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

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

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

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

Quad pullout and comeback

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

Strategic shift

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

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

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

Huawei and ZTE ban

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

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

Ongoing tariff tensions

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

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

ChAFTA

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

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

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

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

Still economic partners, but political rivals

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

Exercise Malabar 2020 and beyond

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

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

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

Supply Chain Resilience Initiative

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

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

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

Ineffective diplomatic efforts

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

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

Way ahead

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

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

Bejoy Sebastian is an independent journalist based in India who regularly writes, tweets, and blogs on issues relating to international affairs and geopolitics, particularly of the Asia-Pacific region. He also has an added interest in documentary photography. Previously, his bylines have appeared in The Diplomat, The Kochi Post, and Delhi Post.

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East Asia

Pro-Communism warping Hong Kong

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The latest turmoil in the Covid-ridden strata of mainland China is not servile to any pandemic, however, the issue has been one of the most queer and rare kinds, enough to be classified as one of the endemic issues in the global affairs. The tension at helm is the chaos following the announcement of a “New Security Law” by the Chinese regime which is being eyed as one of the monumental events of this decade; slicing off a sliver of attention from the deadly Corona virus that continues to exponentiate around the world in its second wave and sporadic variants.

The law that set out by the Chinese lawmakers back on 22nd May 2020, threatens the liberties of subversion and sedition enjoyed by the citizens of Hong Kong under a constitution. Simplistically named “Basic Law”, it aims to tame the country scaffolded by the “One country, Two systems” framework since the power handover by the former colony to China back in 1997. This act came around amidst strained economic relations between the two superpowers of the world; China and USA, each passing the baton in the blame game of who sustains the blood-crown of the catastrophe impending on the world courtesy of the lethal virus that engulfs every periphery in each continent on the globe. The matters seem complex at sight and a glimpse to the historical timeline of how riddled the relations were could hint at how strained they could reach.

The colony, known as ‘Hong Kong’ today, had been the battle ground, figuratively, to the major competitors of the 20th century: The Great Britain and China. The British dominated the colony for more than 150 years, tracing back to the late 19th century; leasing the territory for the span to morph it into the modernised metropolis marking it as the hub we know today. In 1997, an agreement was reached via an accord, ‘The Sino-British Joint Declaration‘ between the two sides. The treaty allowed Hong Kong a semi-autonomous status, that is, relaying self-sufficiency in all the national domains except in defence and foreign affairs. The allotted autonomy arches under the sovereignty of China until year 2047, henceforward melding into the mainland China as harkened by the Chinese hegemony over decades.

Despite of the granted protection of Hong Kong’s own legislation, borders and freedom of speech, the liberties have been trampled on by the Chinese government over the last couple of decades. A similar law abolishing the right to sedition was initiated in 2003 yet mass protests calling out up and about 50,000 citizens impeded the efforts that went futile and drastically ended up being shunned for good. The Communist party under the wings of Chinese president Xi Jinping have expounded further in tightening their talons on the city since 2012 as efforts were made to corrode the educational system of the country via meddling with the curriculum, biasing the foundation to hail Chinese communism. These acts were proactive reactions to the advances of the United States forging relations with the city. China even tried to manipulate the elections in 2014, tampering with the selection their Chief Executive leading to a 3-month long protest known as the ‘Umbrella movement’ and ultimate downfall of Hong Kong’s autonomous political system.

The security law falls in tandem to the events of 2019; the legislation allowing the convicts from Hong Kong to be extradited in China causing a rave of fear of a massive tactical crackdown of the Anti-communist activists of Hong Kong, sighting it just as ruse to underwhelm the right of sedition of the people of Hong Kong. The Law passed by the parliament notions to only one thing; The ultimate end to Hong Kong. The lawmakers in China, hailing from the National People’s Congress (NPC), sight this move as extricating a threat to the national security and stability of the country while many of the pro-activists in Hong Kong deem the law as betrayal, accusing China of walking back on its promise of high-degree autonomy and freedom of speech, marking it as the final straw, the last struggle before the country could override the laws in the city and indirectly, transition from the entity holding the right to veto the laws to now gripping the law altogether.

