Barnaby welcomes his new Chinese overlords

Good on Barnaby Joyce for debating the implications of Hong Kong for Australia at Domain:

In its entire post-First Fleet history, Australia has not had to contend with the larger intercontinental political issues in isolation from its cultural and philosophical alliances. We’ve always had a larger, stronger partner. In the future we may have our own unique dilemmas as we deal with our response alone.

…empires collapse as the Roman Empire did. Large empires are not able to maintain large and disparate borders.

…China has taken the South China Sea without firing a shot. Now the expansion of Chinese control is forcing full legislative absorption of Hong Kong. A million people in Hong Kong may take to the streets but unless the course of events takes a dramatic change from the path determined by Beijing it will merely be a funeral march for a disappearing democratic philosophical foothold on a Chinese continent.

Questions have to be asked as to how countries adjacent to what will be the largest economy and largest population, supported by the largest and most sophisticated military, will exist apart from being supplicant states living next to a superpower with autocratic rule. What will be the limit of sovereignty on nations in our region?

Will the press be able to say what it wishes? Freedom of the press will mean little when it’s corralled by the edicts of a new superpower. Will other nations be able to invite to their country whom they wish and publicly vent issues as they wish? Will they act as determined by the aspirations of their own people or will it be within the confines of what will be accepted by the master of their new regional order.

…Being a world leader in virtuous causes may come at a price which we can no longer afford. Our industry must grow. If you do not want wage cuts then the advantage must be in the cheapest power prices in the OECD. Our defence force must be formidable, our nation-building infrastructure must be able to take a major leap foreword through a hoop currently barnacled with caveats to environmental green tape. Our students must compete and win in the global academic test.

Sensible questions all. Where I take issue with Barnaby is the false binary posed by a bogus assumption: that the rise of China is inevitable and we are doomed to be a Chinese satellite or stand alone military power.

First, China’s rise is not inevitable at all.  Its demographics are terrible and will drag down growth ahead. As things stand today, the Chinese economy has begun to exit the global economy. The Trump trade war is already shifting global supply chains out of China. This will accelerate if the Chinese do not do a deal with the US which, frankly, will result in the same. China’s fall back position of stimulating domestic growth leads not to rising but declining power as it slumps into the middle income trap of excessive debt, misallocated credit and class divisions that require nationalist campaigns to hold the populace together in lieu of rising living standards.

Surplus nations do not win trade wars and if current trends continue then China will devolve into a half-baked great power trading in a limited block of poor “stans” across the Silk Road.

Second, this makes the Hong Kong push a signal of weakness not strength. It is one of several options that the Communist Party of China (CPC) can pursue to galvanise populist support as its economy slows and slumps in the decade ahead. The other obvious one is to destabilise Taiwan. But it is vital to note that these moves are a substitute for the failing economic legitimacy of the CPC, not its crowning achievement. And they are all issues of internal cogency.

Third, the US has been in relative decline as the globalists allowed it. But it is not in absolute decline. It is still the global centre of liberal capitalism which resonates outwards to most of the global economy including Europe. The Trump Administration may be a Jacksonian regime, suspicious of alliances and foreign entanglements, but it will not be in power for very much longer. And even it has stated openly that the Pacific theatre is its backyard and central to its national interest, though I doubt that this will extend to any defense of Hong Kong. As well, unlike China, US debt burdens can be managed into the future via the use of its reserve currency.

It is certainly sensible for Australia to plan to stand alone. To plan for war while aiming for peace. But there is no scenario in which the US departs the Pacific and Australia can make its own decisions regarding China. It is doubtful even if we are nuclear. It’s one hegemon or another.

Thus, while we plan for the worst, we should also be working towards the best possible outcome, which is sustained US power and a China that loses its catch-up growth and strategic impulse.

The question before Australia is not whether we need to be China’s supplicant or stand alone as a pretend power, it is what sacrifices need to be made to bolster a US liberal empire so that we do not become China’s plaything to do as it wishes.

I mean, seriously, where’s our faith in our own system?

David Llewellyn-Smith
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  1. This China Rise inevitability stuff is always written by people with no knowledge of growth accounting. China’s population of working age is shrinking and that trend – along with an ageing population and rising dependency ratio – is the key demographic shift in Asia-Pacific in the 21st Century and there’s nothing the CPC and their monsters can do about it. The country has ramped up capital deepening by burning through all of the windfall gains made post-WTO (and then some) leaving the country dangerously vulnerable and while they continue to ramp-up capital spending, its future looks bleak (especially as it will be reinforced by falling population). Finally, they’ve managed to accelerate TFP growth through a combination of FDI inflows – and willing technological transfers – and unwilling transfers. But their system is inherently anti-growth as ultimately, property rights are insecure and their political and legal systems are not geared to allow for creativity.

