BBC World: Talking Business Asia

E&OE TRANSCRIPTTV INTERVIEWBBC TALKING BUSINESS ASIARECORDED 24 MAY 2021JournalistWelcome to the program, Mr Rudd. How badly are Australian businesses being hit by the current government's pushback against China?Kevin Rudd Well, it takes two to tango in this business. China has taken a number of punitive measures against Australia and the Australian Government of course has been responding as it judges fit. But on the bottom line of the impact on corporates, it does depend on the sector of the Australian economy that we're talking about. On the one hand, iron ore prices are still going through the roof. That's because China's demand for iron ore remains very high. But when you look at other discretionary sectors of the Australian economy, obviously for example, international students not withstanding the current COVID restrictions, but in further consumer areas as well, such as wine products, the impact is being felt in a real and concrete way on the ground by Australian businesses and universities.Journalist How bad could it get between the two countries? Could we see iron ore on the table, for instance, as something that China holds up as a tool of punishment?Kevin Rudd Well, China faces an international market reality that if China could diversify its imports of iron ore tomorrow, it would, but it can't. It can't get sufficient supply out of Brazil. So the damage to the Australian iron ore industry will not be now, I believe it will be medium-term. The takeout message I believe for the Chinese political leadership will be: they will see Australia as an unreliable supplier of iron ore long-term because of the geopolitical conclusions that Beijing will make in relation to Canberra, or at least the conservative government in Canberra, that long-term supply may be put at risk because of geopolitical factors.JournalistMr Rudd, when you were Prime Minister, arguably Australia-China relations were at a relative high. Given what we see today, though, with the way that China is acting, were you too naive and optimistic about China's trajectory?Kevin Rudd Not at all. If you look at the history of our government, we had rolling disagreements with Beijing about every conceivable thing. However, the manner in which we conducted our relationship with Beijing at the time was professional, it was diplomatic, it was hardline, but we also managed to preserve the overall balance of the relationship. Since then, of course, Xi Jinping has had a much greater period of time in office, and has become more assertive than he was in the past. And the Australian conservative government's response to the Chinese has from time to time been measured, but at other times, frankly, has been rhetorical and shrill. If you are going to have a disagreement with Beijing, as many governments around the world now are doing, it's far better to arrive at that position conjointly with other countries and other governments around the world, rather than unilaterally because it makes it easier for China to exert bilateral leverage against you if that's the case.JournalistWhat's your advice to companies and countries who want to do business with China but also want to raise these issues?Kevin Rudd The bottom line is, it's always been a red line for China. I've had many, many disagreements with China on human rights in the past. My first visit to Beijing as prime minister, I delivered an address at Peking University in Chinese criticising China's human rights performance in Tibet. It was not welcomed, but it was a necessary thing to do. For corporations, this is a much harder terrain to navigate, particularly given recent events and Xinjiang, continuing events in Tibet, and again recent developments in Hong Kong. Again, my advice to corporates would be: if there is to be a position to be taken by corporates, it's better if that is anchored in peak industry organisations within countries -- the United States, the United Kingdom or elsewhere -- a rather than necessarily an individual corporation taking the lead. That's not a complete solution, but it's one way of advancing the debate.Journalist From what you're saying it sounds like working together as a global community to put forward these issues to China is perhaps the solution. How do you think China might react to that?Kevin Rudd Well China won't like it because China would wish to leverage other countries bilaterally to either silence them on questions of human rights or silence them on questions of alliance obligations to the United States. But the fact that China doesn't like something doesn't necessarily mean the rest of us shouldn't do it.Journalist What's the single biggest misconception, Mr Rudd, about China's rise, do you think?Kevin Rudd When people analyse China's rise, they seem to do it almost exclusively through the prism of how that rise impacts them externally, and that's natural and that's normal. But in the analysis of China and its rise, we need to be equally clear about the domestic drivers of China's own political and economic and foreign policy evolution. Because if we do that, we'll also arrive at an analytical conclusion that China domestically faces an enormous set of constraints and challenges itself; they won't impede or ultimately prevent China's rise, but they are important factors for us to bear in mind when we analyse China's own vulnerabilities. I think assuming that China is always 10 feet tall on everything is an analytical error which can produce therefore policy errors as well.JournalistThank you for joining us.