Commentary on Political Economy

Friday, 1 January 2021

 Paul Monk was one of my best intellectual friends at the University of Melbourne. A clear-minded, superbly erudite scholar, and a gentleman to boot, I cannot but endorse every word in this piece.

Five steps to rebalancing China policy

The sweeping trade sanctions imposed on Australia by the Chinese government since early last year are elements in a strategy of coercion to which we must not succumb. They spring not from any error on our part but from the intrinsically coercive nature of the Chinese Communist Party.

There can be no return to the naive strategy implicit in our relations with China in recent decades. That jig is up. We need a new and resilient China strategy. Devising and pursuing it will demand a depth and seriousness of thinking not previously exhibited in our relations with China.

The sanctions Xi Jinping’s regime has imposed on our prosperous and productive country extend from barley, lobsters and wine to lamb and beef, cotton, coal and timber. There is no other way to describe these assaults than as an outrage, in blatant violation of the World Trade Organisation principles to which China signed up 20 years ago and of the free trade agreement we reached with it in 2015.

Beijing is depriving its citizens of our high-quality commodities and even of electricity, for no other reason than its anger that we put obstacles in the way of its infiltration of and interference in our institutions — and that we called for an independent inquiry into the origins in Wuhan, in late 2019, of the devastating coronavirus pandemic.

Dismayed by China’s relentless economic siege warfare, many of our businesspeople and various pro-China pundits have been engaged in hand-wringing and fretting about our imagined errors or missteps. There have been calls for us to mend our ways and get the relationship “back on track”.

Scott Morrison and President Xi at the G20 in 2019. Picture: Adam Taylor/PMO
Scott Morrison and President Xi at the G20 in 2019. Picture: Adam Taylor/PMO

The Morrison government has held its nerve and correctly responded that we will not bow to the CCP’s coercive petulance but will systematically diversify our trade and deepen our strategic dialogue with other neighbours and trade partners while protecting our liberal and democratic institutions from subversion.

We should not contemplate going back to the complacent assumptions of the mining boom. But we must seriously contemplate our options for moving forward. That will necessitate not mere reflexive, tactical responses but a fundamental strategic reset.

China’s strategy, as one-time ambassador to China Geoff Raby pointed out in his recent book, China’s Grand Strategy and Australia’s Future in the New Global Order, has been relentlessly mercantilist and revisionist all along. It is not our friend or ally. Our place in its grand strategy has been intended as and would be, should we succumb to its coercion, that of a resource supplier; subordinate and deferential to it, detached from the US and Five Eyes alliances, and accepting of China’s manner of rule and territorial claims.

Beijing has cultivated and won to its viewpoint more than a few public figures in this country. For years now they have been urging that we find a way to accept our “place”. We must not. Rather, as Malcolm Turnbull put it when he was prime minister, we must stand up as a middle power and work with the many other states resistant to China’s overweening ambitions.

The Lord of the Rings trilogy — about the ominous rise of a dark power and the diplomatic, moral and military struggle to resist it — has been touted as among of the best Christmas movies, and given that we have just come through the Christmas period, one is tempted to dub the siren song of the pro-PRC lobby “the Saruman complex”.

There is a dramatic scene (in both novel and film) in which the corrupted wizard Saruman the White urges the good wizard, Gandalf the Grey, to join him in defecting to the rising power since “its victory is at hand” while the “old allies and policies will not avail us at all”. There “will be rich reward”, he insinuates, for those who change sides. Gandalf rejects that option and rallies the West against the dark power.

Chinese soldiers from the People's Liberation Army in Beijing. Picture: Getty Images
Chinese soldiers from the People's Liberation Army in Beijing. Picture: Getty Images

Gandalf’s key insight is that dark lord Sauron understands only one thing — power –— and “weighs everything to a nicety in the scales of his malice”. But Sauron doesn’t comprehend the nature of freedom or altruistic realism and will miscalculate. His blows, therefore, will miss their mark. He has blind spots that vitiate his grand strategy. That’s how things play out in the fable. We need to run with Gandalf, not Saruman, regarding China.

