Why is the RBA telling Australia to kowtow to China?

Via The Guardian:

Malcolm Turnbull has confirmed he has sought information from Australia’s intelligence agencies about the implications of the chair of parliament’s intelligence committee publicly revealing details of an FBI investigation provided by American officials in a private briefing.

It comes as the governor of the reserve bank, Philip Lowe, called for Australia to “avoid escalating issues” with China during a speech in Sydney on Wednesday night.

Facing questions about his knowledge of Andrew Hastie’s decision to use parliamentary privilege on Tuesday night to name one of Australia’s biggest political donors as the person funding the bribery of a senior United Nations official, Turnbull continued to insist he had no prior warning of the contribution.

Asked by Bill Shorten in the House whether he had sought information from intelligence agencies after Hastie’s speech “about the implications of publicly sharing the details of an FBI investigation which has been provided by our ally”, Turnbull replied: “Yes, I have.”

Asked whether Hastie was authorised to disclose information about an FBI investigation that was obtained during confidential briefings in the United States, Turnbull said his understanding was the briefing was “not classified” and had also been attended by Labor members of the intelligence committee.

As Shorten pursued the line of inquiry during question time on Wednesday, one government MP interjected to the Labor leader: “Whose side are you on?”

Is Phil Lowe and the central bank now the diplomat of last resort? What if deeper understanding means we need to escalate issues? Perhaps a little receding diplomatic liquidity is exactly what Australian democracy needs.  Either way it sure isn’t the business of the RBA to comment.

The Chinese dictator jumped the shark in his push to control Australia. All he had to do was to keep quietly buying houses and we were goners. Australia’s clique of insider economists were falling over themselves to hand it to him. Recall former RBA member Professor Warwick McKibbin several years ago:

Obsessed by weak commodity prices and volatility in global financial markets to the point of not thinking about the future?

Don’t be, advises top economist and former Reserve Bank of Australia board member Warwick McKibbin.

Australia is better placed than most countries to benefit from long-term global trends – such as population ageing, fiscal adjustments and the shift in economic clout from Europe to Asia, Professor McKibbin says.

…”If you have got something like a fixed asset in a country and you are globalising the entire world then location becomes a valuable asset.”

“Real estate on Sydney harbour for example is also from a national point of view attractive. But for foreign investors it’s also very attractive because there’s billions of dollars of wealth being generated in China.

“The middle class is expanding, and they’re going to want to buy things, environmental goods – they’re going to want to buy stuff which we actually have in abundance. But much of it is fixed assets so you can’t change the supply of it, and so therefore it’s value is likely to go up a lot.”

But it will also drive up the real exchange rate, hurting the competitiveness of trade-exposed industries such as tourism – currently enjoying good growth with a lower Aussie dollar – and manufacturing. A stronger dollar means Australian goods and services are more expensive for foreigners while competing foreign goods and services are cheaper for Australians.

Instead the Dictator closed his capital account and rescued us from the appalling McKibbin dystopia.

The Dictator’s mistakes have mushroomed since. The Dastayari Affair and its high profile apologists are now objects of such rising concern that they have birthed foreign interference laws. These have been held up by the usual Coalition ineptitude but they will come.

In this context, the apologists of yesteryear – Raby, Carr, Forrest, Laurenceson – appear more and more corrupted in their praise of the Dictator. They’ve gone from free runs for their media propaganda to alienating public outbursts of fascist ideas, kowtowing junkets and panicked op-eds. We get more of that today from Laurenceson who blames the deterioration entirely upon Australia:

Firstly, China’s rise has been “so rapid” that it’s shocked Australian defence and security officials who are seemingly “uncomfortable” with the challenge this has posed to American hegemony, Dr Laurenceson said.

Secondly, Donald Trump’s presidency in the US has made Australia feel “more vulnerable”.

“That means we are more sensitive to countries that we are not particularly familiar with such as China.”

Thirdly, the Turnbull government has publicly highlighted the risk China has posed to its national security because Australia is “not in a position of political strength”, Dr Laurenceson said.