    So, China is well on the way down the road of Japanisation and while they may avert a financial crisis (or maybe not), they are falling deeper into the Middle Income Trap – and their response to Trump worsens that problem.

    Meanwhile, India is now at the tipping point for growth that China was 15 years ago. It’s passing the UK in size now, will overtake Germany inside 5-years and Japan in about 6-7 years to become the third largest economy. It’s a messy place and it’s not going to be as easy for us to tap into, but its a huge counter-weight to China and we have much in common with them including a shared history, democracy/rule of law (to an extent as Indian legal system has problems), a love of cricket and much else. Theirs is a free society and they are a natural long-term ally.

    Australia should work on rapidly securing an FTA Zone with India, Singapore and NZ.

    • If India is doing well, then they can look after their own, instead of expecting the rest of the world to absorb their population.

      Though I think the Australian government thinks that if we build our Indian population, we might build export potential with India. Most Australians, however, would think that is a Faustian pact not worth bothering with.

      • I agree. We don’t need to import Indians into Australia. But India offers a massive market for our products and a geopolitical counterbalance to China.

      • Up until around 2007, Australia seemed to be doing just fine without hundreds of thousands of Chinese and Indians descending into this country every year.

      • @Prom True dat. It makes the inner conspiratorialist wonder, why then? Was it really to get through the GFC ‘unscathed’ or was there a global push from the elites, at that time?

      • @Clive out of the 127 cases on appeal at the AAT in relation to adverse decisions being made against organisation’s in one industr, 97% of those organisation’s were owned and managed by Indian’s, it really makes you think.

      • @jim, I know tradies who simply won’t do work for Indians. They’ve gone to their house to do the job with them looking over their shoulder following them around! Come payment time on a quoted job, they didn’t haggle the price, they down right demand a discount! I know in accounting circles they have a bad reputation for being demanding arrogant cheapskates with many firms happy to show them the door. To be fair it’s mostly the new cashed up family arrivals in their mid 30’s onwards who dish out the most grief and they’re more than welcome to fvck right off.

    • ChinajimMEMBER

      Thanks for the economic detail Peter.

      See my comment below for a (rather too quickly written) historical opinion.

    • The China rise narrative is a creation of the CCP and propagated through the United Front for one purpose – to get foreign elites to preemptively surrender. To give up because there is no use resisting.

      It has no basis in fact but it is very clever and very very effective propaganda/influence narrative.

      • They are following their Sun-Tsu; always aim to win the battle without a fight. If you don’t have the capacity to win the fight, deceive enemy, it’s all there.

        Thing is, 20 years ago, not many people in the West really knew much about what we are up against. That’s changed.

    • The connection between Australia and India is superficial. Cricket, really?

      Fundamentally, we are different cultures – our Christian-Judeo foundations of charity and equality (as well as fairness) is in opposition to the Hindu culture (as well as Mus1im culture, and to some extent Sikhism), where there is no sense of equality or charity (hence the entrenched caste-system and the arrogance of Brahminism, as examples). .

    • reusachtigeMEMBER

      Look I hate Indians just like the rest of you and like the dwarfs in Lord of the Rings it’s hard to tell which are the chick ones because you rarely see them and there’s not much hotness there to distinguish them. In saying that I accept that we absolutely need them especially to fill our chronic shortage of skilled and cost effective IT workers who have a pleasant and agreeable demeanor.

    • The90kwbeastMEMBER

      Unsure about a FTA as such but a more meaningful export partner, absolutely. If Australia is going to pivot away from China who is currently consuming 1/3 of our exports then it needs to be replaced by some other country or countries in order to maintain our current standard of living. If we can’t pivot away from China, we lose a lot of leverage in terms of our democracy and self determination as a country. India would seem to be the logical first candidate to pivot to in my (fairly uninformed to be fair) opinion…

  2. Ronin8317MEMBER

    The extradition law in HK is pure ‘Imperial hubris’, nothing more. China can adjust grab whoever they want from HK, see the case of the HK book sellers.

    The ‘One Country, Two System’ in HK serves dual purpose. It allows HK to continue its function as a finance hub, and also to demonstrate to Taiwan how unification can work. By eroding HK’s independence, it makes Taiwanese independence a certainty.

  3. >Being a world leader in virtuous causes may come at a price which we can no longer afford. Our industry must grow. If you do not want wage cuts then the advantage must be in the cheapest power prices in the OECD
    >Our students must compete and win in the global academic test.

    Spoken like a true cuck

    • No. He is spot on.

      Absolutely crucial for us to get back to cheap domestic energy and an education system which serves domestic Australian students as a priority.