Xi and the CCP are obsessed with power. They too suffer from blind spots. It falls to us to base our own strategy on freedom and altruistic realism, in our dialogue with one another, with our neighbours and with the people of China. Contrary to what the “Sarumans” may sneer, this isn’t fantasy. On the contrary it offers the best prospect, both for our own security and the future emancipation of the mass of people in China.

So far no one in Australia has laid this outlook before us more clearly or gracefully than Rory Medcalf in his deeply considered study, Contest for the Indo-Pacific: Why China Won’t Map the Future. Like Raby and several other well-known commentators, Medcalf has come out of extensive government experience as a diplomat and intelligence analyst. He now works as head of the National Security College at the Australian National University.

His book, 10 years in the writing, is a profound meditation on Australia’s outlook. More than any of the China-centric literature, it draws our attention to the deep historical and geographic context in which our island continent sits — the Indo-Pacific, from the Indian subcontinent, via the Sea of Japan to the west coast of North America. It is a crucial tract for our times. It is wise, temperate and far-seeing, rather than anxious, pessimistic or querulous.

What emerges from a close reading of Medcalf and of numerous deeply informed Chinese scholars, inside and outside China, who have been challenging the CCP’s master narrative is the richness and complexity of our strategic environment — but also the vulnerability and hubris of Xi and the regime over which he presides.

From India to Japan, including Singapore, Vietnam, Indonesia, Taiwan and South Korea, we have neighbours who do not wish to see a Beijing-dominated Indo-Pacific. Medcalf quietly educates us about all this. That is the great value of his thoughtful work.

The Quadrilateral Security Dialogue — between ourselves, India, Japan and the US — has, within it, the economic, strategic and diplomatic weight to counterbalance China’s assertiveness and ambitions.

Chinese medical staff with a Covid-19 patient in Wuhan in January. Picture: AFP
Chinese medical staff with a Covid-19 patient in Wuhan in January. Picture: AFP

It’s high time to make clear to Beijing that balancing will now occur because its own behaviour has left the members of the Quad no other sensible or attractive alternative.

Those who assert that we should accept China as it is, rather than insisting that it ought to be different, fail to grasp the internal logic of the political and economic situation in China, to say nothing of its external ambitions.

For decades, the most thoughtful observers, Chinese and foreign alike, have acknowledged that political reform would have to complement economic reform and growth in China. The serious debate was only over the timing and design principles. All this was explored meticulously many years ago in Dali Yang’s classic work, Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (2004).

In an essay for the January-February 2021 issue of Foreign Affairs, Cai Xia, a former doyen of the Central Party School in Beijing and now a dissident and exile, writes that, having baulked at necessary reforms since 1989, the CCP has failed and a rupture is coming. It has proven itself not only resistant to political reform but incapable of it.

This incapability is in plain evidence in the failure of the party to find a way to accommodate the demands of the citizens of Hong Kong for accountable government and the threats by Xi to assert sovereignty over democratic Taiwan by force.

These, then, are the realities, as we enter 2021. What they require is that we correct our perceptions of China and what is feasible in relations with it for as long as it has Xi at the helm and rejects transparency and accountability at home and abroad.

Contrary to the Saruman-like advice that we distance ourselves from the US — especially given the outcome of last year’s presidential election — and appease Beijing, we must now base our strategic policy vis-a-vis China on five deliberate steps:

• Stop talking up China’s rise but instead scrutinise its vulnerabilities and inefficiencies while openly exploring the prospects for encouraging a “remaking of the leviathan”.

• Deepen our diplomatic co-ordination and security dialogue with our partners in the Quad about the Indo-Pacific and ways to constrain China within the bounds of liberal norms.

• Insist on a level playing field with China as regards trade, investment and information flows. Such conditions have not been, are not now and for the immediate future will not be met by the Beijing regime. Therefore, we cannot have a trusting relationship with it. In consequence, it must be made to suffer proportionate and transparent costs until it mends its ways.

