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Malcolm Turnbull’s attempt to paraphrase Chairman Mao last week was not just a mildly farcical example of political theatre. It also marked an important turning point in a decades-long debate over how the west should respond to China’s rise.

Aodaliya renmin zhan qi lai! The Australian people have stood up,” the country’s prime minister told reporters in mangled Mandarin — a deliberate echo of Mao’s declaration in 1949 that the Chinese people had stood up, thus ending a century of humiliation at the hands of colonial aggressors.

Mr Turnbull was defending new Australian laws drafted this month which are designed to limit the influence of foreign governments and which have one particular target in mind — the Chinese Communist party.

With only a brief pause following the 1989 Tiananmen massacre, most developed democracies have engaged with China since the late 1970s in the belief the country would integrate into the US-led global order and eventually become more like them.

But those assumptions are now under assault as the west belatedly realises China has no intention of opening up its political system. At the same time, there is growing disquiet over Beijing’s efforts to shape the way western countries think about its authoritarian model.

Jian Yang, who had a successful political career in New Zealand while keeping secret his background in Chinese military intelligence © AP

In just the past two weeks, the intelligence services of Germany and New Zealand have publicly warned about the threat of Chinese espionage and influence operations in their countries. In Washington last Wednesday the US Congress held a hearing to discuss the “long arm of China”.

“Attempts by the Chinese government to guide, buy, or coerce political influence and control discussion of ‘sensitive’ topics are pervasive, and pose serious challenges in the United States and our like-minded allies,” said Marco Rubio, chairman of the congressional executive commission on China.

While the world has been fixated on allegations of Russian interference in US elections in the past year, China’s more widespread operations have garnered far less attention, until recently.

“Chinese operations are much more subtle, less targeted and more about long-term influence-building than Russian operations,” says Christopher Johnson, the former head of the China desk at the Central Intelligence Agency and now a senior fellow at the Center for Strategic and International Studies in Washington.

“But as we start to realise that China intends to socialise us rather than become more like us, the debate in the west has taken on a harder edge and people are asking whether 40 years of engagement might have been a sham.”

Distinct from traditional spying activity, which most countries engage in, China’s influence operations are directed by a little-discussed branch of the ruling Communist party known as the United Front Work Department.

They include efforts to co-opt or subvert a broad range of actors and institutions, from politicians to media outlets to universities, although they primarily target the Chinese diaspora — an estimated 60m people around the world.

Experts who study the United Front say the main goal of these operations is to isolate, marginalise and attack perceived threats to the Communist party from overseas-based Chinese dissidents and human rights and democracy activists, Tibetan independence advocates and representatives of the self-ruled island of Taiwan.

But in recent years the objective has expanded and now encompasses efforts to convince western elites and the broader public of the legitimacy of the Communist party and its right to rule China.

On the frontline of this struggle is Australia, a longstanding US ally and crucial security partner in Asia, but whose commodity-based economy is dependent on demand from China. Australia’s spy chief recently warned of an “unprecedented” threat greater than when Soviet agents penetrated the government during the cold war.

Florida senator Marco Rubio: 'Attempts by the Chinese government to guide, buy, or coerce political influence and control discussion of "sensitive" topics are pervasive, and pose serious challenges' © Getty

In that earlier struggle, the Soviet Union sought to influence western elites and discourse with the allure of its utopian ideology. But the modern Chinese Communist party has something far more seductive for capitalist democracies — the size and promise of its expanding economy.

“The party under Xi [Jinping] believes it is engaged in a ‘huayu zhanzheng’ — a ‘discourse war’ — with the west, which it thinks enjoys media hegemony and must be challenged,” says David Shambaugh, director of the China policy programme at George Washington University.

He estimates China spends between $10bn and $12bn a year on a wide range of “soft power” efforts — from traditional lobbying and public relations campaigns to more clandestine forms of influence-building.

The Australian Security Intelligence Organisation has tracked at least A$6.7m in political donations to Australia’s two main political parties from just two Chinese billionaires with close ties to Beijing.

This issue burst on to the political agenda last week with the resignation of Sam Dastyari, a rising star in the Labor party who used donations from one of the billionaires to clear some of his personal debts. He later attended a press conference with Chinese media where he called publicly for Australia to respect China’s territorial claims in the South China Sea — a position contrary to that of his own party.

ASIO has also identified about 10 political candidates at the state and local government level that it believes have close ties to China’s intelligence services, according to Australian media reports.

Western intelligence agencies believe this is part of a wider orchestrated campaign by Beijing to insert agents of influence into the highest levels of democracies around the world.

In a case first reported by the FT in September, one Chinese-born member of the New Zealand parliament was able to serve on the country’s parliamentary select committee for foreign affairs, defence and trade despite having spent 15 years training and working in Chinese military intelligence.

Sam Dastyari, a rising star in the Australian Labor party who used donations from a Chinese billionaire to clear some of his personal debts © Reuters

Politicians from both sides of the aisle have been reticent to question how Jian Yang managed to have such a successful political career while keeping his military intelligence background secret. In contrast to Australia, New Zealand’s politicians and business elite appear much less willing to openly criticise any of Beijing’s actions out of fear of offending a big trading partner.

