Should Australia keep building Xi’s tyrannical “wall of steel”?

From Xi Jinping last week:

China’s strongman leader Xi Jinping has threatened a “wall of steel” will confront any country that tries to bully his rising power.

Thousands of comrades cheered President Xi as he struck an aggressively nationalistic tone during a major speech on Thursday to mark the 100th anniversary of the Chinese Communist Party.

Dressed in a grey Mao-suit, Xi warned the international community that his China would never be “bullied, oppressed or subjected” by foreign forces.

“Anyone who would attempt to do so will find themselves on a collision course with a great wall of steel forged by over 1.4 billion Chinese people,” said Xi to huge applause from the audience gathered in Tiananmen Square.

Whatevs, dude. The only “wall of steel” that has been erected in China is made almost entirely of Australian iron ore.

Which makes you wonder about two things.

First, why is Xi so angry? Especially towards democracies and Australia which he insults daily yet clearly needs.

The answer is simple psychology. Mr Xi protests too much. He is nowhere near as powerful as his overblown rhetoric suggests and he needs other countries much more than they need him. China can’t build or feed itself without global supply chains and Xi likes to hide this fact from the Chinese people who he is trying to impress with this machismo.

Second, why do we put up with it? After all, when a pumped-up dictator uses your own commodities to threaten your freedoms over and again, should you keep sending them?

We do it for the money, especially for a few super-rich, but we don’t have to. We could just say no thanks, we’ll leave it in the ground. No demands. No recourse. So long and thanks for all the fish. It would be an investment for our kids.

What would happen if we did?

Firstly, politically, the CCP would be in an uproar but there is little it could actually do. It’s already cut off most other exports.

We’d see cyber-attacks and other inconveniences but flushing those out would be no bad thing.

Secondly, economically, the fallout for China would be far worse than for Australia. If we left 700mt of iron ore in the ground then our GDP would take a large one-off hit, and perhaps 100k miners and associated industries lose their jobs.

But the price of iron ore in the remaining seaborne market would go up parabolically. How much is impossible to know but we’d be halving the supply in the global market so $1000 per tonne doesn’t seem a stretch. Perhaps $2000 as China vacuumed up every non-Australian FE molecule in the world while we supplied everybody else.

The Aussie dollar would be belted too so the cash flood into Australia would be phenomenal, spiking income even as GDP fell.

China would counter-blockade exports to Australia which would cause congestion in some goods for a while but we’d rebuild other supply chains and our own replacement production quickly enough. Other than a paltry $15bn in tech, it’s mostly cheap China crap:

On the other hand, with steel-dependent construction activity representing 30% of China’s economy, the economic blow to it would be titanic. It is likely that a financial crisis would follow and shake out all kinds of Chinese demons. The CCP’s dodgy foundations would quake.

A global recession is a strong possibility as a spectacular inflation surge hit all steel products. But we’d still be far better off than most as a huge supplier and small consumer of FE products.

In the long run, we’d be accelerating Chinese withdrawal from Australian iron ore as every alternative was aggressively pursued. But that’s coming anyway and we’d make more money by spiking the price in the meantime

The larger danger and opportunity is strategic. Such an act of bald-faced resistance to tyranny might goad the CCP into doing something rash. It can’t invade the Pilbara. The doesn’t have the capability and ANZUS would crush it.

But it could and probably would escalate conflict with the liberal bloc by moving to annex Taiwan. This may not be as bad an outcome as it appears. If the CCP is forced to move before it is ready, it may miscalculate the conflict. Moreover, a war with Taiwan could expand the Australian blockade of China into a wider global version that folds in the US, Europe and global capital markets thanks to Australia’s and Taiwan’s heroic example of fighting for liberalism. That would end Chinese catch-up growth and mark the peak of its strategic power as its economy entered decline.

It’s a hell of a gambit so we won’t be taking it. Unless Scott Morrison does it by mistake, like most else he does. And that is one argument against doing it. If ScoMo can’t manage a few flu shots then how is he going to manage a conflict of such immense scale? Another argument against is wars are inherently unpredictable so it could precipitate the very great power conflict that we all hope to avert. A CCP corrupted Labor isn’t able to pull its lips off Chinese jackboots long enough to even contemplate such resistance.

That said, if I were an enterprising US president, I might ask Australia to do it as a trap to draw China into a broader containment plan. And, in the long run, it’s likely going to happen anyway when China does invade Taiwan.

The most important conclusion from this calculus, for the time being, is the truth that it speaks about the future of Australia and China. If you or your business are exposed to a Chinese supply chain in ANY WAY then find an alternative within the liberal bloc now. Your current relationship is going to break sooner or later and you do not know when.