      • @arrow 2 in case you haven’t noticed, our domestic students are faced with lowered teaching standards due to the requirement of allowing the cash cow that is the overseas student visa program.

      • A2,

        Yes, he’s right if your measure is how you interpret his comments, but my interpretation he’s wrong. By cheap energy he means “build a coal power station”, disregard the environment at all costs and just plain buzz words on education.

        Barnaby is a policy simpleton and I doubt he wrote that or understands it.

      • Dennis I agree it’s typical pollie speak – words which sound right to most listeners but what are they worth – mostly hot air, the question is what action do we see.

  4. Barnaby didn’t write that. Far too cogent. Perhaps his advisors are wising him up?
    However, in the belly of the Trojan horse carrying his China message lurks the “cheapest power prices in the OECD” siren call to coal fired power.

  5. ChinajimMEMBER

    Okay, how about this.

    What if what we have seen over the last few decades is not the rise of China? What if it’s the dead-cat bounce of a decaying empire? What we call China has never really been a modern nation state in the Westpahlian meaning of the word. It’s current borders more or less coincide with the high tide of the Qing Empire (1644-1911) and perhaps we should be looking at it more as like Yugoslavia under Tito than the unified nation that it pretends to be.

    Think about the implications of that. With that mindset one can begin to understand the paranoia and fear that motivates the black-hair died men of Zhongnanhai.

    For most of the last 1,000 years China was under foreign occupation, first by the Mongols during the Yuan Dynasty, and then by the Manchu’s during the Qing. Yes, the foreign occupiers adopted many native Han characteristics, but they were always outsiders.

    The triumph of Mao was that he united the place after many decades of turmoil and violence; and yes, that led to many decades of turmoil and violence. The “century of humiliation” is just a propaganda trope used by the current party in charge to try to create some degree of unity and stir up nationalism. They remember the Japanese attack on Nanjing, oh boy do they remember that, but have forgotten the Hundred Flowers Campaign, the Great Leap Forward, the Cultural Revolution, Tian An Men (not to mention the on-going situation in Tibet and Xinjiang) And now we hear the other trope of “hostile foreign forces”. When you screw up because of your tin ear, innate brutality, and lack of political antennae you blame hostile foreign forces.

    China’s population peaks within a few years, maybe before 2024. China starts getting old before it got rich. What will that bring?

    Those black hair died men are not stupid and are fully cognisant of all these issues. Their solutions may be limited by their ideological blinkers and a culture that discourages any innovative thinking, but thinking about these issues they are, whilst desperately trying to hold on to power.

    I remember in the 1980s when Japan was unstoppable and many in the west were learning Japanese and there were complaints about too much Japanese investment in Australia and the US and too many Japanese tourists (although at least they were extremely polite) What happened to all that in the early 90s?

    So what’s the future of China? I don’t know. But I know a lot about Chinese history and I suspect it will be just like it’s always been – periods of relative peace and stability punctuated by too long periods of chaos and violence and epic human suffering. We’ve had relative peace and stability for a while now.

    • Nice perspective, thanks.
      Seems to me they have zero chance of maintaining supply lines, as the US invests so expensively in doing.

    • I share a lot of your views. I’m not familiar with Imperial history but I’ve covered China as an economist, trader and strategist for 19 years and spent many days in Beijing etc, meeting the leadership and policy makers (mainly pre-Xi) and I’ve read all I can on the CPC and China’s modern history.

      I think the key mistake they are making is to assume that in a “strong state” phase they can assert hegemony. But they don’t realise that the modern era is very different to antiquity. China and India were separated by the Himalayas, Japan was a small island nation, the US didn’t exist. China can’t achiebe hegemony, what it can do is pi$$ everyone off… also, China is a collection of people with different languages, cultures and customs. The Han autocracy isn’t a good guide to the whole country.

      We in the West should also distinguish between the Chinese people – many of whom are wonderful and talented and caring etc – and the CPC (Spectre) and the leadership with Xi, who I think is not only ruthless but also pretty stupid.

    • ChinaJim,
      I’ve long thought China will provide a rhyme to its long history – degrees of unity followed by warlords, rinse and repeat. The difference now is totalitarianism is much more possible with modern communications and subservience-demanding technology, yet it is also its Achilles heel.
      If I was in the strategy room in the USA i’d be thinking long and hard about how a combination of Hong Kong financial disaster, allied with shutting the Straits of Hormuz (nothing like a false flag attack blamed on Iran) and ramping the trade war could force a massive crisis on China while at the same time largely fixing the debt bomb in US shale oil.
      Oil prices through the roof, banking collapse radiating out of HK across Asia, huge global recession and China faced with serious domestic employment problems, a collapse in exports, debt grenades exploding across their economy and housing market, oil consumption whacked to crush industry, capital fleeing (western and local), the Yuan getting smashed but not helping solve the problem and the current account going sharply negative, sucking out all their reserves. Send China back 10 years and force their population curve onto them forever, with Hong Kong no longer the entry/exit point for capital and Taiwan made safe forever. If I was the US I’d wear the domestic pain to produce that outcome, but not just yet as US elections are still 17 months away. Too good a chance to miss and with such a large crisis, a lot of opportunity to change all sorts of things in a hurry.

