A way out of Australia’s China crisis: let Beijing buy Virgin

Scott Morrison may be doing a solid job on the virus in Australia — with stellar, arguably career-saving help from state premiers — but he is flailing when it comes to China.

The more one looks at the Morrison government’s full frontal attack on China, and his bizarre demands for an independent inquiry into the Chinese government’s handling of the COVID-19 outbreak, the stranger it seems. 

Doubling down, Morrison is also pushing the even more ludicrous plan of giving World Health Organisation officials similar investigation powers to UN Nuclear weapons inspectors.

Curiously charging in with no international backing, Morrison has struggled to find support from the UK and France, the only two members of the UN permanent security council that might back his waste-of-time plan.

Still, let’s remember that politics, especially internationally, is the art of the possible. China and Russia would block the plan, and so too may the US — which, having threatened to withdraw WHO funding, surely could not see the point.

All the “he said, she said” tit for tat that seems to excite the press gallery is so much white noise, as quite simply none of this was never going to happen, certainly not in the way that Morrison — is prosecuting the ideas in public. The next step, if reports are to be believed, is to get acting health secretary Caroline Edwards to raise it with WHO. 

The strength of Australia’s high moral ground push seems disproportionate to the likelihood of getting very far with it. Understandably, plenty of observers privately say they smell a rat.

So what’s really going on?

The probable answer is that China’s Canberra envoy Cheng Jingye, clearly given freedom by Beijing to have a public slanging match with his diplomatic hosts, has come up with: that this is political.

He happily produced evidence, leaking a conversation with Department of Foreign Affairs secretary Frances Adamson, whose private assurances to him and Beijing stand in stark contrast with Morrison’s shirt-fronting stance. My my, how tricky.

Take a closer look you’ll see that the shouting match — or barking at the moon on Australia’s part — began with a guerilla attack on China from Peter Dutton.

It is not the first time the man has done this. Liberal insiders say that he and his supporters are using China as a wedge issue inside the party. Foreign Minister Marise Payne’s fervent backing of Morrison would seem to confirm this: in a more conservative Dutton administration, cabinet’s wettest member would be toast.

After promising to continue on the path of repair laid by Malcolm Turnbull, Morrison has flipped and flopped, regularly pushed by the party’s right wing to “get tougher on China”, in the process tearing the relationship asunder — quite possibly the point where China really does not seem to care much any more.

Xi reportedly won’t take Morrison’s calls at the moment.

It’s worth repeating the numbers: China is Australia largest trading partner and export market. Daylight is number two.

Talk of a boycott by Australia or China is simply nonsense. There are simply no other ready buyers to take up the slack in our four biggest non-education exports — iron ore, gas, coal and wool. If China decided to play hard ball, Argentina’s fate beckons. The same goes for international students and for tourism — both sectors teetering on the abyss as it is.

Yet perhaps there is a way out, and it’s one that could solve two major headaches for Morrison.

Letting one of China’s big three airlines (China Southern, China Eastern or Air China) buy Virgin Australia is a big-enough prize to salve China’s “wounds” and make Beijing play ball.

As insurance, the government would keep a small stake and a golden share, giving it final say on strategy. It’s important to remember Virgin is already majority foreign owned, all of it by companies in one-party states, and currently about 40% is held by two Chinese groups.

Perhaps Singapore Airlines and Etihad could stay in the deal — and if you wanted to keep the name and brand, Richard Branson too. Beijing would sort out Virgin’s existing Chinese shareholders.

China Southern may be the most likely taker. Or, now that its code share agreement with Qantas has dissolved, Air China. Qantas still has a deal with China Eastern but again, no impediment.

This would neatly solve the looming Qantas re-monopolisation nightmare. It is also, by far, the quickest way to resuscitate Australia’s stricken tourism sector.

As a relatively COVID-free country, China could be one of the first whose tourists are allowed back into Australia. A welcoming of the Chinese people with open arms by Australia would in turn send the right signals to Chinese parents wanting to send their kids abroad to study.

The problem, in an environment of rising Sinophobia, is the degree of difficultly in selling such a deal to the punters. 

But the lure of a sure-fire way to relight the economy should be very tempting to Morrison. If such an audacious deal were something that he could pull off, it really would be his finest hour — and Peter Dutton would be well and truly back in his box.