• Configure our information warfare capabilities not only to block Chinese hacking and interference but also to push back by consistently documenting and projecting the abuses and inefficiencies built into its rule and its strategic policy, while talking up the attractive prospects for a more open and tractable China.

• Educate a cadre of China specialists with the language skills and analytic abilities to deal with the strategic deception, disinformation and negotiating strategies of the CCP.

All this presupposes that we agree to interpret the trade sanctions imposed on us last year as a watershed event: a point of no return in our relations with Xi’s unpleasant and arrogant regime.

We seek, as we have long done, a good and open relationship with China. We reject subordination to it and will demonstrate our resistance and resilience.

As Medcalf has shown, there is ample scope for us to chart such a course; not in desperation or isolation but in co-ordination with other thriving and proud Asian states and with the US, which is standing up to the most serious constitutional challenge it has faced in a very long time.

Saruman, by detaining Gandalf, showed his true colours. China’s trade sanctions against this country have shown its true colours, even to those who had long hoped that they could profit from commerce with China while largely ignoring the CCP’s human rights abuses, internal totalitarianism, territorial ambitions and growing assertiveness.

Saruman chose the other side and there was no going back; though, when the tide had turned, Gandalf offered him a path to repentance and forgiveness — which Saruman, in his bitterness, angrily spurned.

So it often goes in such matters.

The CCP has had every possible opportunity to embrace the liberal international order, reform its political institutions, become a trusted state within the wider Indo-Pacific and in the world at large. It has forfeited those opportunities. Therefore, the ground and the game have shifted.

There are, of course, those who — mindful of the party’s long history of repression and its unprecedented wealth — will argue that we should not seek regime change in China and that the party will not peacefully surrender power.

However, for the longest time, we placed our hopes in the sheer logic of institutional development nudging the party in the direction of what it spurns as “peaceful evolution”.

We now have no choice but to be less generous and more strategic.

We must, therefore, take the five steps set out above. We may then look for a variety of possible outcomes in China, from incremental adjustment, to internal party crisis, to system-wide upheaval. We cannot bring these things about but we should cease coddling and indulging the party. That’s now done and dusted.

In Seoul in 1979, dictator Park Chung-hee, who had led South Korea to rapid economic growth across the previous decade and more, was assassinated by his own intelligence chief because he would not open the way to political reform.

In Taiwan in 1986, dictator Chiang Ching-kuo legalised political opposition rather than repress it.

These are alternative mini-scenarios for China’s near-term future. There are others.

To explore such scenarios, we need fresh perspectives. Late last month Ezra Vogel, author of a major 2011 biography of Deng Xiaoping, died at the age of 90. He hailed Deng as the hero of the economic “transformation of China”.

Next year will see publication of a biography of the man whom Deng prevented from leading the political transformation of China — Hu Yaobang (1915-89).

The life and death of Hu should thenceforth replace the life and work of Deng (to say nothing of Xi) as our guide to the nature and fate of the Chinese Communist Party.

The biographer, Robert Suettinger, is a veteran China hand and his book draws on the labours of many Chinese reformers, dissidents and scholars in showing that Hu was “the conscience of the party” but was thwarted and humiliated by Deng in 1987-89 because he was encouraging principled political reform.

This, in the era of Xi, must now become our master narrative about the CCP. For just as Medcalf’s book shows us the way to rethink our place and possibilities within the Indo-Pacific, Suettinger’s path-breaking biography of Hu will show us how to reframe our understanding of the whole history of the party.

Grounded in those two narratives, we will be able to press for ways to have the Communist Party, at long last, set China free to fulfil its potential and take its place among us as an honoured and trusted friend, not as an overbearing and threatening totalitarian state.

Paul Monk was head of the China desk in the Defence Intelligence Organisation in 1994-95. He is the author of 10 books, including Thunder from the Silent Zone: Rethinking China (2005) and Dictators and Dangerous Ideas (2018).

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