Today, more than 60 countriesof the world have seen in practice that the implementation of the Chinese Belt and Road initiative (BRI) contributes to the economic prosperity of the countries along the ancient Great Silk Road and economic cooperation in the region; exchange and contacts between different civilizations; and the peaceful development of processes that are taking place in Eurasia. It also became clear that the project has not only economic, but also cultural, and sometimes military – political significance.
It should be noted that there are several main foreign policy strategies of the BRI:
Construction of transport highways. The BRI project involves the construction of new roads (not just the improvement of existing highways). New roads are being built using innovative technologies. Today, China has innovative technologies for building high-speed highways, due to which it was able to make a significant breakthrough and achieve world leadership in this field. According to 2014 data, 111.9 thousand km of high-speed motorways and 16 thousand km of high-speed railways have already been built on the territory of China. Thus, the successful construction of high-speed highways has reached the level of export output.
The construction of transport highways, in turn, entails the development of infrastructure. Thus, new development centers are emerging along the new expressways, the logistics network is expanding, tourist routes are being developed, and many new jobs have been created. This, in turn, contributes to the development of the regional economy as a whole.
Transport and infrastructure development leads to the increasing trade. Thus, the BRI connects various countries of Eurasia, as well as opens new trade channels.
The development of mutual trade through the use of national currencies leads to stability in the currency policy.
One of the conditions for the country’s participation in the BRI is to comply with the main condition – political stability and guarantees of public security. Thus, the new Silk Road can be a guarantee of stability and security in the regions.
BRI also leads to the development of cultural exchange of Eurasian countries and peoples with each other. Achieving a common goal can contribute to the cultural exchange of the participating countries, and can also bring together and unite the Eurasian peoples.
Thus, responding to the global trends of globalization, based on the principle of mutual benefit and having a far-sighted perspective, the Chinese BRI project has a number of foreign policy strategic advantages that can contribute to the consolidation of the countries of the Eurasian region and the disclosure of their economic potential.
However, speaking about the strategic significance of the land and maritime Silk corridors, it cannot be omitted their military – political and geopolitical nature. Thus, in order to secure oil imports from the Middle East to China, Beijing is forced to simultaneously create several international transport Silk corridors. Since Iran is the main supplier of oil to the PRC, Maritime oil delivery communications have become of strategic importance for Beijing. In the logistics chain, the most vulnerable point is a relatively narrow one (up to 2 – 3 km) is the Strait of Malacca, in which the United States attaches exceptional importance to controlling this communication and possibly blocking the Strait. The US Navy is many times superior to the Chinese Maritime forces, and bilateral military alliances with Japan, South Korea, Australia, the Philippines, and Thailand allow to effective control of Maritime routes in the PRC. Beijing, in turn, together with the construction of the BRI Southern corridor, is deploying military bases and electronic intelligence facilities in friendly Southeast Asian countries (Myanmar, Cambodia) and ensuring the political sovereignty of Myanmar, which has large reserves of energy raw materials. Today the PRC is considering an additional possibility of building a shipping channel across the Isthmus of Kra (Thai Khokhok Kra) in Thailand bypassing the Strait of Malacca.
It should be noted that the Maritime Silk transport corridor is being created from the Chinese province of Xinjiang to the Indian ocean, acting as a guarantor of Pakistan’s security. With financial assistance from Beijing, a modern deep-water port of Gwadar is being built on the Makran Coast of Baluchistan (Pakistan). This ambitious project aims to create a new economic center of the Middle East similar to the Arab Dubai (see Fig.2). The deployment of the Chinese naval base and electronic intelligence station in Gwadar will ensure the security of oil imports from Iran, the main foreign supplier of energy raw materials to China, and control the transportation of oil from the Persian Gulf to India. Given the vulnerability of China’s Maritime communications with the Middle East, Beijing, as part of the BRI project, plans to build oil and gas pipelines from the Arabian sea coast to China’s Xinjiang to provide imports bypassing the Strait of Malacca, as well as to continue the high-altitude Karakoram highway to the port of Gwadar. In this regard, the Chinese are seeking to acquire a chain of naval bases in friendly countries of South – East and South Asia. For example, the PRC has managed to reach agreement on the deployment of such bases in Myanmar (where a network of Chinese radar posts already operates) and Pakistan (in the port of Gwadar, where a Chinese electronic intelligence station is deployed), and negotiations are underway with Thailand, Cambodia and Bangladesh.
