Anti-China Tensions on the Rise in Australia

Australia's Sinophile Prime Minister Kevin Rudd is fighting perceptions he has become a "running dog" for Beijing as anti-China sentiment mounts at home, threatening billions of dollars worth of Chinese investment.

Lauren Victoria Burke / AP

With Rudd urging a greater IMF role for China at a meeting this week of major economies in London, Australia's conservative Opposition Leader Malcolm Turnbull accused Rudd of having become a "roving ambassador for the People's Republic of China".

Even a shock decision last Friday to refuse a bid by Chinese state-owned Minmetals to buy Australian miner OZ Minerals on national security grounds appears to have backfired, with media accusing the government of belated chest-beating.

"The government has thrown up a series of arbitrary investment barriers apparently to look like it is 'standing up to China'", the Sydney Morning Herald newspaper said on Monday. "It has sent a message to the Australian public that Chinese money is inherently dangerous. The result is red peril hysteria."

The Mandarin-speaking Rudd, elected in late 2007, was expected to take Australia's relations with China to a new high with his expert understanding of the country, learned in Beijing as a junior diplomat.

But Chinese investment bids now before Australia's foreign investment watchdog, including a $19.5 billion tie-up between Chinese state-owned metals firm Chinalco and Anglo-Australian mining giant Rio Tinto, have sparked public unease.

Conservative opposition politicians and an influential upper house swing vote independent senator plan television advertisements with more than a whiff of nationalism, demanding the center-left government not sell the farm to Beijing.

At the same time, Rudd's Labor has given inadvertent credence to populist attacks, although a poll on Monday showed its popularity remains strong with voters.

Defence Minister Joel Fitzgibbon is fighting for his job after failing to declare two free trips given to him by a Chinese-born friend, while Rudd has endured a media storm over undeclared meetings with China's security and intelligence chief Zhou Yongkang, as well as propaganda tzar Li Changchun.

Opponents had all but tarred Rudd as "Beijing's running dog", newspapers said, with perceptions rising of the popular prime minister as a "Chinese lickspittle" or "Manchurian candidate".

A cartoon in the mass-selling Daily Telegraph newspaper on Monday depicted spies and military chiefs covertly eavesdropping on Rudd as he ordered wonton soup at a Chinese restaurant in London.

Harder Line

Those suspicions could yet influence Rudd's Labor to take a harder line against billions of dollars worth of China investment, although historically, Australian governments have been loath to refuse dollars flowing in from overseas.

A security expert who asked not be named said on Monday foreign investment bureaucrats had privately canvassed resource firms about investment options other than China.

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"It would be ironic if Kevin Rudd ends up as the first prime minister since (1971) to derail the China relationship, at the moment when Australia and the world needs China most," the Herald said.

Rudd's deputy and Acting Prime Minister Julia Gillard accused opponents of trying to stir "yellow peril sentiments" and said the government had the right level of relationship with Asia's emerging superpower.

Two-way trade with China totaled A$58 billion ($40 billion) in 2008, rivaling Japan as Canberra's largest export partner.

"We need to understand China, we need to engage with China, we need to understand all of its strengths and all of its weaknesses," Gillard told state radio.

Rudd's Popularity Near Record Peak: Poll

Ironically, support for Rudd is at near-record levels, a poll showed on Monday, with a recession-fighting economic stimulus package making him one of the most popular leaders in the country's history.

Rudd, who faces re-election by late next year, had risen four points to 74 percent approval with voters as economic turmoil gripped the country late last year, the Nielsen poll in the Sydney Morning Herald newspaper showed.

Support for Rudd's center-left Labor government picked up three points since the last poll in November to hold a 58 percent to 42 lead over the Liberal Party when votes were distributed to the two major parties.

"I guess people like and trust him, and see him as competent and doing a good job. I guess he's just perceived as a safe pair of hands," Nielsen pollster John Stirton told state radio.

Rudd's approval level was close to the all-time poll popularity record of 75 percent set in November 1984 by former Labor prime minister Bob Hawke, who had wide appeal with voters due to his past drinking feats and easy-going personality.

The poll was carried out while Rudd was in the United States for talks with President Barack Obama ahead of a meeting of the world's major economies this week in London.

Factoring in a 2.6 percentage point margin of error, Rudd's popularity had actually equaled Hawke's, Stirton said.

A rival Newspoll last week showed Rudd with a 65 percent to 20 percent popularity chasm between himself and Opposition Leader Malcolm Turnbull, while the government had a 56 to 44 percent lead over the conservatives.

Australia moved a step closer to recession earlier this month when the country reported its first contraction in eight years, with the economy shrinking 0.5 percent. Year-on-year, the economy grew by 0.3 percent, the slowest pace of expansion since the country's last recession in 1991.

The government hopes its A$42 billion ($29 billion) stimulus package, including cash handouts and infrastructure spending, will help the economy weather a downturn tipped to see joblessness hit 7 percent in mid-2010, up from 4.8 percent now.

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