All eyes on November’s G20 meeting as tensions between China and the US ratchet up



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Much attention will be on the next meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 in late November.
AAP/EPA/Roman Pilipey

Tony Walker, La Trobe University

When G20 finance ministers met in Bali last week to review economic developments in the lead-up to the annual G20 summit, they could not ignore troubling signs in the global economy driven by concerns about an intensifying US-China trade conflict.

Last week’s slide in equities markets will have served as a warning – if that was needed – of the risks of a trade conflict undermining confidence more generally.

China’s own Shanghai index is down nearly 30% this year. This is partly due to concerns about a trade disruption becoming an all-out trade war.




Read more:
The risks of a new Cold War between the US and China are real: here’s why


IMF Managing Director Christine Lagarde’s call on G20 participants to “de-escalate” trade tensions or risk a further drag on global economic growth might have resonated among her listeners in Bali, but it is not clear calls to reason are getting much traction in Washington these days.

Uncertainties caused by a disrupted trading environment are already having an impact on global growth. In its latest World Economic Outlook, the IMF revised growth down to 3.7% from 3.9% for 2018-19, 0.2 percentage points lower than forecast in April.

IMF Managing Director Christine Lagarde has called on G20 members to
AAP/EPA/Made Nagi

The IMF is predicting slower growth for the Australian economy, down from a projected 2.9% this year to 2.8% next year. The May federal budget projected growth of 3% for 2018-19 and the following year.

Adding to trade and other tensions between the US and China are the issues of currency valuations, and a Chinese trade surplus.

In September, China’s trade surplus with the US ballooned to a record U$34.1 billion.

This comes amid persistent US complaints that Beijing has fostered a depreciation of the Yuan by about 10% this year to boost exports, which China denies.

These are perilous times in a global market in which the US appears to have shunned its traditional leadership role in favour of an internally-focused “America First” strategy.

So far, fallout from an increasingly contentious relationship between Washington and Beijing has been contained, but a near collision earlier this month between US and Chinese warships in the South China sea reminds us accidents can happen.

This is the background to a meeting at the G20 summit in Buenos Aires late in November between US President Donald Trump and Chinese President Xi Jinping. That encounter is assuming greater significance as a list of grievances between the two countries expands.

US Vice President Mike Pence’s speech last week to the conservative Hudson Institute invited this question when he accused of China of “malign” intent towards the US.

Are we seeing the beginning of a new cold war?

The short answer is not necessarily. However, a further deterioration in relations could take on some of the characteristics of a cold war, in which collaboration between Washington and Beijing on issues like North Korea becomes more difficult.

By any standards, Pence’s remarks about China were surprising. He suggested, for example, that Chinese meddling in American internal affairs was more serious than Russia’s interventions in the 2016 president campaign.

He accused Beijing of seeking to harm Republican prospects in mid-term congressional elections and Trump’s 2020 re-election bid. This was a reference to China having taken its campaign against US tariffs to newspaper ads in farm states like Iowa.

Soybean exports to China have been hit hard by retaliatory tariff measures applied by Beijing in response to a first round of tariffs levied by the US.

“China wants a different American president,” Pence said.

This is probably true, but it could also be said that much of the rest of the world – not to mention half of the US population – would like a different American president.

All this unsteadiness – and talk of a “new cold war” – is forcing an extensive debate about how to manage relations with the US and China in a disrupted environment that seems likely to become more, not less, challenging.

Australian academic debate, including contributions from various “think tanks”, has tended to focus on the defence implications of tensions in the South China Sea for Australia’s alliance relationship with the US.

This debate has narrowed the focus of Australia’s concerns to those relating to America’s ability – or willingness – to balance China’s regional assertiveness.

This assertiveness increasingly is finding an expression in China’s activities in the south-west Pacific, where Chinese chequebook – or “debt-trap” – diplomacy is being wielded to build political influence.

Australian policymakers have been slow to respond to China’s push into what has been regarded as Australia’s own sphere of influence.




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Despite strong words, the US has few options left to reverse China’s gains in the South China Sea


Leaving aside narrowly-focused Australian perspectives, it might be useful to get an American view on the overarching challenges facing the US and its allies in their attempts to manage China’s seemingly inexorable rise.

Among American China specialists, few have the academic background and real-time government experience to match that of Jeffrey Bader, who served as President Barack Obama special assistant for national security affairs from 2009-2011.

In a monograph for the Brookings Institution published in September, Bader poses a question that becomes more pertinent in view of Pence’s intervention. He writes:

Ever since President Richard Nixon opened the door to China in 1972, it has been axiomatic that extensive interaction and engagement with Beijing has been in the US national interest.

The decisive question we face today is, should such broad-based interaction be continued in a new era of increasing rivalry, or should it be abandoned or radically altered?

The starkness of choices offered by Bader is striking. These are questions that would not have entered the public discourse as recently as a few months ago.

He cites a host of reasons why America and its allies should be disquieted by developments in China. These include its mercantilist trade policies and its failure to liberalise politically in the three decades since the Tiananmen protests.

However, the costs of distancing would far outweigh the benefits of engagement to no-one’s advantage, least of all American allies like Japan, India and Australia.

None of these countries, in Bader’s words, would risk economic ties with China nor join in a “perverse struggle to re-erect the ‘bamboo curtain’… We will be on our own”. He concludes:

American should reflect on what a world would be like in which the two largest powers are disengaged then isolated from, and ultimately hostile to each other – for disengagement is almost certain to turn out to be a way station on the road to hostility, he concludes.

Bader has been accused of proffering a “straw man argument’’ on grounds that the administration is feeling its way towards a more robust policy, and not one of disengagement. But his basic point is valid that Trump administration policies represent a departure from the norm.




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At the conclusion of the IMF/World Bank meetings in Bali, Christine Lagarde added to her earlier warnings of “choppy” waters in the global economy stemming from trade tensions and further financial tightening. She said:

There are risks out there in the system and we need to be mindful of that…bIt’s time to buckle up.

That would seem to be an understatement, given the unsteadiness in the US-China relationship and global geopolitical strains more generally.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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World politics explainer: Deng Xiaoping’s rise to power



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Chinese stamps commemorating Deng Xiaoping, a leader widely regarded to have modernised the country and made it a formidable economic power, 1998.
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James Laurenceson, University of Technology Sydney

This article is part of our series of explainers on key moments in the past 100 years of world political history. In it, our authors examine how and why an event unfolded, its impact at the time, and its relevance to politics today.


By orchestrating China’s transition to a market economy, Deng Xiaoping has left a lasting legacy on China and the world.