Given the political and geopolitical nature of the project, it should be noted that it is consistent with the logic of the classical geopolitical formula: “Whoever owns Eurasia owns the world”. Knowing this geopolitical axiom, Beijing at the beginning of the XXI century decided to initiate a new integration project in Eurasia.
According to the long-standing tradition of the “Chinese box” (foreign policy strategies “string of pearls”, “blue water”, etc.), the main geopolitical goal of the Chinese project is gradually revealed to the outside world. Thus, Beijing is supposed to gradually open its intermediate foreign policy and economic tasks in order to finally achieve the General goal. Speaking about the final goal, it should be understood that the BRI project will unite a Large Eurasian multidimensional space, including the PRC, Central Asia, Eastern and Western Europe, out of a population of 3 billion. people (more than 40% of the World’s population) with a huge consumer market. The world’s longest economic corridor has a huge potential for regional development and interaction. BRI has rich energy, mineral, tourist, cultural and agricultural resources. A multidimensional innovative model of regional cooperation will allow the countries of Eurasia to expand the geo-economic space for their development by forming the following directions (corridors):
1. transport corridor,
2. energy corridor,
3. trade corridor,
4. the information corridor,
5. scientific and technical cooperation,
6. agricultural development,
7. development of the cultural sector
8. increasing educational and career opportunities,
9. tourism development,
10. security and political interaction.
Thus, the BRI, along with the revival of the Maritime Silk Rad and the international economic corridors “Bangladesh – China – India – Myanmar”, “China – Pakistan (Baluchistan)”, “China – Tajikistan – Iran”, and the creation of port outposts in South – Eastern Europe, indicates the intention of the PRC to take soft “economic” control of the entire Eurasia (see Fig.1). In fact, for the first time, the outlines of the Chinese geopolitical Eurasian project have been outlined, which will have to be considered by both EU strategists and Russian intentions to create the Eurasian economic Union and American ambitions in Eurasia.
The Chinese “Silk project” serves as a bridge between the Asia – Pacific economic ring and the European economic ring, and will contribute to the development of the Western regions of China. According to analysts, the foundation of this initiative in Beijing is the implementation of five tasks (“connections”):
- strengthening of political and economic ties, balanced development of the West and the East, including at the level of regional cooperation;
- strengthening of communication links in Eurasia, creating a transport corridor from the Pacific ocean to the Baltic sea and creating a transport network connecting East, West and South Asia;
- ensure uninterrupted trade and simplify trade and investment activities, strengthen trade relations and economic cooperation with Central, West and South Asia;
- strengthening of monetary circulation based on settlements in national currencies and increasing the international economic competitiveness of regions;
- expanding the openness of the People’s Republic of China to Eurasia and bringing Nations closer together on the basis of activating and strengthening friendship between peoples.
Thus, BRI, which is based on a multidimensional approach (“five connections”), will promote mutually beneficial international cooperation. In this regard, in contrast to the US, which relied on the path of the world hegemon for neoliberal globalization, China in its foreign policy has taken a course towards regionalization of international economic relations.
The ambitious concept of the BRI has given impetus to the development of infrastructure projects around the world. This concept provides for the development of economic cooperation on the continent through the construction of transport infrastructure. Increasing its effectiveness, together with the removal of trade barriers, should lead to an increase in the volume of mutual trade in the region, as well as increase the role of national currencies, especially the Chinese yuan in mutual economic operations. In addition, the implementation of infrastructure projects should give an impetus to the development of sparsely populated and economically lagging inner provinces of the PRC, Inner Mongolia in the Xinjiang.
Thus, the BRI is not only a geopolitical and geo-economic project of Beijing, but also a multipolar and open cooperation process. It is based on Chinese regionalism, the production of not another regional Union and hegemony with elements of closeness and conservatism, but a process of gradual progress based on economic interaction, versatile cooperation and consultation, mutual respect and tolerance.
This initiative should be viewed from several perspectives. First, this is a whole scattering of infrastructure projects. Some of them are already being implemented, and even more are in the plans for the near future. And it is not just about expanding the geography of Chinese activity in the world. If the current initiatives are successful, China will be able to play a system – forming role throughout Eurasia.
So far, BRI – related projects are mainly concentrated in South – East and South Asia, in the traditional area of Chinese foreign policy. But in the future, the mainstay of the Chinese initiative will be transport corridors leading from China to Europe.
