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.
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.
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.
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.
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.
The Global (Dis) Order Warfare: The Chinese Way
Since the ascension of Xi Jinping, two important developments have come to dominate the global headlines. One, the so-called wolf diplomacy of China has been on the forefront of global political relations and two, there has been a huge spurt in Chinese efforts to use disinformation and espionage, as a part of its global diplomatic-strategic plans to destabilise countries who it sees as rival or a threat, in more than one ways.
Suddenly, there are instances of greater violence, instability and conflict in countries and regions that could be considered as political/economic/military rivals or likely competitors to China. In the US, FBI has reported an increase of 1300 percent in economic espionage investigations with almost 90 percent cases having a Chinese military/government background. On an average, the US has reported registering of a new counter espionage case against China, every 12 hours. A recent report suggested the operation of about 250 MMS Chinese spies in Brussels, the capital of European Union.
In Australia that has a continuing run-in with China in recent times, there have been instances of Chinese overt/covert interference in political/economic domain. In the UK, a highest level confirmation came in from the Home Secretary Priti Patel that confirmed the MI5 report of a Chinese government agent working in the British parliament to subvert democratic process and promote Chinese interests.
In India in particular which is virtually in a state of no-peace, no-war with China for the last 21-months, following a bloody conflict at Galwan (in which 20 Indian and 44 Chinese soldiers killed, though Chinese did not accept casualties for a long time.), the situation is quite favourable to the massive Chinese interference. The Modi-led Indian government is working at a furious pace on various fronts, economic, political, diplomatic and strategic. And that is something that is not convenient to Chinese interests.
The Chinese since 1950s have been used to an Indian government, timid and submissive and more receptive to their interests than protecting national interests of India. A big example of this self-defeating, servile and pro-communist mental make-up has been the Nehru’s support to China for a permanent UNSC seat, even in 1963 after the Indo-China war in the previous year. Successive governments since then have been following the same thinking and policy in the name of ‘continuation of foreign policy’, irrespective of changes in the government.
Hence, when Doklam happened in 2017 and Indian government for a change, showed courage and stood up against the ‘self-proclaimed super power China’ to protect the territories of a friendly Bhutan, the middle kingdom got the shock of the decade. It was used to have a southern neighbour who in spite of decades of supporting terrorism in country’s north-east, supporting Pakistani terrorism, never faced China head-on. And that brought about a change in the Chinese perception and strategic calculations vis-à-vis India.
Since Doklam face-off between India and China, the latter has been playing all games with the clear objective of preventing its rise in the word order. For reasons better known to European politicians, for some years there has been no effort from their side to compete and prevent China from spreading its aggressive strategic-diplomatic policies around the world.
Its genesis could be seen in the passive Obama-led US policy of playing a second fiddle to China. No wonder, during the eight years of Obama administration, China was not only able to strengthen its politico-strategic grip over parts of Asia and Africa but came very close to attack Taiwan. Had it not been the sudden deterioration of US-China relations during the Trump era, probably the world map could have been changed so far, particularly in the south China Sea region.
The passive Obama administration allowed China to grow impressively on the trade-economic front and emerge as the manufacturing hub of the world. It also remained indecisive, letting China develop a huge trade surplus vis-à-vis the US. And the biggest flip came when is spite of being fully aware of the likely catastrophic implications and the debt-trap strategy of the Chinese showpiece Belt and Road Initiative (BRI), it neither discouraged smaller nations nor took a stand against it.
India was the only country that spoke overtly against the concept and remained out of the BRI, even at the cost of antagonising China. Today, the world is witness to the debt trap that Chinese BRI has brought about for many countries like Pakistan, Maldives, Sri Lanka, Djibouti, Laos, Mongolia, Zambia, Montenegro, Kyrgyzstan, Tajikistan and a few others. This grim economic scenario is almost certain to compel such countries to part with their political and economic sovereignty that could well be a 21st century model of Chinese imperialism.
Such explicit Indian opposition to China and its likely emergence as a political, economic and military rival, led China to create a host of internal disturbances in the country. It is interesting to see that most of the damning criticism against Indian government for the past three-four years are emanating from Indian intellectuals living in the US/Europe for decades and are overtly/covertly left-leaning.