After becoming the leader of the Communist Party of China in 1978, following Mao Zedong’s death two years earlier, Deng launched a program of reform that ultimately saw China become the world’s largest economy in terms of its purchasing power in 2014.

Last year it accounted for 18.2% of total global purchasing power, compared with 15.3% for the United States.

What happened?

A major turning point was the 3rd Plenum of the 11th Central Committee of the Communist Party of China, which took place in December 1978. For the three decades prior, production in China was structured around a central planning model: collectivised agriculture in rural areas and state-owned industrial firms (SOEs) in urban regions. The prices of goods and services were also fixed by the government rather than determined by supply and demand.

Deng recognised that the outcomes produced by the planned economy were poor, with more than 60% of the population living in poverty. That’s why he launched a series of measures such as opening up the economy to foreign trade and investment.

He summarised his distinctly pragmatic rather than ideological approach to development with the phrase, “It doesn’t matter whether the cat is black or white, so long as it catches mice”.

Under Deng, the market wasn’t given free rein immediately. There was no reform of the “big bang” variety seen in former centrally-planned economies of Central and Eastern Europe.

Rather, in the words of Barry Naughton, China’s economy was simply allowed to “grow out of the plan”.

For example, state-owned firms were not sold off to private entrepreneurs at the outset. Rather, privately-owned companies were permitted to emerge alongside SOEs. This gave Chinese consumers choices and the competition forced SOEs to become more responsive to market demand and efficient in their production practices.

The impact of the reforms

The outcomes of Deng’s reforms have been without historical peer.

Deng Xiaoping billboard stating
Wikicommons/Brücke-Osteuropa

The latest data put the proportion of China’s population living in poverty at less than 1%. Of course, despite hundreds of millions being lifted out of poverty, this does not mean that all Chinese are rich: average incomes are still only around one-third of those in Australia.

The reasons Deng’s reforms proved successful can be traced back to two key factors.

The first is policy logic.

John McMillan and Barry Naughton showed that the newly-emerged private sector played a crucial role in improving the Chinese economy’s overall efficiency.

Another key consideration was that China benefited from its starting point.

Jeffrey Sachs and Wing Thye Woo pointed out that in 1978, most Chinese people were poor and living in rural areas. Compared with other centrally-planned economies such as the former Soviet Union, this made the task of shifting labour from producing low-productivity agricultural output to higher productivity industrial goods easier.

Just how far along the path to a market economy has China come?

That depends on the measure and the part of China’s economy under focus.

Last month, Meixin Pei, a professor at Claremont McKenna College in the United States, pointed to China’s state sector as evidence its economic growth would slow. He wrote that China’s economy was “nowhere near as efficient as that of the US”. And the “main reason for this is the enduring clout of China’s state-owned enterprises (SOEs), which consume half of the country’s total bank credit, but contribute only 20% of value-added and employment”.

Yet, perhaps unwittingly, Pei makes an important observation. SOEs may account for one-fifth of China’s value-added output and employment. But that means four-fifths now comes from Deng’s private sector.

Contemporary relevance

Careful work by Nicholas Lardy at the Peterson Institute for International Economics has concluded that by 2011, China’s public sector, including SOEs, only employed 11% of China’s labour force. As a comparison, in 2013, Australia’s public sector accounted for 18.4% of total employment. In other words, at an aggregate level and in terms of employment, the private sector is more prominent in China than in Australia.

An OECD study in 2010 found that 87% of China’s 523 industrial sectors were highly competitive. They observed that this compared favourably with international standards, including with the US.

Commentators like Minxin Pei are correct that China’s SOEs do benefit from government policy support, such as cheap loans from state-owned banks.

But the data nonetheless point to China’s private sector being hyper-competitive in the sense that despite such discriminatory policies, the sector as a whole has continued to thrive.

In a 2016 paper for a Reserve Bank of Australia conference, Nicholas Lardy highlighted that in terms of output growth, profitability and indebtedness, private Chinese industrial firms outperform SOEs by a wide margin.

The prominent and vibrant role the private sector plays in China today means that its economic growth may be more sustainable than some of its critics imagine.

That said, the pace of economic reform has slowed under current Chinese leader, Xi Jinping, who took over in 2012.

Arguably the slowdown dates back even further. For example, in terms of subjecting Chinese firms to increased competition from overseas firms, China’s trade-weighted average tariff in 2000 stood at 14.7%. After entering the World Trade Organisation (WTO) in 2001, this fell dramatically to 4.7% by 2005. Since then, no further progress has been made. In fact, in 2016 the figure was higher at 5.2%.

Similarly, four decades after Deng began to allow foreign investment into the manufacturing sector, other parts of China’s economy, particularly the so-called “commanding heights” of the economy such as energy, telecommunication and finance, remain curtailed or off limits entirely. Overall, China is less open to foreign investment than high-income countries and many emerging markets as well.

This lack of reciprocity is at least partly responsible for much of the international community’s criticisms of China’s economy today. Jason Young, the Director of the New Zealand Contemporary China Research Centre wrote last week that the current US-China trade war is really a “dispute over what models of political economy are deemed fair and legitimate economic policy-making in today’s highly-integrated global economy”.

Over the past decade, around one-third of the world’s economic growth has emanated from China. Countries like Australia have been leading beneficiaries, with China buying $116 billion last year.

China’s economic growth, and therefore the world’s, will be more assured if Deng’s reform legacy is reclaimed by China’s current crop of leaders. Just announced tariffs cuts and new openings for foreign investment are steps in that direction.The Conversation

James Laurenceson, Deputy Director and Professor, Australia-China Relations Institute (ACRI), University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The risks of a new Cold War between the US and China are real: here’s why



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The US and China find it extremely difficult to see the world from the other’s perspective.
AAP/EPA/Roman Pilipey

Nick Bisley, La Trobe University

Donald Trump is making good on his trade war rhetoric with China, announcing tariffs on a further US$200 billion worth of goods from the PRC. As China promises retaliation, the warmth of the Mar-a-Lago summit of April 2017 is a thing of the past. When this is added to the wide-ranging tensions such as the disputes over barely habitable rocks in the East China Sea, tensions over the competing claims in the South China Sea, and the spectre of nuclear catastrophe on the Korean Peninsula, the sense of geopolitical risk is as palpable as it is frightening.

During such periods of turbulence, it is not surprising that scholars and commentators look to the past for parallels to current crises. Not long ago, the trend, prompted by the centenary of the outbreak of the first world war, was to see Asia on the cusp of 1914-like conflagration. This proved a highly imperfect point of comparison.

