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Esotericism and Strategic Doctrine in China

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The prologue in Heaven of this topic took place in France, in the last flash of the profound and integral scientific philosophy of a Europe that, years later, Benedetto Croce called “civil”.

  In fact, pending the First World War, Henri Bergson, the brilliant and powerful philosopher of the élan vital(vital impetus or force), besides being the first great theorist to seriously study Einstein’s theory of relativity, developed some new concepts on war and politics that it would be useful to currently revise.

 As President of the Comité France-Amerique, which was very active during the First World War, Bergson believed that, at the time, power did no longer lie in the simple possession of the territory, but in the control of the “vital points of communication” in the various countries at war, not at war and in the whole globe.

Hence, he overcame the difference between belligerent and neutral countries, as well as between viable countries and non-viable areas, which is still a very topical issue.

 The de-territorialization of war is now complete, given that China, like the USA and, to a lesser extent, the European countries, focus on Network-centric Warfare.

In any case, there is no direct link between territory and control.

 From this viewpoint, and only in this sense, something completely new happened in France and in the USA, during the first global war clash, a new phenomenon that, as the historian Arno Mayer said, put an end to the long line of the Ancien Règime: at the dawn of the First World War, for the very first time, the world domination became materially possible.

Therefore, from that time on, it was possible to exploit the opposing populations without having to deport them. Another novelty that Bergson did not neglect at all.

Hence, according to the philosopher of the creative evolution, the United States that entered the war in 1917 brought the “supplement of force” which was necessary to close the allied strategic equation, i.e. support from the Sea and from the Sky.

In current terms, this means the coverage of all the control points that allows – when you control many of them – to end war operations and declare the Winner.

According to a sapiential mythology that manifested itself also at the end of the Second World War, the Atlantic sea was the symbolic and strategic factor that took away the “terrestrial miasmas” of central Europe – as Bergson put it. That recreated a “new collective imagination” of peoples, which is another very topical issue in contemporary strategic thinking.

It was no longer linked to the land to conquer, but to the series of intangible points to control.

 Wars were also waged to reconstruct deep symbols or to “bring the new gods to others”, as Bergson said, by recalling Theseus’ bones or Sophia’s cult typical of Themistocles.

The Greeks who colonized Southern Italy brought their gods, before starting to economically exploit the coast, while the Italic peoples in the South fled to the mountains, bringing their idols and hiding them in forests.

Furthermore, in his war treatises of the time, the French philosopher outlined a substantial difference between the “force that is used” and the “force that is not used”. It is a particularly topical issue.

 This is a very “Chinese” concept: the force that is used puts you on display and makes you be noticed. It makes you immediately be considered in the enemies’ calculations and it becomes a probable foothold for their direct reaction against your moves.

 The “Force that is not used”, instead, is always invisible, hence incalculable and, above all, always moral, even when it regards the deployment of forces: what is not used immediately in the fight is what is really used in the end, because it is only what allows duration – just to use a philosophical concept typical of Bergson.

The winners are those who last one minute longer than their opponents – hence the winners are those who wisely dose and measure out their still unused forces, by hiding them.

This is another classic theme of the Chinese strategic thinking: “cross the sea without the emperor’s knowledge”, the First Stratagem of the classic Thirty-Six Stratagems of the Chinese art of war, means, in essence, that Yin, the art of deception, is already all inside Yang, the art of action.

 There is no clear separation between the two moments, between the force we are obliged to use and the force which remains covert.

 “Create something from nothing” is another Stratagem and this is about creating the illusion that something does not exist or that something exists – but it is the same thing.

 War is waged and made mainly in the mind of our opponent, which is exactly what is moving against us “under the sky”.

Those who see only the Visible Force see nothing. They only see pieces of a chessboard without knowing the rules, which are always the Tao, the invisible that adapts to every moment, remaining always the same because it always changes.