Similarly, the journalists, intellectuals, academicians in India who criticise and abuse the government are having a leftist background, many of them have a record of visiting China in recent past. Some of the politicians, including the de facto opposition leader Rahul Gandhi is said to have had midnight meetings with Chinese Ambassador in New Delhi. The Chinese government has also provided funds to the main Indian National Congress (INC) opposition party, a few years ago. Some media reports suggested that was one of the reasons for INC’s pressure on the previous Dr Manmohan Singh and current Modi governments, to join the Chinese dominated trade block Regional Comprehensive Economic Partnership (RCEP).
The Chinese efforts to politically subvert the democratic countries has become more blatant. The recent anti-India resolutions in the British Parliament could well be seen in the context of MI5 report confirming the presence of Chinese agents in British legislature. In Australia, the reported offer by Chinese to Nick Zhao to run for Australian parliament as a Liberal Party member and recent statement of an apparent Chinese defector Wang Liqinag suggesting that Chinese agents are ‘operating with impunity in Australia’, need to be seen in this context.
And beyond all this politico-diplomatic moves, there have been credible reports of Chinese cyber-attacks on US, India, UK, Taiwan, Australia and others who it sees as rivals. India in the last one year, witnessed a 261 percent rise in Chinese cyber-attacks against military, scientific, banking, telecommunication systems.
To make matters worse, a detailed analysis of individuals occupying important positions in government/international organisations reveals that a few of them do have some or the other sort of Chinese support that has affected their actions or lack of it, vis-à-vis China. The tremendous suffering that the world and humanity have to endure due to Corona, clearly occurred due to deliberate or ineptness of Chinese government/military/scientific community. However, the World Health Organisation (WHO) has failed to fix accountability for this pandemic on China.
All such development clearly points towards a Chinese strategy to create a global disorder, a state where democracies like the US, India, Australia, Japan, Europe, Taiwan will not be able to stand unitedly and make way for the ascent of the middle kingdom to the pinnacle of global political, economic and military hierarchy.
Rebuilding the World Order
Many in the West believe China’s economic ascendancy indicates that Beijing is covertly working to usher in a new world order in which the balance of power has shifted.
History shows that changes in the world order are inevitable, but they are not happening as quickly as some analysts think. For example, the rise of the US to the world’s primary geopolitical position took nearly half a century, from the late 19th to the mid-20th century. France’s rise to domination over western Europe in the 17th century was also a long and arduous process.
In these as well as many other cases from ancient and medieval times, the rise of a new power was facilitated by stagnation, gradual decline, and military confrontation among the various existing powers.
For instance, the US was already powerful in the early 20th century, but it was the infighting during the two world wars among the European powers that brought down the edifice of the Europe-led world order and opened a path for American ascendancy.
But while it is possible to identify the changing winds of the world order through various analytical methods, it is much harder to find ways to preserve an existing order. It requires a whole constellation of leaders from competing sides to grasp the severity of the threat posed by radical change and to pursue measures together to cool down tensions.
The key question that needs to be addressed is whether the West still possesses the necessary political, economic, and military tools to uphold the existing world order and not allow it to slip into chaos, as the world’s leaders mistakenly did in the first half of the 20th century.
The successful preservation of an existing world order is a rare event in history. Following the Congress of Vienna in 1814-15, European leaders gathered to build a long-lasting peace. They saw that the French power, though soundly defeated under Napoleon I, needed to be accommodated within the new fabric of the European geopolitical order. This meant not only inviting French representatives to conferences, but offering military and economic cooperation as well as concessions to the French to limit their political grievances.
In other words, European diplomats had an acute understanding of post-French Revolution geopolitics and understood the need to build a long-lasting security architecture through balance of power.
But such approaches are unusual. Perhaps the shock of the bloody Napoleonic Wars, as well as the presence of such brilliant diplomats such as Metternich, Talleyrand, Castlereagh, and Alexander I, assured the success of the new order.
It is far more common that challenges to the world order lead to direct military confrontation. Failure to accommodate Germany in the early 20th century led in part to WWI, and the errant diplomacy of the Treaty of Versailles led in part to WWII. The list goes on.
China’s rise to power is another case for study. The country is poised to become a powerful player in international politics thanks to its economic rise and concurrent military development. Beijing has strategic imperatives that clash with those of the US. It needs to secure procurement of oil and gas resources, which are currently most readily available through the Strait of Malacca. In an age of US naval dominance, the Chinese imperative is to redirect its economy’s dependence, as well as its supply routes, elsewhere.