Chinese economic investment policy is expanding as well. Thus, the total investment within the “One belt, One road” is estimated at a huge amount: from 2 up to 7 trillion dollars. China is investing about $12.5 billion in creating a transport hub based on the port of Gwadar in Pakistan and linking this port by rail and road with North – Eastern China. Another $5.5 billion in China and Chinese private investors will allocate for the construction of the Boten – Vientiane railway in Laos. But there are also investments that are not directly related to transport infrastructure. In 2016 it was mentioned that Chinese investment in countries that have joined the initiative amounted to about $50 billion and that in the coming years, Beijing plans to triple this amount.
China’s long-term infrastructure investments require a completely different approach to investment protection. China will not be content with being an important trading partner. Thus, it was noted that Beijing needs “shares” in regional political projects, participation in solving international security problems, and levers of influence on the political situation in partner countries. Without guarantees of consistency in the policy of countries – participants, China will not risk billions.
China is already creating new and strengthening existing mechanisms of political dialogue throughout the BRI space: with ASEAN, with Russia, Turkey, Kazakhstan, Mongolia, Vietnam, CEE countries and others.
China’s interest in domestic political processes in the Eurasian countries is becoming more and more noticeable: new, long-term interests will force Beijing to play the same role in the capitals of its partners as, for example, the United States do, and use the same techniques and tools (lobbying, grants, “soft power” and hard political pressure).
In order to successfully implement the tasks set, China will have to revise some of the ancient principles of its foreign policy. Thus, the BRI involves the creation of dozens of new diplomatic formats, the signing of hundreds of deals, and the conclusion of thousands of explicit and secret agreements. All these steps will change the political situation in Eurasia. Therefore, the policy of implementing the initiative will finally confirm that China is a global player, active and independent.
It should be noted that the modern Chinese leadership finally breaks with the tactical move made at the beginning of Deng Xiaoping’s reforms: to focus on internal reforms, not to get involved in foreign policy adventures, not to indulge great – power ambitions.
For the doctrine of the “Chinese dream”, proclaimed by Xi Jinping in 2012 immediately after he came to power, converting the success of reforms into proper international status is a goal as important as continuing economic growth or fighting the country’s property stratification.
Another important shift in Chinese policy was the absence of representatives from India at the“One Belt, One Road” Beijing summit. In Delhi, there are many reasons to fear Chinese activity, but perhaps the most significant is related to the construction of the Karakoram highway.
This section of the Pakistan transport corridor runs through the territory of Kashmir. India continues to consider Kashmir its own – and despite this, China has decided to make significant investments in the disputed territories. This may indicate a revision of the PRC’s position on national sovereignty and territorial integrity.
Until recently, Beijing was categorical – any interference in the Affairs of a sovereign state, which is carried out outside the framework of the UN Charters, is unacceptable. It cannot be justified by anything, not even by a humanitarian catastrophe or systematic violations of human rights.
It seems that this doctrine is also changing, and China will become more flexible: to protect the sovereignty of third countries when it is profitable, or to recognize border changes when Chinese interests require it. In the future, this may be a dangerous signal for some countries.
Assessing the scale of the initiative, some experts noted that China has begun to move to the West. This is absolutely true in geographical terms – the project set the vector for Chinese expansion in the coming decades, and it includes not only the whole of Asia, but also Europe.
However, China’s rapprochement with the West as a political phenomenon is not worth talking about. The current project is almost more political than economic. Its success guarantees China’s place as a key center of power in the modern world. But in order to succeed, Beijing will need to maintain the maximum autonomy of its policy – that is, to build and implement its own global order of the day, in opposition to the West.
“The debt trap for CEE” is what many EU leaders call the BRI. In practice, in recent years, the European Union has tried to limit China’s presence on its territory and counter its influence. Thus, in 2017, the EU launched an investigation in connection with the construction of a high-speed railway between Belgrade and Budapest. Officials concluded that the plan, which will stretch BRI into the heart of Europe, violates EU rules on public tenders for major transport projects. As ForeignPolicy noted in turn, experts warned that another Chinese project – the construction of a high-speed highway in Montenegro – could increase its debt to a volume that could result in severe consequences for such a small country.
In the fall of 2018, the EU unveiled a plan to compete with the BRI and limit China’s influence. This strategy for connecting Europe and Asia should improve the way the two regions interact, while paying a lot of attention to environmental and social norms, taking care that the participating countries do not get caught up in debts that they will not be able to pay.
Soon, the 2019 Munich security conference struck a balance in what one of the meeting’s reports described as China’s “debt trap diplomacy” (Montenegro owes China the equivalent of 80 percent of its GDP. China accounts for 20 % of Macedonia’s external debt, while B&H accounts for 14 % and Serbia for 12 %).
