Robb was the architect of the China-Australia Free Trade Agreement. Tony Abbott was among a handful Liberal heavy weights who were embarrassed after they had to return a fistfull of designer watches worth around $250,000 to a visiting Chinese billionaire. They thought they were fake, they explained when the story went public. An ABC investigation last year found that Chinese individuals and companies were the largest foreign donors to the two parties, pouring more than $5.5 million into Labor and Liberal coffers between 2013 and 2015. Former foreign affairs minister and NSW premier Bob Carr is at the centre of the China influence controversy. Credit:Alex Ellinghausen But one faction of one party appears to be more conflicted than sections of Australian politics, the Sussex Street machine of the powerful NSW Right.

Sam Dastyari, who quit politics when it was revealed he had taken donations from Chinese businesses and then echoed Chinese government talking points, was a rising star of the faction. Loading Its most dominant figure is Bob Carr, the former foreign affairs minister and NSW premier now at the centre of the China influence controversy. Carr is the director of the Australia-China Relations Institute, which was established by Chinese-Australian businessman Huang Xiangmo, the prolific political donor (and a controversial source of funds to Dastyari). The NSW Labor right’s ties to Chinese businessmen, some of whom have links to the Chinese Communist Party and its arm of international influence, the United Front Work Department, is causing increasing disquiet in the broader party, particularly members from Victoria, South Australia and Western Australia. In writing this story Fairfax Media spoke to party members as well as figures in national security and intelligence circles who did not want to go on record for political and legal reasons.

But a common view is that figures associated with the Chinese Communist Party did not specifically target the NSW Labor right - indeed they have sought to influence both parties and other major Australian institutions - but that the NSW faction proved to be an unusually fertile ground to seek influence. Michael Danby, a Victorian Labor right figure and a fierce critic of Carr, said the NSW right was without political ideology and driven by a fierce sense of “whatever it takes” in the accumulation of power and the funds needed secure power. Loading Similarly Rory Medcalf, the head of the National Security College, Australian National University, says the NSW right has been “unusually comfortable” with donors in the business community, and in particular those in development circles. Another security figure noted that the NSW right been a particularly fruitful target for those seeking influence because of the sheer power it wields within the party.

Medcalf believes there is now a background battle going on within Labor over Chinese influence and the NSW right’s ties to figures believed to be involved. Danby and Carr have gone public, trading blows over the issue in Fairfax Media this week, with Danby declaring that “Bob Carr is a pro-Beijing extremist paid by the pro-Beijing think tank, Australia China Relations Institute.” Carr responded: "If Michael Danby had his way we’d be running a Cold War with China, the RAAF would be bombing Tehran and the Australian defence forces would be manning the Gaza fence". Labor leader Bill Shorten’s Victorian background has so far inoculated him from the controversy, along with other key members of his team, such as foreign affairs spokeswoman Penny Wong. Medcalf believes that members of the Labor left who might once have had a sentimental sympathy for the CCP are now concerned by China’s increasing authoritarianism. Some have resisted criticising the party’s ties with Chinese figures because they fear being labelled as racist. This, he says, is an unfair allegation and a propaganda victory for the CCP. Carr rejects outright that China is seeking to undermine Australian sovereignty and believes those who argue that Australia is facing a concerted program of influence are indulging in a “China panic” and necessarily damaging Australia’s relationship with the world’s rising power.