Today, a more common refrain is that Asia is on the cusp of a new Cold War. If it were to happen, it would mean the rivalry that has been growing is transformed into overt militarised competition that drags the region into its vortex.

In this case, the US is confronted not by an expansionary Soviet Union seeking to capitalise on decolonisation to advance its ideological and geopolitical ambition, but by a resurgent China. Its ambitious president, Xi Jinping, has clearly set out his aim to make China the world’s preeminent national power.

Until very recently, it seemed unlikely that a Cold War with 21st century characteristics would eventuate. The USSR and United States inhabited almost entirely separate economic universes during the Cold War.

This meant the dynamic of competition was driven by power politics and ideology alone – the tempering effect of shared economic interests simply didn’t exist. Today, so the argument goes, their economic interdependence is a powerful brake on the worst instincts of the two countries.

While China and the US are in competition, the two countries have also established an extensive range of bilateral mechanisms to manage their complex relationship. There are around 1000 meetings between the countries every year, ranging from summit level down to mid ranking officials, covering issues from trade and investment to coastguard and fisheries.

The two countries know they have to work hard to ensure the competitive dynamic does not spiral out of control. And of course, both sides’ nuclear weapons act as a great disciplining force, ensuring even the most heated of relationships can remain short of outright conflict. Asia also has a wide array of institutional mechanisms such as ASEAN and the East Asia Summit that regularly discuss their common concerns and build a sense of regional trust.

Yet, in spite of their many meetings, in which there is much discussion but little agreement, there are good reasons to think a Cold War 2.0 might be a good deal closer than we realise. The US and China are plainly entering into a period of significant geopolitical rivalry. Each has ambitions that are mutually incompatible. Beijing wants a south-east Asian region in which it is not beholden to US primacy, while Washington wants to sustain its regional dominance.

The two also find it extremely difficult to see the world from the other’s perspective. Washington does not seem able to grasp that even though Beijing benefited from US primacy in the region, it will not forever accept a price-taker’s position in the regional order.

For its part, Beijing simply does not believe Washington’s claim that it wants China to achieve its potential, and that this can occur without meaningful changes to the current international order. When that is added to the nationalism that is a powerful political force in both countries, the prospects of a bleak geopolitical future seem very real.

The trade war escalation is one of the most worrying developments. Not only does it signal a more turbulent and less dynamic period in the global economy, it represents the victory of nationalist politics over shared economic interests. More importantly, it may presage a return to a less integrated global economy.

Trump evidently wants to rip up global supply chains and turn back the clock to the days of mercantilist approaches to economic development. Most worryingly, due to China’s behaviour in the past — stealing IP, predatory approaches to foreign investment and refusing access to its vast markets — Trump’s tariffs have a surprising level of support in business circles in the US.

The risk is not only one of sustained tension between the world’s biggest economies, but significant division between the interests of the two most important countries. If the golden straitjacket of economic interdependence is gone, the prospects of geopolitics and nationalism winning the day are significantly enhanced. China also sees in the tariffs a confirmation of its long-held suspicion that the US is intent on keeping the country from fulfilling its potential.

Worryingly, there is widespread complacency in the region. We used to think great power politics had been banished by globalisation. We were wrong. We thought Trump would come to his economic sense when elected. Wrong again. And now the escalation of trade conflict is undermining the most important link between the US and China – their shared economic interests.

We must not fool ourselves again. High intensity geopolitical competition is increasingly likely. Unless the US and China can step down from the escalatory cycle they are on, we are sliding into another period in which great power rivalry, militarised competition and dangerous nationalism once again dominate the region.The Conversation

Nick Bisley, Head of Humanities and Social Sciences and Professor of International Relations at La Trobe University, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Trump versus China means picking sides



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If the trade war with China escalates, siding with the US is going to cost, but Australia’s long-term national interests still lie with it.
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Giovanni Di Lieto, Monash University

As Donald Trump escalates his trade war with China, slapping a 10% tariff on roughly $US200 billion of imports that will climb to 25% if China retaliates, he appears to found something of a soul mate in Scott Morrison.

“We both get it,” Australia’s new prime minister said this week. What they get, he told the New York Times’ Maureen Dowd, is that some people feel left off the globalism gravy train: “The president gets that. I get it.”

His words signal a profound change of tack in Australian economic diplomacy as the new US approach threatens to break down the World Trade Organisation and universal trade agreements in general.

Under Trump, trade will depend on stronger bilateral (one on one) agreements that support US geopolitics.

It’ll mean Australia picking sides.

Double dangers in middle of the road

The status quo of relying on China for trade surpluses and on the US for security patronage might not be sustainable in the long run.

Siding with neither China or the US, attempting a “third way” of non-alignment, runs the risks losing out on both trade and security.

Broadly speaking, we can summarise the trade war between the US and China as a contest between sea and land.

The US aims to secure trade routes through the Indian and Pacific oceans. China wants to shift the bedrock of international trade to Central Asia.

Its Belt and Road Initiative is a grand strategic plan to join Eurasian economies from Lisbon to Vladivostok. The plan would end the historic era of Anglo-American hegemony founded on controlling trade routes across the Atlantic, Indian and Pacific oceans.




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Australia faces an existential strategic choice.

Leaving political ideologies aside, its economic prosperity depends on trade by sea. The return of Marco Polo’s world would eventually make Australia little more than a price-taking commodity supplier to trade and investment hubs from Beijing to Venice.

This means our national interests lie with the US defence of its seaborne trading routes.

Picking a side will be costly

In the short term, especially if the trade war escalates, siding with the US will be costly. We could lose a good deal of China-related export and business opportunities. Over the longer run we could offset the losses by diversifying to trade and invest in countries with shared strategic interests, such as Indonesia and India.

We would be well advised to reconsider the diplomatic benefit of RCEP, the China-led Regional Comprehensive Economic Partnership. This mega regional trade deal between the 10 members of the Association of Southeast Asian Nations and their bilateral trade partners has been dubbed the Chinese Trans Pacific Partnership. It can be seen as an extension of Xi Jinping’s major-power agenda.

After a promising start, RCEP negotiations now appear to be stuck. The main obstacle is India’s fear of worsening its already significant trade deficit with China.

Our interests lie with the US, and India

Another sticking point is that India, the Philippines and other potential members want countries like Australia, New Zealand and Japan to open up their markets for information technology and professional services.

In pure trade terms we would lose little if the RCEP did not proceed. We already have strong bilateral ties with all the negotiating countries apart from India, with whom we are presently negotiating a free trade agreement.