The kind of Nazi/Stalinist claptrap that we saw in Tiananmen Square last week will force the free world into a fight and you want to be in position before it does.

Houses and Holes
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Comments

  1. The bullying bluster of a psychopath.

    In the past few days we’ve witnessed clearly China’s intent and everyone from Afghanistan to Zimbabwe now knows that this is a rogue leader of a rogue country.

    For many Chinese, who simply want to enjoy their lives with family, friends and food, it must be deeply worrying and for those close to him, they must be living in terror of the door being smashed in at 2am and simply disappearing into the gulag or worse.

    In a way, Xi has been great as he’s unmasked what the CCP is in reality… an evil organisation of the worst kind.

    Xi needs to go and my bet is, one way, or another, he will.

    • Xi is so powerful he ain’t going anywhere, except on a honorary special documentary on the ABC.

      • surfbeach2536

        Unless that is a prosthetic bulge above his belt (that helps him imitate Chairman Mao) he is likely to have significant health concerns before too long.

  2. Ronin8317MEMBER

    I cannot imagine any scenario where China can successfully invade Taiwan in Xi Jinping’s life time.

    • Fishing72MEMBER

      Unfortunately, I think that the extent of CCP corruption into Western democracies and the powerful greed motive entrenched in the transnational corporations which now steer our democracies, is still underestimated. Our societies now appear to be driven by a public / private cooperation and there’s definitely no guarantee that the leaders of either division has the best interests of liberal democracy at heart.

      This means that any response to the actions of China might be curtailed in order to preserve the flow of lucre and power amongst these leaders.

        • Engendered corporate arrogance. To wit – Kunkel @ PMO etc etc.
          It’s amusing to watch them from within deny, then acknowledge the problem and flail at it with more “organic” and plagiarised $10 words. They grow them here like fungus and they would not survive in non “transnational” corp business.

      • boomengineeringMEMBER

        Hey Fishing, been for a wave lately.
        Reminiscent of the old days this morn. Went out at mid Curly but wave after wave stopped me getting out the back then realized I had drifted to South Curly so I took the rip out very close to the rocks still getting nailed on the head. Even when too far out the back copped mini Cyclops’s due to breaking on the rip (only where I was btw). Finally went wide and sat way out when I saw the fire/ rescue brigade with lights flashing stop opposite me then turn back with lights off. Maybe for me maybe not but reminiscent in any case. Ended up paddling to North Curly and caught the biggest one from way out the back but JohnnyDkneelo in his 80’s (yo) got smashed all the way to shore, sat on the shore for a short while and came back out.

        • Fishing72MEMBER

          Haha….classic.

          Pumping yesterday, looks better today. Waiting for the tide to drop then head out at a certain rivermouth which looks to be firing. Glad to hear you’re getting your share.

          • boomengineeringMEMBER

            Funny you say that as when I’m with company I always say ” you can all the waves as I’ve had more than my share during my life”

      • MichaelMEMBER

        “Our societies now appear to be driven by a public / private cooperation and there’s definitely no guarantee that the leaders of either division has the best interests of liberal democracy at heart.”

        It’s worse than that. It’s clear that the national interest isn’t even on their agenda.

        Crush-level immigration isn’t in the national interest. Universities run to expand the bank balance of the vice-chancellor and his cronies isn’t in the national interest. Negative gearing and demand side subsidies for houses isn’t in the national interest. Protection of the banks and financial services sector is not in the national interest. Spending $80 billion on submarines isn’t in the national interest. Coal industry jobs for Queensland isn’t in the interest of anyone much really – and nor is protection of the gas cartel. No accountability for politicians is not in the national interest.

        It’s very depressing, indeed.

    • China can’t afford not to be capable of invading Taiwan at any time. Under no circumstances can they let a sustainable defence be built up on the island. If that means war, that is what will happen regardless of the losses that will incur.

      While Russia backs them they cannot be defeated on a national basis and the only thing that the US can offer Russia to change this is unrestricted access to Europe.

      Probably with the Chinese influence in the US economy growing every day it will end up like Hong Kong…..lots of sound and fury ending in a nothing burger

      https://twitter.com/TheMarketDog/status/1411766525267222537

    • ErmingtonPlumbingMEMBER

      Thanks to Western corporate plutocracy wanting to circumvent democratic demands for tougher environmental laws at home and higher wages and conditions for western workers China now has the greatest manufacturing capacity on Earth.
      Soon enough they will have more Nuks than America and Russia combined.
      I think if, before their inevitable invasion of Taiwan, they state they are fully prepared to let ALL their Nukes fly to take posession of this island then those same western plutocrats will be the first to demand they be allowed to take it.
      If it comes to that they’ll probably make a grab for South Korea, Japan and SE Asia at the same time.
      With 1.4 billion people and that manufacturing capacity They’ll be able to command an expeditionary force 20 times bigger than the one sent out by imperial Japan in the 1930s and 40s.
      A new “Greater East Asia Co-Prosperity Sphere” will be a lot bigger than the last one.
      We would almost certainly incorporated into it if the West ceded the Asia region to China to avoid a Nuclear holocaust.
      A new world order scenario that would end Australian Democracy
      https://en.wikipedia.org/wiki/Greater_East_Asia_Co-Prosperity_Sphere

      • Arthur Schopenhauer

        In WW2, for every 1kg of food and equipment the Japanese provided their troops in the Pacific, the US provided 20kg to their own.