That is the central motivation behind the almost trillion-dollar Belt and Road Initiative, which is intended to reconnect the Asia-Pacific with Europe through Russia, the Middle East, and Central Asia. At the same time, Beijing has a growing ambition to thwart US naval dominance off Chinese shores.
In view of these factors, mutual suspicion between Beijing and Washington is bound to increase over the next years and decades.
Thus, we find ourselves within a changing world order. What is interesting is what the US (or the West collectively) can do to salvage the existing order.
From the US side, a strengthening of existing US-led alliance systems with Middle Eastern and Asia-Pacific states could help to retain American influence in Eurasia. Specifically, it would enable the US to limit Russia’s, Iran’s, and possibly China’s actions in their respective neighborhoods.
Another powerful measure to solidify the existing world order would be to increase Washington’s economic footprint across Eurasia. This could be similar to the Marshall Plan, with which the US saved Europe economically and attached it to the US economy. New economic measures could be even more efficient and long-lasting in terms of strengthening Western influence across Eurasia.
But no matter what economic and military moves the US makes with regard to allies such as South Korea, Japan, Israel, Saudi Arabia, and others, any attempt to uphold the existing world order without China’s cooperation would be short-lived and would echo the way Germany was cast out of the Versailles negotiations, which served only to create a grievance in Berlin and prompt clandestine preparations for a new conflict. In a way, the West’s current problems with Russia can also be explained this way: Moscow was cast out of the post-Cold War order, which caused worry and a degree of revanchism among the Russian elites.
Without China’s inclusion in the world order, no feasible security conditions can be laid out. To be preserved, the world order must be adjusted to rising challenges and new opportunities. Many Western diplomats are uncomfortable dealing with China, but casting Beijing in the role of direct competitor would not solve the problem, nor would giving it large concessions, which would be too risky.
What is required is a middle road, a means of allowing China to participate in an adjusted world order in which some of its interests are secured. Only that will increase the chances for long-lasting security in Eurasia.
Pulling this off will require an incredible effort from Western and Chinese diplomats. It remains to be seen whether they will be more successful than their predecessors were in the early 20th century and other periods of history.
Author’s note: first published in Georgia today
The Spirit of the Olympic Games and the Rise of China
It is fair to say that no country like China has so seriously connected its national rejuvenation to the Olympic Games for one century. It is also rare that the top leader of a major power like Chinese President Xi Jinping has paid earnest attention to the preparations for the Olympics from the very beginning in 2017. It is reported that over the five years, Xi has made five inspection tours to the sports venues. During his latest tour to the sports villages on January 4, he led his entourage to the Winter Games facilities as the opening ceremony is in one month away. During this field trip, Xi called for efforts to ensure the success of the Beijing 2022 Olympic and Paralympic Winter Games in line with what China has promised for the world to host “a green, inclusive, open and corruption-free Winter Olympic Games.”
Historically speaking, China is home to a great and ancient civilization. But as a political entity in modern era, it is a newer player since it was forged after the demise of the Qing Empire in 1912. Since then, the great (and largely successful) quest of China during the following century has been committed to transforming the large country to one strong power and a respected nation-state in the world order. Coincidently, as historian William Kirby put it, the struggle for the rise of China was always linked with the rise of the modern Olympic movement and the growth of spectator sports as an international cultural scenario. To make this long history into a short story, this paper tries to explore the salient legacy of the International Olympic Games in China and its impact on the growth of Chinese nationalism during the 20th century until now.
In a review of the creation of modern China, sports have unusually played a role that has grown in dimensions. For instance, the Olympic Games have aspired the drowsy Chinese to rethink and reinforce new national identities. In 1927 when the Nationalist (KMT) elite took power in China, its early plans for the new capital city of Nanjing included an Olympic-scale stadium. Later, it sent China’s first athlete team to the Olympic Games in 1932 and 1936 for international legitimacy. But China’s inferior power and public poor health only drew international contempt and defeats. Echoing Chinese low-status of the day, Mao Zedong, who later became the leading founder of the People’s Republic of China, warned his contemporaries that “China is being drained of strength. Public interest in martial arts is flagging. The people’s health is declining with each passing day. One day our country will become even weaker if things are allowed to go unchanged for long.” Mao’s words serve us to understand that since the early 20th century, why Chinese political elite are convinced of the merits of the sports in general and the Olympic Games in particular because they would benefit public health domestically and enhance China’s image internationally.
