In my recent series on the macroeconomic blunders of Australian leadership, the prominent role of shaky assumptions about Chinese growth are paramount. It is worth taking a little time to assess just how wrong the Australian elite have been about China, to gauge what chances we have of the same leaders finding a way around an emerging new normal.
The great assumption of Chinese (and Australian) ascension began with commodities boom mark I. At that time it was becoming obvious that Australia’s economic and strategic futures were headed in very different directions. On the one hand Chinese exports were surging. On the other, Australia was being drawn ever deeper into its US alliance dependency owing to the War on Terror and the great power threat rising in the Pacific. I recall a speech given by Paul Kelly at the time summarising the situation and the Howard government’s response to it using a famous Yogi Berra quote: “when you come a fork in the road, take it!
At The Diplomat we did a special issue on the issue and interviewed Treasurer Peter Costello asking how this contradiction might be resolved. He replied that China would liberalise politically as its economy became freer and hence any contradiction between an autocratic Chinese economic partner and democratic strategic partner would dissolve even as the Chinese economy powered to ever greater heights. Chinese success therefore equaled Australian success.
The full text of this article is available to MacroBusiness subscribers
