Finding our place in the new world order – book extract (AFR 30.10.2020)

Nov 2, 2020

Central to understanding the emerging world order is to comprehend China’s strategic intentions and potential. The question of whether China is an expansionary power or not becomes crucial in understanding how the new order will unfold.

This book argues that China will not be an expansionary power that seeks to establish global hegemony. This is not because of lack of intent or ambition, nor is it because historically China has not been an expansionary power – as it was when ruled by the Manchus – but rather because China is a constrained superpower.

China is invariably seen as thrusting outwards, its imperial ambitions now stretching far and wide. Like any state, China seeks security, influence and recognition of the legitimacy of its interests. More peculiar to China is the perceived need – rightly or wrongly – to defend the party-state from external attack.

Few other countries’ political systems are subject to sustained attack and criticism from other governments, such as when Australian foreign minister Julie Bishop said China’s political system made it unfit for leadership in the Asia-Pacific, or when Vice-President Mike Pence effectively called for regime change.

Australia will need to demonstrate that it wishes to pursue an independent foreign policy towards China. It is a long road back to how things stood at the start of the decade, when relations were in a constructive phase. There was no frothiness but rather a clear understanding of the mutual benefits to be had from a co-operative relationship.

Australia then still spoke the language of strategic co-operation and engagement, and, importantly, acted on that basis. Foreign policy towards the region was still directed at promoting greater integration, not division. The pursuit of a free trade agreement with China was not just about selling more beef and wine. It was also about higher levels of economic integration around services, investment and intellectual property.

It will be argued that China was different then, and that things changed appreciably after Xi Jinping took over as leader in 2012. That is true up to a point, as Xi adopted a more muscular foreign policy and began to change course on economic policy in a less market, more statist direction.

A more assertive foreign policy from China should have been anticipated as its economy and power grew commensurately. In fact, Beijing has not given up on economic reform andstillcontinuesitspolicyofopeningup,but as it has become richer, it has become less needy of foreigners. Nevertheless, reforms in thefinancialsector,suchaspermittingmajority ownership by foreigners of domestic securities companies, continue.

China post-COVID-19 may attempt a partial decoupling from the international economy, pursuing domestic consumption-led growth and seeking higher levels of selfreliance, especially in technology.

Had China’s threat to the old order been understood more widely, would the correct policy response have been to thwart China’s economic rise? Certainly not, just as policies to try to contain China today are not appropriate. Australia and the US, and the West more generally, have no option but to accept China as it is – for better or for worse – and work out how to respond in ways that avoid war and maximise benefits.

It is also necessary to recognise that, no matter how overweening a leader’s ambitions may be, China is a constrained power and all its grand schemes, from the Belt and Road Initiative to a global soft power effort at great expense, will always over-promise and under-deliver. It is important not to jump at shadows but to assess Beijing’s initiatives and actions on their merits.

When Beijing’s actions challenge the interests of states, it will of course be necessary and legitimate to push back against it both individually and collectively. Beijing needs to understand that its bad behaviour has a cost for itself. Ultimately, an inclusive framework of norms, rules and habits of consultation which include China and of which it is an author, will be the best means of constraining bad behaviour.

The new world order is here. While uncongenial to the West, it is not obviously threatening to Australia’s security. To hedge against a dominant China, Australia needs to work within constantly changing coalitions of states forming around specific issues and then dissolving when no longer required. Australian diplomacy must be creative, flexible, resolute and consistent. It must also be well resourced and led.

First published by the Financial Review on 30.10.2020

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