown in the world last March, Indonesia’s President Joko Widodo frankly conceded his citizens would not comply with such a tough approach.
Then earlier this year when Modi ignored social distancing to allow state election campaigning and Hindu religious gatherings, Widodo tried to discourage his Muslim citizens from making their post-fasting month return to villages – but without firm rules.
Early in the pandemic, when Indonesia faced an infection surge due to resisting a widespread lockdown, India sent it medicinal raw materials. But by April this year Indonesia was sending oxygen cylinders to India as it became the world’s pandemic hotspot.
Both countries have struggled with a national crisis due to their evolving, but different, federal political systems, raising questions about how they will deal with future cross-border political, economic and social challenges.
Now, India is recovering from its devastating second wave with a single day record of eight million vaccinations on June 22, but Indonesia’s daily infections are reaching record highs. And that is at least partly due to the arrival of the Delta variant – which first emerged in India.
Now Widodo is set to put his country into some form of lockdown for the first time since the pandemic began, posing the question of just what mutual lessons are being learned.
The latest Lowy Institute opinion poll provides some interesting insights into how these mercurial policies in two of Australia’s most important security and economic partners are regarded.
India and Modi have over time been rated a bit above Indonesia, but in the past year there has been a noticeable divergence between leader and country.
Warmth towards both countries is up four points on last year and trust in them to be responsible is up even more with India ranking the same as the US at 61, while Indonesia is at 48.
But in a sign the leaders are being blamed for their policies, confidence in them has fallen by four points to 38 for Modi and six points to 26 for Widodo.
- The growing nervousness in Indonesia about Widodo’s latest resistance to a lockdown is neatly captured in this editorial comment from The Jakarta Post.
- India’s federal system may have saved it from poor management of the pandemic by the central government, according to this scroll.in article.
- Meanwhile this Asia Society Policy Institute analysis from Richard Maude examines how Southeast Asian countries are managing their vaccine rollout.
GOING FOR GOLD
When about 15,000 athletes begin their quest for long delayed Olympic medals in Japan on July 23, the country’s Prime Minister Yoshihide Suga will more likely be focussed on his own medium distance event.
Suga has gambled that getting the Games under way will calm the remarkable opposition from his citizens to even holding them at all and clear the way from him to win an election in September.
So far, the gamble seems to be paying off with opinion polls showing opposition to the Olympics started to decline in late June as Japan’s COVID-19 vaccinations finally gathered pace and the state of emergency in several prefectures was officially lifted. But with even the Emperor breaking with normal protocol to warn about health risks from the Olympics, the overall outcome from the event remains hard to judge. While the election must be held by October 21, Suga has hinted he wants to hold it before he faces an internal vote on his party leadership on September 30 which could see an internal challenge to his leadership.
Suga only replaced long serving Prime Minister Shinzo Abe last September and is without a traditional factional base in the ruling Liberal Democratic Party. His mixed record managing the country’s pandemic response and the public dissatisfaction has raised the prospect that Japan may return to fast turnover of leaders even if he does win the election, but only narrowly.
Australia has a lot invested in Suga maintaining the leadership stability established by Abe, with the diplomatic relationship as close as it has ever been and growing Japanese investment into Australia even though the pandemic.
- At Foreign Policy, Kazuhiro Maeshima argues: “Suga’s only real chance at political viability now maybe if the government can pull off a successful games that doesn’t result in a public health disaster.”
Three new polls on Australian attitudes to China generally support the government’s tougher approach but with some lingering contradictory tendencies as the country adjusts to a dramatic change in diplomatic relations.
Sixty-two per cent of respondents to a Sydney Morning Herald/Age poll said Australia should stick to its values despite risking retaliation from its major trading partner. Only 23 per cent favoured thinking twice before antagonising China.
Meanwhile an Australia China Relations Institute poll asked a similar question in a reverse form with only 27.6 per cent of respondents saying Australia should not call out China on issues it disagrees with, while 50.5 per cent said Australia should speak up.
And for the first time, the Lowy Institute’s annual poll shows more Australians see China as a security threat rather than an economic partner. And less than half of respondents see China’s economic growth as a positive for Australia.