We would be well advised to use our limited diplomatic resources for that and supporting the US when it comes time to pick sides.The Conversation

Giovanni Di Lieto, Lecturer of international trade law, Monash Business School, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Turnbull pushes the ‘reset’ button with China, but will it be enough?



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In a recent speech, Prime Minister Malcolm Turnbull attempted to reset Australia’s relationship with China, which has become strained in recent months.
AAP/EPA/Kanzaburo Fukuhara / POOL

Tony Walker, La Trobe University

Prime Minister Malcolm Turnbull’s so-called “China reset” should be viewed for what it is. That is, neither a self-criticism of mistakes made in managing the China relationship, nor necessarily a self-confident assertion of Australia’s foreign policy priorities.

For all intents and purposes, Turnbull’s speech at the University of New South Wales last week was an exercise in damage limitation, as he trod lightly over vexed issues in relations with Beijing.




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Among the motherhood statements about contributions Chinese-Australians have made to the greater good was a key passage in which Turnbull emphasised a common interest in “free trade and open markets in every part of the world”. He said:

So in the midst of this rapid change, Australia continues to address its own interests by pursuing a relationship with China based on mutual respect and understanding. For our part, we act to advance Australia’s prosperity, ensure independence of our decision-making, and secure the safety and freedom of our people.

After this summation of the national interest, Turnbull reproduced a quote from Chinese President Xi Jinping to the Australian parliament in 2014, long before any thought of a disruptive Donald Trump presidency had materialised. At the time, Xi said:

The United Nations Charter and the basic norms governing international relations should apply to all countries. With that, countries big or small, strong or weak, rich or poor, are all equal. This means not only equal rights and interests for all countries, but also equality of all countries before international rules.

In doing so, Turnbull sought both to assert Australia’s sovereignty in pursuit of its own interests, and also to remind Xi of China’s commitment to a “rules-based” international order.

This was diplomacy at work, prompted by a realisation that relations with Australia’s cornerstone trading partner have become strained – due partly to Turnbull’s own clumsiness, which I will come to later. His mission on this occasion was to unstrain them.

Beijing has put Canberra in a freeze for the past year or so over statements by both Turnbull and Foreign Minister Julie Bishop that were regarded as unhelpful. China took particular exception to a Bishop speech in which she criticised its political model.

Bishop herself has not been to China for two years. As a consequence, relations are perceived to be drifting or, worse still, in a state of disrepair.

Judging by Beijing’s mild response to Turnbull’s speech via a foreign ministry spokesperson – and the presence in the audience at UNSW of China’s ambassador to Australia and its consul-general in Sydney – the prime minister achieved part of his objective.

This was Australian statecraft at work, driven not by China hawks in Canberra, or advisers who are jaundiced where Beijing is concerned, but by realpolitik.

In other words, no purpose would be served by a continued freeze in relations with Beijing, notwithstanding real policy concerns about Chinese assertiveness in both the South China Sea, and in Australia’s own southwest Pacific sphere of influence.

Turnbull had yielded to diplomatic advice to separate domestic politics from foreign policy, as if such advice should have been necessary.

Department of Foreign Affairs and Trade advisers, led by the Chinese-speaking head of DFAT, Frances Adamson, had secured a “battle victory not a strategic victory”, in the words of a prominent Canberra China-watcher.

Why is a reset needed?

In all of this, the question might reasonably be asked: how did Australia manage to aggrieve its cornerstone trading partner in the first place?

The answer to that question lies partly in Turnbull’s own poor political judgement.

The prime minister makes much of his China experience as a merchant banker seeking to do deals on the frontier of that country’s economic emergence in the 1980s.

On the evidence, Turnbull still has a bit to learn about dealing with China, including the importance of nuance. The Chinese are masters of diplomatic subtleties – unless it suits them to be otherwise.

Turnbull’s error was to frame Australia’s foreign interference laws – aimed at limiting the ability of foreign entities to intrude into Australian domestic politics – in such a way that his public statements caused unnecessary offence in Beijing.

While these laws clearly had China’s state propaganda apparatus and Chinese money in mind, there was no need for Turnbull to rub it in. And yet rub it in he did.

In a surprising display of ineptitude between December 7 and December 9 last year, he said on three separate occasions Australia had “stood up” against outside attempts to interfere in its internal affairs.

On the last occasion, he said it in his own version of Chinese. Such phraseology – “the Chinese people have stood up” – has sacred meaning in China. This was the expression attributed to Mao Zedong when proclaiming the People’s Republic in 1949 after decades of foreign interference, including unspeakable crimes by the Japanese.

It might also be observed that China is not the only country that seeks to influence Australian domestic politics via its various agencies and an active diaspora. Hardly less assiduous in its attempts to exert pressure on an Australian political process is the State of Israel, via its own government and semi-government apparatuses and an assertive domestic lobby.

Complications arise when activities cross a boundary between the legitimate exercise of soft power and attempts to corrupt the political process, or resort to forms of intimidation.

Where to from here?

There is no doubt that managing relations with China is challenging, especially at a time when Beijing is constantly testing the limits of what is acceptable in ruthless pursuit of its interests.

A mercantilist China will seek to get away with what it can.

That said, Australia has no choice but to strive to get the balance right in dealing with a rising power whose trajectory is such that by mid-century, or sooner, it will have the world’s largest economy and a military capability that will enable it to project power far beyond its shores.

Turnbull’s early priority should be to restart bilateral interactions at senior level, including a Beijing visit before the year is out either by himself or by Bishop.

Where Turnbull was on firmer ground in his UNSW speech was in the emphasis he laid on shared interests with China on free trade and open markets. Leaving aside Chinese mercantilism in which it invariably seeks to tilt the trade environment in its favour, Turnbull identified what is clearly a common interest, and one that needs to be exploited.




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This is resistance to the sort of trade bluster emanating from Washington in which the Trump administration seems bent on disrupting an international trading environment that is being run ragged by capricious policymaking. Turnbull said:

When it comes to trade, we should never forget that protectionism is self-defeating, not a ladder to get you out of the low growth trap, but a shovel to dig it deeper… In trade, there will always be more winners, more growth and more jobs, on a level playing field.

The ConversationIn the end, relations with China can be likened to a long march, in which each step along the way needs to be taken with care – or as Deng Xiaoping might have advised: Cross the river by feeling the stones.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.

Why Trump’s liberal demolition job and authoritarian outreach is about China


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US President Donald Trump has been reaching out to totalitarian leaders such as North Korea’s Kim Jong-un while snubbing traditional allies.
AAP, CC BY-SA

Reuben Steff, University of Waikato

It is obvious that US President Donald Trump is comfortable engaging with dictators and even US adversaries.

