When the NT Government leased the Darwin Port to a foreign company for 99 years, it promoted the deal as a lucrative opportunity to forge closer economic ties with China and the broader region.
- The Belt and Road Initiative (BRI) is China’s plan to increase global trade routes and political ties
- Advocates say the BRI offers investment opportunities at a time when the economy needs a boost
- Critics say it is part of a strategy designed to increase China’s global influence
“We are confident that Landbridge (the Chinese company that leased the port) will bring the Territory the benefits of their position, networks and experience in Asia,” CLP chief minister Adam Giles said in 2015.
But the $506 million deal triggered deep concerns among some in Australia’s defence and diplomatic circles because it gave control of a critical piece of infrastructure to a Chinese-owned company at a time when tensions between the two nations were escalating.
The United States, which in 2012 began deploying hundreds of US Marines to Darwin each year, felt so blindsided by the port deal that then-president Barack Obama conveyed his concerns directly to then-prime minister Malcolm Turnbull.
Five years on, the ructions have only intensified further, with ongoing trade disputes, human rights concerns, cybersecurity issues and military expansion in the South China Sea all creating an increasingly abrasive political relationship between Australia and its biggest trading partner.
While the geopolitical backdrop might seem a world away in Darwin, the port deal remains a divisive issue, with Territory Alliance leader Terry Mills describing it as a “huge mistake”.
The Darwin Port has become symbolic of the controversy surrounding Chinese investment in Australia — an issue front and centre for some Territory voters weighing up their choices ahead of this month’s NT election.
As part of the ABC’s You Ask, We Answer project, an audience member asked us to examine the Territory’s commercial relationships with China.
That includes whether the NT Government has officially signed up to the controversial infrastructure and investment program known as the Belt and Road Initiative.
Here’s what we found.
What is the Belt and Road Initiative?
The Belt and Road Initiative (BRI) has been described as a 21st-century Silk Road — a network of trade routes linking China to different parts of the world.
The “Belt” symbolises overland corridors stretching into Central Asia, Russia and Europe, while the “Road” refers to maritime routes reaching across Asia, Africa and Australia.
To achieve its ambitions, China is investing more than $1 trillion in other countries’ critical infrastructure — including ports, railways and roads.
By 2019, more than 150 countries and organisations had signed up to the strategy, which also aims to coordinate development programs, strengthen trade relations, improve financial cooperation and deepen social and cultural exchanges.
The BRI has been promoted in the Northern Territory by the Australia China Business Council, a national not-for-profit focused on economic engagement between the two countries.
“If we are part of those processes, our exports go to the front of the line,” the organisation’s NT president, Daryl Guppy, said.
“If we do not use those procedures and processes, then our exports go to the back of the line.”
Why are some people opposed to the BRI?
While advocates promote the BRI as a positive advancement in international trade, critics say it enables the governing Chinese Communist Party to use the country’s financial investments as political leverage on the world stage.
“This is part of the strategy for the Chinese Government to compete with America for regional, if not global, hegemony,” said Dr Feng Chongyi, an Associate Professor in China Studies at the University of Technology Sydney.
One of Dr Feng’s concerns is so-called “debt-trap diplomacy”, where poorer nations are forced to hand over strategic infrastructure to China when they fail to repay their loans, as happened with a port in Sri Lanka.
“When the [foreign] government or companies run into difficulty, that creates vulnerability for the Chinese Government to exploit,” Dr Feng said.
The Darwin Port deal was not officially part of the BRI, but Dr Feng said the Chinese Government’s ability to exert control over companies such as Landbridge should not be underestimated.
“The case of Darwin Port is a very poor decision by the Northern Territory Government,” Dr Feng said.
“The major enterprises or companies in China, by law, have [an] obligation to obey the order and instructions from the [Chinese] government.”
The NT Government has previously dismissed such concerns, noting its retention of a 20 per cent non-controlling stake in the port, which includes consultation rights over some of Landbridge’s decisions.
Chinese President Xi Jinping has also rejected claims against the BRI, saying all projects are managed in a transparent, law-abiding and financially-sustainable way.