However, it is since the foundation of the PRC that has fundamentally heralded an era of mass participation and public consumption in China as elsewhere of sporting competitions. Since the 1980s when China first participated in the Olympic Games in Los Angeles and then in Seoul, it has been involved in the IO games because sports, and the Olympics in particular, show well how nationalism and internationalism come together in China. It is self-evident that Chinese participation and interest in modern sports are largely driven by nationalism and, through taking part in world competitions, China has engaged the international community. Now Beijing is set to become the first city in the world to have hosted the summer in 2008 and soon to host the Winter Olympic Games in 2022. It is proud to say that hosting a successful Winter Olympic Games is a solemn commitment China has made to the international society. As the Olympic Games are around the corner, China’s preparation for the Games has attracted the global attention.
Now the inquiries go to what are expected for China to attain during the 2022 Olympics given that it is not only the second largest economy in the world but also a rising military power? Looking into the legacy of the Olympic Games in China and Chinese aspiration for their historical mission since the early 20th century, we can possibly suppose three results expected.
First, China aims to rebuild an image of a responsible power in light of multilateralism. With the world still battling the COVID-19 pandemic and the climate crisis, compassion, solidarity, and friendship among nations have never been more critical. As UN head Antonio Guterres, who has accepted an invitation to attend the Beijing Winter Games, has said, “The Olympic spirit brings out humanity’s best: teamwork and solidarity plus talent and tolerance.” Echoing this call, the games organizing committee has vowed to use latest technology in Beijing’s Main Media Center which is the temporary home and office of some 3,000 journalists from more than 100 countries and regions and 12,000 broadcasters from over 200 networks. Moreover, armies of robots will help to provide a wide range of services, working as guides and doing things from those related to COVID-19 prevention and control, to food delivery and food preparation. Since the Olympic spirit of unity, friendship and peace is deeply rooted in China, sports are supposed to promote the mutual amity and respect among the athletes from diverse nations and cultures.
Second, the CPC elite aims to present a healthy and happy China to the world which has been sieged by the multiple complex challenges over the past decade. It is estimated that about 300 million Chinese will be inspired to participate in winter sports through hosting the Olympic Games. In addition, it will not only contribute substantially to the Olympic cause, but also foster domestic public engagement in sports. By hosting the summer and winter Olympic Games, Beijing and elsewhere in China will make full use of the sports venues for ordinary Chinese as they see the sports to promote the public health, to stimulate social-economic growth and to revitalize the cultural legacy of China since it has long regarded physical fitness as an essential national trait.
Third, China, both the leading elite and the led mass, has attest to the contribution of sport for sustainable economic and social development. The 2008 Olympic Games are a prime example of how the games can affect society, triggering action by the government to improve the lives of people with disabilities and protect their rights as equal members of society, along with nationwide investments in sustainable transport, public health, and renewable energy–all important legacies enjoyed by Chinese people today. Indeed, the UN Environment Program’s office in China has provided technical support and advice on the development of national policy initiatives in support of preparations for a green and sustainable Games. In this context, delivery of a Beijing Winter Olympics and Paralympics can be again a beacon of hope, demonstrating the value of unity, resilience and international cooperation in overcoming today’s pandemic.
In sum, this discussion on “The Olympic Games and the Rise of China” will be incomplete if it does not mention the personal ties between Chinese President Xi and the 2022 Olympic Games in Beijing where they are scheduled from February 4 to 13. From bidding for the Games to the extensive preparations, he has played a leading role and vowed to present a “fantastic, extraordinary and excellent” Games to the world. An avid sports fan, Xi sees sports as a driving force for improving people’s health, an engine to stimulate social-economic growth and a showcase to project China’s cultural legacy. As a statesman, President Xi has encourage Chinese athletes to strive for excellence at the upcoming Games while vowing to deepen international cooperation for a brighter future with people of all countries: that is, harnessing the power of the Olympic spirit to promote a community of shared future for mankind.
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