Despite of the speculated protests to spark like the history dictates, many of the sage minds predict either a relatively dormant demonstrations or none at all, having a tint of finality in the statement shote the protests are “high stake in risk and repression”. The recent arrest of the leading activists of Hong Kong standing up to voice their disdain to the separatist efforts of China further solidify the notion. Despite of a global condemnation to the new law, the efforts of China resume to subdue any opposition in Honk Kong no matter how sparse. Foreseeing no way out for Hong Kong this time; the Covid-19 paralysis the United States in its own crisis and the legislature inclining towards the Chinese pressure, a complete erasure of Hong Kong is sighted and could not be restrained- for better or for worse.

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East Asia

The Belligerent Chinese Diplomacy and Its Failure

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The Chinese media has recently reported of Xi Jinping writing a letter to George Schultz the former chairman of Starbucks, the US coffee giant. In the letter, he has requested Schultz to play a positive role in advancing the US-China relations. While head of a major state writing letter to big corporate heads is not a common but not an unusual development either, this letter from Jinping should be seen in a relevant context. It indicates a certain amount of desperation and difficulty of China in its dealings with the US.

It suggests that after months of aggressive posturing and verbal duels against Trump, the State Department and Pentagon, China is now cosying up to the new Joe Biden administration. Further, it also means the recent Chinese aggressive posturing, wolf diplomacy has failed to bring in the desired results and that the Xi Jinping-led CCP is under more pressure now to soft-pedal the recent acrimonious ties between the two.

The year 2020 had been a very disappointing and calamitous year for the world. And Corona pandemic could well be cited as the most important reason. While the world as a whole has struggled to fight this unknown enemy individually as well as collectively, one country that has been in the limelight, for all the wrong reasons, been China.

Foreign policy and diplomacy is all about protecting and promoting the perceived national interests of a country. While achieving its objectives, the country tries to create and maintain a favourable image in the international community. The Chinese diplomatic endeavour since the ascension of Xi Jinping has been starkly opposite. From the most likely origin of Corona virus, to rebuking leaders, diplomats and media of other countries, China has been trying to create a new diplomatic norm, a new normal where none of the countries would dare criticising China, through political discourse, media or any other way while silently acceding to its territorial expansionary designs.

There  have  been  unusually  vitriolic  reactions  by  Chinese  diplomats against seemingly innocuous comments or actions by governments, politicians, diplomats  or  media  in  various  countries.  A  very  rational  request  by  the Australian government to initiate investigations by the international community into the genesis of Corona virus, made China so furious that apart from making crude undiplomatic comments, it even created a virtual political, diplomatic and trade war against the country. Critical comment by certain politicians in Brazil and Japan, led Chinese diplomats to publicly issue personalised attacks against them.

The Chinese ambassador to Sweden has went on to lambast the country’s media in most rustic manner. No wonder, in the last two years, he has been summoned to the Swedish foreign ministry an unprecedented 40 times and there have been demands from native politicians for his expulsion. In India, a country that is being seen as the closest political and military rival by China but is scared of admitting it publicly, the diplomats have kept on reminding the government and media not to play the so-called Tibet card or must adhere to One-China policy by not getting close to Taiwan, have repeatedly been ignored by the government as well as the media.

No wonder, a recent Pew Research study has revealed that globally China has lost a huge amount of goodwill. A significantly very high majority of natives in nine of the advanced economies like the US, UK, Germany, Australia, South Korea, Sweden, Netherlands think negatively of  China. Australia (81%), UK (74%), Sweden (85%), Netherlands (73%) show a very high increase in the negative perception against China, very recently and that has affected their politico-commercial relations too.

With the US, the Trump administration acting aggressively in the backdrop of the November Presidential elections, the Chinese actions of challenging the lone superpower has not helped the country anyway. On the contrary, US has become more supportive of Taiwan, politically as well as militarily, making it even more difficult or virtually impossible to China to even think  of  occupying  the  territory  forcibly  in  near  future.  India  that  had maintained a cautious approach towards Taiwan till recently, have started enhancing political and commercial relations with the country.

