Amid the ongoing coronavirus pandemic, all eyes, yet again, are on China, which many expect, equally enthusiastically and alarmingly, to become the world’s largest economy over the next few decades. The economic growth, though, does not automatically root out all sources of disparity even if it shrinks the overall scope of inequality.
Being almost exactly in the middle on the Gini line between total inequality and full equality at 46.7, mainland Chinese wealth distribution is now more unequal than it has ever been in the nation’s history. This figure is even more startling considering the fact that the country had a very low inequality level in the 1980s, so the Chinese population is fully aware of the problem and its severity. Historically, the peaks of economic disparity have coincided with major national events, especially the Great Famine in the late 1950s, the Cultural Revolution in the late 1960s and early 1970s, and the global integration that began in the late 1990s. Although the highly centralized and deeply bureaucratic nature of the Chinese government allows for the efficient implementation of inequality solutions, official poverty-reducing policies at such peaks had minimal effects.
In contemporary China, the state of inequality is essentially determined by regional differences and the countrywide urban-rural divide. Kanbur and Zhang  claim that the share of heavy industry in gross output values, the degree of decentralization, and the degree of openness are three main driving forces of inequality across regions. The urban-rural divide, on the other hand, is sustained by top-down regulations that affect basic human rights, such as health, housing, and mobility. One of such regulations is hukou, a system of household registration linked to social programs provided by the central government, which assigns social benefits based on the agricultural and non-agricultural residency status. As such, hukou has been a structural source of inequality since the establishment of the People’s Republic of China in 1949, as urban residents receive benefits, ranging from retirement pensions to healthcare, that are unavailable to rural residents. Chan  asserts that to reduce rural poverty is to end hukou, which directly impedes with rural-to-urban migration, the main means of escaping poverty in rural areas. The internal migration, including the interprovincial one from the thinly populated and deprived Western regions to the densely populated and affluent East Coast, has intensely accelerated since the 1980s. Referred to as the ‘floating population,’ rural migrants tend to circulate in-between cities rather than settle, making them in a way statistically invisible. Yet their presence in the urban landscape critically influences workforce and housing markets. Given the unparalleled magnitude of the Chinese population, housing registration, obviously, needs to operate for practical purposes, but not in its current caste-system resembling form.
Furthermore, the government has to instill lawful procedures for assimilating rural emigrants, who, alongside their children, confront serious predicaments in the multidimensional process of urban societal integration. Having crossed 250 million by 2015, the Chinese migrant population is the largest in the world; however, due to official restrictions, especially hukou, the interprovincial migration in China is even more administratively challenging than the state-to-state migration in the United States. These restrictions equally impact children, both who stay behind in rural areas, the so called ‘left-behind children,’ and those who with their parents move to or are born in cities. Liang  suggests that further research on the internal migration be devoted to the mobility of minority groups, such as Muslims, and finding out if the importance of hukou is declining for the new generation of migrant workers. Even if this were true, the government is not free from providing additional ameliorating measures for migrants, for example, a cheaper, less complicated way of making remittances to countryside family members and other relatives and food stamps until the job acquisition.
Big companies, in turn, should offer educational enrichment programs to their urban and rural employees to meet the international employment competition. Despite its unchallenged advantage in sheer numbers, the Chinese workforce is relatively weak in terms of education levels, which in long run can create a human capital crisis in mainland China, as the upper secondary school attainment is a crucial ingredient for the country’s continued economic growth. Khor and others  estimate that only less than 25% of the Chinese labor force have completed secondary education, a significantly lower figure than around 55% average across all G20 countries. The Ministry of Education pompously inflates official figures. Considering that China is gradually transitioning from an upper middle-income state to a developed economy and that this transition means supplanting low-wage, labor-intensive manufacturing with high-wage, high value-added industries that require knowledgeable cadres, the Ministry of Education is obliged to bring education programs and workplace demands in unison. Lamentably, the government routinely overlooks school attainment levels of its citizens, because service and manufacturing industries, the titans of national employment, hire staff based on discipline indicators and occupational skillsets rather than school performance.
