The Australian Government is a day late and a dollar short when it comes to Australian-Chinese research collaborations, writes Professor Vince Hooper, likening it to the subprime lending practices that led to a global financial crisis.
A UNIVERSITY OF NEW SOUTH WALES (UNSW) engineer who collaborated with Chinese scientists on eavesdropping and covert drone research has been handed two taxpayer-funded grants.
Natasha Bita's latest report in The Australian is not an isolated finding. It is a data point on a curve that has been steepening for years, and whose gradient Australia's universities have been remarkably reluctant to acknowledge.
In May, the intelligence firm Strider Technologies published its report From Innovation to Weaponisation, documenting more than 6,000 joint publications between researchers at over 80 Australian organisations and institutions affiliated with the People's Liberation Army (PLA), all since 2020.
More than 300 of those papers were co-authored with a "Seven Sons of National Defence" university that had been sanctioned by the United States for attempting to acquire items in support of PLA programs.
The collaborations spanned artificial intelligence, aerospace systems, communication jamming, target tracking and swarm-enabled precision strike. One ARC-funded project examined insect-inspired flapping-wing robots; the Chinese partner institution subsequently developed a mosquito-sized drone for covert military operations.
On 14 May, Education Minister Jason Clare blocked 13 Australian Research Council (ARC) grant applications for reasons relating to the security, defence or international relations of Australia, more than double the number vetoed on such grounds in any previous year.
Clare acted on advice from ASIO and the departments of Defence and Home Affairs. ARC data reveals the organisation has funded at least 1,500 joint projects with China, Russia, Iran and North Korea.
In the language of the banking crisis that Australia's universities ought to remember, these are not minor exposures. They are toxic assets on the national balance sheet, rated as safe by the very system that produced them.
The parallels with 2008 are instructive. Begin with counterparty risk: the most elementary question in any transaction is who is actually on the other side.
A visiting scholar from the National University of Defence Technology (NUDT) is not simply a collaborator. The counterparty is the PLA.
Alex Joske's earlier work for the Australian Strategic Policy Institute (ASPI) found that some two dozen NUDT-linked researchers had passed through UNSW alone in a single decade, many holding PLA rank, returning to China with advanced training and international networks that fed directly into military projects.
As with the subprime crisis, nobody was checking the underlying exposure. The grant was approved, the paper was published, the ranking improved. The counterparty's intentions were someone else's problem.
Then consider moral hazard. Universities captured the upside of these collaborations: revenue, publications, global prestige.
The downside, the strategic risk of knowledge transfer to a military adversary, fell entirely on the Australian taxpayer and the national interest.
When the agent who takes the risk bears none of its cost, the risk is never properly priced. It was not properly priced here.
The ARC grant assessment framework evaluated research quality and national benefit without ever valuing the embedded strategic liability. That is subprime lending applied to national security: volume rewarded, scrutiny absent, default deferred.
Clare's 13 blocked grants function as a stress test, and the system has failed it.
Associate Professor Brendan Walker-Munro, whose UNSW Law Journal analysis of ARC research security has become a reference point for policymakers, has documented how ARC-funded researchers have continued to collaborate with peers from institutions that have direct and visible links to the military, defence, law enforcement or intelligence organs of unfriendly nations, even after assurances that they would stop.
Multiple funding sources and collaborators' multiple affiliations sometimes obscure the true ownership of the research.
As Walker-Munro has concluded, Australian universities do not seem able to properly monitor the work of their scientists, engineers and researchers. Thirteen blocked grants against 6000 papers is not a correction. It is a margin call on a portfolio whose true losses have not yet been disclosed.
The systemic risk is real. The exposure is not confined to one institution.
UNSW, the Australian National University (ANU), and the University of Technology Sydney (UTS) recur disproportionately in the Strider data, but researchers from more than 80 organisations contributed to those 6000 papers.
Like the interconnected balance sheets that turned a housing correction into a global financial crisis, the research network is cross-linked in ways no single regulator can see. Knowledge, once transferred through a co-authored paper, a shared data set, or a visiting scholar's notebook, cannot be recalled.
There is no clawback provision on intellectual capital. The university retains the citation. The PLA-affiliated partner retains the capability.
Universities challenged on these associations have reacted with institutional defensiveness that would be familiar to anyone who watched the banks in 2007.
UTS partnered with CETC, the China Electronics Technology Group Corporation, on a $10 million research collaboration even as CETC was building surveillance and control infrastructure for the Chinese state.
CETC's own documentation described the work as enhancing public security supervisory abilities and cyberspace control. These are not ambiguous signals. They are published capabilities. The due diligence that should have caught them was never conducted.
On 10 August, the government finally acted on the instrument it had held in reserve for years.
Foreign Minister Penny Wong invoked the Foreign Relations Act 2020 to terminate the Australian National University's Joint Science College with Shandong University, declaring it invalid and unenforceable and ordering ANU to shut the programme by January 2027.
It was the first time the Act had been used to cancel a university collaboration. Wong simultaneously ended a University of Queensland (UQ) research partnership with the Chinese Academy of Sciences.
The U.S. Pentagon had added Shandong University to a blacklist of institutions engaging in problematic activities only weeks earlier; ASPI data links it to China's nuclear weapons program and identifies cryptography and cyber operations among its core military specialisations.
ANU, which shares its Canberra campus with a joint laboratory run by the Australian Signals Directorate (ASD), had been hosting a Chinese partner whose research strengths include code-breaking.
A Nobel laureate and former ANU vice-chancellor described the arrangement as "almost no risk" — 116 further Australian agreements with Shandong University remain on the foreign arrangements register, untouched.
Australia now plans to raise defence spending to three per cent of GDP by 2033, under the NATO definition, and has committed $7 billion to counter-drone systems alone.
Walker-Munro advocates a holistic framework for vetting research collaborations, adapted from anti-money-laundering and counter-terrorism-financing mechanisms. The analogy is apt. When the problem is systemic and the counterparty is concealed, you do not fix it by blocking individual transactions. You reform the plumbing.
A listening post works both ways. Australia built one of the world's most open research systems. It is long past time to ask who has been listening, and what they heard.
Professor Vince Hooper is a proud Australian-British citizen and professor of finance and discipline head at SP Jain School of Global Management with campuses in London, Dubai, Mumbai, Singapore and Sydney.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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