        The Japanese were out-manufactured.

    • Strong words but in the real world actions speak louder than words, so what actions can Taiwan take to avoid a determined invasion of Taiwan?
      Think of the simplicity of an invasion force consisting of say 1M small vessels (up to 20 troops each) capable of sustained operation at 30km/hr (if you do the sums it implies 100hp outboards powering an 8m tinny).
      Ok so if they’re launched around midnight they’ll arrive on the Taiwan coast at just before dawn.
      Lets say the Taiwan navy stops 10% of the troop vessels, that still implies 18M heavily armed CCP troops arriving arriving over the space of a couple of hours along a 300km long section of coast line. I think we call that “job done”
      From a numerical perspective China could mount just this sort of million angry ants attack, so why wouldn’t it?
      All this military capability rhetoric comparing US Navy’s blue water capability with China’s Navy conveniently ignores the fact that the Taiwan conflict isn’t (and never will be) a “Blue Water” engagement.

      • “…
        Taiwan conflict isn’t (and never will be) a “Blue Water” engagement.”

        Indeed.
        Westworld’s concept of war is based on open ocean and air supremacy and attacks from afar based on it. They forget that the most advanced tech can be defeated only with simple low tech solutions (Afghan experience and defeat of US(SR)) and what you suggest is one of them. Next important factor is that US will sacrifice every Taiwan’s Chinese life to spar with mainland China but will never commit to a boot on the ground.
        More important than any of the above, either Republic or People”s Republic, China does not want a military conflict, particularly not on its own soil.
        Someone mentioned Kissengers doctrine of distancing China from Russia to weaken China and Russia yet again… well, a good idea but unfortunately both Russia and China are well aware of this and times are quite different now for this to work. Even Kissenger said recently that US will have to get used to multipolar world and that his doctrine is now impossible.

        • Yeah, I remember reading a US briefing on Taiwan defense that suggested that a large contingent of US troops could be landed on the East Coast of Taiwan. from Korea and Okinawa in as little as a week. I laughed so hard I nearly pee’d my pants. Anyone that bothered to read anymore then the introduction has never travelled along the East coast of Taiwan, simple as that.
          It’s a stupid idea to even suggest that a large, fully supported army can be landed on the East coast of Taiwan under even the best possible weather/wave condition. But just imagine the carnage if China invaded ahead of a Typhoon…and why wouldn’t they time the invasion to best leverage the natural advantages on offer?

      • ChinajimMEMBER

        Ever been in the Taiwan Strait? I have. An 8m tinny with 20 troops on board doing 10 knots would be upside-down in, oh, about a minute.

        • Am yeah, many times I’ve paddled a windsurfer out through the viscous sometimes half meter swell at Chupei (Zhubei…for those that prefer bopomofo)…I must admit I was scared really scared

  3. Know IdeaMEMBER

    I am sure Albo is on the cusp of announcing he has discovered peace in our time.

  4. That speech was so 1930s Nuremberg but without the charisma. The cheering uniformed kids especially.
    I hope it finally ends the bleating about us using megaphone diplomacy.

  5. Rubber manMEMBER

    Very cool article – is Macrobusiness becoming a Morrison mouthpiece; ” pipe down China, or I will mistakenly draw you into a global conflict’.

    • ErmingtonPlumbingMEMBER

      I think its more a piece expressing concern about us moving into a future that is more analogous to,… “a boot stamping on a human face –forever” than some kind of partisan warbling in support to the LNP.
      This shyte has got nothing to do with petty party politics.

  6. SnappedUpSavvyMEMBER

    wall of steel maybe, balls of steel definitely not.
    The people of china want to eat fried chicken and queue out the front of luxury brand stores and they don’t want to lose that for Xitler’s war

    • That’s only a small cadre of the ccp elite. The majority poor rural folk will be used as pawns and sent to the slaughter for love of nation and all that. Always as it ever was.

    • The West’s “rules-based order” invokes rulers’ authority; Russia-China say it’s time to return to law-based order…
      source

      Every military advance on any Chinese soil (inclusive of Republic of China aka Taiwan) will only cement Xi’s support.