It is “not unusual for Australian governments to focus on issues around national security when they’re in a politically vulnerable position”, he added.

No mention at all of the Chinese bribery push, upon which his institute was founded.

No wonder the defense establishment has moved from alert to alarm and is now actively pushing the debate away from Chinese soft power engagement towards US hard power. This is how you should view the excellent work of Andrew Hastie yesterday.

As the blow back to the “silent invasion” has developed, the Dictator appears to have lost patience and, rather than taking stock for a longer run battle, has now gotten himself into a persistent slanging match with the Australian people. Via his media Chinese media mouthpiece, the Dictator now delivers daily threats to Australia that is formalising a welcome Sino/Strayan schism:

China does not have to throw away Sino-Australia relations. China just needs to slow their relationship for a period. For example, it will not be necessary for the Australian Prime Minister to visit China this year. In fact, he could visit a few years later. China’s ministerial officials, other than those with the economic and trade departments, could postpone interactions with Australia.

Non-government related exchanges between the two nations should be maintained. Chinese students and tourists in Australia should not be bothered.

China has promised to increase its imports from the US, according to the recently-concluded Sino-US trade talks. It is reasonable to cut a few imports from Australia to implement the China-US trade agreement. It will benefit China anyway. By doing so, China will be able to keep its promise to the US, and while helping Australia to reconsider the ways in which they can balance relations with their Western allies and China’s interests.

Metal ore is Australia’s major export to China. As long as China is in need of the metal exports, and a replacement remains difficult to find, they will continue to import them. But when it comes to wine and beef, China can easily import those items from the US, replacing Australia.

The scope of import reductions could be limited. Last year, Australia exported $76.45 billion in goods to China. Lowering Aussie exports by $6.45 billion would send cold chills up and down the spine of Australia. Of course, it would be an even greater shock if the import reductions totaled $10 billion.

China has been very friendly toward Australia, but their arrogant attitudes in return over the past two years have become a virtual example of what it means to “bite the hand that feeds.”

Australia’s image among Chinese people has grown increasingly negative due to its warped accusations hurled at China. China does not need to spend time and effort seeking out revenge against Australia.

The cooling of bilateral relations between the two may last for a while, perhaps a few years or even longer. It will be a good lesson for Australia to learn, while also setting a precedent for other nations to follow in that there are no benefits for any country that chooses to take provocative measures against China.

Perhaps most worrying is Labor’s response, via Domainfax:

Fairfax Media has been told some Labor MPs were angry at Opposition Leader Bill Shorten’s decision to pursue the government over Andrew Hastie’s surprise move, and that some regarded it as a breakdown in traditional bipartisanship on sensitive national security issues.

This has deepened tensions on the key Parliamentary security committee that Mr Hastie chairs and which is examining the foreign interference laws, with a meeting set for Thursday being cancelled, Fairfax Media understands.

Labor MP Anthony Byrne, who is the deputy chair of the committee, was in the chamber when Mr Hastie gave his speech. As he gave leave to Mr Hastie to table US documents relating the bribery case, Mr Byrne said: “Leave is most definitely granted in support of my friend and colleague.”

Fairfax Media has been told there was disagreement within Labor over whether to pursue Prime Minister Malcolm Turnbull politically over Mr Hastie’s speech. One Labor MP who opposed pursuing the government “absolutely did his head” about the decision, according to an opposition source.

That does not bode well for national security nor democratic integrity under Bill Shorten.

Houses and Holes

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.

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Comments

    • mild colonialMEMBER

      I went and read that article and then some links incl, Clive Hamilton’s article on his book, Silent Invasion. as he mentions the pushback he’s got from academics I thought I should make a plug for the wonderful Belgian Australian Sinologist (and wonderful writer) , Pierre Rijkmans, who saw through CCP claptrap decades ago when the left in academia was more infatuated.

    • Canada just blocked the sale of construction company Aecon to Chinese state owned entity CCCC on national security grounds.

      Here we waved through the sale of John Holland to CCCC, now they are building and operating prisons here (among other things). Think about it – a company controlled by an authoritarian state that routinely uses torture and forced confessions, chases and kidnaps dissidents around the world, put in charge of locking up Aussies. And no one even questions it.

