In the nineteenth century Europe’s key cultural impact on China has probably been its influence in modernizing the Chinese state. In the 1870s and 1880s, Chinese engineers who visited Europe realized in no time that Europe’s successes were not just due to technological advances but were more deeply rooted.
One returning scholar was Yan Fu, who translated the works of Montesquieu and Adam Smith, which introduced Western ideas to China and changed the way subsequent generations saw the world around them. Thomas Huxley’s Evolution and Ethics made the theory of social Darwinism popular. Although the writings of Bakunin and Kropotkin led some Chinese towards anarchism, the most influential streams of political thought among the elite were those of liberalism and socialism, which then made their way into the wider society through nationalism aimed at China’s modernization. Until the end of World War I the teachings of liberalism dominated public thinking, but the Treaty of Versailles sent China the message that the Western powers had exchanged their liberal worldview for the policy of force. In the post-war years, socialist ideas quickly caught on as they emphasized the common good and not the individual as the key motive of restructuring society.
The teachings of socialism and Marxism gradually became more widespread in China. It had been a widely held belief that these ideologies could only become successful in a developed capitalist country, but the Bolshevik revolution demonstrated that Socialist and Marxist ideas could release enormous energies from the tyrannized classes of underdeveloped Russia. One of the founders of the Chinese Communist Party, Li Dazhao believed that since China was even less developed than Russia, its revolutionary potential was greater.
Europe influenced China in several other ways throughout modern history. China had to abandon its hopes of becoming a universal power and to settle for being just a state like any other, only bigger. This meant the acceptance of a Westphalia-type setup, which introduced the new concepts of sovereignty, territorial integrity and clearly defined borders.
The two key events of the post-World War II era that have left their mark on China’s view of Europe were the consolidation of the Communist regime in China and the process of European integration. Following the end of the Cold War, many Chinese scholars were convinced that the globe would be dominated by one superpower and several regional powers, which would eventually lead to a multipolar world order. Studies on Europe are usually based on this presumption, therefore Chinese analysts usually first discuss whether the European Union can be considered an independent international power, in particular whether it can act independently of the United States of America. Independence from the USA has become China’s yardstick of Europe’s place in the world.
There is no such thing as an independent approach to Europe’s role in today’s world. Chinese analyses of Europe’s place in the world often reflect their own preconceptions. Observations about Europe mostly reflect the hope that the international order is on its way towards a world in which there is not one single dominant power but several politically equal regional centers, a world with a culture characterized by diversity and an economy characterized by interdependence. Even though some Chinese authors do understand the complexity of decision-making procedures in the European Union, the difficulties of finding consensus in an enlarged Europe, and the traditionally pivotal role of the Franco-German axis, the majority of them more or less see the EU as a single actor on the global scene. Chinese are fully aware of Europe’s weakness on the international political scene, which is largely due to the Union’s cumbersome and non-coordinated foreign policy profile.
The Asia-Europe Foundation conducted a survey in 2006 on how the Asian media, the elite and the ordinary citizen saw the European Union. Three leading newspapers were observed for a full year for the frequency of EU-related news, their relative significance and themes. The biggest daily published about 60 pieces of news on the EU monthly, while the leading TV channel featured a dozen news items on the EU monthly in its evening news program. Most of these news items were not leading ones and were usually unaccompanied by any commentary. The researchers queried 400 ordinary Chinese citizens about their knowledge and opinion of the European Union. The majority of respondents said that China’s key partner was the USA, followed by the EU, and somewhat surprisingly adding that the EU was likely to take over America’s pole position at some time in the future. In links with the EU, trade and finance were considered the most important. Most respondents associated the EU with the euro and trade when asked the question: what is the first thing that comes to your mind when you hear the term EU? There was a general consensus that the euro was the most important symbol of the European Union. The third part of the survey involved interviews with representatives of the Chinese political, economic and media elite as well as of civil society. 95% of the interviewees said that the EU was a major power, and they also agreed that the EU was one of China’s key partners alongside America and Russia. The opinion of the political elite was more positive than the economic elite’s: the latter gave an unequivocal answer, putting the USA as clearly the number one partner of China. However, to the question whether the euro would ever replace the dollar in international money markets as the leading currency, the economic elite gave a surprisingly open and positive answer: most respondents did not rule out the possibility of this scenario. Let us not forget though that this was before the Eurozone crisis. The opinion of the political elite differed: they believed that, due to America’s political dominance, the dollar would maintain its top spot. In general terms, the EU was considered most important by the political elite and the least important by the media elite, but all four groups expected the EU to take on a more important international role in the future.
The EU became China’s leading trading partner in 2004, and China is now Europe’s second most important trading partner behind the United States. The total value of EU-China bilateral trade grew more than sixty-fold since 1978, and Europe has worked its way up to become China’s number one supplier of technology. Germany is China’s key European trade destination, absorbing a third of all Chinese exports to the continent.
