Taiwan generated some serious angst over the weekend. Chris Joye is thumping the drums of war:
- The chance of a forced Chinese forced annexation of Taiwan is now above 50%.
- The probability of war is higher in the next five years than after because the CCP has closed the military gap.
- Australia will be bombed in any war.
Peter Hartcher added some useful material:
- Kevin Rudd says the Morrison Government is aiming for a khaki election.
- This is pointlessly insulting China with risk of blowback.
- Rudd reasons that China will not invade Taiwan for a decade so why antagonise it now?
- Hartcher concludes we should go easy.
We also saw various pundits weighing in with Labor kowtowing again, led by its lost greybeards, especially Beijing Bob.
The prism through which to view any Taiwanese conflict is not what is good for China, nor what is in the Chinese national interest, nor what the Chinese people want, nor what is good for the Chinese military. It is what is good for the CCP and most sustains its power.
In those terms, a Taiwan conflict serves little good purpose in the near term. The CCP is in firm control at home with no serious challenge. Its social contract with the Chinese people is intact. Economic growth is still sufficient to generate opportunity enough for rising living standards.
Why waste such a war now when in the years ahead China faces more severe economic dislocation as its population ages, the middle-income trap closes and it virtually stops growing?
Therefore, I tend to agree with Kevin Rudd over Chris Joye on the timing of any conflict. There is no reason for the CCP to risk debilitating international blowback until a new and nationalist social contract is needed to offset the fraying political legitimacy that comes with declining economic fortunes. That seems more likely a ten-year timeframe. Especially since, as was made clear in the latest five-year plan, China has some major strategic economic vulnerabilities to address before it takes on the US. These include semi-conductor production and commodity supply chains.
That said, I also disagree with Kevin Rudd. Why would Australia seek to increase its engagement with the CCP today when we know that this is the probable future, alongside more economic coercion? Let’s get on with diversifying away from China now while the going is good and the commodity cycle is strong. A staged decoupling is much more manageable for the Australian economy than all in one go at the outset of war.
This is basic risk management.
So, I was also thrilled to read the following last week:
- China’s local embassy warned that tourists will not return in previous numbers.
- The media is hostile to China, bleated the wolf wanker ambassador.
I have been expecting this development and fulsomely hope it transpires for two reasons.
Less Chinese tourists and students will mean all associated economic activity withers and, on balance, the Australian dollar will be pushed lower. That lift in competitiveness will help diversify our trade away from China.
Less Chinese tourists and students will also mean the Chinese diaspora stops growing. That will make it easier to protect it from coercion at the hand of Beijing.
Both of these outcomes are thoroughly welcome for the Australian national interest. If they have to be achieved by insulting the CCP and triggering its withdrawal, instead of being done more deliberately at home, then so be it.
If Labor faces khaki elections along the way then that’s its own fault for getting on the wrong side of history.