The guiding principle of reforms must be making the Chinese education system more inclusive. Wu and Zhang  claim that recent expansions in this field have benefited urban women more than any other social group and that despite an overall increase in educational equality, the urban-rural contrast is ever stark; however, this is in line with the worldwide trend, which shows that educational inequality as a whole is declining with the continued economic growth, but the urban-rural divide permeates in face of modernization. To reduce this divide, the government must rescind educational policies that favor city students, starting with the elimination of standardized testing as an upper secondary school entrance requirement, which highly favors urban over rural students. Having completed superior middle schools and resources to private tutoring, urban students disproportionately beat their rural counterparts out, keeping the cycle of urban-rural divide in education spinning.
Beyond the education system, the government has to transform workplace structures, foremost by substituting danwei, a work unit with communist roots that in the form of ‘organized dependency’ maintains the state administrative hierarchy, with non-state labor unions or guilds. Xie, Lai, and Wu  assert that even if some of its original functions, such as housing and health subsidies, have declined with the rise of private sector, danwei continues to play a central role in the social stratification and occupation mobility in post-reform China, influencing earnings (salaries are low in mainland China) more than benefits — a reverse was true in pre-reform China. Not as interested in maximizing occupational profits as in maintaining ties with the ruling authority, danwei stratifies the contemporary Chinese society because of its more equal nature than the market justifies. That is why independent labor unions, which can provide not only similar benefits, such as a health coverage, but also guarantee adequate wages that the current work unit system compromises for the sake of social advantages, ought to overtake danwei.
Another factor hampering the national progress is the Great Firewall, the combination of legislative actions and technologies enforced by the government to regulate the Internet domestically. King, Pan, and Roberts  emphasize that as opposed to the popular assumption that any government-critical content is taken down, the Internet censors are actually oriented to the content with a collective action potential, notwithstanding with its underlying attitude towards the government. Yet history, in particular the Great Famine, has shown that the Chinese people, in accordance with the Confucian values, tend to blame not the ruling authority, but local officials for their problems. This, coupled with the fact that a common Chinese online user self-censors, demonstrates that the Internet censorship is an excessive administrative measure. This measure deters the info-communicational advancement of the mainland Chinese population, which lacks a unified intention for the regime change.
Abolishing hukou, danwei, and the Great Firewall schemes, as well as reforming the education system, requires a coordinated national effort between the central government and provincial leaders. The majority of regional officials, though, behave not as much in response to the countrywide market-preserving federalism as within the multidivisional-form structure of the Chinese economic sector. As the political status of a Chinese province directly correlates to its economic power, the post-Mao China witnessed political conformity being largely supplanted by the economic performance as a chief competence-related indicator. Li and Zhou  confirm that the local GDP growth rate is directly proportional to the official’s turnover, which is nonlinear due to the effect of performance during tenure as a whole over a single year being more important. Besides promotion as an instrument of personnel control, the ruling government exercises termination, transition, and retirement, for example, successful Chinese officials, whose merits are almost exclusively measured in financial terms, receive honorary, albeit powerless, titles before their official retirements.
The economic performance endures as an effective political tool as long as the Chinese economy continues to grow; however, in light of 6% economic growth rate as the new normal and the ongoing trade war with the United States, securing successful operations of local officials principally through economic incentives seems myopic from the central government. This needs to complement its existing economic leverage in governing localities with more stable social factors, especially given that governors are inclined to artificially boosting financial figures of their provinces. This not only results in distorted reports on living conditions of people, but also in the national prevalence of the economic growth at all costs, which only exacerbates intra-regional inequalities in terms of education and employment prospects. Xie and Zhou  note that despite being comparable in both the total area and income distributions as well as the subordination of state/provincial officials to the federal/central government, USA, where a family structure combined with race and ethnicity significantly influences lifetime earnings of every person, has had a smaller rate increase in economic inequality over the last decade than PRC.
