Groupthink Australia and the China problem

How far can a very big, technologically leading-edge corporation preserve its independence, even if privately owned, in a Leninist political set up?

By Gary Scarrabelotti*

Another day, another outrage.

Just now it’s the Alan Jones affair.  The other day it was Senator Cory Bernardi.

What cavalier words, I ask myself, will tomorrow bring; what storm of confected offence will blow up in response?

In mythology a robust people, a lot of Australians are developing a sensibility too delicate to survive in a land of free speech.

This frailty in the face of freedom is something well understood now in the political class and among those who wish to dominate it or exercise influence over it. Playing on our finely tuned sensitivities is proving a brilliant way for those in power — for the guardians of right thinking in our institutions, public and private — to shut down or to limit debate.

Whether we are talking about the legitimacy of gay marriage, the nature of Islam, or foreign investment, speech protocols — accompanied by a bodyguard of censors – aim to enforce a rigid code of thought.

Barnaby’s doubts

On September 4  National Party Senator, Barnaby Joyce, raised a question about whether it was prudent for Australia to sell the huge Cubbie Station, together with its rights to massive water supplies, to a consortium dominated by the Shandong RuYi Scientific & Technological Group. Shandong RuYi is a Chinese textile and real estate business.

Originally a state-owned enterprise (SOE), Shandong RuYi was privatized in 2001 but it appears still to retain a close relationship with the Chinese government and is said to be favoured by cheap loans from the state-controlled banks. In China SOEs — which cover the whole banking system — are controlled ultimately by the Chinese Communist Party (CCP).

The purpose of this control is to entrench the political power of the CCP by ensuring that the path to riches, power, success, and social standing in China is through the Party itself.  Within China the CCP has co-opted capitalism as its preferred instrument of political, economic and social control; outside of China SOEs and other government-related businesses serve, ultimately under the direction of the Party, to advance China’s strategic interests.

One of the best accounts of how the CCP manages Chinese capitalism comes from Dr John Lee, adjunct associate professor at the Sydney University Centre for International Security Studies.  Entitled “China’s Corporate Leninism”, and published in the May/June 2012 edition of The American Interest, Lee mounts a powerful case.

“Although China’s SOEs are called upon to nominally behave as profit-making entities, they are viewed ultimately as instruments of the régime. This is clear from the structure of authority in the Chinese system. The shares and therefore assets of SOEs are held by the SASAC [the State-owned Assets Supervision and Administration Commission], which takes instructions from relevant ministries. Further up the chain, the SASAC is controlled by and answerable to the State Council of the National People’s Congress, China’s peak administrative and legislative body. This structure is replicated for provincially and locally managed SOEs. In effect, then, it is the CCP that monitors and preys financially upon the SOE sector.

“That China’s state-owned firms remain instruments of CCP power is illustrated by the links between SOE executives and the CCP. Meticulous research by Minxin Pei has revealed that the senior managers of all central state-owned enterprises are almost all senior CCP members. The three most senior positions (Party Secretary, Chairman and CEO) of the fifty centrally managed SOEs are appointed directly by the CCP’s Central Organization Department (COD). The current head of the COD is Li Yuancho, who also sits as a member of the Politburo. Almost all appointees are CCP members, and in many cases, the CEO and Party Secretary within the company is the same person. Many of the appointees at these levels were formerly top-level provincial officials. All remaining senior executive appointments are controlled by the SASAC, which consults with the COD. Once again, the process for appointment at these senior levels is replicated in provincial and local SOEs. If there were ever an example of an interlocking directorate, this is it.”


Meantime, back in the world of what people pretentiously call “political discourse”, Barnaby Joyce’s reservations about Cubbie’s fate — reservations which did not call into question the value to Australia of foreign (or even of Chinese) investment — brought forth a storm of rejection.

Former Treasury Secretary, Ken Henry, led the attack with withering condescension.  The debate over foreign investment, he opined, on September 5 at the ANU, was “frequently misinformed” and “populist” and much too important “to leave … to Australia’s elected political representatives.”

Get that. This is not an argument.  It’s an echo of Robert Manne’s thesis that only recognised “experts” should be heard.

Whether we are talking about the legitimacy of gay marriage, the nature of Islam, or foreign investment, speech protocols — accompanied by a bodyguard of censors – aim to enforce a rigid code of thought.

On the same day, Keith de Lacy, a former Labor Treasurer of Queensland, Chairman of Cubbie Station before the buyout, and a man not often given to wild words, reckoned Joyce was “stoking xenophobic flames”.

Xenophobia, as we’ve come to understand, is second only to racism in the hierarchy of contemporary evils. We are not dealing with an argument here, but a slur.

Nine days later at the “Australia in China’s Century Conference” hosted by The Australian and The Wall Street Journal  Treasurer Wayne Swan returned to the “xenophobic” theme.

To give him his due, Swan imposed some sound conditions on the Cubbie sale.  Management has to be in the hands of Australians and Shandong RuYi has to sell down its 80 per cent stake to 51 per cent within three years.  But it is unreasonable to question whether greater prudence might be called for in the case of companies with close links to the Chinese government? Apparently, it is. To harbour doubts is to be a xenophobe, a populist, and a danger to Australia’s national interests, especially if you are a popular conservative politician.

Swan found himself in strangely agreeable company at the “China’s Century” conference.  There they were, the two billionaires, James Packer and Kerry Stokes, obligingly singing from the same hymn sheet as Swan. The tycoons, who Swan allegedly hates, closed ranks with the Government to clamp down on debate. And the Federal Opposition had no objections either. In order to back up Shadow Treasurer, Joe Hockey, and to preserve unity on his front bench, Abbott smothered Joyce.

Leninist China

Meantime, a beautiful half-true piece of misinformation was fed to the media by Alexander Downer, former Howard Government foreign minister, and now a lobbyist for Shandong RuYi:

“People who have a 1960s view of Mao’s China, they’re just out fanning a scare campaign rather than telling people how China has changed and how we can work with China.”

What Downer failed to say – but then he is paid not to say it – is that, while China has abandoned both Maoism and Marxism, it has preserved — and developed – Leninism.  It’s seen in the CCP’s intricate system of central control. That’s the whole gist of Lee’s brilliant article.

One of the few people in the Federal Parliament, besides Joyce, who really understands the Chinese reality, and is prepared to speak openly about it, is the doughty Michael Danby, Labor Member for Melbourne Ports. Commenting on the recent federal government refusal, on security grounds, to entertain a bid by Huawei – a classic Chinese SEO – to subcontract for work on the National Broadband Network, Danby put it this way:

“All this tells us is that Huawei is a willing servant of the political, military and intelligence interests of the Chinese government and Communist Party.”

That’s the nub of the Chinese investment problem. Although Shandong RuYi is not an SOE, one has to ask this question: how far can a very big, technologically leading-edge corporation preserve its independence, even if privately owned, in a Leninist political set up?

In Groupthink Australia you won’t find too many people ready to ask that question.

*This article has also been published on

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