To many Chinese authors Europe symbolizes the spirit of the modern age, all the more so as they see their own aspirations materialize in European policies. Chinese analysts agree that Europe is not only keen but increasingly manages to build a key international position independent of the USA since the end of the cold war. More and more Chinese academics realize that the EU not only talks about the necessity of an effective multilateral system but also puts those ideas into practice. Some believe that this European aspiration stems from Europe’s postmodern foreign policy orientation and the neoliberal school of international relations. One of China’s leading Europe experts, Professor Feng, is often heard saying that the majority of Chinese have an overly generalized and idealized view of Europe’s position in the global pecking order. Professor Feng argues that the EU lacks one of the key prerequisites for status as a global power –military power – but that what it lacks in military might, Europe makes up for in extensive economic and diplomatic relations. Accordingly, he considers the EU as an incomplete and unbalanced pole of power. Many analysts put the emphasis on cooperation in the framework of the European foreign and security policy. Some of them are convinced that both Europe and China wish to strengthen economic globalization and curb political globalization, i.e. American political and cultural hegemony. Moreover many in China believe that the Chinese economy is more open than the often protectionist European economy.
China does not see Europe as having a global strategic vision – primarily because Europe is divided internally hindering it to speak with one voice on the international political scene. Due to these internal rifts in Europe, apart from trade policy, Sino-European relations take place at the level of the member states and the Union as a whole. China – known to steer clear of sensitive issues during international talks – does support Europe’s soft-power policy on the surface, but in reality has always been avid for hard solutions. The failures of Europe’s foreign policy in the Balkans and the Middle East have exposed the weaknesses of the soft-power approach to China too.
The one area where Europe’s economic, political and symbolic unity is beyond question is the single currency, the euro. Having said that, China still has no idea whom it should negotiate with on international monetary issues. Europe’s institutional representation is muddled, unlike in the United States, where there is a Treasury Secretary (finance minister) and a Chairman of the Federal Reserve (central bank governor) and that is it. According to Chinese predictions, in 30 years’ time there will be three major currencies in the world: the yuan, the dollar and the euro.
China still has a rather haphazard and changeable view of the EU. In the 1970s, China saw the EU as the embodiment of the capitalist world, the state-monopoly and imperialism, a political union of Western imperialist countries. It speaks volumes about the age that, in the seventies, the Eastern European press commented on European integration in much the same way. The Chinese defined the European Union as an ally of the USA, as Washington’s instrument to control Western Europe and as a political formation born out of the rivalry between the Soviet Union and the United States.
These beliefs were based on Lenin’s theory of imperialism and the Maoist “three worlds” concept. Back in those days, the popular Chinese line of thinking saw three reasons for the nations of Western Europe to create a European Union. Firstly, European integration was thought to be the upshot of the unbalanced development of capitalist politics and economics. America’s power was believed to be superior but provisional, which would gradually give way to a rising France, Germany and Italy. With this predicted shift of power, the Chinese thought that the aim of uniting Western Europe was to gain progressive detachment from the USA. Secondly, the European Union (the Common Market) was regarded as a product of the competition between Western Europe and the United States. With the spread of the Soviet Union’s sphere of influence and the collapse of the colonial system, the West was no longer best placed to compete for the markets of the industrialized and developing world. The Chinese were in no doubt about the objective of the six founding members of the Common Market: to secure their grip on key markets. Thirdly, the Common Market was seen as an offshoot of state-controlled monopolist imperialism. Monopolization is one of the basic features of imperialism — Lenin tells us. The European Coal and Steel Community was the first step towards international monopolization and a logical continuation of the Italian, German and French monopolist economies’ post-war development. The EU symbolized the highest level of European monopoly, created between private and state monopolies.
In the Maoist “Three Worlds” theory, Western Europe was America’s ally but also China’s potential partner for a joint fight against the Soviet Union. Intriguingly, from an intellectual point of view, in the 1960s and 1970s China had a bigger impact on Europe than vice versa. Many Western European intellectuals and the student movements of 1968 saw their own aspirations – namely their rejection of the establishment – in Mao’s Cultural Revolution. This only went to show how fragmentary their knowledge of the reality of the situation in China really was. Chinese analysts reckoned that the aim of the USA was to subdue Europe by way of its economic, political and military unification. When Europeans realized what the USA’s plans were, they brought into being their own Union in order to be able to counteract American and Soviet weight through economic and political unity. Nevertheless, in military terms, Europe needed America and NATO to protect it from the Soviet threat.