In Asia, its aggressive military designs against India’s northern borders has had a very rude awakening for China. Used to a timid Indian approach since 1950s under Nehru, it never expected the aggressive Indian response that even put its own military positions in Moldo and other strategic positions vulnerable. To further undermine political and military calculations, its adversaries in South China seas like Vietnam, Indonesia and Philippines today are in advance negotiations with India to secure sophisticated missiles and armaments.

A very significant strategic development in the form of QUAD has taken the preliminary shape and that whenever gets in a concrete form, could well portend an ominous future for China, politically and militarily. The belligerent Chinese behaviour, especially since the onset of Corona virus has brought India, Australia, the US and Japan very close. With talks of Vietnam, Philippines and others in south-east Asia joining it later, the future of a QUAD could well be a security nightmare for China.

In the economic realm, India has reacted sharply too. Being a huge market for Chinese cheap goods and scores of apps till recently, India has not only banished  hundreds  of  apps  but  has  also  been  working  on  a  mechanism  to regulate, control and even stop imports in a number of segments from China. A big share of enormous infrastructural contracts in telecommunications, roads, ports, airports and railways in India too, have become difficult for Chinese companies. And taking a leaf out of India, the US and other countries too, are making it difficult for Chinese organisations to secure big contracts in their respective countries.

Over the next few years, China is going to lose a huge chunk of its popular and big market in India while territorially too, it has failed to make any significant gains.  Strategically what China  wished to see was  countries like Japan, India, Australia, Vietnam, US all having disputes with it dealing individually  rather  than  getting  together  and  forming  a  coordinated  and collective political, economic and strategic response against it.  And the very opposite has happened. There have been greater and collective political, military and economic coordination amongst all these countries today and most of the strategies are aimed against one country, China.

All these developments including Xi’s letter to Schultz, indicate one point very  certainly  that  Chinese  belligerence  has  backfired  hugely.  It  needs  to reorient its diplomacy and political behaviour significantly and if it fails to do so, its position in the emerging post-Covid geopolitical order could be anything but that of an emerging superpower.

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East Asia

The Problem of Uncontrolled Nationalism: The Case of Japan before the WWII

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Authors: Chan Kung and Yu(Tony) Pan*

Throughout the modern history of the world, Japan is undoubtedly an interesting country: it went from the edge of becoming a colony to one of few independent countries in Asia before World War II, and after the Great War, Japan even became a great power. From a broader level, Japan’s success at that time showed that Asians were not inherently inferior to Westerners. Unfortunately, Japan which was supposed to be the leader of Asia to a bright future, chose the path fascism and imperialism. Eventually, Japan became the source of the Pacific War.

It is undeniable that from the Meiji Restoration until the early Showa period (the end of World War II), Japan adapted an expansionary policy, which brought deep suffering to its neighboring countries and ultimately dragged itself into the abyss of destruction. When World War II ended, nearly 70 years of development achievements were utterly wiped out by the war.

In this context, an important question we need to ponder is: What led Japan to embark on an expansionary and self-destructive path? At what point in time did Japan’s policymakers start to lose its mind? What can future generations of nations learn from Japan’s tragic experience to prevent the same fate from happening again? As a country that has been entangled with Japan for generations and has a complicated relationship with Japan, these issues are of even greater relevance to Chinese researchers today.

Fortunately, there is actually a fair amount of scholarly research on the subject, and there exist four main explanations. The first is the “international structure theory” most commonly used by IR scholars (especially the realists), and the second, more common among Western scholars, is the “weak democratic government theory. The third is the “Pan-Asianism,” which focuses on the constructivist perspective. Finally, there is the political economy explanation of expansionary policies.

At the first glance, it seems that each of these explanations has its own rationale. Of the four, the view that the navy and the military were increasingly extreme in their struggle for policy dominance is the most possible explanation. However, it seems that each of the four existing explanations can, in fact, be incorporated into a new one, namely, that Japan’s self-destructive expansionary policies prior to World War II were the material manifestation of an uncontrolled nationalism. More specifically, these four explanations answer why the Showa government was unable to control the nationalist forces in the country. On the other hand, however, the question of whether nationalism would necessarily expand without outside interference and lead to expansionist policies was left unexplained.