Another Stratagem is “decorate the tree with false blossoms” i.e. make important what is worth little, thus reversing the order of apparent values, just as a magician could do.

Finally, the last Stratagem we need here is “inflict injury on yourself to win the enemy’s trust”, another traditional criterion that is aimed at fighting not only against some material forces, but also against the mental image that the enemy creates and possesses of us. This is exactly what we must really fight, besides the visible forces (that “are used”, as Bergson would say), but especially those that are not used, which always remain covert and hence move the visible.

 The moral force cannot certainly be seen, but it is the one that really counts since, to some extents, it can make up for the other forces and it is the force that really makes us win.

After all, in Bergson’s mind, his creative evolution is properly a vis a tergo(a force behind).

 All powers are a force according the French Jewish philosopher, who dared to put on David’s yellow star and go outside, just before dying, while the SS were combing Paris in search of Jews to be sent to extermination camps.

But the Force and the vital impulse itself are always finite and limited. It is a Force that does not last, precisely because it cannot help showing itself and being used.

Let us now analyse in depth the issue of the sapiential philosophy of war in China, which is also currently in place and operating in the planning of the post-modern war of IT Networks and Nodes.

 The Chinese sapiential philosophy, which is timeless, maintains scientific and rational effects that still last. They can be observed in many fields ranging from management to finance, from cultural and influential operations to political negotiations and diplomacy.

In Chapter 11 of the fundamental text, “The Science of Military Strategy”, regarding the management of the Chinese war of the future, we can read about Tai-Kung, the proverbial lucky and skilful Chief of the Chinese tradition of “warring States”.

 The example of the successful leader is an essential lesson to be learnt: it is the ability of the strategic commander, as well as his shrewdness and far-sightedness,which are at the core of the troops’ morale and cohesion. Not the other way around.

Mao Zedong, however, maintained the same in his Problems of Strategy in Guerrilla Warfare: in that type of warfare command should absolutely be centralized at top management and fully decentralized in campaigns and battles.

 The Centre is the Force that is not used, the one that never fades away because it is essentially spiritual.

 The Force that is not used lies in the centre, while the one that is used lives at the visible edges of the forces’ field.

Hence Sun Tzu’s traditional criterion: commanding many soldiers is exactly the same as giving orders to a very few. It is a problem of troop division and specialization.

 The leader is worth as much as and even more than all troops – an unusual, but very clear doctrine in a Communist country like present China.

Hence,when the current Chinese doctrine speaks about “hi-tech local wars”, the post-Maoist theory of the 21st century echoes  SunTzu’s.

In other words, it is maintained that – in China’s modern and old doctrine -the Chinese victory is s “precise application of violence”. It should also be recalled that, in Clausewitzian thought, Victory is a vague and voluntaristic concept, considering that, for the winner, it is a matter of “placing the enemy under his own will”, an evident Kantian echo of the Prussian military.

If it is a matter of Force that is used, everything must be visible and clear. Powerful, immediate and concentrated in one point. Like the Thunderbolt, the sapiential symbol of war.

Will, however, is not used and does not fade away in a single act of war.

Sun Tzu’s tradition is still evident in the current Chinese doctrine, where – again with reference to peripheral hi-tech wars – it is stated that “nodes must be attacked to destroy the entire network”. Not all nodes, but those that are needed to permanently block the Network. The “territory” is not necessary. What is needed is the victory over the minimum number of points, which are necessary to block the flows on the Network.

A minimax problem, as mathematicians would say.

However, this is something we have already seen in Bergson, albeit expressed in other words.

Hence total destruction, which is carried out through a sufficient and limited destruction of nodes to protect one’s own Force, while eliminating the Force that the enemy is using. 

 In this way -immediately afterwards -we obtain political, psychological and organizational effects, which lead to a complete and uncontrollable pressure on the enemy’s mind and spirit – which is the real goal of Chinese war, from Sun Tzu to current times.