These rough-hewn theories were then replaced in the 1990s by a more sophisticated and better grounded view of the EU. From this point on European studies became more social science oriented in China, devoting more attention to how the EU and its policies work. Chinese academia changed its opinion and no longer believed that the European Union had been founded to counterbalance another economic or political world power. China now understood that the main motivation behind the EU was to secure the conditions for economic development and long-term peace through regional cooperation.
China began to study Europe and the EU methodically, dissecting it from an economic, political and cultural perspective. In the late 1990s, China recognized that Western powers were still members of the same family and that globalization only drew family ties closer. Hence, the main trend of development of international relations pointed towards a multipolar world rather than towards one without any poles. In such a world order the European Union’s mission would not be to simply act as one of the poles but to use its political and economic clout and become a key diplomatic player.
This Chinese fascination with European studies stems partly from the fact that they see Europe as a potential model for integration involving China and Taiwan or the Asian economies. The market economy reforms led not only to economic growth but also created new social problems in Chinese society, such as regional disparities, the growing gap between the rich and the poor, problems of public health and the mass influx of the rural population into cities. These problems generated a degree of social instability that could undermine the position of the ruling Communist regime. In response to these domestic social challenges, Chinese researchers started looking into the welfare and social security systems of European countries and into the regional policy of the European Union. It is significant that most of the Chinese scholars visiting Brussels came to study European social policy. This keen interest is attributable to the fact that China can only envisage a successful social security model with a strong state presence; therefore the Chinese are more curious about European achievements in this field than about the American model based on the idea of self-support. For some Chinese intellectuals, the model focusing on social equality and environmental friendliness instead of economic efficiency could serve as an example when implementing the long-cherished Chinese dream of “harmonious social order”. Just as European thinkers such as Voltaire or Leibniz once felt that another distant society was much closer to the ideal society, some Chinese may feel that way about Europe today.
The peaceful rise of China is the number one priority of the Chinese political elite, who collect all available analogies and lessons from around the world. China has several lessons to learn from the integration of modern Europe. European countries first fostered close links with one another and then extended various forms of cooperation to more and more areas on their way towards widening integration. The success of this process could serve as an example for the future development of an Eastern-Asian Community. On the other hand, while rising to the rank of a global actor through this process of integration, Europe was wise enough to maintain good relations with the USA within the framework of their political and military alliance. Thanks to the Atlantic alliance and their economic interdependence, the USA did not see Europe’s integration as a challenge to its dominance. The Chinese often refer to the USA-EU alliance as the “Western collective hegemony”, indicating the strength of trans-Atlantic ties. In parallel with its rise, the European Union commanded an increasingly important role in international institutions in the creation of which the USA had a decisive part. In fact, Europe became a major international player without becoming a competitor or challenger of the USA, and it did so by aligning itself to the international order built by the United States.
As China assumes a growing role in international organizations it can rely on the EU’s effective doctrine of multilateralism as a model to follow, as opposed to the USA’s unilateral approach. So a proper management of relations with neighboring countries, key global powers and the international community is a key factor. The ongoing enlargement of the Union is seen in China as proof of the fact that the EU is an attractive club that more and more countries wish to become members of, which in turn further strengthens its international clout. The 2004 Big Bang enlargement of the European Union – the reunification of Eastern and Western Europe – confirmed that Chinese conviction. Nonetheless, some of the ramifications of this last round of EU enlargement make China somewhat anxious. Most of the new member states had been liberated from Communist rule only a decade or so earlier, and with the Soviet Union now gone and consigned to the history books China remains the only major country governed by a Communist party.
Some in Europe have the belief that Europe could become China’s “tutor”, introducing this vast country to the world of fundamental European values such as soft power, consensus-based foreign policy, multipolarity, a social model built on justice and solidarity or environmentally-conscious living and business. But China has a different view. No doubt that China is sincerely interested in, studies and uses the achievements of the West and of Europe, but the idea of Europe becoming China’s tutor is mere fantasy. Nevertheless there is a middle ground how one can approach this issue. Continuing intensive exchange of views and structured dialogue at different levels, reinforcing institutionalized political and academic contacts to enhance the depth of Chinese knowledge about Europe’s values and achievements would definitely be beneficial for both of us.
Through a series of future papers focusing on some selected aspects of potentially relevant fields of EU know-how transfer (regional policy, social policy and the issue of multilateralism) the author proposes a modest contribution to the above objective.
A brief history of Sino-Australian political relations from 1949 to 2020
To understand what is happening now requires an understanding of history. The recent Sino-Australian relations have been like a roller coaster ride, which needs to date back to history at least from 1949.
