The inevitability of fundamental change in the world and what China wants

“The coronavirus pandemic will change the world order forever. When the Covid-19 pandemic is over, institutions in many countries will look as if they have failed. It is not a question of whether this judgment is correct from an objective point of view. The reality is that after the coronavirus, the world will never be the same again.” Henry Kissinger 2020.

How are we to divine public policy consideration of the post-COVID-19 world in Australia? We are left in a state of drift as to whether and what our government is thinking. Public discussion and government pronouncements are about details, grievances and shifting rules on mobs, jobs and sports. Plus ideology articulated with venom; yearnings for a past world. And flirts with Five Eyes and India.

Should we turn to hairy radicals for advice? Why not? But rather to quote Henry Kissinger as quoted in a paper out of the US National Defence University but originating in the Wall Street Journal:

The coronavirus pandemic will change the world order forever. When the Covid-19 pandemic is over, institutions in many countries will look as if they have failed. It is not a question of whether this judgment is correct from an objective point of view. The reality is that after the coronavirus, the world will never be the same again.The effort to deal with the crisis, however great and necessary, should not prevent the urgent launch of a parallel initiative to ensure the transition to the new post-coronavirus order. Leadership is managing the crisis largely at the national level, but the disruptive effect of the virus on societies knows no boundaries…The pandemic has become an anachronism, reviving the walled city at a time when prosperity depends on global trade and the free movement of people.”

We are not going back to things as they were. Read the paper at link. Ask the Australian government for its views. Ask the prime minister.

There are two central issues.

The first is whether the United States will persist with a contestatorial approach to China or shift to collaborative contention. Just as in Australia there are in the US populist emotional obstacles to sensible collaboration with China. How these will play out in the period beyond the November 2020 US elections is not clear, whoever wins. But the predominant body of opinion is that contestation, while damaging to both the US and China, will most damage the United States. The United States is slipping as it has antagonised on so many fronts.

The second question: what does China want? In the boogie man utterances of the ABC and Fairfax and beyond, China wants ‘us’: old paranoia about taking the land, the politics, who knows, conventional tropes suggest taking our wives. This kind of thing. Murdoch forbid, they might take our media… oh yes, our media is largely gone elsewhere already. Ask the ABC when it will report the big future questions other than by opinion piece.

There are practical things China is most keen to achieve. First is a shift from denomination of foreign trade payments in dollars. At the present time, oil is paid for in USD, as also Australian resource exports to China or whoever are transacted in USD. China wants a different international reserve currency and perhaps a return to the gold standard. To do those things would imperil the USD and economy. To have movement towards that in adversarial rather than collaborative circumstances would be very disturbing. It is unlikely that payment for Australian exports in something other than USD will hurt us. The effect on international economic circumstances and Australian interests of the world having less need to hold USD is for someone more clever than I am to explain. If someone sees a different outcome please say.

China wants to get international payments away from the SWIFT system. SWIFT is the channel of large and small international funds transfers. It is controlled by the United States. It is the device by which Secretary of State Pompeo can say sanction this person/business/government office in Russia, Iran, Venezuela, China, DPRK, wherever (in a manner now generally without regard for international law) and the SWIFT system just does it.

To the extent that US power has floated on the status of the USD as trading currency, that is in jeopardy, or let us say more accurately, coming to an end. We have no national interest in persistence of venom-based US foreign policy; someone please explain how an alternative to SWIFT will hurt us…and what we should do about that.

To the extent that US foreign policy has degenerated from the maintenance of fabrics of the international order to whacking people and organisations with sanctions and war activities which are significantly of its own creation, quite a lot of people in the world would favour shifts from US dominance. If you can get people in Australia away from the comic scary stuff of Netflix and US giggle and superhero free-to-air entertainments, um, well… how?

In the immediate future, both the American and Chinese economies will be set back. Arguably this will hurt America more as China has been stoking internal demand to replace exports as its national economy driving force and the US like Australia is very dependent on supply chains of globalisation far beyond government control other than the crudity of sanctions. It is also a practical reality that there is more order in China and social and economic policies can be applied more easily, noting however the gargantuan size of the Chinese population: 1.4 billion, 56 times the Australian population. Consider the quality of Australian government and political debate and be glad China hasn’t followed our model.

Somewhere in the shrubbery Australian experts on globalisation must still exist: please explain how to act now constructively. The trend away from globalisation began before COVID-19 and is now accelerated by COVID-19, with fresh drastic mechanisms.

The Huawei ban obliges China to undertake a massive process of building semiconductor industry more independently, without dependence on US intellectual property. (There is a curious dependence on Holland for one very fancy item, see this Asia Times report.) To whom do South Korea, Taiwan and Japan turn in this situation? Which is the best market, best trading partner, where to grow the supply chains if there is some demand that they choose between the US and China? China of course.

To whom do ASEAN countries turn?

To whom does Morrison turn? Five Eyes and India? Pull the other leg.

We need to hear the long term perspective on which such government initiative is based. What went to Cabinet? The people need to participate. We need sensible presentation of facts and ideas. We need that now, not after some year long green or white paper deliberation. A national collaboration, not just a national cabinet.

… Regarding that paper out of the US National Defence College from which I quoted at the beginning of this essay, I learned of it in a briefing note for the Algeria-Britain Business Council, a document that fell off two trucks to reach me. What are the peak Australian business organisations and their foreign collaboration councils thinking? Open doors pleas

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Dennis Argall's degrees were in anthropology and defence studies. his governmental work in foreign, defence and domestic departments and for the Australian parliament. His overseas postings included Beijing as ambassador, and Washington. He regrets the extent of his personal experience with disability but it has perhaps sharpened his desire that the future be a better country.

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