At the same time, it should be noted that according to a number of European analysts, China’s economic expansion may indeed be a political risk both at the EU level and in individual member States. However, the current European debate about China’s economic presence in Central and Eastern Europe contains a number of inaccuracies that make it difficult to assess the scale of the phenomenon and its political consequences. One of the main problems is the lack of accurate information about the nature of China’s participation in financing infrastructure projects in Central and Eastern Europe.
World experts also mention the “dark side of Chinese investment”. Thus, investments in a vast network of harbors around the world have made Chinese port operators world leaders. Chinese companies carry more cargo than companies from any other country. Five of the world’s 10 largest container ports are located in China, and one in Hong Kong. Its coast guard owns the largest law enforcement fleet in the world, its Navy is the fastest growing among the great powers, and its fishing Armada numbers about 200,000 naval vessels. In strategic and military terms, China’s investment policy within the BRI has led to the replication of the example of Gwadar, where Beijing used its commercial knowledge and financial muscle to secure ownership of a strategic trade base and then use it in military operations. Similar scenario was replicated in other key locations : in Sri Lanka, Greece, and Djibouti in the Horn of Africa, Chinese investment in commercial ports was followed by deployment or visits by ships of the PLA fleet, and in some cases the announcement of a longer term deployment of military contingents.
Not only the world’s largest ports have attracted Chinese investment. A dozen small harbors – some located in key strategic locations such as Djibouti, Hambantota in Sri Lanka, Darwin in Australia, Madai island in Myanmar, and projected ports on the Islands of Sao Tome and Principe in the Atlantic ocean and Walvis Bay in Namibia – also have developed investments or intentions to build a Chinese port.
Investment policy in most cases has its own consequences. Thus, the financial power at China’s disposal can make its requests fail-safe. Sri Lanka and Greece are examples. In Sri Lanka, President Maithripala Sirisena, shortly after he came to power in 2015, suspended a $ 1.4 billion “port city” project in Colombo that was being built by Chinese companies. M. Sirisena was concerned about China’s growing influence after two unscheduled visits in late 2014 by a submarine and a Chinese Navy warship to a Colombo container terminal owned by a Chinese state-owned company.
In Greece, China’s acquisition of a controlling stake in Piraeus, one of Europe’s largest ports, also signaled a merger of commercial and strategic programs. When A.Tsipras, the country’s Prime Minister, hosted a Chinese warship and naval command in Piraeus in early 2015, Chinese state publications quoted him as saying that he supported the sale of the port to China. Less than a year later it was sold for 420 million dollars.
It is true and it is worth understanding that the Chinese initiative can be used as a unique opportunity to overcome the economic backwardness of many countries and poorly developed regions of the world. China offers an alternative model of economic development for countries in Asia, Africa, South America, and Central and Eastern Europe. Economic and infrastructural development may be the most important opportunity that can be used in both Asia and Europe, as well as in Africa.
But it is also true that the BRI project is undoubtedly a globalizing one, but it is Chinese globalization, which may be as far from the West as the Chinese Communist project.
Thus, it should be noted that the construction of BRI is a big project that requires step-by-step implementation. Today, official Beijing calls on all countries to unite and move together towards results that will be positive for the peoples of the world. However, it should also be remembered that along with big changes always come consequences, and the question of whether all countries are ready to deal with them will not lose its relevance until the Chinese investments begins to bring profit to all participants of the initiative simultaneously.
The concept of “string of pearls”was proposed by Christopher Person, a Lieutenant Colonel in the us air force, later a Pentagon analyst. In January 2005 it was first used in a report for the US military prepared by the expert company Booz – Allen Hamilton. It specifically demonstrated to the world the growing influence of China in South-East and South Asia and the Indian ocean through the appearance on the map of such points in its strategic Arsenal as Hainan island, Woody Islands near the Vietnamese coast, Chittagong (Bangladesh), Sittwe and Coco Islands (Myanmar), Hambantota (Sri Lanka), Gwadar (Pakistan), Seychelles archipelago, etc.
For China, this strategy is primarily aimed at protecting its oil flows, establishing the country as a global Maritime power with diverse interests around the world, and overcoming US attempts to block access to China or its access to the world’s oceans.
The concept of “blue waters” is defined by China’s access to the world’s oceanic expanses. Along with the old land route, there is a Maritime silk road that stretches from China through South Asia and the Indian ocean to Africa, and through the Red sea and the middle East to the Mediterranean sea and Europe. This also includes South America and the future passage through the Arctic.
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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