There are several characteristics worth mentioning in Sino-Australian relations. First, there have been diplomatic ups-and-downs between the two governments due to the divergence of the two countries’ political systems and ideology. Second, by comparison, bilateral ties have generally been improving for decades due to the reciprocal economic complementarities and cooperation despite the recent trade disputes. Third, Sino-Australian relations “has become more unequal with the passage of time” due to China’s rise. Fourth, the influence of the US on the foreign policy of Australia cannot be underestimated. In terms of structure, this part will be divided into four periods, posited on the founding of the People’s Republic of China in 1949, the establishment of diplomatic relations in 1972, the outbreak of Tiananmen Incident in 1989 and the recent decline of bilateral relations starting from 2015 with additional illustration of the influence of the US in Australian foreign policy.
Graeme Dobell argues, “China has always loomed in the Australian consciousness”, possibly because Australia is geographically located in the Asia Pacific and surrounded by Asian countries with a significant number of ethnic Chinese. Historically, China was viewed in Australia as a threat, namely, “Yellow Peril”. The notion is a color-metaphor, full of racism. East Asians, especially the ethnic Chinese, are an existential hazard to other countries as immigrants. Professor Gina Marchetti argues that
the rooted in medieval fears of Genghis Khan and Mongolian invasions of Europe, the yellow peril combines racist terrors of alien cultures, sexual anxieties, and the belief that the West will be overpowered and enveloped by the irresistible, dark, occult forces of the east.
In Australia, as a Western country located away from the West, its Immigration Restriction Act of 1901, infamous as the White Australia Policy, was designed to prohibit Chinese settlers. “Fear of China and hostility to the Chinese immigrants were factors” that supported the Federation of Australia, and both factors existed for decades. The federating of Australia was the process by which the sixBritish colonies consented to unite and become the Commonwealth of Australia. Liberal Prime Minister Harold Holt formally abolished the White Australia Policy in 1966 with the introduction of the Migration Act 1966. By legislating legal equality among European and non-European migrants, this new Act has opened a new immigration history era. It has been the most crucial step in forminga multicultural society in Australia.
However, Australia’s unique geographic location and huge disparity of population between Australia and China have decided that the natural insecurity of Australia as a nation, for that linguistically, historically and intellectually, Australian ancestry originates from Europe, and its vital economic partner and most crucial military ally is the United States, both far away from Australia. Furthermore, Gyngell argues there is always “fear of abandonment” in Australian foreign policy. Likewise, former Australian Minister for Foreign Affairs Gareth Evans and former Australian diplomat Bruce Grant confirm that
the evolution of Australian foreign policy needs to be assessed against a background in Australian politics of persistent anxiety about a threat from Asia: sometimes vague and undifferentiated, sometimes specific, but always there.
In this period, China was viewed in Australia as a threat, namely, the aforementioned “Yellow Peril” and “Red Menace”. Arguably, the Red Menace has always existed in the Australian society and the government until now,which is a term applied during the Cold War for describing a nation that faces the increasing authoritarian threat of communism. This term was used to refer to the Soviet Union, while nowadays, it has been employed to mean Communist China. Besides, the difference of scare only reflects the extent to which the Australian government fears the Chinese Communist Party. From 1949 to 1972, especially when Australian and Chinese troops participated in the Korean War as rivals and later the Cultural Revolution was launched in China, Sino-Australian relations were hostile to each other due to the fact they were both subordinated to different political and ideological camps: USSR-led communism and the United Stated-led capitalism.
During this period, Sino-Australian relations encountered the most drastic ups and downs the bilateral ties have ever experienced. In 1972, the Whitlam Labor government’s election marked the most radical turning point in Sino-Australian history by establishing diplomatic relations with China in December of the same year. Despite the endeavor, Whitlam made, this new chapter of the bilateral relations is mainly dependent on the change of China Policy from the strongest ally of Australia, the United States. More concretely, in the early 1970s, the American army was withdrawn from Vietnam, indirectly ending the military collisions with the People’s Liberation Army.At the beginning of 1972, Nixon has his dramatic visit to Beijing and Shanghai.
From 1972 to 1989, the bilateral relations were at the stage of steady development. Partly, the positive Sino-Australian relations can be attributed to the same view of opposing the Soviet threat, which facilitated the Sino-Australian cooperation. More specifically, in July 1973, the first Sino-Australian trade agreement was signed by the Chinese government and the Whitlam government. The visit of Whitlam to Beijing in late 1973 culminated in a joint communique, concurring with the promotion of views exchanges among the Sino-Australian officials. In 1976, during the period of the Coalition-led Fraser government, “the Australian Parliament even stood in silence in the honor” of Mao Zedong, when Mao passed away. In 1978, the Australia-China Council was built by the Coalition-led Fraser government to facilitate bilateral relations.