  1. Bad Billy!

    Chuck out Turnbull and give Billy a term then chuck him out.

    Rinse, repeat for as long as it takes to get the worst nuts out of Canberra.

    • Despite ALP being preferable to me on almost all domestic issues, I could never vote for them until they toughen up on China. Too much at stake.

      • Yes – their absurd attitude to China and to the Big Business population ponzi will be a problem for plenty of voters.

        Unfortunately the globalist welfare function progressives in the party and union movement have joined forces with the neoliberal right in the party to back up the liberals every step of the way.

        Keep in mind that the Liberals would love nothing better than to be pals with China. I don’t think they expected the reaction they got from China when they gave Sino Sam a hard time. They have wedged themselves on the issue.

    • I have been thinking about what a crushed dollar might mean in a TTP world, for Australian poor say the bottom 25% of the income pyramid. If the dollar goes to 0.20 USD then “Our” poor will not be able to afford protein.

      • DominicMEMBER

        That day is coming. You can put your (soon-to-be ‘worth less’) house on it. When the housing bubble goes and the banks need to be bailed out by a Govt that can’t afford to do so the $A is heading (along with our credit rating) into the toilet.

  2. Mark Carney told that the UK was going to crash after Brexit, going into recession, (two quarters of negative growth), whilst the UK Treasury predicted 500-800k jobs lost following the vote (https://www.youtube.com/watch?v=9HjplHVTm_U). Barclays, Credit Suisse, and Nomura forecast declines in 2017 GDP of 0.4%, 1%, and 1.3%, respectively. DB threatened to cut thousands of jobs – instead they have added 400.

    Despite the professional doom and gloom, the UK economy grew 1.6%. UK employment rose by 560,000 and unemployment sank to a 43- year low.

    Don’t trust central bankers, they always live in the status quo. They believe the they are ultimately in control, they know more than you, have your best interests at heart; and the rest of us a mere plebs to disbelief, we just need faith!!!
    more

    Brexit will probably the best thing that will happen to the UK in decades, unemployment is at record lows, international investment at record highs. Common sense is key… a rarity these days! And completely absent with central bankers. The modern Mystic Oracles of Delphi… captive to their own BS.

    • I agree
      I bought gbp at 59/60
      I think I’ll buy more not sure if here or wait until 57/58 and def 60 again if we see
      Uk has already had their deleveraging in 09/10/11
      I think gbp will be safe haven as eur implodes on day

      • bolstroodMEMBER

        Whacko, here we go.
        This could be the best news ever.
        What a great opportunity to reset this nation on a path of independence and self sufficiency.
        Get the young into real meaningful work, growing, making, building, throw off the chains of smart phones and fake jobs, and fake degrees.
        Roll up the sleeves and get their hands dirty.
        Up to WW2 this nation grew , produced and manufactured everything it needed.
        After WW2 we got tricked into thinking we needed foreign capital to “compete ” in the “modern”world.
        Well! What has that delivered us?
        We have the land , the energy rescources, the raw materials , all that’s lacking is the Will.

    • Absolutely spot on. I picked it before it happened. All the sub 40 yr olds thought i was mad. Most were upset that they thought with their british passports travel and iving in europe will be made more difficult.
      Boo hoo.
      I worked for an architectural firm in the midlands and due to the fact a few years earlier they had gone to poland and set up interviews to recruit staff meant incredible downward pressure on salaries. And the prick who run this company won a queens business enterprise award and became the sheriff on nottingham..

      • bolstroodMEMBER

        Sheriff of Nottingham, ha you can always tell a robber baron when they meet their sovereign
        But they never beat
        Robin Hood ,Robin Hood riding thru the Glen,
        Robin Hood , Robin Hood, with his band of men.
        Feared by the rich, loved by the poor, Robin Hood , Robin Hood.

        Sorry my childhood conditioning reawoke.

      • haroldusMEMBER

        The actual sheriff of Nottingham, or is this just a figure of speech? Sorry if I am being thick here.