Therefore, the enemy’s destruction and annihilation is the real aim of the clash, when this is objectively possible. This applies to both Mao Zedong and Sun Tzu, as well as China’s contemporary strategic doctrine.

 Obviously, for Sun Tzu, victory was not so much the physical annihilation of the enemy, but rather the destruction of his plans and strategies. One must win by possibly not fighting any battle.

The logical principle, however, is the same: if we destroy the enemy’s plans and strategies, we really destroy him in the core of the Force he does not use and hence we deprive him of any political and military identity.

Still today, however, in the current Chinese military doctrine, priority is given to victory by stratagems rather than to victory connected with a direct and evident clash, with a Force that is used.

Nevertheless, in the reality of the network and hyper-technological clash of current wars, China’s strategic issue is the use of “limited force” to reach the goal traditionally stemming from the use of a fully deployed Force.

 The Void for the Full, the Little that becomes Everything, the little Force that becomes absolute. Basically, an act of magic.

This is the reason why, nowadays, Chinese strategists do not much discuss “mass war” and “long-term war”, i.e. Maoist themes which are no longer conceivable in a scenario of hi-tech local wars.

According to China’s current strategic thinking, however, future wars will also be “people’s wars”.

 The future “people’s war” will not be a Long March outside the enemy’s most natural and strongest lines of resistance, but a new mass war that will be fought in peripheral strategic lines, far from the State centre and from the Commander’s physical presence.

The “people’s war” is currently understood as the full mobilization not of all Chinese people, but of the civilian and military people who live and work directly at the junctions of the “network war”.

Furthermore, if the (present) and future technological wars  always cost too much and cannot become long-lasting wars even for the great capitalist and Western countries, the future will be characterized by quick battles and even faster decisions, which will sometimes be supported by Artificial Intelligence and Big Data technologies.

Therefore we have here a synthesis of Mao Zedong’s military thought, which aimed at an extensive but targeted use of Force, and of Sun Tzu’s thought which, instead, aimed at a minimum, quick and specific use of Force.

The two criteria are only apparently opposed: in hi-tech warfare we must use the targeted and economically rational attack, but such attack must be “Maoist”, i.e. it must strike hard and always use – in one way or another – the “people’s war”.

 It is always the crowds who are directly interested in Victory.

 The people are, however, the most widespread, useful and effective military resource.

 There is no populist myth, however, in Sun Tzu’s and Mao Zedong’s doctrines.

Still today, however, the current doctrines of the Chinese Chief of Staff underline some classic criteria of Sun Tzu: the minimal but powerful use of Force to acquire strategic objectives, as well as the need to precisely predict the effects of an action or a battle.

They also emphasize the importance of the tactical and strategic initiative, although with a typically Maoist approach on the concentration of forces which must be deployed in a cost-effective,  careful and powerful way, but only in one point, or can also be staggered over time, but always with a predefined and clear objective.

Once again a pretence of Maoist “long-lasting war”.

With a view to correlating Sun Tzu and Mao, but in the new configuration of the Network-centric warfare, we can note that, in the Chinese texts, the “strategic initiative” is still defined as “freedom of action of a player” that, in Bergson’s thought, is the Force that is not used.

Nowadays, China’s military decision-making is also defined as the possibility of obtaining a strategic initiative by reaching superiority both in materials and, above all, in the psychology of one’s own and of the enemy’s troops.

 It is not a matter of “own will imposing itself on the enemy” – as Von Clausewitz maintained – but of a model of action on minds and hearts that becomes the real aim of war, without the psychological inaccuracies of traditional Western philosophy.

We here return to Tradition, a word that is much deeper than Western “philosophy”, as taught to us by Giorgio Colli, who believed that the Greek Wisdom was mostly the dawn of thought, which later no longer reproduced itself with the same strength, even in the traditional Greek philosophy.

 After Heraclitus’ lightning, the slow discussion, which began and ended often without leading to immediate and complete enlightenment.