Because of the natural characteristics of nationalism, it seems to us that there is a natural tendency for nationalism to expand in the course of its development. The main reasons for this phenomenon are not complicated. First of all, nationalism is a group ideology, which means that nationalists have a common goal at the macro level, but the boundaries of national interest are not consistently defined by different individuals. On this basis, because of the unreliability of group rationality, nationalism as a groupthink is prone to overstretch in the course of its development. Moreover, when such currents are not rationally controlled and end up holding state policy hostage, the state tends to follow a self-destructive path of expansionism. Pre-World War II Japan is a classic case in point.

It should be noted that the positive effects of nationalism is not being denied here, but it is crucial that a country’s policymaking process should not be ultimately being a hostage to nationalist forces. The question then, is how to prevent nationalism from spiraling out of control. From an empirical point of view, there are two different directions to prevent nationalism from getting out of control at the macro level: first, to eliminate “group irrationality” in nationalism; Second, to establish a corresponding gatekeeper between nationalism and state policymaking.

The first direction is essential to improve the thinking capacity and cultural literacy of society as a whole. This is a radical way to solve the above problems, and the improvement of the education system is the most crucial part of it. However, for reasons that are easy to understand, this approach often takes too long to implement, and the process is not really controllable. As a result, this approach, while very important, is often insufficient for policymakers.

The second approach, on the other hand, is a short-term solution (relatively speaking). To use the common metaphor of treating a bodily disease, a gatekeeper-kind-of-approach is not to eradicate the disease but rather to prevent it from damaging health amid acceptance of its existence. There are two other ways to establish gatekeepers: one is to establish a mature political system that uses institutional factors to insulate people from the negative effects of nationalism. This is also the more popular approach in developed Western countries. It should be noted that this approach has proven itself to be effective, most notably in the case of the United States, which also has two populist leaders, as opposed to Brazil, where institutional constraints and the resulting establishment have been significantly more effective in containing the negative effects of nationalism on the policy.

The alternative is to rely on a small number of political authorities within society to isolate the scourge of nationalism through the elite’s prestige and quality. Again, this is also an approach that has worked before. The best example is the significant role played by Chinese leader Deng Xiaoping in the “reform and opening-up” process.

So, which is more effective, institutions or authority? This is not a question that can be easily answered. There are advantages and disadvantages to both approaches, and because every country and society is different, and there is no one-size-fits-all solution.

First of all, the main advantage of institutional gatekeepers is that once established, the containment is apparent and fairly solid; however, the disadvantage is that institutions may take a long time to develop and may come at a cost (e.g., the French Revolution). An authoritative gatekeeper’s advantage is its high degree of operability, while the disadvantage is the unsustainability and instability of the individual factor. On this basis, the realization of either approach needs to be linked to local realities; in other words, neither is necessarily successful. However, despite the different possibilities of approaches and paths, one issue is certain: in this day and age, uncontrolled nationalism is still a problem that threatens national interests, and this issue must be given sufficient attention and focus by policymakers.

Lastly, for contemporary China, the case of Showa Japan has another area of critical research value: how to deal with the current international order? History has shown that almost every attempt to challenge the existing international order independently has often ended in self-destruction. Successful transformations of the international structure tend to be incremental. In the case of pre-World War II Japan, the immediate effect of nationalism was to push the Japanese government to place itself on the opposite side of the prevailing international order. Today’s China has certainly not come that far. In fact, as Professor Wang Jisi says: “In those days, Japan was an ‘institution’ in the international order, while China was rejected and discriminated against by the West as an ‘other.’ Today, Japan is still ‘within the system’ of the international order, while China has risen to become the world’s second-largest economy and its military power is not what it used to be, but there is still the question of how China views the existing international order and how to deal with its relationship with the existing international order. ” In dealing with this problem, preventing the negative effects of nationalism on state policy is undoubtedly an important aspect.

*Mr. Yu(Tony) Pan serves as the associate research fellow and the research assistant of Mr. Chan Kung, Founder, Chairman, and the Chief Researcher of ANBOUND. He obtained his master’s degree at George Washington University, the Elliott School of International Affairs; and his bachelor’s degree in University of International Business and Economics in Beijing. Mr. Pan has published pieces in various platform domestically and internationally. He currently focuses on Asian Security, geopolitics in Indo-Pacific region and the U.S.-Sino Relations.

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