Furthermore, in the 1980s, with the economic reform of Deng Xiaoping and the incrementally frequent visits of Sino-Australian senior leaders, the Australian government saw the economic opportunities China may bring, and the Chinese government also realized the Chinese modernization might benefit from the support of Australia. Mackerras argues that “the mid-1980s saw the relationship reach a peak”. In 1984, the ALP-led Hawke government launched the China Action Plan, “an overall economic program towards China”, aiming to deepen bilateral economic cooperation. In 1985, Hawke told the Australian parliament that a ‘special relationship’ between the two countries was forming.
The realistic Sino-Australian political relations from 1990 to 2015
The outbreak of the Tiananmen Incident in 1989 was a devastating turnaround in Sino-Australian relations, bringing the vigorous relations to a sudden stop. To some extent, Deng’s economic reform gave Australia and the Western world an illusion that China tried to become more Western. Contrariwise, the Incident shattered misapprehension of the special relationship between the two countries and has pushed human rights to one of the central issues that needs to be addressed in the bilateral agenda until now. It is noteworthy that the negative influence of the Tiananmen Incident was in all domains. Antagonized by the Australian broadcasting of violence in Beijing, the Australian people, including politicians, business people, scholars and religious figures, unanimously condemned Beijing. All aspects of Sino-Australian relations were affected at varying levels.
Arguably, after the Tiananmen Incident, the attitudes of the Australian government has changed to be more pragmatic and national-interest-driven. Wang argues that the reassessment of Sino-Australian relations “did not lead to a fundamental policy shift” in Canberra “and human rights were not emphasized to the detriment of Australia’s economic interests”. In 1993, as the first Australian Prime Minister after the Incident, Keating visited China, breaking the diplomatic ice, partly because he needed to push wool exports to China.
Noticeably, from 1989 to 2015, China and the comparison of world powers experienced earthshaking changes. The hazards of the Asian Financial Crisis in 1998 and the Global Financial Crisis in 2008 lead to the economic meltdown of some Southeastern countries and the relative decline of the West. Bearing the two Crises, China has benefited enormously, even the most, from joining the WTO and other regional and global economic organizations as a member of economic globalization. At the end of 2010, China surpassed Japan and has become the second-biggest global economy, indicating that the global economic center has gradually transferred to East Asia. During this period, Hong Kong and Macao were subsequently handed over to China, enhancing China’s confidence. There is no doubt that bilateral relations have been increasingly asymmetrical during this time, leading to the concept of equal partners less possible.
From 1989 to 2015, facing China’s economic rise, on the one hand, the Australian government and business took advantage of the historical opportunities and have been more engaged in the Chinese economy. For instance, the Coalition-led Howard government was a firm“ supporter for China’s accession to the WTO” to share better Chinese economic growth. In 2014, the Coalition-led Abbott government and the Chinese government started to portray the bilateral relations as a “comprehensive strategic partnership” due to the incremental and robust trade relations and more frequent communication between top leaders of the two sides. On the other hand, due to the different political ideologies and systems, and the gradually widening disparity of the two countries, there have been strong concerns in the Australian government that China may leverage trade over Australia. Foot indicates the sense of uncertainty and insecurity in Canberra that
Has Beijing worked to support the dominant norms of the international order, or has it striven to overturn them? Has it ever deserved to be called “responsible power”, a term defined by the dominant states, or has it acted irresponsibly? To place these questions more explicitly within an international relations framework, has China shown itself since 1949, and more especially during the period of reform and opening since 1979, as capable of be socialized into supporting global norms? Or, as realists would predict, have there been signs that its rising power over the past two decades has generated new tensions in the international system? Looking more to the future, what kind challenge does its enhanced capabilities pose to the status quo?
Despite the dilemma that the Australian government has to face and the political ups and downs between the two countries during this period, “the growing sense of independence in formulating Australia’s policy towards China, as well as the increasing saliency of trade considerations in implementing such policy, has transcended political and inter-administration divides”. Thus, to some extent, although there were still ups and downs during this period from the ALP-led Hawke government to the Coalition-led Abbott government in 2015, the bilateral relations “appears to have become less uncertain” and matured. Arguably, the Australian government started to view China either without unjustified fear as they had before 1972, or super optimism as they had before 1989.
In fact, the differences may only exist in the style of how different administrations approach China. For instance, the first Mandarin-speaking Prime Minister Kevin Rudd introduced a concept called “Zhengyou in Chinese that means to voice different opinions to benefit the Chinese leadership. By comparison, another Prime Minister John Howard preferred to deal with China on more practical issues.
The increasingly strained bilateral political relations from 2016 to 2020
Bilateral relations have deteriorated since the exacerbation of territorial disputes in the South China Sea in 2016. The Australian government criticized China for not abiding by the South China Sea Arbitration, a joint statement with Japan and the US. In response, the Chinese government expressed its strong displeasure through its state-owned media the Global Times, denouncing Australia as a “paper cat”. Currently, the Australian government is concerned that Chinese activity in the South China Sea may threaten Asia pacific security, thus influencing Australian sovereignty and security.