Clarity and contradictions
Sources: SMH/Resolve Political Monitor(left) and ACRI/UTS BIDA
Source: Lowy Institute
In the SMH poll only 45 per cent supported government warnings of armed conflict with China suggesting some objection to the more confrontational language from some parts of the government. However, in the ACRI poll 72 per cent of people agreed that China was a security threat to Australia, with 63 per cent seeing it as more of a security threat in the Lowy poll.
In the more wide-ranging ACRI poll 61 per cent supported Australia building a stronger relationship with China and 43 per cent said they were not satisfied with the way the government was handling the relationship. But 62 per cent said their view of China had become more negative since the start of the pandemic.
And in the SMH poll, while two-thirds backed a values-based public stand on issues such as the Hong Kong and Muslim Uighur crackdowns, almost the same number backed a “quiet diplomacy solution” with China.
The ACRI poll also reveals contradictory views on economic issues with, for example, 49 per cent saying the government needs to support closer economic ties with China while 53 per cent separately say the bilateral economic relationship is more of a risk than an opportunity. In both cases 20 per cent disagree with these two propositions.
Labour migration is fast becoming the pointy end of Australia’s trade and aid policymaking with new plans in the past month to both expand existing Pacific worker schemes and open up a parallel policy for people from Southeast Asia.
The Department of Foreign Affairs and Trade has issued a discussion paper on expanding the numbers and scope of the Seasonal Workers Program (SWP) and the Pacific Labour Scheme (PLS) which have become a key part of the Pacific Step-up because they are non-cash aid programs which channel money back to ten Pacific countries.
The SWP began in 2012 to provide low skilled workers to farms and accommodation businesses for nine-month periods. The PLS started in 2018 with tighter training and management designed to also improve skills in the source country.
But the discussion paper is flagging an expansion of the programs to industries such as aged care to fill new labour shortages in Australia but also assist the Pacific source countries recover from the COVID-19 tourism downturn.
But at the same time the government has announced a new scheme to bring farm labourers in from Southeast Asian countries to fill a gap which will emerge from the new bilateral trade deal with the United Kingdom. British backpackers have been exempted from having to work on farms in order to extend their stay in Australia.
In flagging an expansion of the Pacific schemes, the discussion paper says: “The continued success of Pacific labour mobility will be dependent on maintaining the breadth, quality and integrity of programs, ensuring safeguards remain in place to protect the welfare and wellbeing of workers and enabling demand-driven growth.”
But while the Southeast Asian scheme would be in line with the government’s increased focus on these countries, the proposal for it to be less regulated like the backpacker scheme, means it could undermine the attraction of the Pacific policy.
Development Policy Centre analysts Stephen Howes and Richard Curtain argue: “It would make no sense to have two seasonal labour programs – the tightly regulated SWP and a more lightly regulated ASEAN ag visa – applying different rules to the same workers just because they are from different countries.”
- The last two episodes of the Memorandum of Understanding podcast about Timorese abattoir workers in the Victorian town of Warrnambool provide a great grassroots insight into the complexities of the Pacific labour schemes.
NEW CHINA RISK: IMPORTS
The federal government should appoint an assistant trade minister with the specific responsibility for diversifying exports and imports to prepare for a deeper conflict with China, according to a new report.
And it says the government should also be encouraging businesses that depend on China as a source of supply or market to invest in identifying alternatives and developing contingency plans.
Written in the context of China attempting to seize control of Taiwan, the Australian Strategic Policy Institute report says the impact on Australia would be far more wide-ranging than the recent China export losses and likely to require rationing.
“Australia’s dependence on China both as a market for its exports and as a supplier of its imports has grown rapidly over the past decade and that this has generated an economic vulnerability should Australia ever confront a blockage to its trade. The plausible scenario of a forcible attempt by the People’s Republic of China to incorporate Taiwan that’s resisted by the US and its allies could result in such a blockage,” David Uren writes.
He says the current Productivity Commission review of supply chain disruptions takes a conservative approach to possible trade risks that does not account for what would happen in a military conflict.
