Australia’s China strategists are complete dills

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Various pundits have criticised last week’s cancellation of Victoria’s Belt and Road deal with China. The AFR editorial is typical:

  • Dead little deals like BRI are irrelevant.
  • We must engage China where we can.
  • Defending values is aided by finding common interests.

These are weasel words. The main reason Australia pivoted away from China was its intent to corrupt the country. The BRI deal is a perfect example of that attempt and the ideal target for pushback.

Historically, Australia’s China engagement transpired in two distinct phases. The first was commodities-based up to 2011 as Chinese economics and politics liberalised. The second was services-based after Xi Jinping took China back down the path of economic restructuring and tyranny.

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The second phase came with a lot of tourists and students plus soft commodities. But as people-to-people exchanges deepened, China also injected a massive corruption push via lobbying, political bribes and various influence operations.

This was a plan by the Chinese dictatorship. It sought to wedge Australia from ANZUS by capturing interest groups, misusing our immigration program by occupying ethnic Chinese electorates, and to outright buy political parties.

The push back against this “silent invasion” is the most important feature of Australia’s Chinese decoupling given it is the feature of engagement most likely to destroy our values (that is, liberal democracy).

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The BRI may be a largely dead deal, but it is the perfect symbol of this push by the CCP to quietly occupy Australia. On that basis alone it was right to can it.

But we must also look forward. On that basis, canning the BRI was even more important. By doing so, the Morrison Government has applied a corrective salve to what were deteriorating Australian normatives around the CCP.

Canceling BRI has reaffirmed an Australian value system that all such deals are inappropriate, that they comprise the national interest and that they will erode our freedoms. It has directly bulwarked what were warping political, business, education and community values around Chinese influence.

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On that rationale, all such sub-national deals with China should be erased with prejudice.

While we are finally winning this battle at home, there are still some pretty scary ideas floating around on another front. A relevance deprived Tony Abbott was on the hustings on the weekend:

  • Xi Jinping is dedicated to taking back Taiwan.
  • If he succeeds, then other allies will no longer trust the US alliance network.
  • They will collapse into Beijing’s arms.
  • The US should remove all strategic ambiguity and back Taiwan to the full.
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Even worse is Hugh White this morning:

  • US can’t win Taiwan war without nuclear deployment.
  • US is bluffing.
  • But if it does not fight then US strategic leadership collapses in Asia.

Both articles are typical Thucydides Trap drivel. Taiwan is not in the formal US alliance network for a very good reason. The Chinese/Taiwan conflict has always been a civil war played out on the global stage.

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Taiwan is not the equivalent of Singapore for the British Empire in WWII, the point at which the rising power overruns the declining. It is the US’s equivalent of the British Hong Kong arrangement. China has always had a long-term lease on Taiwan, even if it is written in blood and not ink.

We should all be very thankful that generations of US strategic planners have had the foresight to see it this way, even if binary Australian dunderheads cannot.

If China invades Taiwan, then it will strengthen all formal US alliances in the region because every Asian capital will immediately be forced to ask themselves “are we next on the CCP target list?” They will scurry straight to Washington to sure up the alliance with big, fat cheques for new US naval bases in their home countries. Ask yourself, which southeastern Asian country wants to be occupied by a vicious and racist north Asian fascistic state a second time?

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The US should absolutely play hardball over Taiwan. It should absolutely arm it to the teeth. It should absolutely see it as a crucial Cold War conflict and push China all the way. And, if the worst comes, it should absolutely destroy Taiwan’s strategic strengths such as semi-conductor production.

But it does not need to fight the war to save the empire. Instead, the US should build a global coalition of liberal states to make it plain to the CCP that if it does annex Taiwan then it will be unceremoniously booted out of the global economy via commodity, trade and capital blockades. Accompanying this ought to be a liberal BRI. A global Marshall Plan that rips all US-supply chains out of China and rains them upon the Asian alliance network instead.

That would make any CCP victory in Taiwan entirely Pyrrhic as, before long, it faced collapsing living standards and mass unrest at home.

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We can already see the beginnings of this from the Biden administration:

  • Like-minded allies must come together to fight the rise of autocratic states.
  • They should act collectively on Xinjiang slave labour.
  • Values should permeate trade relationships.

The realist question facing the liberal world is not whether or not to defend Taiwan to save the US liberal empire. It is how to make that conflict the end of the illiberal Chinese upstart.

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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.