Canberra considers axing Victorian research agreement with China - The Age

The federal government is considering tearing up a research agreement between the Victorian government and China's Jiangsu province that experts say could allow the work of Australian scientists to be used by the Chinese government.

The deal, signed by the Labor state government in 2015 and renewed in 2019, provides grants of up to $200,000 for Victorian companies and universities to share intellectual property and develop new products with companies from the Chinese province.

Workers in Jiangsu province. The deal links Victorian businesses and universities with Chinese counterparts in the province. Credit:AP

Two senior federal government sources with knowledge of the review process for foreign agreements, who spoke on the condition of anonymity because they were not authorised to speak publicly, said the Victoria-Jiangsu Program for Technology and Innovation Research and Development was on a list of agreements the Department of Foreign Affairs had identified as potentially contrary to Australia's national interest.

The sources said the deal was among agreements on the list that the government would scrutinise.

Legislation created by the federal government this month allows the Commonwealth to cancel agreements with foreign powers made by states, local governments or universities if the deals are deemed harmful.

Dr Paul Monk, former head of China analysis in Australia’s Defence Department, said the Jiangsu deal could allow firms linked to the Chinese Communist Party to obtain access to Australian intellectual property, and it should be viewed through the prism of President Xi Jinping's recently stated intention, reported by Chinese state media, of increasing military-industrial strength with the aim of winning wars.

“They have a rapidly growing, high-tech military sector that is strongly integrated between private firms and the Chinese government. This deal must be seen in that context,” Dr Monk said.

Dr Paul Monk, the former head of China analysis at Australia’s Defence Department, said the Jiangsu deal could allow firms linked to the Chinese government to obtain access to Australian intellectual property.Credit:Michel O'Sullivan

“For this deal to be getting promoted by the Chinese government, there is likely to be something we can provide that they want – otherwise they would do it themselves. So we must ask: what [intellectual property] do we bring to the table that they are seeking?”

The Jiangsu deal links Victorian businesses and universities with Chinese counterparts, and supports the Australian entities to travel to Jiangsu, a province in China’s east of about 80 million people, for research and development related to innovations in sectors such as advanced manufacturing, aerospace, biotechnology, medicine, information and communication technology, and environmental protection.

Two previous rounds of the program's grants have funded CSIRO research on manufacturing and materials technology; Walter and Eliza Hall Institute work on a potential cure for hepatitis B;membrane technology for mining wastewater treatment by Deakin University; Swinburne University 3D concrete printing technology; development of bio-organic fertilisers by the University of Melbourne; and a quantum information technology project involving Monash University, Deakin University, the University of Melbourne and the Burnet Institute.

The program guidelines say that at the conclusion of the projects, both the Chinese and the Australian parties receive beneficial ownership of the existing background intellectual property and the fresh intellectual property created during the collaboration.

Dr Monk said a research and development deal with the government of an ally such as the US or Britain would not pose similar risks because it would be clearly apparent whether an Australian company was dealing with a private firm or the government itself.

“Any notion that China is some kind of normal, open, free-market economy is delusional. This is a militaristic, mercantilist country where [strategic] industries are owned by the government and directed to increasing military power,” he said.

The Burnet Institute's deputy director of partnerships, Associate Professor David Anderson, is involved in a project with a Jiangsu biotech company to develop antibody tests to immediately diagnose medical conditions including COVID-19 and measles.

He said his institute struck an agreement with its Chinese partner to ensure background intellectual property would not be transferred as part of the project, contradicting the program guidelines. He said the IP clause in the guidelines was "bad wording" and that no Australian institution would ever sign up to an agreement under which its existing IP, which might have been years in the making, was handed over.

Professor Anderson said the Victoria-Jiangsu program provided significant benefit for Victorian institutions and that the Burnet Institute's Chinese partner would gain a 10 per cent financial benefit but no ownership of the final product. All project applicants must come to an agreement with their Chinese partners on IP arrangements before the project commences.

"The Victoria-Jiangsu relationship is coming up to 40 years, and this deal is an extension of that. The Chinese have a lot of people banging down their door wanting to do things ... and the Victorian government should get lots of credit for embracing genuine collaboration," he said.