So, the Federal Treasury needs to go beyond the Commission definitions to look at where measures such as stockpiling might be justified.
DEALS AND DOLLARS
Australian investors joined the national pandemic lockdown last year cutting their holdings in all four key parts of Asia led by a massive halving of direct investment in China.
While the apparent investor evacuation from China occurred under the radar of the bilateral trade row, the pullback from Southeast Asia, Japan and India at the same time is an implicit rejection of the federal government’s push for greater business diversification in Asia.
The cumulative stock of foreign direct investment (FDI, the more stable long-term form of investment) in China fell from $15.5 billion to $6.8 billion – the lowest level since 2011. The overall investment stock (which includes shorter-term financial market capital flows and portfolio investment) fell from $85.3 billion to $64 billion.
Ironically, this pull-back from China by Australians occurred as China became the world’s largest recipient of FDI for the first time overtaking the United States.
The annual Australian Bureau of Statistics figures can always hide some financial shuffling that reflects housekeeping, such as superannuation funds raising money for special COVID payouts, rather than broad strategy changes. But the Australian stock of investment in China has been generally rising since these figures were first collected 20 years ago and in recent years was only exceeded in the region by FDI in Singapore and Papua New Guinea, and Japan in terms of the total investment measure.
While the quiet departure from China may not be surprising given the state of diplomatic relations and Chinese trade sanctions, the rundown of investment into other countries is more striking.
The stock of total investment in Japan fell 19 per cent to $112 billion – which is ironically almost the same as the China fall – despite a range of initiatives and visits to bolster that bilateral relationship.
Likewise, the overall Indian investment stock fell even more, by 22 per cent to $15 billion, and the direct investment halved, just like with China, to less than $1 billion, two years after the lengthy report on Indian economic engagement by former top diplomat Peter Varghese.
Meanwhile, total investment into Southeast Asia fell 25 per cent to $92 billion, and the more diplomatically-sensitive direct investment stock plunged a staggering 40 per cent to $27 billion, three years after Australia hosted the first summit of leaders from those countries in Sydney.
And this withdrawal of Australian capital from the four main Asian economic zones has happened in a year when two lengthy reports on the need to increase business engagement in Asia were issued by the Business Council of Australia with Asia Society Australia and separately by Asialink.
The future of Australia’s economic relationship with Indonesia is no longer about increasing exports to each other, but instead about becoming complementary partners in regional economic networks, according to a new report.
It says they have the opportunity to grow their capacities in agriculture; battery and electric vehicles; the digital economy; and education as new value (or supply) chains in the region take shape.
The Perth USAsia Centre report says the near simultaneous arrival of the Indonesia-Australia Comprehensive Economic Partnership (IA-CEPA) bilateral trade deal and the Regional Comprehensive Economic Partnership (RCEP) agreement require a shift in the way the two countries frame their relationship to see themselves as complementary (or powerhouse) partners in a new regional economy.
“Within the framework of IA-CEPA, an economic powerhouse would pair Indonesia’s rising manufacturing capabilities and Australia’s strengths in agriculture and resources to create high-quality products. The implementation of RCEP will help make this concept a reality,” the Beyond the Bilateral report by Kyle Springer and Brian Kraft says.
It says that as businesses try to make their supply chains shorter and more resilient in the wake of COVID-19 and the US-China trade tensions, Australia and Indonesia are in the favourable position of having shorter, resilient short supply chains and shared security interests.
VIETNAM IRON DEAL
Vietnam has become the latest Asian country to firm up its control of Australian commodities for its steel industry with the purchase of the Northern Territory Roper Valley iron ore project by steelmaker Hoa Phat Group. This is the first move by Vietnam’s biggest steelmaker to lock up a supply chain of raw materials from Australia, but it is following in the footsteps of steel companies from Japan, China and South Korea. The company says it wants to source half its iron ore supplies from Australia and is looking at further vertical integration into the country by buying coking coal mines. Hoa Phat was originally established as a construction machine and equipment trading company in 1992, but has expanded into a conglomerate ranging from production of furniture to agriculture. While Vietnamese companies have been importers of Australian commodities, especially coal, the deal is in line with the policy aim of both countries to double two-way investment.
