Hugh White needs to get laid urgently in the national interest

Via the AFR comes one of the legends of strategic policy in Australia, Hugh White:

China’s bid for regional hegemony poses the most momentous strategic challenge America has faced in Asia since at least the Vietnam War, if not the Second World War. And yet Australia, as its closest ally in Asia, is declining to follow the US lead. If our leaders mean what they say, this is the biggest split between Washington and Canberra on a key strategic issue in many decades.

…But something Scott Morrison said a few weeks ago suggests that this might be about to change. Responding to questions about America and China, Morrison went out of his way to praise a speech given a few days before at the Shangri La Dialogue by Singapore’s Prime Minster, Lee Hsien Loong. He described it as “a very insightful presentation” and said that “there are many insights there that Australia would share”.

…And Morrison should be agreeing with Lee Hsien Loong, because what Lee had to say was absolutely right. China’s growing power and ambition pose real challenges, but Washington’s reckless fantasy of containment offers no solution. That is why, in his big foreign policy speech on Wednesday, Morrison should go much further than he has done so far, and explain frankly and in detail why we do not support America’s new Cold War on China. If he does that, he would start to offer Australians the kind of leadership they need, and have so far been denied, on the most important foreign policy issue of our time.

The White Doctrine is very simple: China’s economic rise is unstoppable and therefore so is it military rise. End of story. See more on that here.

That this is more an economic argument than a strategic one hands the White Doctrine a rather large hidden assumption. White relies upon conventional forecasting models such as those used at the Australian Treasury. These are the same dynamic stochastic equilibrium models that are no more sophisticated in reality than a child’s ruler. They simply extrapolate trends.

They take no account of imbalances like debt, economic structure, demographics etc. In short they take no account of the very inputs that determine the long economic cycle, which is what we are talking about here.

Yet when you do plug these three into a model of the Chinese economy they are disastrous. Debt has ballooned to apocalyptic levels long before the nation is rich. Demographics have already rolled over and are headed into a Japanese style stagnation on sterioids. Economic structure illustrates an enormous dependence upon building empty apartments to pointlessly lift empty calorie GDP and keep idle hands busy for political purposes.

These are not the characteristics of a titanic and dynamic rising superpower economy. They are the harbingers of decline in an (albeit very large) emerging market that has overreached an economic model owing to its dictatorial government’s claim to economic legitimacy. The only way out is to rise up the production value chain, an exit now blocked by one Donald J. Trump.

I am not arguing that China is about to collapse like the USSR. It’s not. But it does share with its failed progenitor the characteristic of mind-numbing inefficiency in massive capital misallocation. Add the demographic and debt woes and it becomes obvious that economic stagnation and much slower growth is China’s not very distant destiny, before it becomes super rich and all powerful. China itself is the giveaway on this, with its convulsive attempts at reform then retreat as growth slows too much.

By Hugh White’s own definition, once China goes ex-growth then any notion of it being an indomitable military force evaporates. Then we must pose questions about internal stability and security threats to the Communist Party of China as its economic legitimacy falters.

This makes Hugh White’s argument that we must immediately kill Australian democracy within an embrace of Chinese hegemony panicked to the point of the ludicrous.

Indeed it makes me think that our Hugh needs to get laid urgently. In the national interest of course.

Comments

  1. DominicMEMBER

    In fairness to White, a large cheque from an anonymous source probably helped him arrive at this conclusion.

    Times are tough – you’ve got to take the breaks when they come your way.

  2. This is straight out of Sun Tzu. The best battles are the ones you don’t have to fight. Create the illusion of invincibility and inevitability and demoralise your enemy forcing them to capitulate without fighting. Well, I am not demoralised. I think MB’s view of the Chinese economy is spot on. Its a giant Ponzi Scheme and their growth dynamics – if viewed carefully through the prism of a Solow growth model – is built on sand. They are lying about the size of their economy, it’s around 20% smaller than the official figures. Much of their growth is very poor quality and involves massive mal-investment. They have awful demographics – and are probably also over-stating their population.