Evidently, the Chinese economy is neither laissez-faire nor Leninist, but rather a unique case. Oi  claims that the economic growth of China is embedded in the system in which local officials, acting as CEOs, treat local enterprises under administrative control as parts of a larger corporate whole. Accordingly, the national economic growth rests largely on the rural industry, which has experienced an upsurge following a few amendments to the Maoist system, especially de-collectivization of agricultural production and the fiscal reform that allows for the autonomy over any local surplus. To strengthen corporatism in their provinces, officials pursue one of three methods: misappropriating marked funds coming to local farmers from the central government; licensing non-bank credit institutions that avoid central regulations — a more legal way; and granting small loans from bureau funds. Having been long ignored by the central government because of its quintessential role in the Chinese economic expansion, local state corporatism is directly responsible for the accumulation of debts worth $5.8 trillion. This issue is especially problematic in light of the Chinese market leaning more and more towards privatization — a process catapulting a new type of corporate elite into prominence in the midst of this managerial revolution.
Whether the new corporate elite will push the country to approach the capitalist economy model established in free states is a critical question. Walder  notes that both economic assets and ties to the central government of this new elite are equivocal, so each sector — state-owned, privatized, transactional, and entrepreneurial — demands to be separately analyzed. Corporate networks mapped via interfirm webs can also point to China’s course moving towards or away from being a state where wealth and political power are synonymous. Arguably, the new corporate elite will maintain close political ties with the ruling government. Alternatively, it can act as a political opposition by challenging the status quo whenever appropriate. The ruling party is absolutely creditable to a degree for the country’s success, but being completely unrestrained, it will fail to perceive overstretched borders of its regulations, including the Great Firewall, as the established framework is self-damagingly hostile to change. The new corporate elite has a potential to become a powerful intermediate agent safeguarding the consolidation of the social contract between the Chinese people and state, and it should not miss this exciting chance. Still, where there is the elite, a clash with interests of people is inevitable, and China has yet to match its powerful economic status with a benevolent state image internationally.
Considering Chinese citizens’ rising awareness of universal human rights violations in the country, especially with regard to family and religious domains, both of which an almost uninterrupted nature of the Chinese civilization has substantially burdened by its institutional emphasis on the former and a lack of such emphasis on the latter, the ruling party can no longer afford to ignore its obvious shortcomings in dealing with ethno-linguistic and religious minorities and novel family structures emerging out of the tension between persisting cultural customs and changing social behaviors in the contemporary Chinese society. Raymo and others  claim that the second demographic transition, which is characterized by a variety of living arrangements and a disconnection between marriage and procreation, is more conspicuous in the East than in the West. Traditionally, East Asian families are patriarchal, patrimonial, patrilineal, and patrilocal, but the global rise of the women’s socioeconomic status has undermined this organization.
Although women in mainland China have advanced their social status over the last decade, they continue to be disadvantaged in terms of household labor, education, salaries, and leadership positions due to gender bias. For example, parents disproportionately put educational resources in sons at the expense of daughters, as they expect the former to materially support them in their old age and the latter to be taken care of by husbands’ families. Men, on the other hand, face an extreme competition not only in employment, but also in the marriage market. Xie  notes that Chinese men find it increasingly difficult to marry partly because of the prevailing social hypergamy exacerbated by present economic pressures. In addition, men massively outnumber women as a result of a higher cultural and economic value assigned to them. Of course, a growing number of single, unemployed men has a socially disruptive potential, but being an authoritarian state with Confucian values, China would be resistant to the gang culture that has eroded Latin America.
Without taking demographic changes into account, the government cannot adequately address such issues as population aging, labor force shortages, public health care, family planning, and retirement arrangements. The rapid pace at which China has been modernizing since its global integration began in the late 90s only intensifies this challenge. Peng  states that as the age of first marriage has gone up to twenty-five, the birth rate has dwindled (Japan has the lowest in the Far East), more individuals prefer not to marry (childbearing outside wedlock is still very rare), and more couples choose to cohabitate. China is achieving its second demographic transition in a relatively compressed period of time.
It is ambiguous how official Family Planning Commission programs have influenced this transition.` For example, the One-Child Policy, which the government ended after 35 years, might not have caused a supposed fertility decline in the country given that Chinese families have been naturally leaning towards having two or less children since 1990s. Family policies in general apply differently to urban and rural areas. For instance, while the urban implementation of pensions has lifted an adult’s traditional economic duty to provide for elderly parents, transforming the nature of monetary support from financial to symbolic, this duty remains in force in countryside. Xie and Zhu  emphasize that in cities compared to married sons married daughters give more money to their parents contrary to custom. This can be explained by the fact that over the last decade, women have outranked men in educational attainment, bolstering their job income.
