Clive Palmer, the Palmer United Party (PUP) and China

Clive Palmer is an Australian billionaire, a Member of Parliament since September 2013 and the leader of the Palmer United Party (PUP) that he founded in April 2013. Palmer has long been a provocative voice in Australia-China relations, but his changing business fortunes have led him to switch from championing China to being a vehement critic.

Before entering politics, Palmer made a fortune in Gold Coast property development, and in mining. From the mid-1980s, he began buying mineral tenements that developed into mining operations such as China First, Queensland Nickel and Waratah Coal. But Palmer’s most successful endeavour has been the Sino Iron project in Western Australia’s Pilbara region. In 2006, Chinese state-owned conglomerate CITIC Pacific paid Palmer’s company Mineralogy A$415 million, plus royalties on each shipment, to mine magnetite iron ore on its land. The twenty-five-year deal was worth A$5 billion when signed, making it the largest-ever Chinese investment in Australia.

At this time, Palmer was an enthusiastic supporter of China and Chinese investment in Australia [topic link page]. In 2001, he accused the Australian government of racial discrimination against Chinese investors. In 2008, he addressed the Asia Society on the topic of: ‘Match Made in Heaven: Clive Palmer and his love for China’. In the same year, he launched the Gold Coast United soccer club to lift his profile in China. In 2009, he advised the Australian government that intervening in the Stern Hu case [topic link page] could jeopardise bilateral trade. In 2011, he called the Foreign Investment Review Board ‘an outstandingly racist legislation designed to slow Chinese growth … a national disgrace’. In 2012, Palmer commissioned China’s state-owned CSC Jinling Shipyard to build a full-size working replica of the Titanic. Palmer even claims to have sat on Chairman Mao’s knee as an eight-year-old during a family trip to China in 1962.

However, Palmer’s Sino Iron joint project is ‘famous in China as the single most disastrous outbound investment deal in Chinese history’. When CITIC bought into Sino Iron it lacked experience in both iron ore and Australia, its actions being primarily motivated by the Chinese government’s desire to break the global iron ore market power of BHP Billiton, Rio Tinto and Vale. The Sino Iron project suffered massive cost blowouts and delays from rising labour and capital costs and a strengthening Australian dollar. A planned investment of A$3.46 billion ballooned to over A$10 billion. When magnetite export began in December 2013, the project was four years behind schedule. And iron ore prices have plummeted since late 2013, leading CITIC to write-down Sino Iron by A$3.2 billion in March 2015. CITIC later admitted its plans were ‘unrealistic’.

CITIC’s commercial catastrophes have both been motivated and been exacerbated by numerous high-profile legal battles over royalty payments, port facilities and Palmer’s withdrawal of A$12.167 million in CITIC funds to finance PUP’s 2013 election campaign (Palmer has since returned the funds). These disputes have elicited high-level concern in both countries about the consequences of the failed Sino Iron project for the Australia-China business relationship. CITIC Pacific managing director Zhang Jijing 张极井 has linked the future of Chinese state investment in Australia to the resolution of CITIC’s disagreements. Leading Chinese business magazine Caixin has quoted a CITIC executive saying ‘Clive Palmer is … [swindling] money from us and it will have grave consequences’. Colin Barnett, Premier of Western Australia, claims ‘the Chinese hate Clive Palmer’ and accuses Palmer of negotiating in bad faith.

As the relationship between him and CITIC soured, so too did Palmer’s attitudes towards China and Chinese investment. Following critical articles published in the Murdoch-controlled News Corp media before the September 2013 election, Palmer accused the media mogul Rupert Murdoch’s ex-wife Wendi Deng 邓文迪 of being a Chinese spy. In November 2013, Palmer accused the Chinese government of executing 500,000 people a year, a gross exaggeration compared to estimates by human rights groups of 3000-5000 per year. In January 2015, during the Queensland state election, PUP accused Premier Campbell Newman’s Liberal-National government of being ‘traitors’ for privatising power networks that could then be bought by China.

On 18 August, Palmer appeared on the ABC television program Q&A. Responding to questions about whether he used CITIC funds for PUP electioneering, Palmer claimed that he was owed A$500 million by the ‘communist Chinese government’; that ‘the Chinese government wants to bring workers here to destroy our wage system … they want to take over our ports and get our resources for free … and I don’t mind standing up against the Chinese bastards and stopping them from doing it’; that he had obtained three favourable legal judgments ‘against these Chinese mongrels’; and finished his fulminations claiming that ‘I’m saying that because they’re communist, because they shoot their own people, they haven’t got a justice system and they want to take over this country’.

Now it was Palmer’s turn to be accused of endangering Australia’s economic relationship with China. His comments were swiftly and widely criticised throughout the Australian political and media establishment. Prime Minister Tony Abbott called them ‘over the top, shrill and wrong’. Treasurer Joe Hockey worried Palmer’s tirade could be ‘hugely damaging’ to Australia-China relations. Foreign Minister Julie Bishop contacted the Chinese embassy to ‘let them know that these were the comments of one Member of Parliament and not representative’. WA Premier Colin Barnett apologised to the Chinese Embassy. The Australian Industry Group slammed the comments as ‘a new low in the political debate’. The Chinese Embassy in Canberra said Palmer’s words were ‘absurd and irresponsible’ and the state-affiliated newspaper Global Times urged sanctions on Palmer and warned that he ‘could be the last straw for worsening Sino-Australian relations’. Hundreds of Chinese Australians protested outside Parliament House in Canberra. However, some observers criticised the Australian government for micro-managing the China relationship and apologising for Australian democracy, encouraging China to believe it can ‘exert pressure on Australia to dampen debate’.

Facing an onslaught of criticism and mounting pressure to retract his remarks, Palmer eventually apologised to Chinese Ambassador Ma Zhaoxu 马朝旭 for ‘any insult to the Chinese people’. Ambassador Ma replied that bilateral ties ‘cannot be overturned by any individual’ but the ‘Chinese people are never to be insulted’. China’s state news agency Xinhua ran Palmer’s apology as a banner story.

Jacqui Lambie, PUP Senator for Tasmania at the time, issued a press release on 19 August supporting Palmer’s remarks and saying Australia must double the size of its military to counter the threat of ‘Chinese communist invasion’ and ‘stop our grandchildren from becoming slaves to an aggressive, anti-democratic, totalitarian foreign power’. Lambie’s comments were widely condemned as alarmist by business groups and politicians, and Tasmanian Premier Will Hodgman apologised to the Chinese Embassy in Canberra. Lambie refused to apologise, claiming ‘I’m actually speaking about the Chinese communist regime and not the Chinese people’.

As of June 2015, the only remaining PUP representative in federal parliament apart from Palmer was Dio Wang 王振亚. Wang was born in Nanjing, China, came to Australia for graduate study and then worked for Palmer’s business before being elected as a senator for Western Australia in 2014. He is the first mainland Chinese-born person to be elected to the Australian Senate [Topic page link: Chinese Australians]. Wang told the media that he was not offended by Palmer’s comments on Q&A because they were directed at CITIC. In June 2015, Wang told an Australian newspaper that he believed the Chinese government ‘did the right thing’ by repressing the Tiananmen protests in June 1989, as ‘Otherwise the country would have descended into hell.’

Clive Palmer, the Palmer United Party (PUP) and China

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