      • haroldusMEMBER

        @ Tony that is a very informative site.

        For example here is what to do if gypsies or travelers set up on your estate

        http://www.nottinghamshire.gov.uk/business-community/gypsies-and-travellers/gypsies-and-travellers

        Gypsies and Travellers
        Who are the Gypsies and Travellers of Britain?
        Romany Gypsies are the largest minority ethnic group among the Travelling communities in Britain, whose ancestors migrated to the UK some 500 years ago
        Travellers of Irish Heritage do not necessarily come immediately from Ireland, and may visit Ireland infrequently and for short periods only. It is thought that many Irish Travellers are descendants of people who lost their land during the potato famine in the mid nineteenth century
        New Travellers are a community of more recent origin. They have adopted this way of life for a variety of reasons, such as lifestyle change, homelessness, unemployment or environmental issues.

        Why do Gypsies/Travellers pursue a travelling lifestyle?
        In most cases it has been a way of life for generations. Their way of life means that they travel the country staying for various periods in different locations in order to earn a living for themselves and their family.

        Like other minority ethnic groups Gypsies and Travellers have their own language, culture and traditions. These are passed down the family and, as in any family, the onus on keeping them varies from family to family.

        Gypsies and Travellers may move into houses, but do not lose their culture or ethnic status. Many move into houses for health reasons, or to give their children an education. Many will still travel in the summer months, even if they are based in a house.

        How do Gypsies and Travellers affect me?
        Some of the better known areas of work that Gypsies and Travellers are involved in include seasonal agricultural work, motor trading and tree-felling. Some are employed as academics, teachers and public servants and in this way they add to the local economy.

        Gypsies and Travellers add to the culture and diversity of Nottinghamshire and the positive contribution of Gypsies and Travellers should be recognised.

        Why do Gypsies and Travellers set up sites without permission?
        The lack of public sites and the difficulties Gypsies and Travellers have in setting up their own sites has often left them without the ability to access their basic rights to accommodation.

        Why do Gypsies and Travellers pull up so near to the settled community?
        Like the settled community, Gypsies and Travellers need access to services. They may want to be near a school or shop or petrol station to access water and food. Many of the traditional stopping places that Gypsies and Travellers have used for decades have now disappeared because of urban expansion.

        Does the council have a duty to move Gypsies/Travellers when they are camped without the landowner’s permission on private land?
        No. If Travellers are camped on council land, the council can evict them, using the proper and most appropriate channels to do so. If they are camped on private land, usually this becomes the landowner’s responsibility.

        The Government has advised that when Gypsies/Travellers are not causing a problem, the site may be tolerated.

        If Gypsies/Travellers camp on my land what can I do?
        Talk to them, and through negotiation, see if a leaving date can be agreed.

        If this cannot be achieved you can take proceedings through the County Court under the Civil Procedure Rules, 1998. There must be a minimum of two clear days between the service of documents and the Court hearing. You can also seek the help of a solicitor.

        What if I decide to let them stay on my land temporarily?
        Unless you have already obtained planning permission for a caravan site or you are a farmer and they are helping you with work e.g. fruit picking, then you could be in breach of the Planning Acts.

        You may wish to seek further advice from the Planning Department of the relevant Local Authority.

        More information on planning in Nottinghamshire.

        I have seen Gypsies/Travellers camping on the side of the road and sometimes on parks or other Council-owned land. What can the you do in these cases?
        If the Gypsies/Travellers are causing problems they will be moved on as soon as is reasonable. We consider each case on its merits.

        In all cases the site is visited and every effort is made to try and make sure that the Gypsies/Travellers keep the site tidy and do not cause public health problems. This sometimes means that a portable toilet and refuse collection facilities may be provided.

        If the council want to, can they force Gypsies/Travellers to move immediately?
        No. There are steps we must take first. We need to:

        be able to show that the Gypsies/Travellers are on land without consent
        make enquiries regarding the general health and welfare of the Gypsies/Travellers and their children
        go through the proper channels in terms of serving notices and follow due processes in the courts to gain the necessary authority to order the Gypsies/Travellers to leave the site.