Professor Anderson said Chinese universities and companies had more capacity to do resource-intensive "big science", such as genomic sequencing and X-ray crystallography, than any other country.

"And Australians, in particular, are great at innovation but we do not fund big science very much, so it's an area we can work together to make better things," he said, adding: "Everything we do with China is about increasing the value of jobs created in both countries."

Western officials have expressed concern for years that China has exploited research collaboration and used subversive tactics to gather IP from other countries. The US IP Commission, a non-government research body, estimated in 2017 that Chinese IP theft cost the American economy between $US225 billion ($296 billion) and $US600 billion each year. The dispute over IP has been at the centre of the trade war between those two countries.

Nathan Attrill, a researcher at the Australian Strategic Policy Institute, which is partly funded by the US government, said the Victoria-Jiangsu program illustrated how “hidden” and highly technical clauses in deals with foreign nations could create considerable risk.

“Maybe five years ago, these kinds of deals would have been more common but in the last 18 months, these deals are coming under a lot more scrutiny,” he said.

“There was a little bit of naivete on the Australian side, a desire to just have agreements for agreements’ sake. This is particularly true of the university sector in Australia.”

Mr Attrill said the sectors that featured in the Jiangsu program — including aerospace, information technology, biotechnology and advanced manufacturing — aligned with the fields in which China was attempting to learn from countries with sophisticated economies like Australia.

Dr Monk said China was displaying “blatant aggression” and attempting to “humiliate and subordinate” Australia through trade strikes on exports including coal and beef. Those moves followed diplomatic tussles over an inquiry into the origins of the coronavirus, human rights and national security.

Victorian Premier Daniel Andrews has been criticised by federal and state Coalition MPs over his government's memorandum of understanding with China on the Belt and Road infrastructure program. The federal government has given Victoria three months to show how the deal accords with Australia’s foreign interests.

Belt and Road deal critics say it is an attempt by China to strengthen its influence through debt diplomacy, but the Victorian government says its involvement in the deal is about trade and jobs for the state.

A Victorian government spokesperson said the Jiangsu agreement was "about driving innovation and creating jobs for Victorians".

“We expect the Commonwealth is providing strong representations to China and all trading partners and advocating for all of our exporters," the spokesperson said.

Victorian Opposition Leader Michael O’Brien said that by signing up to the deal, the Premier had shown he was willing to risk "Victorian jobs, intellectual property and the national interest to pursue his relationship with the Chinese communist government”.

The federal government is also involved in a scientific research program with China, but the program guidelines do not stipulate that background IP becomes mutually owned at the conclusion of projects.

In November, federal Education Minister Dan Tehan quietly announced he was holding back 18 research grants to Australian scientists until they were reviewed by security agencies.

Federal Education Minister Dan Tehan.Credit:Alex Ellinghausen

The Australian Research Council grants, often worth several million dollars, are recommended by independent panels of scientists but must be approved by the federal education minister.

Typically this is a rubber-stamping process, but under Mr Tehan scrutiny of the foreign research partners Australian universities pair with has dramatically increased.

The minister announced new voluntary guidelines last year urging universities to examine the background of their research partners and any ties they had to foreign governments.

China, which invests half a trillion dollars in research every year, overtook the US as Australia’s leading research partner this year, with 16.2 per cent of Australian publications involving a researcher affiliated with a Chinese institution.

Alex Joske, a Chinese Communist Party analyst at the Australian Strategic Policy Institute, said past Australian Research Council grants had been used in projects that collaborated with the Chinese military.

“I hope security agencies are careful in their assessments to ensure grants are used appropriately, but also not to overreach,” he said.

“It’s important for people to understand that this is a relatively small segment of grants that seems to be in line with the level of past grants that raised concerns. If it’s carried out effectively, this process should be a step towards making sure research collaboration is transparent and based on a complete understanding of risks.”

Mr Tehan's office declined comment further on the withheld grants and Universities Australia and the Australian Academy of Science both declined to comment.

Do you have a tip about China-Australia research agreements? Contact paulsakkal@protonmail.com.

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