More importantly, Australia’s closest and strongest ally, the US, initiated a trade war with China at the beginning of 2018. Since Australia often follows American foreign policy, the increasingly intense Sino-American relations have negatively affected Sino-Australian relations. In the same year, Sino-Australian ties soured further when Australia became the first country to officially ban China’s Huawei from its 5G network. A similar prohibition on Huawei was later executed in the US in 2019.
In terms of domestic politics, there are continuously more negative speeches about China.Australian politician Andrew Hastie urges urged the Australian government and public to realistically recognize the unprecedented democratic conviction and security threat from China. He even goes “as far as to compare the Western tolerance of China’s rise with the appeasement of Nazi Germany”. Hamilton argues Chinese infiltration in Australia is a “silent invasion”. The Minister for Home Affairs Peter Dutton, one of most senior officers in the Liberal-Coalition-led Morrison administration, condemned China’s interference and cyber hacks in Australia and claimed that the policies of the CCP are incompatible with Australian values.
2020 may have been the most turbulent year for Sino-Australian relations so far. Facing the once-a-century Covid-19 pandemic, Beijing has taken trade actions against a series of Australian goods such as barley, cattle, wine, cotton and coal after the Morrison administration advocated an independent Covid-19 inquiry without consulting Beijing first.
The tension also extended to people-to-people exchange. Canberra has warned its residents against arbitrary arrest in China. In contrast, Beijing has cautioned against studying and visiting Australia due to purportedly increasing racism and discrimination against people of Chinese and Asian descent. At the end of 2020, Morrison reacted furiously and demanded an apology from Beijing to an image tweeted by a Chinese diplomat showing an Australian soldier holding a knife to an Afghan child’s throat, which has further shadowed current and future relations.
Meanwhile, despite the global pandemic, there is increasing scrutiny in Australian media, including of the Hong Kong anti-extradition bill, the Xinjiang re-education camp, and China’s political donation to Australian political parties, Chinese spy students, the fight between Hong Kong and Chinese students in Australia, the defection of Wang Liqiang, Huawei backdoor suspicion and the detention of Cheng Lei and Yang Hengjun. According to the Lowy Institute poll in 2019, Australians’s trust in China to ‘act responsibly’ has dropped to 32 %, a 20-point decline from 2018. In 2020, trust in China has deteriorated to 23%, the lowest point in the Poll’s history.
Whatever, if any, evidence underpins these narratives or not, they seem to point out one reality: the plummeting state of Sino-Australian relations. Geoff Raby, former Australian Ambassador to China, even argues that Sino-Australian relations are at their lowest ebb since 1972.It may be controversial to argue that the current bilateral relations are worse than the relations in 1989, but it is appropriate to point out the reality that the Sino-Australian relations have been incrementally damaged. The Australian government’s dilemma is the overreliance of the Australian trade upon China and the exacerbated political disagreement. Jonathan Pearlman argues that “security and economics are tugging Canberra in different directions, as are its values and its interests”.
The Influence of the United States in Australian foreign policy
Undoubtedly, the Australian foreign policy has been influenced by the American government, as Australia has been called the “fifty-first state” of the US. Australia and the US have the same language background, similar European ancestry, similar political systems and strong economic ties. More importantly, in 1951, Canberra and Washington agreed on the Australia, New Zealand and United States Security Treaty (ANZUS), regulating that “an attack on either country’s armed forces or territory in the Pacific area” means “common danger” for the three countries. Since the US abolished its responsibilities to New Zealand due to the disputes of nuclear-armed ships, the ANZUS has become a bilateral treaty between Australia and the US and, separately, between Australia and New Zealand.
Given the American economic and military power around the world and the substantial disparity of Australia-American strengths, it is easy to argue that the ANZUS is the cornerstone of Australian security, and the US is the most important ally of Australia. In fact, Australia followed the US’s leadership through the UN, in the Korean War in 1950, the Vietnam War in 1962, the Afghanistan War in 2001 and the Iraq War in 2003 and recognized the PRC after the Nixon government had changed its China policy. To underpin the above view, Tow and Albinski affirm that the “ANZUS alliance remains Australia’s primary security relationship”. The former Australian diplomat Dr.Alison Broinowski argue that
Australia uncritically and voluntarily imitates its major ally (the United States) and its minor ally (the United Kingdom) in most things, yet lacks the capacity to do them well and the independence to do them differently. Having taken the drug of dependence from birth, Australia seems allied and addicted to it.
Thus, it is easy to question how independent Australia’s foreign policy is, especially its China policy, and argue that Australia does generally imitate the US’s foreign policy. As for the recent downturn of bilateral relations, Geoff Raby, an insider of Australia politics, believes that Canberra has developed policies to push back China’s rise in that the US started regarding China as a strategic competitor.