        Can the court refuse to grant the council an order to move the Gypsies/Travellers on?
        Yes. If there is an unavoidable reason for the Gypsies/Travellers to stay on the site, or if the Court thinks we have failed to make adequate enquiries regarding their general health and welfare.

        We have a duty to find out this information before going to court.

        What can the police do?
        Trespass on land by itself is not a criminal offence and the prevention of Trespass is the responsibility of the landowner not the police.

        The police will visit all sites reported to them. In certain circumstances (for example where the Travellers have with them six or more vehicles). The duty of the Police is to preserve the peace and prevent crime and they will investigate all criminal and Public Order offences however, these powers will not be used as a matter of routine.

        Section 61 of the Criminal Justice and Public Order Act 1994 gives the police powers to act, but officers visting the site can choose whether to use them or not.

        Each case will be looked at on merit, having due regard for the safety of the community but also taking into consideration any aggrevating factors of crime or disorder.

    • I’ve no position on Brexit, but isn’t it a bit early to be talking about Brexit results when Brexit hasnt happened yet?

      • People take actions in anticipation… e.g. GBP falling! If Brexit was so dire to business, they would flee… but, hang-on they haven’t, and no, the are increasing their position!

        Which means, as opposed to their public rhetoric, they are more fearful of something else, to do the exact opposite! Have a look at Germany!!!

    • DominicMEMBER

      Small, decentralised economies always perform better than the large centralised States which is why the EU is an exercise in hubris and its future is economic malaise and eventually outright failure. The big winners from centralisation are large multinational companies who can lobby for one set of legislation to be passed (in their favour) rather than having to lobby separately in 30 different countries which is not only expensive but extremely time consuming. These entities would the driving force behind a ‘global government’ — you only need one Govt in your pocket to run the world etc.

      Small states also keep a check on Govt tyranny and largesse as companies and individuals can vote with their feet any time they like i.e. competition between States makes for better outcomes for citizens as the States that treat their citizens best will likely attract the most productive people and certainly those who appreciate personal freedom.

  3. If RBA Is advising kowtowing, then it must be necessary for the support of the housing bubble.

  4. St JacquesMEMBER

    Because, you know, the RBA’s ultra-high Aussie dollar policy forced industry to “make way” for *that* bonza 30 year mining boom under the leadership of *that* genius Glenn whatwashisname? Absolute &^#*.heads.

    Of course, nobody could see it coming….

    • Yep we gave up industrial diversity for the mono product space and now must accept the customer subservient position that comes with this over reliance on a single income stream.
      Now chop chop Aussies .. bossman has spoken…he bù gāo xìng
      The daily whippings will continue until morale improves!

  5. J BauerMEMBER

    Maybe we can ban the export of baby formula and enforce FIRB rules and confiscate Chinese owned real estate.

    • You got it wrong. If china want to sink us, they will support confiscation of property in Oz. That would be a single silver bullet to our economy lol.

      It will cost them nothing, the citizens will bear the loss and they will be off the hook because it was Australia that did it.

      • Agreed in one move they could pull the rug out here…then come and buy it back through some Vampire Squid created special purpose vehicle and 20cents in the dollar/

      • Isn’t blackstone already doing this – iirc didn’t they pick up the shopping centre at top ryde?

    • reusachtigeMEMBER

      LOLOLOLOL… I just got a phone call from a random mobile number that had a recorded message in what I assume to be Mandarin. Honestly. If I call the number back I just get “network busy”.
      .
      Hey Chinamen spooks, I’m a big fan! Youse guys are the best property investors ever. I love youse guys!

      • FiftiesFibroShack

        There’s also an automated call (in english) that claims to be from the Chinese Embassy. They’re just scammers.

        Don’t call back unless desperate for substandard hand relief.

  6. Good post HnH. I like the use of “The Dictator” terminology. I think that is succinct and accurate.
    BTW.. The final sentence on the Australian’s editorial today is also good. In the context of the lack of bi-partisanship shown by Labor yesterday they say: Be warned. Australians expect their politicians to be on Australia’s side.

    Amen to that.