But China’s United Front work goes far beyond influencing antipodean governments. “The Chinese Communist party is seeking to suppress dissent among its diaspora in countries around the world,” says Rory Medcalf, head of the national security college at Australian National University. “It uses a tapestry of methods to achieve its goals: political donations, control of Chinese language media, mobilising community and student groups; and engaging in coercive activities that involve CCP proxies and even consular officials.”

Along with the carrots of economic engagement and market access, Beijing also uses sticks. Foreign journalists, politicians, businesspeople and academics regarded as “unfriendly” to China are refused visas to visit the country, attacked by state media and paid online trolls and sometimes targeted by Chinese hackers. The families of Chinese students and recent emigrants are often threatened by state security agents back in China if they are seen as stepping out of line while abroad.

One of the Chinese billionaires who allegedly provided donations to Mr Dastyari is Huang Xiangmo, founder of a property development company in Shenzhen who moved to Sydney with his family in 2011. Until recently he was chairman of the Australian Council for the Peaceful Reunification of China, a United Front-backed organisation.

As well as donating to politics, Mr Huang helped fund a China-focused think-tank at University of Technology Sydney, which has Bob Carr, a former Australian foreign minister, as its director. Mr Huang eventually resigned as chairman of the Australian-China Relations Institute’s advisory board when some academics questioned whether it was becoming a mouthpiece for Chinese propaganda.

Australian prime minister Malcolm Turnbull has defended new laws drafted this month which are designed to limit the influence of foreign governments © EPA

Defenders of these initiatives say Beijing merely wants to “tell China’s story well” and is acting no differently from western countries. The US government supports organisations that fund pro-democracy groups around the world, while Washington-based think-tanks have international affiliates that promote an American world view.

But this argument ignores the fact that most United Front work is carried out covertly.

“The Communist party’s United Front work is very different from western efforts to exert influence — there is a degree of long-term planning and central co-ordination between public and nominally private enterprises that democracies can’t even imagine,” says Gerry Groot, an expert on the United Front Work Department at the University of Adelaide. The efforts retain “plausible deniability” by using “seemingly independent societies and organisations whose actions are in fact determined by Beijing”.

ASIO’s investigation into Chinese political interference and the Dastyari affair prompted the Turnbull government to revamp the country’s espionage and foreign influence laws this month. The draft laws would ban foreign political donations and force lobbyists to reveal when they are working for overseas entities.

Beijing has reacted angrily to the new laws and public reporting of its extensive United Front work in the country.

These media reports “were made up out of thin air and filled with cold war mentality and ideological bias, reflecting a typical anti-China hysteria and paranoid [sic]”, read a statement from a spokesman for the Chinese embassy in Australia. The reports “unscrupulously vilified . . . the Chinese community in Australia with racial prejudice, which in turn has tarnished Australia’s reputation as a multicultural society”.

Others in Australia, which has a long and difficult history with race relations, have accused the government of stoking xenophobia for political advantage.

China's leader Xi Jinping. One estimate says the country spends between $10bn and $12bn a year on a wide range of 'soft power' efforts © Reuters

But sinologists and some members of the Australian Chinese community argue that ignoring Beijing’s United Front work can be seen as a form of inverse racism, since the people most affected by these operations are ethnically Chinese Australian citizens.

Many of the 1.2m people in Australia who identify as Chinese have been there for several generations and a large proportion came from Southeast Asia, democratic Taiwan or left Hong Kong and mainland China to escape repression. Some of them are deeply disturbed by Beijing’s attempts to infiltrate their community organisations and they blame it for creating the conditions for public suspicion of their communities.

“Many in the Chinese community welcome this new legislation, which is very clearly targeting the actions of foreign governments rather than any individuals or communities,” says Feng Chongyi, an associate professor at University of Technology Sydney who was detained in China by state security agents for 10 days in April because of his academic research into Chinese politics. “If the Chinese government is not interfering in Australian politics, then why is it so concerned and so desperate to portray this as anti-China propaganda?”

Investment scrutiny: Australia has tighter rules for sensitive asset sales

When Chinese port operator Landbridge paid A$506m for a lease on Darwin port in 2015, the Northern Territory government celebrated a “fantastic outcome” for taxpayers.

But defence chiefs in Washington, who had no prior knowledge of the deal, sounded alarm about growing Chinese influence in a city with a military base that is used every year by US marines.

“Let us know next time,” President Barack Obama told Malcolm Turnbull, Australia’s prime minister, when they met a few months later.

The incident sparked a revamp of Australia’s foreign investment rules, including tighter scrutiny of sales of critical infrastructure and farmland. Canberra has drawn up a list of critical national infrastructure and appointed a former spy chief, David Irvine, as head of the Foreign Investment Review Board, which makes recommendations on foreign takeovers. It also refused a request from Beijing to formally align its A$5bn state infrastructure fund with China’s One Belt One Road strategy.

The new FIRB regime has become a model for others to consider, as they respond to a range of Chinese investments. The UK and EU are both moving to beef up their scrutiny of Chinese takeovers, while the US has adopted a tougher approach.

Canberra’s tighter rules have begun to put a hold on some sensitive deals. In 2016, it prevented China State Grid Corporation and Hong Kong-based Cheung Kong Infrastructure from buying Ausgrid, an electricity company. It also blocked the sale of Kidman & Co, a cattle company with vast landholdings, to a Chinese investor. But analysts say it is unlikely to slow overall bilateral investment. Australia is the second-largest recipient of overseas investment from China, after the US.

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