However, there is some policy flexibility in the Australian government, mainly economic-interests-motivated. To cite an instance, despite the opposition of the US, Australia participated in the China-led Asian Infrastructure Investment Bank in 2015 and leased the Port of Darwin to a Chinese company in the same year. Australia took the position as an outsider in terms of the Sino-American trade war, suggesting the two sides to end the fight to avoid the risks of collateral damage to Australia. Even in the 1950s and 1960s, when the Australian government adopted a hostile attitude towards China, the wheat trade between China and Australia“reached a significant level”.
The Economic Revival of Japan
Amidst the uncertainty weaved by the pandemic, the stock markets around the world have shunned the preconceived notions associated to their functionality over the past year. While some sophisticated economies are suffering turmoil at the ensue of new Covid variants, deviant vaccination drives, and resumption of state-wide lockdowns, some of the countries are outright negating the educated forecasts made by seasoned financial experts all over the globe. China stands as a flag-bearer of such reality-defying markets: bagging GDP growth unlike any in the world whilst simultaneously controlling the virus strain in Beijing. Recent to the tally, however, is the quaint nation of Japan that despite being head-to-head with another gruesome wave of Coronavirus, still manages to consistently outperform the hailed champions of the global financial markets.
The 3rd biggest economy in the world astonished the financial gurus when Nikkei 225, Japan’s core stock market Index, soared up steadily over the last few weeks. With a 1.9% hike at the week’s opening on Monday, 15th February, Nikkei 225 Index surpassed the coveted 30000-point threshold after more than three decades. The economic rebound is associated to the export sector picking up the pace after a sluggish performance last year. The country still wrestles with the throttle of the pandemic; confirming over 1000 Covid-positive patients since November 16th and adding the cumulative death toll of 7056; surpassing the 7000 deaths mark in just under two weeks.
The positive effect, however, dawns since the daily confirmed cases are showing a steady drop; below 1000 daily-confirmed cases in over 4 months. This occurrence is in tandem to the global fall in the Covid cases. Moreover, Japan’s approval of the Covid vaccine produced by Pfizer Inc. is reflecting the recovery in the health condition of the country, especially a lucrative news amidst the second health emergency recently imposed in Tokyo.
Standing at the 30393.13-point mark, Nikkei 225 is expected to follow the bullish trend heavily over the following week as well. According to the measured forecasts, the bourse is optimally headed to strike the 33000-point mark after crossing the milestone of triple decades. This is due to the positive economic outlook in tandem to the rebooting of the global economy which would ultimately enable the export-reliant country. With Japan announcing a 12.7% GDP growth trailing from the recovery of the last quarter of 2020, followed by a hefty government stimulus to prompt domestic consumption, the Japanese bourse is expected to inflate by up to 30% by the end of the first quarter of 2021 in March, presumably speculating a record surge to bypass the highest ever figure of 38915.87-point, posted by Nikkei 225 back in 1989 before being subsequently floored by the notorious price bubble crash.
However, the economic recovery much less a record shattering surge in the market is heavily dependent on some of the core facets. The debacle of the nationalisation of vaccines is evident in Europe and ironically is the crisis posing more of a serious threat than the pandemic itself. Japan’s economic stability would only be possible given the vaccinations are administered effectively and timely with minimal resistance. As Japan still finds it hard to evade the emergency measures introduced in multiple regions, a vaccine crisis could intensify the emergency precautions and lockdowns may even gear into effect. This could seriously undermine the production capabilities of the country which ultimately could carry forward as an element hampering the blooming investor confidence in Japan.
Much to the global conformity of economic peril last year, Japan’s economy also contracted by 4.8% in 2020. The steep contraction, despite being of a greater extent relative to the 3.5% annualised shrinkage in the US economy, was still much controlled than the forecasted 5.3% fall projected by the International Monetary Fund (IMF). However, unlike some of the regional economies, the pandemic-induced decline lasted only for a short span of time before Japan waded through and rallied. Posting a 3% growth in the 4th quarter of 2020, when major economies like Germany and US grappled with recession, Japan steadily made surface.
Now as the pessimism looms in Europe and the political divide worsens in US, Investors are pouring confidence in Japanese equities which provide a solid foundation to the already surging Japanese Indices. This shift in perspective could be gauged by the purview of global stock positions taken by the active equity investors throughout the globe; pouring investments unlike the sceptical position adopted since January. The increasing investor confidence coupled by the improving economic and social health of Japan has proved monumental on the financial charts; despite being in the highs of a heavy stimulus, S&P 500 continues to be outperformed by Nikkei 225, sometimes even falling short by colossal margins to the returns added by the Japanese Index.