 In chapter 6 of Sun Tzu’s “Vacuity and Substance”, it is maintained that if we can concentrate our forces when the enemy is fragmented, we must do so when we ourselves are”shapeless”, i.e. we are the Tao that adapt – like water – to the immediate reality of the Full and the Void.

 This is another idea that can be found in Mao Zedong’s thinking: “the strategic initiative is nothing imaginary, but it is completely concrete and material”.

It is always active and real. The leader only needs to take the initiative and regard it in the reality of military movements and the creation of a great Theater of Shadows, namely psywar, which is never a corollary of the action on the ground, but the essence of strategic planning.

In the Chinese tradition and contemporary theory of “unlimited” war, the strategic thinking is essentially political, economic, geo-economic and financial will and – only finally -strictly military will.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Europe 1914- East Asia 2020: Similarities and Differences

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Many scholars argue that what is happening between the major powers in East Asia at the present time is what actually happened between the major powers in Europe in 1914, and there is a rising power in East Asia causes a threat to other states

Historically speaking when a rising power challenges a global power the war is inevitable and sometimes it’s a matter of time. The situation in East Asia is a little bit like the situation in Europe in 1914, at that time there was a rising power-seeking for the hegemony and challenges the other major powers, so the war between them was unavoidable. Comparing that with what is happening in East Asia, we will find that in East Asia there is a rising power, and this power became a challenge to the major powers not only in East Asia but also in the global arena.

From realism theory perspective, as we know that relists focus on the international system and states, they explain that the international system is an anarchic system and state is the most important actor in this anarchic world, so states have to preserve its security and interests against any power when a state becomes too much powerful that cause a threat to other major powers, and that might cause a war between the rising state and other states, and that is a conflict to balance against the powerful state.

Apply the realism theory on the First World War, the First World War was unavoidable and that because of the collapse of the balance of power in Europe and the rising of other powers such as Germany and its challenge to the major powers as Russia and Britain. According to the classical realists, they argue that major wars can happen when a state has superiority or an overbalance of power. Germany after the collapse of the Bismarck system started to increase its power and challenge the major power in central Europe, the rise of Germany caused a shift to the balance of power at that time.

The realists also argue that what is happening in East Asia is like what happened in Europe in 1914. The classical realists argue that the balance of power in a multi-polar system is most stable, while neo-realists as Waltz argues that the bipolarity is most solid and most stable, a world controlled by two states is better than a world dominated by four, five, or six powers, and that because in the multi-polarity the alliances could give up on each other’s any time, moreover, in the bipolarity states don’t want to depend on other states military power, but they can depend on their own powers. In East Asia there is a change in the equilibrium system, some the states become too much powerful, for instance, China, China now is a rising power in East Asia, we can clearly see the economic growth of china, and the military forces, and the rise of China might cause a threat to its neighbors in East Asia, frankly speaking not only in East Asia but also cause a threat to other global powers as the United States and its European allies, in this regard, the realists they emphasize that the shifting of power in East Asia might cause a conflict or a war among states because the system is an anarchic global system. But if we will compare China with other major powers in the global arena as the United States we will find that China still not that powerful to cause a threat to the U.S., maybe China has economic ties with East Asia countries, but they still not a good alliances, while the United States has its alliances in both continents Europe and East Asia, and that is a reason that proves that it is might hard to see a conflict or war in East Asia. But what about the border conflicts, China till nowadays has border conflict with other states such as India, last May Chinese and Indian soldiers fought against each other in the Ladakh region and some Indian Soldiers were killed, also the maritime conflicts between China and its neighbors, these conflicts might cause a conflict between rising China and its neighbors including Japan, Philippines in the near future, and this conflict the United States will take part in it in order to help its allies.