In contrast, he displays indifference – if not hostility – towards the liberal rules-based order that has served US interests since World War II. Issues like human rights, trade, climate change, and even America’s democratic allies have all been criticised or undermined by the president during his time in office.




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The general explanation for the president’s behaviour is that it stems from his personality. He seems to see something he respects in “strongmen”, whether it is Duterte, Putin, Xi, Erdogan or Kim.

But is the explanation that simple or is there something else at work? Is there a strategy that, President Trump and his allies believe, serves America’s geopolitical interests? If there is, it’s about China.

America’s ideological problem

Consider that there are a number of states throughout the Asia-Pacific and across Eurasia that may soon be “up for grabs” as US-China tensions escalate and states hedge their position. Clearly, Washington wants as many states as possible to maintain their strategic distance from Beijing and lean towards the US. This is a task that will become more difficult as China’s power continues to rise and America finds it harder to reassure its allies that it can maintain its dominance in the region.

A number of these states have authoritarian governance systems, forms of illiberal democracy or may be trending in this direction. They do not share America’s governing liberal ideology. This ideological difference could complicate America’s efforts to keep these states out of China’s orbit, which claims to have no interest in the domestic affairs of other states.




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US foreign policy since the end of the Cold War cannot have reassured authoritarian and illiberal states that Washington’s ideological values play only a minor role in it. US foreign policy, at times, has looked like that of a revolutionary power intent on transforming the international system in its own image. After all, the Bush administration appeared to believe that the only way for the world to be safe was for liberalism and democracy to triumph everywhere, which could usher in a global democratic peace. This is an assumption with some empirical support.

Furthermore, the immense power of the US may have made it difficult for non-liberal states to feel assured that even if they complied with US demands to give up their weapons of mass destruction (which they perceive as a critical deterrent to US intervention), they might still face further requests and threats. As Libya’s dictator Muammar Gaddafi found out in 2011, even a regime change can be a consequence.

Addressing a disadvantage

So how does all this tie back to America’s competition with China for the allegiance of states across the world? What could encourage authoritarian and illiberal states, in particular, to lean towards China in the years to come and accelerate the emergence of a bipolar US-China system?

Firstly, America’s power provides it with immense discretion to act and the capacity to undermine and enact regime change against illiberal states. Since 2003, we’ve seen this in Iraq, Afghanistan and Libya. Secondly, it is US ideology, and their fears that US power will be used for ideological ends – that is, to militarily intervene against illiberal states to try replace their regimes with liberal ones. The first point can generate concern all on its own but it’s further magnified by the second point.

To illiberal states, US liberalism has compelled Washington in the past to go abroad “in search of monsters to destroy” – and they are the ideological “monsters”.

Therefore, a case can be made that if the US credibly communicates that it is not motivated by liberal impulses, it will reduce these ideational concerns. It will increase (by how much is debateable) incentives for states to lean towards the US. Thus, American liberalism, rather than being seen as a source of strength, could leave the US disadvantaged as China’s power rises.

Trump’s challenge to the liberal order

Trump’s recent behaviour towards the G7 is consistent with this. It further communicates the point to authoritarian and illiberal states that this administration does not care about a state’s ideological stripes. This approach even gives President Trump more room to manoeuvre to attempt his own “Nixon to China” initiatives towards Moscow (if he can overcome domestic opposition) and Pyongyang.

Rapprochement with North Korea could reunify the Korean peninsula in a way that benefits the US at China’s expense (as well as eliminating a nuclear threat). With respect to Russia, it could stop Moscow’s drift towards China, and eliminate the prospects of Eurasia coming under the effective domination of a China-Russia led de facto alliance. Removing liberal ideology from the picture removes one roadblock towards these geopolitical initiatives.

The Trump administration appears to believe there is little material costs to adopting this approach. America’s traditional liberal allies lack the will to pay for their own defence and thus cannot constitute a true challenge to US global power. They can issue rhetoric and voice their opposition to US foreign policy but President Trump, rightly or wrongly, does not view these as meaningful forms of influence.

The ConversationUltimately, to the US president, liberalism is an ideology with no clear foreign policy benefit. To him it is one that could, at worst, act to drive states towards China, accelerating the emergence of a bipolar world order. This is one consistent element of the president’s strategy. The faster we reconcile ourselves to this, the quicker we will be able to grapple with the implications his foreign policy has for the existent liberal international order.

Reuben Steff, Lecturer in International Relations and Security Studies, University of Waikato

This article was originally published on The Conversation. Read the original article.

What’s driving Chinese infrastructure investment overseas and how can we make the most of it?


Shahar Hameiri, The University of Queensland

Chinese infrastructure investment in Australia has rarely left the headlines lately. It’s reported that telecommunications giant Huawei will likely be banned from building Australia’s 5G network on national security grounds. Hong Kong-based company CK Infrastructure’s bid to buy APA Group’s gas pipeline network is also proving controversial.

Scrutiny of the national security implications of infrastructure has been upgraded. The new Critical Infrastructure Centre is assisting the Foreign Investment Review Board in this. Though not made explicit, the main focus is China.




Read more:
Explainer: why Chinese telecoms participating in Australia’s 5G network could be a problem


Greater scrutiny of investment projects is welcome, especially if community and environmental concerns are also considered. However, Australia could benefit from the availability of Chinese infrastructure financing.

Australia’s north has significant infrastructure needs. And in the major Australian cities, public transport systems are inadequate, leading to ever-longer commuting times. China also possesses world-class expertise in high-speed rail, which could be harnessed to better connect cities on the eastern seaboard.

Given the state of relations with China and Australia’s pressing infrastructure needs, the Australian government must develop a clear strategy for Chinese infrastructure investment. Instead of passively scrutinising bids, the government should proactively identify worthwhile projects and engage Chinese counterparts to finance and implement them.




Read more:
Australia risks missing out on China’s One Belt One Road


Belt and Road isn’t just a political ploy

A proactive approach could benefit Australia because Chinese infrastructure investment is not as strategically directed as many assume. This is clear if we examine the Belt and Road Initiative (BRI) – the centrepiece of China’s global infrastructure financing spree.

The Australian government, on security officials’ advice, has not joined the BRI. However, Belt and Road is not a carefully planned “grand strategy”. It is largely driven by the diverse activities of state-owned enterprises competing for projects and financing.

President Xi Jinping has undoubtedly used the BRI to signal China’s rise to “great power” status. But its main drivers are domestic and commercial. At its core, the BRI is an effort to alleviate China’s industrial overcapacity problem in key sectors, such as steel, glass, cement and aluminium.