How significant is Chinese investment in the NT?
China is the NT’s second-largest export partner, behind Japan, and both Labor and CLP NT governments have sent frequent political and business delegations to China to attract investment into the Territory.
Over recent years, Chinese companies have committed millions of dollars on several significant projects in the NT, none of which are officially tied to the BRI, despite being aligned with its aims.
In 2018, an $800 million gas pipeline linking Tennant Creek to Mt Isa was installed by Jemena, a company majority-owned by China’s State Grid.
The same year, the NT Government provided $10 million in “cooperative marketing” to support Donghai Airlines’ flights between Shenzhen and Darwin, however the pandemic has forced its suspension.
And in addition to the port, Landbridge has promised to build a $200 million luxury hotel on Darwin’s waterfront, with $17 million kicked in by the NT Government for public infrastructure and a skybridge, although the project has been beset by delays.
So, has the NT Government ever signed up to the BRI?
NT Chief Minister Michael Gunner, a long-time advocate of economic and cultural engagement with China, has previously described the Belt and Road Initiative as mutually beneficial for the two jurisdictions.
“The Belt and Road Initiative and [the NT’s] Developing the North [policy] generate, and benefit from, increased trade in and out of northern Australia,” he told a conference in 2018.
“Ultimately, these two strategies promote a more prosperous Australia and more prosperous China.”
But unlike Victoria, which signed a BRI memorandum of understanding in 2018, the NT has never done so.
“The Northern Territory Government is not part of the Belt and Road Initiative or related projects,” the Chief Minister’ spokesman told the ABC.
However, several non-BRI agreements have been signed with local governments, education institutions and other organisations in China over the past few decades.
Five of them remain active, including:
- China Council for the Promotion of International Trade Economic Development Cooperation Agreement 1993.
- Anhui Sister Province Agreement 1995.
- A Cooperation Agreement with China Mining Association, signed by the NT Minister for Mines and Energy in 2007.
- A letter of intent between the NT and Shaanxi Province regarding movement towards a sister province relationship, signed by former Chief Minister Adam Giles in 2015.
- Rizhao Municipal Government Friendship Agreement, signed by Chief Minister Michael Gunner in 2016.
The Darwin City Council has also signed its own “cooperation agreement” with the Yuexiu District in Guangzhou in 2018, which was reportedly promoted in China as being linked with the region’s BRI strategy.
What’s the Australian Government’s view on the BRI?
The Federal Government has previously rejected requests to be involved in the BRI and recently rebuked Victoria over its own MOU.
“It is not a program that the Australian Government has signed up to, it is not the Australian Government’s foreign policy,” Prime Minister Scott Morrison said in June.
“And all states and territories should not be doing things that act inconsistently with the federal policy.”
Given the Federal Government’s opposition, Charles Darwin University’s fellow in law, John Garrick, said it would be legally difficult for the NT, which has fewer rights than states, to sign up to the BRI if it wanted to.
“If [the NT] did, it would have to be a very limited trade-specific set of deals between local industries and their Chinese counterparts,” Mr Garrick said.
“But it would really be subject to overarching federal governance.”
What about other NT parties?
The CLP said it recognised China’s importance for the NT economy, including “untapped export opportunities”, but it would not pursue anything that went against Australia’s strategic interests.
“A CLP Government will work with the Commonwealth to ensure the Territory is geared towards achieving those interests while taking advantage of the economic opportunities that China presents,” a spokesman said.
Territory Alliance leader Terry Mills, who was previously a CLP chief minister before being rolled by Mr Giles, said the NT government should not have sold the port to foreign interests.
“That was a huge mistake,” Mr Mills said.
Despite his criticism of the port deal, Mr Mills said his party would develop “constructive” relationships with China and other international trading partners, so long as they aligned with Australia’s foreign policy.
“Territory Alliance will respect our nation’s position in not signing up to China’s Belt and Road Initiative,” Mr Mills said.
“We believe our most critical infrastructure relationship is with the Commonwealth Government.”