Beijing bites back over Kadeer visa and iron ore prices
AUSTRALIA'S relationship with China has plunged to a decade low, with Beijing taking a series of tough measures, including cancelling high-level visits, to convey its displeasure with the Rudd government.
The Chinese have effectively banned visits by senior officials and sanctioned a press campaign against Australia, angered by several recent Rudd government decisions, such as granting a visa to exiled Uighur leader Rebiya Kadeer.
It is believed that the Chinese have also intimated that they may not co-operate readily with Australia over Asia Pacific regional architecture, which would make Kevin Rudd's plan for an Asia Pacific community difficult to achieve.
While Foreign Minister Stephen Smith declined to comment on the Asia Pacific matter, his office confirmed that the visit by Vice-Minister for Foreign Affairs He Yafei was cancelled over the granting of the Kadeer visa.
Analysts have told The Australian the Chinese were extremely frustrated at their inability to influence the price of iron ore imports.
However, the last straw was the decision by Canberra to grant a visa to Ms Kadeer, who attended the Melbourne International Film Festival this month.
The Chinese also cancelled a meeting of senior Australian and Chinese officials.
Mr He had been scheduled to attend the Pacific Islands Forum meeting in Cairns, which began on August 5, but was replaced by the lowly ranked Wang Yongqiu, the special envoy for the Pacific Islands Forum. This broke with previous Chinese practice of PIF meetings being attended by either a Chinese vice-minister or an assistant minister.
It was also in marked contrast to India, which sent its Foreign Minister, S.M. Krishna, and the US, which was represented by Assistant Secretary of State for East Asia Kurt Campbell.
International delegates at the PIF interpreted this as a deliberate slight to Australia.
A spokesman for Mr Smith told The Australian: "We regret that the Chinese government has felt obliged to take these steps, since the government's position on the Xinjiang Uighur Autonomous Region is clear."
In opposing a Greens motion on Xinjiang in the Senate yesterday, senator Joe Ludwig, on behalf of the government, reiterated Canberra's support for a one-China policy, and said that it considered Xinjiang to be part of China.
However, he also said the government had no evidence that Ms Kadeer was a terrorist. China frequently makes this charge against Ms Kadeer.
The souring of relations has prompted a major Chinese government policy think tank to warn Chinese companies about investing in Australia.
But it comes as China backs Andrew Forrest's Fortescue Metals Group to the tune of $US6billion ($7.2bn) in funding for a major production expansion in an attempt to break the oligopoly of major iron ore producers.
To secure its financing windfall, FMG yesterday handed China's major steel mills a better price than Rio Tinto and BHP gave to steelmakers in Japan and Korea.
China received a 35 per cent cut on last year's price compared with a 33 per cent cut.
The battle over iron ore pricing has already resulted in the arrest of four iron ore executives from Rio, including Australian Stern Hu, with tensions affecting politicians and media on both sides of the relationship.
As part of the investigation that caught up Mr Hu and his colleagues, a second local steel executive -- Wang Hongjiu from Shandong province's state-owned Laigang and one of the country's top 16 steelmakers -- has now been detained.
Body: "The bilateral relationship between our two countries has become a little strained," Mr Forrest said. "They have a volatile and unstable iron ore pricing system and they needed a major supplier to bring in a uniform pricing arrangement.
"This move by a major Australian company should endorse the strength of that long-term relationship."
Han Feng, the leading Australian researcher at the China Academy of Social Science, the government's main think-tank, said the bilateral relationship had been weakened by the failure of the $US19.5bn bid by Chinalco to buy a bigger slice of Rio as well as the arrest of Mr Hu. "The government tries to downplay the negative impact but for the Chinese businesses they should think it over before going to Australia," he said.
"In the past, the Western businesses had the higher level of trust -- now they are losing that. This is very important.
"Turning down the (Rio/Chinalco) deal from the Australian side made the whole situation a mess. At that time it was still a business deal. It is two cases but having relation to each other."
The comments by the leading Chinese think-tank figure that the relationship between Australia and China is at its lowest level indicate China has decided to make its displeasure with Australia widely known.
Beijing bites back over Kadeer visa and iron ore prices | The Australian