Australia has a secret China Unit

Dennis Richardson: Represents Defence on the China committee

After years of policy confusion, a high-powered task force has been quietly pulling the China threads together in the federal bureaucracy.

Canberra‘s leading mandarins have formed a secret task force to cope with the unprecedented challenges of rising China.

The Committee of Secretaries on China was formed by a cabinet decision of December 2010 following criticism that the federal government was struggling to keep track of the reach and complexity of the nation that has come to dominate Australia’s trade accounts and is reconfiguring the geopolitical order.

The committee is chaired by the secretary of the Department of Foreign Affairs, Peter Varghese, and includes the heads of about 20 departments and agencies including Treasury, Defence and the Australian Secret Intelligence Organisation, according to several sources with direct knowledge.

There is no similar arrangement in Canberra for any other country, region or policy area.

The committee has been kept under tight wraps even though it has met roughly each quarter since mid-2011.

Fairfax understands it met on March 21 to co-ordinate priorities and tactics ahead of Prime Minister Julia Gillard’s trip to China, which begins on Friday.

Richard Rigby, former head of the North Asia section of the Office of National Assessments, said he was relieved to hear of the task force’s existence because it showed Canberra was now treating China with the seriousness it demanded.

”There are others relationships that are extraordinarily important, the US and also Japan and increasingly India, but there’s nothing that looms quite in the way China does,” said Dr Rigby, who now heads the Australian National University‘s China Institute.

”There are just so many more questions about China, things that are unknown or unclear.

”Precisely where is China going? We simply don’t know and they don’t know. We are on a very steep learning curve.”

The China committee was established by Ms Gillard and the then foreign minister Kevin Rudd after gaps in analytical capacity and co-ordination were seen to contribute to a period of erratic policymaking and frayed bilateral relations in 2009.

Members include secretary at the Department of the Prime Minister and Cabinet, Ian Watt, Treasury secretary Martin Parkinson, Defence secretary Dennis Richardson, ASIO director David Irvine, Australian Federal Police commissioner Tony Negus, Office of National Assessments (ONA) director Allan Gyngell and Australia’s ambassador to China, Frances Adamson.

Also represented are the heads of health, education, customs and about a dozen other departments or agencies.

The impact of China is most visible on the economic front, where trade has risen more then tenfold in a decade to $128 billion last financial year.

China is the largest source of overseas students, with about 150,000 enrolments in 2012, and the second largest source of overseas visitors, with more than 626,000 arrivals in 2012.

But the membership of the committee demonstrates how the rise of China is affecting almost all areas of policymaking, from climate change to public health, education, agriculture, counter-espionage, money laundering and the narcotics trade.

”Whatever happens across the broad range of policymaking and economics in China, these days it impacts on Australia,” said Philippa Kelly, managing director of China Policy, a Beijing consultancy. ”Every capital in the region is grappling with the challenge of keeping track.”

The committee is the leading example of how the federal bureaucracy, like the corporate sector, is attempting to work with a limited China-savvy workforce and keep up with China’s rise.

In October the Asian Century White Paper highlighted gaps in capacity, leading to what one insider called a ”massive” revamp of training and recruitment to build China experience and knowledge and have it efficiently deployed across the bureaucracy.

The capacity program is being led by Australian Public Service Commissioner Stephen Sedgwick and Mr Watt.

Stephen Joske, an executive at Treasury and the ONA until 2008, said a failure to build and co-ordinate China capacity had contributed to policy confusion.

”There was a long period when outside DFAT and ONA the government wasn’t really resourcing China,” said Dr Joske, now a Beijing-based manager for Australian Super. ”And getting it all to work together in an environment where people changed jobs all the time was tricky.”

Senior officials say China capacity is still spread too thin, but is improving.

Last month the Department of Foreign Affairs introduced a policy that requires diplomats with Asian language training – which can require up to two years – to do repeat postings in the area of their linguistic expertise.

The intelligence agencies have been targeting graduates with China knowledge and language, Canberra sources say.

Treasury has expanded its presence in Beijing and created a ”China unit” in Canberra, now staffed by eight people. It has also conducted a China roundtable to tap into expertise outside the bureaucracy, although analysts say such efforts have not gone far enough.

”My concern with Canberra is they are too focused on themselves and they don’t reach out to business,” said Hans Hendrischke, Professor of Chinese Business and Management at the University of Sydney China Studies Centre.

Professor Hendrisch said a focus on bureaucratic rather than business outcomes had contributed to years of fruitless negotiations over a free trade agreement with China.

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