Australia’s challenge is not a US retreat, it is China’s advance

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From Paul Keating yesterday:

The United States will not be able to recover its position as the dominant power in the world – nor its approach to globalism – even if Donald Trump were to be replaced by vice-president Mike Pence, according to former prime minister Paul Keating.

In a tough assessment of United States strategy going back to the end of the Cold War, and its implications for Australia’s approach to the US alliance and foreign policy, Mr Keating told a conference on the US-Australia alliance in Sydney on Tuesday that Australia had to keep an “open and alert mind and not one riveted to a romantic or even idealised notion of a singular guarantor”.

…While the continuing presence of the US in the Pacific was very important, he said, Australia had to understand the rise of China and be more self-reliant in its foreign policy.

Mr Keating told the conference the days of US-led multilateralism were over.

“President Trump has articulated a move away from liberal internationalism and multi-lateralism to a more America centric position and the world has noticed,” he said.

“[Even] if for some reason Mike Pence replaced Donald Trump as President tomorrow I believe the world will never return to the multilateralism or the spirit of it that, say, Barrack Obama presided over.

“This is over,” he said.

“Not only is the world naturally splintering into West and East, but the US itself has eschewed its own globalism.

“Coming as this does with the demise of the ‘Washington Consensus’ – the so-called ‘end of history – which itself ended with the unprovoked attack upon Iraq and the near collapse of the US financial system, the United States having pawned the crown, can’t redeem it at its full value”.

What I find amusing about these often Labor visions for Australia is that they presuppose that Australia currently has some foreign policy that favours the US. Nothing could be further than the truth. We are not importing hundreds of thousands Americans each year to live here. We are not utterly dependent upon US capital (given it has no savings) nor are our export flows and stocks much related to the US.

Sure, we still have a goodly inflow of direct investment and large stock but these things are the cream not the cake. China now owns Australian economic flows lock, stocks and barrel.

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You can’t possibly look at this circumstance and not see the soft power that it hands to China. It is immense. While the US is our hard power buddy, China is already our soft power owner.

So, when Paul Keating considers the relative power of China, the US and Australia, and sees us as the lap dog of the latter, he is basically discounting everything except aircraft carriers.

The question we need to ask ourselves is not which of these great powers is our ally, nor how to balance them, it is what world do we want to live in and how can we best see it delivered?

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On that front it could be that China is the better option. It may be that it’s rise will be peaceful and allow other political economic systems – such as liberal democracy and capitalism – to flourish in its friends.

Then again, it may not, from Peter Hartcher:

The man who replaced the Dalai Lama as the head of Tibet’s government-in-exile has brought a troubling message to Australia. The Chinese military forcibly annexed Tibet in the 1950s, sending the Dalai Lama into hasty exile in India. The Dalai Lama retains his role as spiritual leader. But the Tibetan diaspora elected Lobsang Sangay as their political leader six years ago. He spoke at the National Press Club in Canberra earlier this month. The Harvard-educated lawyer’s message to Australia: “It happened to Tibet – you could be next.”

…Does have anything to support his assertion? His case: “If you understand the Tibetan story, the Chinese government [before the military takeover] started building a road – our first ever highway in Tibet.

“Now, we were promised peace and prosperity with the highway, and our parents and grandparents joined in building the road. In fact, they were paid silver coins to help them build the road…

“So my parents told me the Chinese soldiers with guns were so polite, so nice, the kids used to taunt them and taunt them, they always smiled. They never said anything. Then they built the road. Once the road reached Lhasa – the capital city of Tibet – first trucks came, then guns came, then tanks came. Soon, Tibet was occupied. So it started with the road.

“Then another strategy that they deployed was divide and rule, co-opting our ruling elite… They were paid, I think, in Australian context, huge consultation fees.” This brought knowing guffaws from the Australian audience.

“So,” Sangay concluded, “what you see in Australia and around the world – co-optation of ruling elites, getting high consultation fees, business leaders supporting the Chinese line of argument, and even the religious figures – we have seen all that in Tibet. So it started with the road.”

…Is Sangay right? Geremie Barme, former head of ANU’s Centre for China in the World, is both deeply knowledgeable about China and highly sceptical of its party-state apparatus. He says that Sangay is wrong on two counts. First, says Barme, it’s a “false comparison” to put Tibet with Australia and other countries in the Chinese worldview. “China went into Tibet to extract resources and for military reasons, it was not a big market for China,” says Barme, now an independent scholar and publisher of chinaheritage.net.”China as an economic and political entity is deeply implicated with global economics and politics and it needs not only resources, it needs markets.” Tibet was about resources, in other words, while it sees most of the rest of the world as markets.

Second, the Chinese ruling class has not yet decided the scope of their global ambitions, according to Barme. “There is a debate in China at the moment – what responsibilities will they take in the world, and what can they afford?

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Geremie Barme is indeed a fine China scholar but his expertise is Chinese culture not strategic thinking. Experts on the latter will tell you that rising great powers have a habit of wanting to see their spheres of influence spread. As their power and its apparatus’s grow, there is a kind inertia in using them. Client states tend to take on the shape of the hegemon.

Can we really say that a rising Chinese hegemon will allow Australia to keep its democracy and liberal institutions? Especially so, if it means another great power is encouraged and has further reason to remain within its sphere of influence? Even more so, if it becomes the domicile of a large Chinese diaspora, over which Beijing claims cultural and strategic dominion? Should we add strategic allegiance to an already overwhelming economic dependence? What will that future deliver our liberal traditions?

China is clearly already of equal weight in Australia’s external relations. What Paul Keating is proposing is to take us deeply under its umbrella effectively booting the US from our strategic matrix.

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I’m not trying to stoke hysteria here. These are real questions in our immediate future over the next several decades, not far flung visions. We have all tasted Chinese power in the model of the early years of Tibetan friendship already. It has not enhanced our democracy.

In fact, Paul Keating is on retainer at BHP. While he is above reproach in his views it is symbolic. What about Bob Carr receiving bucket loads of Chinese cash and the rest of the Parliament? Does that enhance the independence of our thought and choices? Under Chinese over-lordship would you even be reading this article. Would MB be allowed to exist? Try this today:

Following a clear order from its Chinese importer, Cambridge University Press reluctantly took the decision to block, within China, 315 articles in The China Quarterly. This decision was taken as a temporary measure pending discussion with the academic leadership of the University of Cambridge, and pending a scheduled meeting with the Chinese importer in Beijing.

The academic leadership of the University has now reviewed this action in advance of the meeting in China later this week. Academic freedom is the overriding principle on which the University of Cambridge is based. Therefore, while this temporary decision was taken in order to protect short-term access in China to the vast majority of the Press’s journal articles, the University’s academic leadership and the Press have agreed to reinstate the blocked content, with immediate effect, so as to uphold the principle of academic freedom on which the University’s work is founded.

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By the same token, of course, recent American influences over the world and Australia have clearly soured as its capitalism has corrupted and its strategic outlook has turned inwards. I write about that all day, every day.

But it does at least come with the structures of a democratic past that can be repaired and reformed. A Chinese future is devoid of such architecture.

I would have thought that if we really want to balance our external interests between competing powers, we would be desperately seeking for ways to keep the US engaged as China gobbles up our welfare.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.