John Mearsheimer as an offensive neo-realist, in his debates about the rising of China he always argues that China won’t rise peacefully, and the rise of China will lead to a direct confrontation between China and the United States and that because states in the international politics always want to preserve and maintain their security, they only care about their security, and also want to be a hegemony, in this regard, the U.S. won’t let China take its place in international politics, and won’t let China control Asia or other regions, and they might go war against one another. The scholar Steven Walt explains the Balance-of- Threat and argues that equilibrium anti the threat caused by other states in the international arena, China is a big country, large population, economic growth also military growth all of these elements cause a threat to its neighbors in East Asia. East Asia is a very important region to the United States and its allies, former America president Obama mentioned that before and said: “the United States is turning our attention to the vast potential of the Asia Pacific region. The Asia Pacific is critical to achieving my highest priority, and that’s creating jobs and opportunity for the American people.” From President Obama’s speech we can note how Asia is a very important region to the U.S. and its allies.

Although theories predict about a potential conflict between China and the U.S., one more thing to consider is the nuclear weapon, China and U.S. both have nuclear weapons and nuclear weapon plays a vital role in maintaining peace between them as what happened during the Cold War many scholars argue that what made the U.S. and the Soviet Union didn’t go to war was the presence of the nuclear weapon (nuclear weapon deterrence).

Unlike the realism theory that focuses on the international system and the structure of the system, and argues that the global system is anarchic, the state is the main actor in this anarchic system, and the state has to protect its own interests, thus, the state can go to war to preserve its interests and security. The liberalism theory focuses on the role of the institutions, organizations, etc., and how they can play a very vital role to maintain peace and stability in this anarchic world, liberalists interpret the role of the non-government organization in reducing the role of the state in the international politics in order to mitigate conflicts and wars among states. Moreover, liberalism focuses on peace and the means to achieve lasting peace among states in the global arena. For the liberal, economic integration plays a significant role to preserve peace, economic integration and interdependence make countries want to collaborate with each other, instead of fight against one another. 

Liberalism explains the main reason for the outbreak of the First World War was the absence and lack of organizations and institutions at that time, and there no means to resolve the conflicts among countries. For Democratic Peace Theory, the war was most likely to occur and that because at that time not all the states were democratic states, and for that theory, the democratic states can fight and go to war against the non-democratic states, although Germany at that time started to be a democratic country, that didn’t help to prevent such a war, by contrast, helped Germany to enter in such a war and with the support of its people.

Apply the liberalism theory on East Asia we will find that East Asia countries in the twenty-first century are more independent, and they have economic ties with each other, and because of the economic interdependence between the countries in East Asia we will find that even they are rivals, but economic ties will play an important role to prevent a conflict or war between them. China as a rising power in East Asia its economy highly relies on its neighbors and other European countries such as the U.S., China after the reform and opening-up policy increased its economy. Although the rise of the volume trade exchange between China and its neighbors and China and the U.S., that didn’t prevent the tension between China and the U.S. as what happened between them because of the trade, the trade conflict between them that have started in 2018, the two countries have increased the tariffs, the United States increased the tariffs by approximately 25%, and China increased the tariffs to be 5% and 25%, this tension between the two counties has reduced the volume of trade between them, and some of the scholars explained that the trade conflict between the United States and China would have a great impact on the global trade. 

The scholar Waltz argues that the economic integration and interdependence can’t prevent the conflict between the U.S. and China, go back to the First World War at that time there was economic ties between some of the European countries but that didn’t prevent the outbreak of the major war between the major powers, because the national security is more important than the economic. In Asia, there are some countries still non-democratic countries, to the democratic peace theory argues that the democratic states don’t go war and fight against each other, so they assert that U.S, Japan won’t fight, Japan and U.S. are allies, by contrast, China is a communist state that also might be a reason that leads to a conflict between China and U.S.

 Constructivism theory doesn’t focus on the international system like realism theory, or the state and organizations like liberalism, Constructivism focuses on the ideas, values, and norms. Constructivist as Alex Wendt argues that global relations decided and fixed not by the nature of human beings but by the ideas, and how people share these ideas. Go back to the First World War, constructivism explains that states as Germany and other major powers had the same ideas at that time, the ideas were each country wanted to be powerful and expand its territory. They didn’t share the ideas with each other’s; instead they went to war against one another.