Beyond adjusting its family policies to emerging social norms, the government has to offer an integration path for ostracized ethno-linguistic and religious groups. Gladney  claims that China, which is home to the largest Muslim minority in East Asia (around 20 million people), has so far failed in incorporating Muslims, whose self-preservation is at risk, in the national fabric in a way that is neither full accommodation nor complete separatism. Obviously, Islam and traditional Chinese beliefs have distinct worldviews. For example, Muslim Chinese evaluate development levels of majority-Muslim countries far more favorably than the Han Chinese do , but their co-existence over several centuries means that common ground can be found. Moreover, China’s dependence on the Middle East as an oil supplier and an export market mandates for Muslims’ acceptance in the Chinese ‘leviathan.’
Like religious ones, ethno-linguistic minorities bear discrimination in China. Wu and He  state that despite of the regional distribution of ethnic minorities being relatively stable from 1982 to 2005, the Han-minority disparity in education and employment amplified in the same period. After it had started identifying all 55 minorities (around 10% of the national population), which are geographically isolated not just from the Han Chinese but each other, the communist party has taken a few steps to stimulate their socioeconomic mobility, such as granting college admission bonuses. However, the country’s forceful economic transition has widened the gap instead of narrowing it, as the profit-driven private sector values economic efficiency over social equality. That is why the government must pass anti-discrimination laws that will subdue institutional prejudice against ethno-linguistic and religious minorities.
Finally, if the Chinese government makes a conscious decision to contain ever-expanding state machine or apparatus from permeating every aspect of citizens’ daily lives, allowing the society to ‘breath normally,’ it will be able to competently respond to polit-economic and socio-cultural challenges that contemporary China is confronting, such as a slower economic growth rate and elevated ethnic tensions.
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Liang, Z. 2016. “China’s Great Migration and the Prospects of a More Integrated Society.” Annual Review of Sociology 42, pp. 451-471.
Khor, N., Pang, L., Liu, C., Chang, F., Mo, D., Loyalka, P., and Rozelle, S. 2016. “China’s Looming Human Capital Crisis: Upper Secondary Educational Attainment Rates and the Middle-income Trap.” The China Quarterly 228, pp. 905-926.
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Xie, Y., Lai, Q., and Wu, X. 2009. “Danwei and Social Inequality in Contemporary Urban China.” Research in the Sociology of Work 19, pp. 283-306.
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Oi, Jean C. 1995. “The Role of the Local State in China’s Transitional Economy.” The China Quarterly 144, pp. 1132-1149.
Walder, A. G. 2011. “From Control to Ownership: China’s Managerial Revolution.” Management and Organization Review 7(1), pp. 19-38.
Raymo, J.M., Park, H., Xie, Y. and Yeung, W.J.J. 2015. “Marriage and Family in East Asia: Continuity and Change.” Annual Review of Sociology 41, pp. 471-492.
Xie, Y. 2014. “Gender and Family” in The Oxford Companion to the Economics of China, pp. 495-501. Oxford, UK: Oxford University Press.
Peng, X. 2011. “China’s Demographic History and Future Challenges.” Science 333(6042), pp. 581-587.
Xie, Y. and Zhu, H. 2009. “Do Sons or Daughters Give More Money to Parents in Urban China?” Journal of Marriage and Family 71, pp. 174-186.
Gladney, D.C. 2003. “Islam in China: Accommodation or Separatism?” The China Quarterly 174, pp. 451-467.
Lai, Q. and Mu, Z. 2016. “Universal, yet Local: The Religious Factor in Chinese Muslims’ Perception of World Developmental Hierarchy.” Chinese Journal of Sociology 2(4), pp. 524-546.
Wu, X. and Gloria He. 2016. “Changing Ethnic Stratification in Contemporary China.” Journal of Contemporary China 25(102), pp. 938-954.
From our partner RIAC
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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