CONFLICTING AUSTRALIAN MEDIA REPORTS CHINA AS

UNCLAS CANBERRA 000671

SENSITIVE
SIPDIS

EAP FOR CM, PD/EMMONS

E.O. 12958: N/A
TAGS: ECON
SUBJECT: CONFLICTING AUSTRALIAN MEDIA REPORTS CHINA AS
REDEEMER AND RISK


1. (U) SUMMARY: The front page headlines of most major
newspapers on July 17 highlighted Australia's growing
obsession with China and the contradiction between the PRC's
role powering the Australian economy and the uncertainty
about what the relationship will mean for Australia. Two
major national papers carried breathless headlines that the
7.9% growth in Chinese GDP for the June quarter has given
Australia renewed hope of a quicker recovery. Two other
major papers headlined that China was reprimanding Australia
for it efforts on behalf of detained Australian Rio Tinto
executive Stern Hu. End Summary.


2. (U) The Australian media's recent coverage reflects the
broader contradiction between China as a driving force behind
Australian prosperity and China as a potential threat. On
July 17 some papers headlined that China will "Rescue the
World and Australian Economies" while other headlines
described China scolding Australia with headlines like "China
Tells Australia to Butt Out". Articles from the Australian
Financial Review (owned by the Fairfax Media Group, which is
traditionally viewed as tilting toward the Labor Party) and
The Australian (the flagship of the Rupert Murdoch-owned News
Corporation press in Australia) headlined China (with its
7.9% GDP growth last quarter) as Australia's knight in
shining armor coming to pull Australia out of the financial
slump and restoring hope for Australians worried about the
global economic crisis. They reminded readers that iron ore
shipments to China hit a record in the first half of the year
and proved pivotal in returning to GDP growth of 0.4% in
Australia in the March quarter (Iron ore made up 60% of
Australian exports to China last year). However, the
Fairfax-owned Sydney Morning Herald and Melbourne Age carried
front page articles discussing China's reaction to Stern Hu's
detention highlighting a strained China-Australia
relationship. They described China criticizing Australia for
trying to get involved in China's judicial system and warning
Australia that interfering is not in Australia or Hu's best
interests. They also noted that China recently entered into
negotiations with Brazil's Vale for lower prices in return
for higher export volumes possibly causing Rio Tinto
(Australia's largest iron ore exporter) to suffer a
significant drop in sales. Treasurer Swan and Foreign
Minister Smith told the press they are concerned about damage
to economic relations with China with the detainment of Rio
Tinto's Stern Hu.


3. (SBU) COMMENT: These conflicting reports highlight the two
sides that have emerged in the media with differing views on
what role China should play in Australia's future. There is
clearly mounting discussion in the media over the Stern Hu
detention and the implications for the safety of Australians
doing business in China versus the fact that China is a major
economic player that many consider as the engine that will
pull Australia out of the economic crisis. End Comment.

CLUNE