To conclude, what is happening in East Asia nowadays might be the same as what happened in Europe in 1914 and the rise of a major power in East Asia as the rise of China could cause a threat to major powers in Asia and Europe, but it does not mean that it will certainly lead to war. Anyway, in this unpredictable international arena, it is difficult to predict what will happen tomorrow and what changes the world will witness.

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Beijing pushes Hong Kong towards a drastic fait accompli

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Hong Kong’s liberal democracy faces an existential threat, more visible than any time in the past 23 years, as exemplified by the recent arrests of democratic activists. Beijing seems to be running out of patience and continues to push the city towards a fait accompli of ‘one country, one party, one system’, as in mainland China.

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When Britain handed over Hong Kong to the People’s Republic of China after 156 years of rule in 1997, a novel principle of governance known as ‘One Country, Two Systems’ was agreed upon with a validity of 50 years. Today, it is no longer visible in Hong Kong in actual practice, while it still stands in principle.

The agreement was perceived as the basis on which the unique character of the city and its people, rooted in a Western political outlook different from the mainland’s communism-inspired political system, would be preserved for the next five decades, until 2047, after which that arrangement would expire, paving way for transitioning into complete Chinese control.

The arrangement requires another 27 years for its expiry. Notwithstanding this fact, the Communist Party-controlled Beijing seems to be losing patience and not willing to wait for another three decades to legitimately take control of the city.

Today, Beijing is pushing and coercing Hong Kong towards a fait accompli of ‘one country, one party, one system’. This is proved by its tactical and suppressive moves in the recent past.

Protests continue, so do crackdown on dissent

Recent tensions and public unrest in the city have been simmering for the past 18 months, beginning with an extradition law imposed by Beijing in June 2019 targeted at suppressing sedition and rebellion on the citizens of Hong Kong, which allowed handover of convicts from the city to mainland China, triggering public unrest. Mounting protests finally led to the withdrawal of the bill in October.

Before 2019, there were nonviolent protests in the banners of Occupy Central Movement and the Umbrella Movement, both in 2014, demanding transparency in elections and preserving time-held electoral procedures which the Chinese Communist Party attempted to dilute, triggering protests. These were led by students and the youth numbering in tens of thousands, if not millions.

Coming to 2020, the move that triggered protests was a national security law imposed by Beijing on the city in the midnight prior to the anniversary of Hong Kong’s handover on July 1. It was aimed at disqualifying legislators in the name of offences such as supporting Hong Kong’s independence, refusing to acknowledge China’s sovereignty, supporting foreign forces to interfere in the city’s affairs, or in any other ways threaten national security.

The new law also allowed Beijing to open an intelligence office in the city soon after, to monitor whether the behaviour of Hong Kong citizens is in line with its expectations, effectively formalizing and legalizing crackdown on dissent. Any act of disrespecting national symbols including Chinese national anthem was also penalised.

Sidelining the Opposition

In another move, earlier this year, a resolution passed by the Chinese legislature allowed the Beijing-backed city government to directly dismiss elected members of the Hong Kong Legislative Council or LegCo without taking the judicial route. This triggered mass resignations by lawmakers as an expression of protest, and effectively leaving the 70-member LegCo with no functioning Opposition. This has further strengthened Beijing’s will to intensify crackdown on anyone opposing its objectives.

With the Opposition tactically removed and a pro-Beijing Chief Executive, Carrie Lam, at helm, Beijing expedited its witch-hunt on Hong Kong’s prominent and outspoken democratic activists and Opposition leaders, including Joshua Wong, Agnes Chow, and Ivan Lam, jailing them for taking part in protests, last year. Most recently, a Hong Kong media tycoon running an anti-government tabloid, Jimmy Lai, was arrested in a fraud case and was denied bail.