    I am no fan of Donald Trump, but his confrontation of China and his policy of containment is the correct response. India, Vietnam and Japan are totally onboard with that strategy and I believe that Korea, Taiwan and Singapore are too. Australia and New Zealand need to wake up. If we acquiesce to their demands, we will be enslaved. The Chinese Communist Party is pure evil.

    • They are lying about the size of their economy

      They are lying about everything really. Consider their mighty, mighty military. The last war they fought resulted in the Vietnamese cleaning their clocks back in 1979. Like many things Chinese, it’s a house built on sand. And how much of their technical “development” has resulted from stealing other people’s work?

      The idea of China as the dominant 21st Century world power is laughable. Apart from anything else, nobody likes their damn tyrannical system government, and nobody want to live under that regime. If the millions of people demonstrating in Hong Kong are anything to go by, even lots of Chinese people don’t want to live under Chinese government rule.

      • But Scummo’s masters like the $$$$$.
        That is all that matters to someone like him.

      • Yeah. 1-2 million Hkers take to the streets because they don’t want to be under the Chinese system yet our feckless elites think we should become a Chinese province.

    • +1
      I find it hard to fathom how so many supposedly smart people fail to see the evil regimes ability to get even worse as they get stronger.

    • Lying, cheating and stealing are all considered acceptable and a normal part of doing business. Its only considered to be wrong if you get caught, because getting caught is “losing face”.

      • Smart person cheats the dumb person.
        The onus is on you not to be cheated instead of the onus being not to cheat.

      • Many if not most cultures around the world are like this. But then we get told that we are only successful because of ‘racissicm.’

    • I agree but Harry Triguboff needs to sell apartments, Kmart and target need cheap stuff to flog… BHP/RIO need to sell dirt.
      Money talks and Scummo works for these people.
      Hence the never ending search for the ‘middle way’.

  3. We should also stop talking about “China” – the CPC are not China, they are a ruling clique.

  4. China’s rise is shaping up to be like the rise of Germany in the 19th and early 20th centuries. Asia doesn’t make much sense without it economically, but it’s rise causes all kinds of strategic bother. Containing Germany became an obsession for the Triple Entente, and what seemed like just more Concert of Europe morphed into WWI and then the horrific WWII. Asia’s economies are so entwined with China’s, it’s just not funny. I said yesterday we need nuclear weapons, or at least the threat that we could have them very quickly, and I stand by that. It would cause all kinds of ructions with America and probably kick off a regional arms race, but we are all the way over here in this quarter of the world and China needs to understand that attacking us in any way will come at an outrageously high price…..so it should play nice.

  5. There will be no real push back probably to either the US or China.

    There was a ANU professor on the ABC saying that China’s social credit is widely accepted by the most of Chinese citizens and hinted we might benefit from something like this. Shakes head, but when you hear this on the ABC does it mean it’s acceptable?? I think it was in the last two days, but China was saying the UK pollies should stop bad press about China…right up in the face, so do we see that here as well?

  6. This is the topic. Its why I Love the Donald. We have taken up a position at the right side of a grandiose bully and we should be ashamed to have sold our collective souls. There is a price to be paid for our behavior and our standard of living adjustment will do us the world of good.

  7. BoethiusMEMBER

    Is anyone aware of any good recent studies on China’s true real GDP growth rate? E.g. Perhaps ones that rely on official stats of exports of trading partners with reliable statistical agencies.

  8. Tom ConleyMEMBER

    Spot on H&H.

    White would despise economists using simplistic International Relations assumptions in their work, yet he fails to interrogate any of the assumptions of the ‘China will keep on growing forever’ ‘argument’.

    There’s a debate between offensive realist John Mearsheimer and Hugh White in August https://www.eventbrite.com.au/e/china-debate-john-mearsheimer-vs-hugh-white-tickets-63847135501. Basically Mearsheimer thinks serious conflictbetween China and the US is inevitable https://www.youtube.com/watch?v=fWYRO-HFkbA