Via Alan Kohler today:
The same principle – that politics trumps economics – applies to the developing cold war between the United States and China.
President Donald Trump began a trade war that involved increasing the taxes that Americans pay for goods from China, seriously damaging the US economy, for purely political reasons. The close integration of the two economies has clearly been as beneficial for the US as for China, but an enemy “over there” is too useful for a President entirely focused on winning the next election.
…the best thing Australia can do as Trump escalates the conflict with China as the US Presidential election approaches, is to stay out of it, while preparing for the worst.
What’s the worst? That whoever wins the US election, we are heading for a bipolar world in which Australia ultimately has no choice than to side with the loser – the United States – and to shoot itself in the economic foot by alienating our major trading partner.
We do have a choice, of course, but as discussed, politics trumps economics.
…But the best thing Australia can do as Trump escalates the conflict with China as the US Presidential election approaches, is to stay out of it, while preparing for the worst.
Lordy, Alan, you didn’t think that one through. Lumped into your clearly pejorative definition of “politics” is the defense of liberalism, free speech, the right to vote etc. These things may be contested in the arena of the political but they’re not just jaded “politics”.
As we have seen in recent years, “staying out of it” is the same as handing everything to China. If you don’t actively push back against the CCP then it occupies you via sharp power strategies such as bribery, oligarchy and lawfare.
That is, “staying out of it” hands Beijing exactly what it wants.
And what’s all of this guff about the US being the loser in any Cold War? It will clearly be better off:
- it has the lowest exposure to world trade of any major economy by far;
- it has a gigantic alliance network to trade with anyway versus a competing Chinese network of a few failed states;
- Chinese exposure to world trade is immense not just for exports and imports but for stealing IP;
- as well, China’s debt-juiced development model is clearly running out of puff and plugging the only exit to higher-value added growth will obviously slow if not trap it.
In the end, it comes down to this: the global US liberal empire gave China shot at joining it. Instead, the CCP has tried to occupy and corrupt it to turn it into the Chinese illiberal empire.
The choice between those two is so obvious for Australia for broader living standards that I’m not sure what Mr Kohler has been smoking.