International reactions

Following the passing of the new national security law, Britain formally suspended its extradition treaty with Hong Kong, that had been in place for 30 years, for an indefinite period, fearing the possibility that anyone extradited to Hong Kong from the UK might be sent to China to face trials.

Citing China’s open disregard for bilateral agreements, London even promised an alternative route for British citizenship to any Hongkonger holding a British National Overseas passport, inviting a strongly-worded response from Beijing.

Britain, US, Australia, Canada, and New Zealand, collectively known as the Five Eyes, have also criticized Beijing’s ploy to destroy democratically-elected LegCo, last month. They called the Chinese move a clear breach of its international obligations under the legally-binding and UN-approved Sino-British Joint Declaration of 1984 that paved the way for the territory’s handover in 1997.

Most recently, the British foreign secretary said London is considering a review of the arrangement for appointment of British judges for Hong Kong’s top court, absence of which could act as a severe blow to the city’s judicial reputation. To this, Beijing responded by saying that Britain had no supervisory power or moral responsibility over Hong Kong’s affairs.

The United States responded by sanctioning members of China’s ruling party and by making visa rules stricter for them to enter the US, yet another factor contributing to the retaliatory rants of a new brand of Chinese ‘wolf-warrior’ diplomats.

Disappearing thin line

Deprived of their natural and democratic rights, the sorry plight of the people of Hong Kong remains unchanged for many years now, and the Chinese power and influence continues to expand to newer horizons beyond its neighbourhood and across the globe. As each day passes, the thin line between mainland China and Hong Kong is disappearing, faster than expected.

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The complex puzzle of Canberra-Beijing ties, as diplomacy takes a back seat

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Australia and China seems to be engaged in a repulsive tariff war targeting each other’s goods. Canberra is struggling to manage its complex economic relationship with Beijing even as it finds itself in the strategically opposite camp. How did things turn out this way? Here, I analyse.

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There was a time when Australia under the Mandarin-speaking Prime Minister Kevin Rudd, who was in office from 2007 to 2013, had the highest level of warmth in relations with China.

The Labour premier saw a promising prospect of economic partnership with a rising China at that point of time, but gravely under-estimated the geopolitical threat that would be soon posed by Beijing, a mistake later governments would realise and is still striving to rectify.

Quad pullout and comeback

Rudd even pulled Australia out of the four-nation Quad grouping in 2008, a year after it was conceived by former Japanese PM Shinzo Abe, in a move to appease Beijing with which Canberra’s economic partnership was progressively moving upwards. But, nine years later, Malcolm Turnbull’s premiership brought Canberra back to the Quad as regional and global security dynamics witnessed a paradigm shift.

Strategic shift

A decade later since Rudd took office, despite closer economic ties with Beijing, Canberra pushed for a closer alliance with the United States since 2017, the year Quad Security Dialogue was revived during the ASEAN and Related Summits in Manila.

It was a result of changes in security assessments by Canberra with regard to new threats and challenges from an increasingly assertive Beijing in the Indo-Pacific and beyond.

The rift between Australia and China further widened, earlier this year, when the Australian government supported an inquiry into the origins of the novel coronavirus, annoying China where it originated. Australian politicians also became increasingly divided on hawkish and dovish lines.

Huawei and ZTE ban

Tides were turned in 2018 when Australia became the first country in the world to ban Chinese telecom giants Huawei and ZTE from 5G trials and rollout, citing security concerns, as these companies ‘allegedly’ had links to the Chinese ruling establishment which they deny.

Beijing also reciprocated with tit-for-tat measures from time to time. The latest in line of such measures was the imposition of temporary anti-dumping tariffs up to 212.1 per cent on Australian wine imports with effect from November 28, this year.

