Dealing with China is so difficult for the Australian government because of collapsing categories.

Things used to be simpler. Ministers in portfolios—industry, treasury, science, foreign affairs, trade, education, immigration or defence—used to be able to work within their lanes with pretty light coordination between them.

Trade was trade. Defence was defence, and foreign affairs was something that diplomats managed that rarely impinged on domestic issues.

That’s changed. Economic issues—like where and how our universities earn their revenue—now have security and strategic aspects.

Trade is now intermingled with technological advantage and is used by some states as a tool of punitive policy. And foreign investment, once an unalloyed good for Australia, is now laden with national security implications that go well beyond the particular transactions involved. Education ministers can find themselves in the middle of strategic debates about foreign influence and propaganda.

This merging of the domestic and the international, and of economic, technological and strategic boundaries is partly from the long-standing trend of globalisation. But it’s mainly a result of how the Chinese state operates domestically and internationally, perhaps because the ruling Chinese Communist Party uses a consistent ideology of power it applies both to rule the 1.4billion people within its multi-ethnic empire and to how it engages with governments and peoples outside the borders of China.

You can see the struggles and discordance this collapse of categories bring to the Australian system of government

You can see the struggles and discordance this collapse of categories bring to the Australian system of government. Trade Minister Simon Birmingham would have made sense ten years ago talking about the opportunities he sees to deepen economic engagement with China while having nothing to say about the implications of the increasingly more obvious and aggressive nature of the authoritarian regime of General Secretary Xi Jinping.

Defence and foreign affairs ministers and opposition spokespeople have been equally flummoxed when faced with handling the relationship with China’s military with the Australian public, as we saw in June this year when the 3 PLA warships sailed into Sydney Harbour to be there on the 30th anniversary of the Tiananmen Square massacre. The same PLA that had been used by the Chinese government to massacre their own people 30 years ago and whose defence minister, General Wei, had just publicly endorsed the massacre as ‘correct policy’ at a prestigious international security conference. Defence and foreign affairs portfolios are offshore focused entities, so they seemed to not understand that they needed to think through the implications of a ‘goodwill visit’ at this time by the PLA, let alone talk to the Australian public about it. The defence relationship with the Chinese military will be an issue that the Australian public will be increasingly interested in as the Chinese state uses this power more prominently in the world.

Then there’s higher education—an island of academic research and exuberant business entrepreneurship that, along with the resource sector, has led Australia’s ‘China boom’ over the last few decades. Who knew that university research and university campuses would find themselves in the middle of strategic competition, foreign influence and foreign interference and be a source of capability advantage for China’s military and for the Chinese government’s repressive internal security forces?

But that’s what’s happened, with university funding from China compromising academic independence and freedom of speech on campus and with close research collaboration between Australian and PLA scientists. Two of Australia’s top “Group of 8” universities are in the global top ten for advancing PLA military capabilities.

The category collapse that is making this so difficult comes from the way that Xi’s state operates. It crosses boundaries between the state and corporate world, making our attempts to distinguish between what is a Chinese company action and what is driven by state policy and action an empty effort. Xi is as comfortable using the Ministry of State Security’s cyber hackers to get hold of corporate intellectual property to advance Chinese companies’ commercial edge as he is using them to hack into the Australian Parliament.

And, most of all, the Chinese state sees all linkages across any sectors of Australian society, economy, levels or portfolios of government as opportunities to create advocates for Chinese policy, spokespeople who caution against criticising his government’s use of power, and simple ‘fellow travellers’ who are happy to get wealthy and look the other way.

Xi’s institutions are driven by party ideology that understands the value of this approach for leveraging support, reducing dissent and fragmenting cohesion of [potentially adversarial groups—whether other states, societies or industrial competitors. These are the ‘united front’ tactics that brought the Chinese Communist party to power in the 1940s and have been used and tuned ever since.

The place in the Australian government where all the issues, interconnections and dynamics come together is in the prime minister’s office, so it’s no surprise that Scott Morrison’s agenda and decisions show that he understands this category collapse—but he has yet to find a way of operating his Cabinet and the Commonwealth government machinery that can manage this outside his own head.

It’s jarringly discordant to have Australian and US foreign and defence ministers endorse the strategic challenge from the Chinese state at the same time as Simon Birmingham portrays an unqualified upside to deeper economic engagement with that same state’s economy. And it’s not good enough for Australian leaders to call for restraint in Hong Kong and talk about travel advice for Australians living or working there, instead of working with international partners to show General Secretary Xi that if he applies General Wei’s ‘correct policy’ and uses lethal force against his own people, there will be consequences to his regime, whether the weapons used are owned by the PLA or the People’s Armed Police or mysteriously well-equipped thugs overcome with nationalism.

Australian government machinery needs to operate in this world of category collapse. This requires much closer ‘interagency’ work between portfolios—including some who may have had little contact with each other in earlier times, as well as much better connections with State, territory and even local governments. And it requires thinking about domestic cohesion and functioning as it is affected by eth very motivated and well-resourced Chinese state. This is a foreign affairs driver of domestic issues, and is perhaps the most challenging case of category collapse the Australian government faces.

How Scott Morrison handles this could be informed by lessons from President Xi. Xi has a lot of power, but in a multi-ethnic, multi-lingual empire of 1.4 billion people, 80 million of whom are in the Chinese Communist Party, with central, regional, provincial, local levels of governance, large unwieldy bureaucracies with overlapping roles, and complicated mixes of state owned and private sector entities, even Xi’s power fragments and diffuses. It does so through party and state organs, companies and myriad provincial party and state structures.

So, Xi uses ‘signature initiatives’ to drive the cumbersome beast of the CCP and the Chinese economy. The Belt and Road Initiative is one example, his anti-corruption drive and the still active but now unnamed ‘Made in China 2025’ program are others. So, Xi governs by exhortation and core priority. It can be messy and it leaves a lot of judgement on implementation to a wide range of organisations and individuals, who bring their own agendas and perspectives to what they do and don’t do in the leader’s name.

Taking this approach, Morrison can create more cohesion across government ministries and economic and research sectors by setting out some simple central principles and initiatives for Australia. He has done so with his Pacific Step Up, and seems to be adding a reinvigorated Australia-US security and economic relationship as another. How Australia will balance security and engagement with the Chinese state and economy is another area that is calling for him to play a defining role.