      If I was in China’s strategy room i’d be thinking the US could really fuck us. Xi’s over-reach needs to be reined in, maybe time the comrade went to sleep and didn’t wake up, otherwise we’re at risk of our house burning down while the local are standing outside with pitchforks waiting for us. So, lots of rhetoric ramped for domestic purposes while despatching soothing messages of conciliation and trying to talk down Trump from trashing the world. All the while stealing as much IP and secrets as you can and going back to playing soft power long games while you spend one (or two) 5-year plan seriously restructuring the economy

      • Cheers John. Once you start thinking through the strategic implications of China’s rise you see why the US will play hardball. As Churchill said, “the Americans will always do the right thing, after exhausting every other alternative”. Soon enough the elites who control almost all the capital in the West will be telling us they’re going to change capitalism to make the world a fairer place. Bullshit of course, but income distribution in the West is the medicine to get the masses to go along with your game of world domination. Make the Western masses poor and all bets are off. Self-interest will drive a sea change and it’ll be tied to putting China back in its box where it can be controlled.

        China of course doesn’t want to play that game and thought, given the access to western capital and technology, and the lack of push-back on its expansionary ambit, they were home free. Not to be. Now they’ll find their reach has exceeded their grasp and the debt used to make it happen (and addiction to the debt model) will become their Ancient Mariner’s albatross. They need to re-think big time as the ground rules have shifted immensely. Sure, they can still be an export powerhouse but debt and population dynamics aren’t just a handbrake, they’re a game-changing handicap now the West is revising the game board. China can’t and won’t go to war conventionally. But they’ll hack the hell out of western systems. But they can’t crash the western world’s economy, be the same as slitting their own throat. Room to manoeuvre? Not much in the short-term and long term is going to cause a world of internal pain

  6. “Will the press be able to say what it wishes? Freedom of the press will mean little when it’s corralled by the edicts of a new superpower. “

    Does Barnaby mean countries like Australia would be too afraid to defend their own citizens as is the case with Julian Assange? Or selectively applying national security laws to intimidate specific elements of the media like the AFP raids on the ABC?

  7. Stewie GriffinMEMBER

    “The Trump Administration may be a Jacksonian regime, suspicious of alliances and foreign entanglements, but it will not be in power for very much longer.”

    LOL – if by not very much longer you mean 2020 than I think you will be sorely dissapointed. If you mean 2024 then possibly, however the election of Trump is a beach head by Jacksonians. Pandoras box has been opened and the ideas around economic nationalism are being increasingly embraced by a pissed off populace. The more interesting question is who will take the Jacksonian torch from Trump in 2024?

    • matthew hoodMEMBER

      I have the same questions, why on earth does H&H think we will have a new POTUS in 2020? How many 1 terms happen? Are the reason he won in the first place gone? When you stop and just put a little bit of thought into it, it does seem silly to think Trump will lose just because you don’t like him. I would think its he’s to lose. What are the bookies odds for 2020?

      • Odds are too low to bother placing a bet for Trump 2020. I got 7/1 betting on him in 2016 though 😁.
        The Democrats have learned nothing from 2016. Tulsi Gabbard is their most impressive candidate, and staunchly anti-war to boot, so of course the DNC and MSM are ignoring or mocking her. Biden and Sanders are really too old, but it looks like it will come down to one of them.

  8. Barnaby’s false binary is in his last few sentences.
    Kowtow to China or burn more coal and get rid of “green tape”.
    That is pretty much what he is using the China Boogey Man for.

  9. Tsai Ing-wen’s support surged thanks to this proposed legislation and protest in HK so China has really shot itself in the foot. Annexation of Taiwan has been push back for at least another 5 years.

  10. I don’t hold out quite so much hope for the corrupt oligarchy that is the USA. China will undergo a population reduction but as in Japan this should be considered a good thing as both countries were hideously overpopulated, most of the debt they owe is to their own banks and hence completely irrelevant when the government controls the banks, so an inability to pay it off is not so important.
    A country that has a trade deficit should in theory be able to win a trade war but the USA is different as it needs the petrodollar recycling scam to prop up its military empire and China has a lot of influence there if decides to divest its treasury bonds. The Americans could win the trade war but it might come at the cost of its military empire, which would undoubtedly be a good thing for most of the world and ordinary american workers as well.