Drinking together has always been a way to show solidarity. And that’s what Australian allies are doing, in response to Beijing’s newest trade sanctions on the country’s wine industry. Taiwanese legislators posted photographs of themselves with bottles of Australian wine, while a Swedish politician urged people to stand up to Beijing by “drinking a bottle or two.” Even the U.S. National Security Council joined in with an unusually punchy tweet. The bandwagoning may be awkward at times, but it contains an important lesson: The best way to push back against Beijing’s coercion is through a unified response.
For more than six months, Beijing has been waging a trade war against Australia. The latest salvo—up to 212% tariffs on Australian wine, announced on Nov. 27—threatens to decimate the country’s roughly $3 billion wine industry, and adds to a crowded list of tariffed items. The total amount targeted is now roughly $20 billion. Beijing has blamed Australia for a “series of wrong moves,” and announced 14 political disputes it expects Canberra to rectify in order to improve the relationship.
This is not a new tactic for Beijing. Since the 1990s, Beijing has made public examples of foreign institutions, people, and countries, and used that to scare others into acquiescence. After the Houston Rockets’ then general manager Daryl Morey tweeted about Hong Kong in October 2019, for example, Beijing froze the NBA out of China for a year, leading to hundreds of millions of dollars of lost revenue for the organisation. Reached for comment, an NBA spokesperson forwarded NBA Commissioner Adam Silver’s recent comments, where he said that the NBA’s response to the China scandal was, “We support freedom of expression.”
The NBA incident wasn’t the first. After the independent Nobel committee’s 2010 decision to award the Nobel Peace Prize to the Chinese dissident Liu Xiaobo, Beijing drastically curtailed Norway’s salmon exports to China. Companies like Marriott and the South Korean conglomerate Lotte have been targeted, too.
The strategy Beijing is using against Australia—coordinated complaints, economic punishment for political crimes, and an insistence that the other party is solely at fault—is remarkably similar to what Beijing did to the NBA. What’s new is Australia’s response.
The crucial difference lies in Australia’s smart insistence in not facing China alone. Since the beginning of its trade war, Canberra has strengthened old alliances and built new ones. It has agreed to develop a supply chain resilience program with Japan and India, signed a free trade deal with Indonesia, and benefitted from political support of countries like France, New Zealand, and especially the United States. Australia has urged its allies to understand that the more it yields to an attack by Beijing, the worse it is for its partners. This is especially true with the countries in the so-called Five Eyes intelligence sharing partnership, whose other members are Canada, the United Kingdom, New Zealand, and the United States.
The other major difference is Canberra’s willingness to publicly criticise Beijing. The NBA’s responses were almost uniformly milquetoast, including from normally outspoken stars, like LeBron James, who called Morey “misinformed.” Compare that to criticism of Beijing across the Australian political spectrum: Prime Minister Scott Morrison has posted criticisms on Chinese social media, while Penny Wong, the leader of the opposition in the senate, called one of Beijing’s recent actions “gratuitous” and “inflammatory.”
Corporations can learn from Australia. When faced with Beijing’s ire, businesses need to partner more closely with their home governments and their global competitors. Organisations like the U.S.-China Business Council already serve as platforms for companies to coordinate and share grievances. But they do so mostly privately, and with an overwhelming desire to maintain positive relationships with Beijing. They argue that staying quiet in public helps companies maintain leverage and keep their China presence. “China can’t make good on its promises to further open its economy if there is no longer anyone there—or that could be there—to open to,” a spokesperson for the council said.
Chambers of commerce need to understand that publicly and privately pushing back against Beijing with American and other home government support when one of their members is targeted is better in the long run for all member companies. In certain cases, Congress should consider an antitrust waiver for firms that are collaborating to challenge Beijing.
Will publicly and multilaterally pushing back against Beijing help Canberra succeed in reducing tensions without showing weakness? It’s difficult to say—in large part because Beijing’s responses to these situations are uneven. Sometimes Beijing holds the grudge for years, and sometimes it calms down in weeks, or even days. The capriciousness of the response is a sign of strength, not weakness—it pushes the adversary to overcompensate, to seek to right the relationship. But standing strong and not yielding is Australia’s best hope for a healthy future relationship with both China and the United States. And Australia’s allies are stepping up. In late November, the Trump administration announced plans to work with Australia to counter Beijing’s economic hostage-taking. “The West needs to create a system of absorbing collectively the economic punishment from China’s coercive diplomacy and offset the cost,” a senior administration official told the Wall Street Journal.
Corporations targeted by Beijing can effectively engage their allies, both in governments, and in the business world, but most don’t. As tensions between the United States and China continue to worsen, it’s imperative that they build support from their home governments—and that they speak out when Beijing targets them.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
The younger generation will bring a different mindset to how and where their newfound wealth is invested
There is an enormous global wealth transfer in its beginning stages, whereby one of the largest generations in history – the baby boomers – will pass on their wealth to their millennial children. Knight Frank’s global research report, The Wealth Report 2024, estimates the wealth transfer set to take place over the next two decades in the United States alone will amount to US$90 trillion.
But it’s not just the size of the wealth transfer that is significant. It will also deliver billions of dollars in private capital into the hands of investors with a very different mindset.
Wealth managers say the young and rich have a higher social and environmental consciousness than older generations. After growing up in a world where economic inequality is rife and climate change has caused massive environmental damage, they are seeing their inherited wealth as a means of doing good.
Ben Whattam, co-founder of the Modern Affluence Exchange, describes it as a “seismic change”.
“Since World War II, Western economies have been driven by an overt focus on economic prosperity,” he says. “This has come at the expense of environmental prosperity and has arguably imposed social costs. The next generation is poised to inherit huge sums, and all the research we have commissioned confirms that they value societal and environmental wellbeing alongside economic gain and are unlikely to continue the relentless pursuit of growth at all costs.”
Investing with purpose
Mr Whattam said 66% of millennials wanted to invest with a purpose compared to 49% of Gen Xers. “Climate change is the number one concern for Gen Z and whether they’re rich or just affluent, they see it as their generational responsibility to fix what has been broken by their elders.”
Mike Pickett, director of Cazenove Capital, said millennial investors were less inclined to let a wealth manager make all the decisions.
“Overall, … there is a sense of the next generation wanting to be involved and engaged in the process of how their wealth is managed – for a firm to invest their money with them instead of for them,” he said.
Mr Pickett said another significant difference between millennials and older clients was their view on residential property investment. While property has generated immense wealth for baby boomers, particularly in Australia, younger investors did not necessarily see it as the best path.
“In particular, the low interest rate environment and impressive growth in house prices of the past 15 years is unlikely to be repeated in the next 15,” he said. “I also think there is some evidence that Gen Z may be happier to rent property or lease assets such as cars, and to adopt subscription-led lifestyles.”
Impact investing is a rising trend around the world, with more young entrepreneurs and activist investors proactively campaigning for change in the older companies they are invested in. Millennials are taking note of Gen X examples of entrepreneurs trying to force change. In 2022, Australian billionaire tech mogul and major AGL shareholder, Mike Cannon-Brookes tried to buy the company so he could shut down its coal operations and turn it into a renewable energy giant. He described his takeover bid as “the world’s biggest decarbonisation project”.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’