Overcapacity has worsened since the global financial crisis, as Beijing sought to maintain growth by encouraging an infrastructure construction boom. State-owned enterprises (SOEs) spearheaded this. After profitable domestic opportunities had dried up, international expansion became attractive, to keep SOEs working and to find more productive outlets for China’s huge foreign currency reserves.




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The BRI’s implementation has reflected competition, lobbying and compromises among ministries, provinces and SOEs. Its masterplan document – “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road” – is a case in point. It contains 50 “priority areas”. These cover virtually every governmental and non-governmental activity, showing little actual prioritisation.

Early statements suggested a BRI focus on Central and Southeast Asia. But since 2015 the initiative has been formally opened to all countries. This was again due to intense lobbying from provinces, SOEs and some foreign governments. All are keen to get some of the action, suggesting little strategic direction.

The vague and loose Belt and Road plan has enabled considerable scope for interests within the Chinese party-state to use it for their own, economically motivated, agendas, with little consideration for Beijing’s wider diplomatic objectives. This has generated a rather chaotic, “bottom-up” process for selecting and funding projects.

Belt and Road project ideas usually emerge from state-owned enterprises’ in-country subsidiaries. After spotting an opportunity, they try to build support in the recipient government. Occasionally, this includes bribing officials. They also often seek to obtain the local Chinese embassy’s support to improve lobbying back home.

Once agreement with the recipient government is reached, the SOE or the recipient government applies for financing from China’s policy or commercial banks. The banks determine whether to extend credit after assessing repayment capacity. The central government’s involvement is typically limited to the National Development and Reform Commission’s formal approval.




Read more:
The Belt and Road Initiative: China’s vision for globalisation, Beijing-style


Australia still needs to manage the risks

Chinese infrastructure projects are not risk-free. The potential for misuse of key infrastructure to serve Chinese strategic agendas is clearly the Australian government’s foremost concern. But there are more immediate issues too.

Chinese banks’ lending standards are well below world “best practice”. They give limited consideration to social, environmental and labour protections when awarding financing to projects.




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China’s green planning for the world starts with infrastructure


Tough competition between Chinese companies means they have strong incentives to cut corners and promote projects that recipients do not need. The latter can be saddled with unnecessary infrastructure and potentially unsustainable debt. Furthermore, Chinese central agencies’ capacity to regulate SOEs’ offshore activities is weak, so they cannot be relied upon to manage these problems.

Closer scrutiny of investment proposals is, therefore, clearly necessary. So, too, is tight regulation of project implementation. Australian regulators should also ensure Chinese projects adequately resolve social, environmental and labour concerns.

The fragmented nature of Chinese investments provides opportunities, however, for selective engagement that could serve the wider public interest. This should form part of a clear Australian strategy towards China based on a nuanced analysis of both the threats and opportunities of this multifaceted relationship.


The Conversation


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Canada’s disturbing lack of vision on dealing with a rising China


Shahar Hameiri, Associate Professor of International Politics, The University of Queensland

This article was originally published on The Conversation. Read the original article.

View from The Hill: China challenge is the issue of the moment in Australian foreign policy


Michelle Grattan, University of Canberra

Two contributions made in separate forums in Parliament House on Tuesday captured the sharp cross-currents in the China-Australia relationship.

At the Australia China Business Council’s “Networking Day”, Chinese ambassador Cheng Jingye reiterated that China “never interferes in the internal affairs of other countries”, let alone engaged in “the so-called infiltration of other countries”.

The ambassador delivered little-disguised criticism of Australia. To dispel “the clouds” over bilateral relations, “the two countries need to have more interactions and inclusiveness, with less bias and bigotry… less cold war mentality”.

Over in the Coalition party room Liberal senator David Fawcett, chairman of the parliamentary foreign affairs committee, also had a forthright message, urging the cabinet to put security concerns at the forefront in considering the Chinese company Huawei’s push for a slice of the action in the 5G network build.

The government’s attitude to China’s protestations that it doesn’t interfere is one of, “it would say that”. Its view of claims by non-state companies such as Huawei that they have no connections with the Chinese regime is much the same.

For both sides of politics, the China policy challenge is to strike the right balance in a bilateral relationship now infused with Australian suspicion and openly-expressed Chinese irritation.

If Labor wins the election Penny Wong, now shadow foreign minister, will be shouldering much of that responsibility.

In her speech at the business forum, Wong criticised the Turnbull government’s management of the relationship and said “a more considered, disciplined and consistent approach is required”.

So how would a Labor government handle things? Wong outlined six “operating principles” that it would use:

  • A clear understanding and articulation of Australia’s national interests, which included the country’s security and prosperity, regional stability and constructive internationalism.

  • Acceptance that we live in a disrupted world.

  • Acceptance of China “as it is, not as others might perceive China to be or as China itself might represent itself”.

  • Acknowledgement of how important and beneficial China’s emergence as a major economic power has been to Australia and the world.

  • Pursuit of an integrated approach to the many strands of the relationship.

  • A commitment to working constructively with China and others in a regional framework.

Australia and China were very different culturally, politically and socially, Wong said.

“The important objective is to prevent differences from becoming disagreements, as far as possible. And when disagreements do occur, they must be managed with intelligence and tact,” she said.

“To the extent possible, Labor will work towards ensuring that our political relationship works on the same basis as our economic relationship – respect and trust based on dialogue and understanding. Respect and trust don’t just happen. They have to be built and maintained, and that’s what we intend to do”.

Of course it is easier to say how things should be managed than to manage the often tricky realities.

In his address to the forum, Malcolm Turnbull did not dig down deeply to those realities. He kept his references to differences to the easier, less sensitive ones. “Sometimes you’ll get issues at a fairly granular level,” he said, and referred to the problem with imports of Australian wine. “We went to work to ensure that that could be resolved and indeed so it was”.

Turnbull also suggested the reality wasn’t always as it was portrayed. “Sometimes in the media there is always going to be an emphasis on differences, on conflict, on problems”.

It was a superficial speech – which can be defended on the grounds that it can create more trouble than it is worth to be too blunt in public about the actual problems. Also, Turnbull regarded it as a business occasion rather than one for a more formal foreign policy presentation.

The crack at the media was, however, a cheap and not very honest shot. The media is often simply saying publicly and directly what the government is saying privately or more obliquely. It’s notable that Andrew Hastie, Liberal chair of the parliamentary intelligence and security committee, recently put on record (under privilege) allegations against business figure Chau Chuk Wing, partly on the grounds of giving some backing to media outlets that are being sued over stories about him.