    • bolstroodMEMBER

      “Australians expect their politicians to be on our side”
      What is our side ?
      Hastie is doing the Americans bidding.
      We do not want to become the Syria of Asia.

      • bolstroodMEMBER

        @Cristian
        I would prefer we align with no one.
        Especially the greatest warmongers in history

  7. J BauerMEMBER

    Just a thought, wouldn’t putting tariffs and reducing trade be a breach of the free trade agreement between Australia and China?

  8. “The Chinese dictator jumped the shark in his push to control Australia.” –
    That is right. Deng had China on a sure winner. Xi has put all of that in jeopardy by destroying the China fantasy.

    • Ronin8317MEMBER

      I think the rift started last year after Australia refuse to ratify the extradition treaty with China. Vassal states are not suppose to do that, so must be taught a lesson!

  9. TailorTrashMEMBER

    Well at least one senator understands the importance of the new motherland ……looks like Tassy has run up the white flag already .

    “Steve Martin isn’t the most influential player in Canberra. But the former mayor of Devonport turned senator has his nose close to the ground in his home state of Tasmania.

    And he used his first speech to the Senate to deliver a stark warning — as our economic reliance on China grows, Australia simply doesn’t have the luxury of angering it.

    “As China is the biggest overseas market for Tasmanian exports and biggest source of overseas tourism, investment and international students, our economic prospects as a state and a nation are today tied to China, whether we like it or not,” he told the Senate.

    “Diplomatic cocktail parties in Canberra must feel a long way removed from a mine at Savage River, an arts space in Hobart, a farm in Spreyton or a vineyard in the Tamar Valley.

    “But it is these places which feel the pain if relations go bad, and we simply cannot afford it.”

    …should have added …and we cannot afford freedom either …….

    http://www.abc.net.au/news/2018-05-23/china-australia-relationship-strained-not-broken/9791468

  10. Who gives a tinker’s damn??? We took the decision, decades ago, to sell out our sovereignty, out nation and our children. Negative RAT interest rates, globalist BS, Open capital account all resulted in a debt-ridden, over-consumption economy with a lopsided political and economic system favouring consumption cities and destroying productive and regional sectors.
    Now we’ve got crocodile tears from everyone including MB. What a load of hogswill!
    The RBA just maybe, finally with the advent of Phil, sees the reality of where we are at??????

    • Yep: The day I see a stream of city born kids moving to rural NSW to to find work or buy a farm, is the day that believe Australia has begun the economic reform process.
      We Australians fail day in day out to even acknowledge the extreme privilege that comes with our big city living, we fail to even recognize where the wealth (that we all want a bigger share of) actually originates. it’s unbelievable, makes you want to go back in time and subdivide Australia into say 10 different countries, so that this gang rape of our countryside by privileged suburbanites can finally come to an end.
      None so blind as those that do want to see.

    • St JacquesMEMBER

      The RBA needs to be humiliated because they, the FIRE interests they represent, and their ideology played a central part in putting us in this situation as you very well know. Look after yourself, throw petrol on the fire from time to time, pull up a chair and enjoy the show. It’s just begun.

    • Relevant StakeholderMEMBER

      The people that made these decisions aren’t the ones being offered indentured servitude.

      The other aspect I think is lost in these morality tales is the actions of China, they have used their currency to distort their trade position. They have also seemingly had a strong relationship with essentially all our PMs (including post-office) since Whitlam. The fact Australians grew up in a high trust society shouldn’t be seen as a bad thing. I hope we can rise to the occasion..

      • RS – the currency thing maybe….but..it could not have been done without the connivance of Western nations including us but ESPECIALLY the U.S. The Chinese played them at their own game and have won.

  11. We need to wake up and realise that China can never achieve hegemony given a likely containment by Japan, the US and India. The latter is a natural hedge for us on CHina. They’re going to overtake the UK in 1-2 years, Germany in 5-7 and Japan in 10-12. They need our energy and will likely absorb our agricultural and some of our metals they love gold. India is a natural hedge for us on China. We need to embrace a closer Canberra-Delhi alliance.