Ongoing tariff tensions

2020 saw a foray of imposition of tariffs and reciprocal duties from both sides right from the beginning of the pandemic. Attempted mergers and acquisitions by Chinese companies involving companies in Australia were also blocked by Canberra citing security reasons.

Adding oil to the fire, anti-dumping investigations were initiated by both sides against each other, for using its findings as rationale for imposing more tariffs on different sets of goods such as aluminum, steel, paper, coal, copper, sugar, log timber, and barley.

ChAFTA

What will be the fate of the 2015-signed China-Australia Free Trade Agreement (ChAFTA)?

The worsening ties might take a toll on ChAFTA as it readies for a five-year review next month, notwithstanding the other broad-based trade pacts in which both countries are participants such as the recently-signed, 15-nation Regional Comprehensive Economic Partnership (RCEP).

ChAFTA took about a decade to complete and led to zero tariffs on many goods, but RCEP is still in its infancy.The main issue is not whether a review of ChAFTA is possible, but how to prevent the looming prospect of Canberra and Beijing retreating from the current commitments directly or indirectly that would effectively reduce the pact into a state of coma.

As ChAFTA goes for review in December, the most likely outcome could be both countries agreeing to maintain the deal’s status quo. If any of the parties wishes to terminate the pact, there is a six-month notice period after which they can leave, with or without a review.

Still economic partners, but political rivals

Today, China has positioned itself as Australia’s largest trading partner. Moreover, Australia strongly benefits from its close proximity to the vast markets of China and Japan which together represent over 40% of all Australian exports, in which a little over 32% amounting to $89.2 billion, are exclusively to China, as data from 2019 show. Despite this, Canberra and Beijing remain at odds politically.

Exercise Malabar 2020 and beyond

One of the striking questions in the strategic circles of all Quad partner countries is, will Australia continue to take part in the annual Exercise Malabar in the coming years, annoying Beijing further?

While Japan is a strategic partner in the Quad, ties with China are moving on an adversarial path, particularly worsening since Canberra took part in the annual Exercise Malabar in the Indian Ocean this month, after a gap of 13 years since it left the mega naval war games.

The exercise by the four Quad partners of India, United States, Japan, and Australia is apparently a warning to Beijing’s naval ambitions in the waters of the Indo-Pacific.

Supply Chain Resilience Initiative

In fact, all the Quad partners and other democracies in the Indo-Pacific wish to decouple itself from over trade dependency on China. But, domestic economic realities prove otherwise. With a raging pandemic and the unravelling US-China cold war threatening supply chains, Japan has recently put forward an idea – the Supply Chain Resilience Initiative or SCRI.

It is a trilateral approach to trade, with India, Australia, and Japan as the key-partners aimed at diversifying its supply risk across a group of supplying nations instead of being disproportionately dependent on just one, apparently keeping China in mind.

Despite all these measures, the prospect of closing of huge Chinese markets for Australian exports, owing to a disproportionately high level of tariffs is haunting domestic producers in Australia that could potentially make Australian wine largely unmarketable and non-feasible in Chinese markets.

Ineffective diplomatic efforts

Current Australian PM Scott Morrison has been trying to bridge gaps in a reconciliatory tone by stating that his government’s actions are wrongly seen and interpreted by some only through the lens of the strategic competition between China and the US. But, Beijing doesn’t seem satisfied, as evident in the decision to impose the recent set of disproportionate tariffs on wine.

Loss of businesses for Australian domestic producers is already hurting the Australian economy badly as goods remain stalled at ports. But, the behemoth of Chinese economy appears to be largely resilient to adverse impacts, compared to the Australian economy.

Way ahead

Australia’s producers and farmers are largely unhappy and unsatisfied with the way Canberra is dealing with Beijing as it directly threatens their livelihoods.

As things turn out worse, Canberra will have to strategise newer options to effectively balance geostrategic and economic considerations with regard to Beijing, possibly through the diplomatic route, in a way to immediately diffuse the prevalent confrontational approach to come out of this diplomatic impasse.

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