On other fronts this week, Huawei has been lobbying MPs to try to convince them it is as transparent as it claims, while Hastie’s committee is preparing its report on the legislation – which the government wants passed next week – for a register of agents of foreign governments and other foreign political interests.

The Australia-China relationship involves walls and whispers, as well as all the rhetoric about trust and respect.

Meanwhile the Lowy Institute’s annual poll, Understanding Australian Attitudes to the World, released Wednesday, suggests ordinary Australians are less galvanised by the China debate than the decision-makers.

“Australians remain remarkably sanguine about foreign interference in Australia’s political processes following the furore over Chinese-linked donations to Australian political parties, politicians, and institutions. Foreign interference remains a low-order threat in the minds of Australians, who are almost equally concerned about US influence as Chinese influence,” Lowy’s executive director Michael Fullilove writes in his introduction to the poll, done in March with a sample of 1200.

“Foreign interference in Australian politics” was seen as a “critical threat” by 41% – behind terrorism (66%), North Korea’s nuclear program (66%), climate change (58%), cyber attacks from other countries (57%), the prospect of a severe downturn in the global economy (50%), and the Trump presidency (42%).

Although the debate has been all about China, the poll found what concerns there were appear to be focused on foreign influence generally, rather than specifically Chinese influence. Asked about influence from both China and the US in Australia’s political processes, 63% expressed concern about China and 58% concern about the US.

In other findings relating to China

  • 72% said the Australian government was “allowing too much investment from China”. In 2014, the figure was 56%.

  • 46% believed it was likely “China will become a military threat to Australia in the next 20 years”.

  • But 82% said China was more of an economic partner to Australia than a military threat to it.

  • 81% believed it was “possible for Australia to have a good relationship with China and a good relationship with the United States at the same time”.

The ConversationIn their attitudes to China, the Australian public may be alert but they’re not alarmed.

Michelle Grattan, Professorial Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Despite strong words, the US has few options left to reverse China’s gains in the South China Sea


Adam Ni, Australian National University

At a top regional security forum on Saturday, US Defence Secretary Jim Mattis said China’s recent militarisation efforts in the disputed South China Sea were intended to intimidate and coerce regional countries.

Mattis told the Shangri-La Dialogue that China’s actions stood in “stark contrast with the openness of [the US] strategy,” and warned of “much larger consequences” if China continued its current approach.

As an “initial response”, China’s navy has been disinvited by the US from the upcoming 2018 Rim of the Pacific Exercise, the world’s largest international naval exercise.

It is important to understand the context of the current tensions, and the strategic stakes for both China and the US.




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Is China playing a long game in the South China Sea?


In recent years, China has sought to bolster its control over the South China Sea, where a number of claimants have overlapping territorial claims with China, including Vietnam, the Philippines and Taiwan.

China’s efforts have continued unabated, despite rising tensions and international protests. Just recently, China landed a long-range heavy bomber for the first time on an island in the disputed Paracels, and deployed anti-ship and anti-air missile systems to its outposts in the Spratly Islands.

China’s air force has also stepped up its drills and patrols in the skies over the South China Sea.

While China is not the only claimant militarising the disputed region, no one else comes remotely close to the ambition, scale and speed of China’s efforts.

China’s strategy

The South China Sea has long been coveted by China (and others) due to its strategic importance for trade and military power, as well as its abundant resources. According to one estimate, US$3.4 trillion in trade passed through the South China Sea in 2016, representing 21% of the global total.

China’s goal in the South China Sea can be summarised with one word: control.

In order to achieve this, China is undertaking a coordinated, long-term effort to assert its dominance in the region, including the building of artificial islands, civil and military infrastructure, and the deployment of military ships and aircraft to the region.




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Explainer: what are the legal implications of the South China Sea ruling?


While politicians of other countries such as the US, Philippines and Australia espouse fiery rhetoric to protest China’s actions, Beijing is focusing on actively transforming the physical and power geography of the South China Sea.

In fact, according to the new commander of the US Indo-Pacific Command, Admiral Philip Davidson, China’s efforts have been so successful that it “is now capable of controlling the South China Sea in all scenarios short of war with the US”.

America’s declining relevance

China’s efforts are hard to counter because it has employed an incremental approach to cementing its control in the South China Sea. None of its actions would individually justify a US military response that could escalate to war. In any case, the human and economic cost of such a conflict would be immense.

The inability of the US to respond effectively to China’s moves has eroded its credibility in the region. It has also fed a narrative that the US is not “here to stay” in Asia. If the US is serious about countering China, then Mattis’ rhetoric must be followed by action.

First, the US should clearly articulate its red lines to China and others on the kinds of activities that are unacceptable in the South China Sea. Then it must be willing to enforce such red lines, while being mindful of the risks.

Second, the US needs to renew its efforts to cooperate with allies in the region to build capacity and demonstrate a coordinated commitment to stand in the face of China’s challenge.

Third, the US needs to deploy military capabilities in the Indo-Pacific region, such as advanced missile systems, which would reduce the military advantages gained by China through the militarisation of the South China Sea features.

Long-term consequences

China’s tightening control over the South China Sea is worrying for a number of regional countries. For many, the shipping routes that run through the South China Sea are the bloodlines of their economies.

Moreover, the shifting balance of power will enable Beijing to settle its territorial disputes in the region for good. Without a doubt, China is willing to use its new-found power to change the status quo in its favour, even at the expense of its weaker neighbours.

Control of the South China Sea also allows Beijing to better project its military power across South-East Asia, the western Pacific and parts of Oceania. This would make it more costly for the US and its allies to take action against China, for example, in scenarios involving Taiwan.

On a higher level, China’s assertive approach to the South China Sea demonstrates Beijing’s increasing confidence and its willingness to flaunt international norms that it considers inconvenient or contrary to its interests.

There is little doubt China is becoming the new dominant power in Asia. Its rise has benefited millions in the region and should be welcomed. But we should also be wary of Beijing’s approach to territorial disputes and grievances if it employs military and economic intimidation and coercion.




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China’s quest for techno-military supremacy


If we want to live in a “world where big fish neither eat nor intimidate the small”, then there must be consequences for countries, including China, when they flaunt international norms and seek to settle disagreements with force.

It may be too late to turn the tide in the South China Sea and reverse China’s gains. No one would run such a risk. But it is not too late to impose penalties on China for further destabilising the region through its actions in the South China Sea.

The ConversationThe challenge is to figure out how to do that, and what we would be willing to risk to achieve it.

Adam Ni, Researcher, Strategic and Defense Studies Centre, Australian National University

This article was originally published on The Conversation. Read the original article.