Which way the markets would turn and how Japan could sustain the whelming economic recovery depends largely on how Japan deals with Covid and how efficiently it regulates the vaccination drives. Moreover, Japan’s success may be upped the ante by any new misery that might befall on US or Europe that could ultimately drive more confidence and flare to the 3rdlargest economy of the world.
Mongolia-World Bank Group Partnership: Three Decades of Partnering for Prosperity
It all began exactly thirty years ago. On February 14, 1991, the eve of Tsagaan Sar, Mongolia joined the World Bank Group. This was the period when the country had just gotten on the path of democracy, free market, and openness to the outside world. Mongolia rightly took pride in this transition but, at the same time, it presented enormous challenges, including a sharp economic contraction. Following the cut of external aid, the hardship was felt by Mongolians every day. Long lines were visible on every street corner for rationed food.
The World Bank’s support was quick to arrive. By the end of 1991, the first project of $30 million was already signed to help rehabilitate production in key sectors such as agriculture, energy and transport. The World Bank also carried out a comprehensive macroeconomic analysis, zooming in on the immediate challenges of runaway inflation and falling output.
Since these early days three decades ago, the World Bank Group (WBG) has accompanied Mongolia’s strong recovery and development, culminating in the country’s graduation from the International Development Association (IDA) – the WBG’s lending window for low income countries – last year. Mongolia’s economy has expanded significantly over this period, with GDP per capita rising more than fourfold from $1,072 in 1991 to $4,339 in 2019. But growth has been volatile. Like many other resource-rich countries in the world, Mongolia experienced persistent boom-and-bust cycles. Economic diversification remains critical to generate productive jobs, especially for the young. People’s living standards have improved, but growth did not not generate shared prosperity for all. Mongolian citizens expect their government to deliver quality education and health services, and provide for a clean and safe living environment. Their aspirations have not yet been fully realized.
Through good and difficult times, the WBG has remained a steadfast partner of Mongolia. Our budget support operations helped Mongolia restore macroeconomic stability and lay the foundations for inclusive growth. Our investments contributed to economic development in both mining and non-mining sectors, improving people’s livelihoods, and addressing environment and climate challenges. A total of $1.28 billion World Bank financing has been committed to Mongolia for these years. The WBG’s private sector arms—the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA)—have also been active in supporting private investments.
The investments have helped improve people’s livelihoods across the country. In the energy sector, we supported electricity access to over 100,000 rural and herder families providing them with portable solar panels in the 2000s. In the early 2000s, the World Bank telecommunications project helped all 360 soums in Mongolia gain access to modern phone and internet services. To help herders mitigate natural disaster risks, we supported the world’s first index-based livestock insurance system in Mongolia. To improve governance, we helped revamp the statistical system in Mongolia to match international standards to inform decision making, and empowered citizens to make their voice heard on public expenditure allocations at local levels. IFC financed Mongolia’s first utility-scale windfarm for the country and supported reforms to increase access to finance for SMEs through enabling movable collateral.
Most recently, in the face of the COVID-19 pandemic, the WBG quickly mobilized over $60 million to support the relief and stimulus measures for saving lives, protecting the poor and vulnerable, and ensuring sustainability of businesses and jobs. These resources are being invested for the most essential medical and diagnostic equipment in three tertiary hospitals, nine district hospitals of the capital city and 21 aimags, personal protective equipment for frontline health workers, and training for medical staff. A new project, which would finance the vaccination of about 60 percent of Mongolians has just been approved. The Bank is also financing the temporary relief of social insurance contribution for over 120,000 self-employed workers including 72,000 women and around 150,000 workers employed by 18,000 firms affected by COVID-19. Bank support has also benefited approximately 1.19 million children through the top-up payments to the government’s Child Money Program.
After thirty years of partnership with the World Bank Group, Mongolia has become a lower-middle-income country and its vision is to become by 2050 a high-income country with high levels of human development, better quality of life, a diversified economy, and good governance. This is an aspiration we will continue to support. To turn it into reality will be challenging. The first step will be to gradually phase out short-term relief measures and return to the important agenda of structural reforms which are needed to rekindle growth and make it sustainable and inclusive. Over the medium-term, Mongolia will have to contend with the growing risks associated with climate change, and the challenges this will bring to the structure of its economy. And it will need to offer its youth the perspective of productive, well-paying jobs, to retain the country’s talents at home.
The WBG is honored to have been Mongolia’s trusted partner over the past thirty years. We are confident that our partnership will continue and further strengthen in the decades ahead, rain or shine.
 Mongolia joined the International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), the International Finance Corporation (IFC), and International Centre for Settlement of Investment Disputes (ICSID) in 1991; and Multilateral Investment Guarantee Agency (MIGA) in 1999. All these organizations together known as the World Bank Group.
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