MYANMAR MINE GRAB
A Chinese conglomerate has made an opportunistic takeover offer for a Myanmar-focused Australian mining company Myanmar Metals, which has been suspended from trading since the February military coup. Yintai Gold has offered to buy all the company’s shares for $67 million, or about half what they were worth before the coup, in one of the first public moves by Chinese companies to cash in on the coup. Yintai is a Shenzhen Stock Exchange company valued at more than $5 billion and part of the broader Yintai Group which includes retail, commercial real estate development, tourism, finance and mining. Myanmar Metals holds a majority interest in the Bawdwin Project which is an historic silver, lead and zinc project in northern Myanmar near the Chinese border. It has two local partners Win Myint Mo Industries and EAP Global.
They (China) have set out 14 points and many Australians would be aware of what they relate to. They go to how Australia runs our democracy, then goes to the freedom of the press. And these are matters that they've raised as concerns. They are not matters with which Australia is prepared to provide any change to, quite rightly.
- Prime Minister Scott Morrison (June 10)
I have never heard something so insane in my life, this discussion about this issue (China). The idea that somehow we should be promoting armed conflict with a superpower is madness and I don’t get it … The Prime Minister has a view that he needs to attack them on trade. I have the view that they’re our biggest customer – we sell them literally 20 times as much as we buy from them. Why do we want to undermine that?
- WA Premier Mark McGowan (June 10)
You need to work with the country (China). … It’s going to be a substantial presence. And you can co-operate with it, you can engage with it, you can negotiate with it, but it has to be a long and mutually constructive process. You don’t have to become like them, neither can you hope to make them become like you. You have to be able to work on that basis.
- Singapore Prime Minister Lee Hsien Loong (June 10)
Source: Department of Education, Skills and Employment
The chart shows the decline in the number of enrolled international students from Asia in Australian higher education, vocational training and other schools during the pandemic. The largest absolute fall in students has been for China, with a decline of 61,000 to 211,000. But the biggest percentage falls have been for Japan (-61 per cent), Thailand (-43 per cent) and Malaysia (-42 per cent) compared with only -29 per cent for China. This data does not reveal whether the students are studying in Australia or overseas.
ON THE HORIZON
WHEN WILL THE BELLS RING?
Malaysia’s Dewan Rakyat (or parliament) has been suspended since January 12 due to a COVID-19 state of emergency, in the first such shutdown since 1969.
Amid the challenges to democracy in Southeast Asia, from the Myanmar coup to the erosion of institutions under Philippines President Rodrigo Duterte, the democratic stalemate in Malaysia has tended to slip under the radar.
But that seems set to end after the unusual decision of the country’s King Sultan Abdullah Ahmad Shah to call for the resumption of parliament as soon as possible and for no extension of the state of emergency when it expires on August 1.
But that move seems set to trigger another round of manoeuvring over the country’s prime ministership and probably an election, which incumbent Prime Minister Muhyiddin Yassin seems unlikely to win.
Muhyiddin has used the emergency to run the country without a clear majority in parliament while his many rivals have floated various alternative coalitions which they claim would have more support.
The biggest threat to Muhyiddin seems to be from an alliance of convenience between two of the most bitterly opposed forces in Malaysian politics for more than two decades: former deputy prime minister Anwar Ibrahim, who was forced from power in 1998, and his old once-dominant party the United Malays National Organisation.
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Briefing MONTHLY is a public update with news and original analysis on Asia and Australia-Asia relations. As Australia debates its future in Asia, and the Australian media footprint in Asia continues to shrink, it is an opportune time to offer Australians at the forefront of Australia’s engagement with Asia a professionally edited, succinct and authoritative curation of the most relevant content on Asia and Australia-Asia relations. Focused on business, geopolitics, education and culture, Briefing MONTHLY is distinctly Australian and internationalist, highlighting trends, deals, visits, stories and events in our region that matter.
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