Australia needs to reset the relationship with China and stay cool



File 20180601 69493 pi0fsy.jpg?ixlib=rb 1.1
In happier times: Prime Minister Malcolm Turnbull talks with Chinese President Xi Jinping at the 2017 APEC summit in Vietnam.
AAP/STR

Tony Walker, La Trobe University

Let’s call it the “China syndrome”. This describes a condition that is a bit compulsive and not always rational.

Australia’s response to China’s continuing rise mixes anxiety, even a touch of paranoia, with anticipation of the riches that derive from the sale of vast quantities of commodities.

Economic dependence on China is two-edged and potentially policy-distorting.

To put this in perspective: Australian exports of goods and services to China in 2016-17 were worth $110.4 billion. That accounts for nearly 30% of total exports. This compares with $20.8 billion for the US, or 5.16% of total exports. The EU (including the United Kingdom) accounted for $30.5 billion, or 9.8%.

In other words, nearly one-third of Australian goods and services trade is hinged to the China market. Putting it mildly, such a level of dependence on a single market is not ideal.




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No other country, relatively speaking, has benefited to quite the same extent from China’s extraordinary development since it began opening for business to the outside world after the Third Plenary Session of the 11th Central Committee of 1978 of the Chinese Communist Party (CCCP).

In 2017, Australia registered the longest uninterrupted stretch of economic growth in modern history. This surpassed previous record holder the Netherlands with 103 uninterrupted quarters.

That expansion continues. Australia’s commodities exports, driven by Chinese demand, sustain unparalleled growth.

This is the context in which Australia might do a better job managing relations with its cornerstone trading partner and, arguably, its most important bilateral relationship.

This latter observation requires a leap beyond assumptions that security ties with the US mean there is no relationship more critical to Australia’s wellbeing.

That is changing fast as China’s economic might continues to expand and its ability to project military power in the Asia-Pacific grows in leaps and bounds.

None of this is to say that Australia’s security arrangements with the US versus China’s rise represent a zero-sum game. You could argue that security ties to the US have become more important as a consequence. It is simply to acknowledge the world has changed. It is sprinting ahead of the ability of policymakers to keep up.

Take the 2017 Foreign Policy White Paper, for example. Formulated over the period 2016-2017, the paper asserted the need for Australia to bolster its relationship with the US to take account of China’s rise.

On the other hand, and unavoidably, it acknowledged that the Asia Pacific is no longer uncontested space.

As the paper puts it:

Powerful drivers are converging in a way that is reshaping the international order and challenging Australia’s interests. The United States has been the dominant power in our region throughout Australia’s post-second world history. China is challenging America’s position.

Those “powerful drivers” have become more powerful since publication of the white paper.

At the same time, Australian policy towards Beijing has become more ragged, driven by worries about the impetus of China’s rise, concerns about America as a reliable ally under an “America First” Trump administration, and fears about Chinese influence in Australia itself.

Unfortunately, Prime Minister Malcolm Turnbull’s response to the latter became enmeshed in domestic politics, leaving the impression the new laws to forestall foreign interference in Australian democratic processes were aimed at China alone.

Between December 7 and 9, 2017, Turnbull said on three separate occasions Australia had “stood up” against outside attempts to interfere in its internal affairs. This was a pointed and, as it turned out, unwise use of the phrase.

On the last occasion, he said it in Chinese, adding offence to Beijing where such phraseology – “the Chinese people have stood up” – has sacred meaning in Chinese Communist Party history. This was the expression Mao Zedong used when proclaiming the People’s Republic in 1949, after decades of foreign interference, including the deaths of hundreds of thousands of Chinese at the hands of the Japanese.

Turnbull’s intervention raises questions about the quality of China policy advice from his own office.

Foreign Minister Julie Bishop had, in any case, irritated Beijing in a speech delivered in Singapore in March, 2017, in which she questioned China’s political model.

While non-democracies such as China can thrive while participating in the present system, an essential pillar of our preferred order is democratic community.

Bishop might have phrased her remarks aimed at “non-democracies such as China” more judiciously, while conveying a similar message.

What is lacking in Australia’s approach to its relationship with China is consistency, so the government speaks with one voice and, where possible, separates domestic politics from the conduct of China policy.

Beijing values consistency. It may not like forthrightness in defence of Australia’s legitimate interests in maintaining its own sovereignty and its own security, but it respects firmness.

Canberra should not shy away from articulating its concerns about China’s continued militarisation of facilities in the South China Sea. It should be on guard in withstanding Chinese efforts to interfere in domestic politics.

Policymakers should bear in mind a simple rule of thumb in dealing with China. It will seek to get away with what it can. That includes bullying and bluster.

Peter Drysdale, emeritus professor of economics at the Australian National University and author of a study of the Australian-Chinese economic relationship, told me the government needs to assert its “control of the China agenda”. This has been pushed off course in the recent past.

Drysdale perceives a “structural problems” embedded in the Australia-China relationship arising from “accelerated complications” in US-China relations. At the same time, Washington’s security establishment is pushing an alarmist viewpoint about China’s regional ambitions.

No reasonable observer pretends China’s impulses are benign. The question is how to manage, in a way that is not counter-productive, China’s attempts to spread its influence.

In Drysdale’s view, the greatest risk for Australia is that an erratic Trump administration will undermine a rules-based international order critical to Australian security.

Canberra’s diplomatic efforts over many years have been aimed at drawing Beijing into a rules-based system, promoting certainty in China’s behaviour as a “responsible stakeholder”.

That longstanding impulse of Australian foreign policy is now under stress.

However, what also needs to be kept in mind is that relations between Canberra and Beijing have had their ups and downs over the years. These blips have come and gone.




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Why China’s ‘debt-book diplomacy’ in the Pacific shouldn’t ring alarm bells just yet


The question is whether these latest tensions are more serious and lasting than others such as the chill that occurred after the 1989 Tiananmen Square massacre. Or frictions that accompanied Australia’s support in 1996 for the dispatch of US naval forces into the Taiwan Straits after Chinese missile tests during the Taiwanese election.

The Australian government needs a reset of the relationship that would move the two countries past a difficult stage caused by a combination of misunderstanding and loose talk.

Australian officials also need to bear in mind that, in a region in flux, Australia’s Asian neighbours are accommodating themselves to new realities at warp speed. Old certainties such as the validity of US security guarantees are being questioned.

The ConversationThe Turnbull government is operating in a much-changed environment. Stakes are high. Levels of anxiety about China’s rise are unlikely to fall. Australia needs to keep its cool and avoid falling prey to a China syndrome characterised by unsteadiness and poor judgement.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.