SPEECH NOTES FOR LOWY INSTITUTE – China on our mind
Let’s begin with a question: who can recall Australian MPs being boycotted from an official delegation simply because they’d been critical of some aspect of that country’s policy?
The fact that the Chinese government has chosen to refuse visas for Andrew Hastie and James Paterson, and demanded that they “repent”, no less, of their thought crimes – on top of its deep freeze on ministerial contacts – shows how complex Australia’s relationship with China has become. But unlike a prime ministerial predecessor speaking last week, I don’t assume that this must all be Australia’s fault.
After all, the only way to keep the Chinese government always on-side is always to be compliant, and that’s a position that no self-respecting country could ever adopt.
Very early on, the Abbott government annoyed the Chinese by objecting to their unilateral declaration of an air defence zone over a disputed island and by flying a military aircraft through it without first seeking their permission. This triggered a legendary dressing down of our foreign minister by her Chinese counterpart. As well, I maintained the former government’s ban on Huawei helping to build the NBN and began our naval build-up.
Of course, once governance arrangements were changed to reflect international norms, Australia did join the Chinese-led Asian Infrastructure Investment Bank (despite US and Japanese concerns), but we held aloof from the Belt and Road Initiative, sensing that this was more a debt trap for vulnerable economies than a latter-day version of the Marshall Plan.
Even so, China chose to upgrade its relationship with us to that of a “comprehensive strategic partnership” (one of 11); and, more importantly, finalised, with us, its first trade deal with a G20 economy.
As prime minister, my view was that I wanted the best possible relationship with China, consistent with our values, and with our fundamental security partnership with the United States. I always hoped that John Howard would turn out to have been right when he declared that it was not necessary “to choose between our history and our geography”. My own way of putting it was to stress that you “don’t make new friends by losing old ones”, and usually the adding the rider that “we would all advance together or none of us would advance at all”.
It was much easier, though, to think that hard choices could be avoided when China seemed to be liberalising, on the reasonable grounds that freedom was ultimately indivisible, and that market competition would eventually lead to political competition too.
But that was before the militarisation of the South China Sea was complete, before the internment of a million-plus Uighurs, before the development of the technology-backed social credit system designed to enforce conformism, and before Xi Jinping was declared president for life. Still, I’m confident that Australia would only ever choose between China and America, if China forced us to.
As prime minister, I never met the Dalai Lama on the grounds that I did not want to give gratuitous offence. Likewise, there was no additional ministerial contact with Taiwan. But that was then and this is now.
It would not be possible for a credible Australian government to ignore any abrogation of the “one country, two systems” arrangement for Hong Kong. That would have to be met with targeted sanctions at least as significant as those imposed on Russia for its proxy invasion of the western Ukraine. And any attempt by China to coerce Taiwan could have incalculable consequences, the least of which would be an arms race in East Asia unprecedented in history.
As prime minister, I routinely congratulated the Chinese government and people on lifting a half a billion people from the third world to the middle class in scarcely a generation, the greatest and fastest advance in human well-being in all history – because it was true, and because it was helpful to say it.
And I acknowledged that the rise of China had been good for the world, not just for the Chinese, with Australian exports of coal, iron and gas giving us sustained prosperity, and China the energy and resource security it craved – again because it was true, and because it was helpful to say it.
It’s worth noting that the Chinese have not become our biggest customer because they wanted to do us a favour. They buy from us because it’s in their self-interest; because we are a reliable, relatively low cost supplier.
Yes, it would be quite possible, in a command economy, for China to buy elsewhere if it wanted to punish Australia (say) for our closeness to America. But any form of economic sanction would hurt them as much as us; and as most of our exports are commodities, at least in the short term, we could readily find alternative buyers amongst alternative suppliers’ current customers.
It would be harder, though, for our universities to replace any lost Chinese students, which is why they have been unwise to become so dependent on one market.
Of course – like the previous economic take-offs of Japan, Hong Kong, Singapore, Korea and Taiwan, and the emerging take-offs of India, Vietnam and Indonesia – China’s economic rise was only possible because of globalisation, under the liberal world order guaranteed by the United States.
By contrast, there had been no US investment in the old Soviet Union, almost no trade between the West and the old Soviet bloc, and certainly no exchanges between Western and Soviet universities giving our ideological and military rivals privileged access to our latest technical insights.
While the old Soviet Union was a first rate power but a third rate economy, thanks to its integration into global supply chains, China may already have the first rate economy needed to sustain a first rate military.
America is changing too – and not just because of President Donald Trump. With its armed forces demoralised by asymmetric wars against Islamist fundamentalists, and its industry sapped by competition from rising economies, both sides of American politics seem to have concluded that globalisation was a bad bargain: that America has paid the price, while others have reaped the benefits.
This is behind the shift from cautious engagement with China to full strategic competition, now that China has dropped the mask of biding its time and hiding its strength.
My instinct is that the trade skirmishes between America and China are only superficially about the deficit and much more importantly about removing China from US supply chains. If so, banning Huawei from participation in 5G networks could be just the start of a much larger shift, perhaps engineered by strategic government purchasing, away from Chinese componentry in sophisticated Western systems and products.
Thanks to its economic and military strength, its intellectual and scientific creativity, its immense soft power, and its decent and humane instincts, America remains the world’s pre-eminent and indispensable nation – the only country with the strength and goodwill to be universally looked to for leadership.
But Trump’s America is quite different to JFK’s and will most assuredly not “pay any price, (and) bear any burden…in order to assure the survival and the success of liberty”.
Trump’s America is transactional, and will expect its allies to do much more for their own defence. And why not? Americans, after all, should hardly be expected to do more for others than others are prepared to do for themselves.
So with a more assertive and a more capable China; with a less dominant and more self-absorbed America; and with a less certain strategic environment – with a new Tsar in Russia and a new Sultan in Turkey, as well as a new emperor in China – apart from fretting, what should Australia actually do?
To start, not be complacent at home and innocent abroad. Because nothing can be taken for granted anymore; not our own prosperity, not American involvement in our region, and certainly not Chinese strategic benevolence.
There were two things wrong with John Curtin’s famous wartime statement that Australia “looks to America, free of any pangs as to our traditional kinship with the United Kingdom”.
First, it underrated Britain’s then-Herculean contribution to the defence of Australia. Second, and worse, it reinforced the notion that we could not be responsible for our own security, even though this is something that no self-respecting country can ever neglect or sub-contract to someone else.
Because we alone are ultimately responsible for our own national survival and well-being, there has to be a strategic intent to everything we do; a strategic intent, indeed, at least to match China’s.
Obviously, we should be doing all we can to strengthen our economy and to build our prosperity because the richer a country is, the more security it can afford. It’s good that the government is cutting taxes, has rediscovered the will to cut activity-killing regulation, is trying to stop the green sabotage of resources projects, and is keeping up the pressure on rogue unions.
It even seems to be making some progress on getting more dams built and more baseload power into our grid. And our immigration programme is becoming slightly smaller and more focussed on migrants who are employed and paying taxes from day one.
Equally obviously, we should continue to engage more with the other democracies in our region. As prime minister, I moved swiftly to deepen our security engagement with Japan and to reach a nuclear understanding and a security relationship with India. I strove to revive the Quadrilateral Security Dialogue that had been so unwisely scuttled in 2008.
The recent Quad foreign ministers’ meeting, on the sidelines of the UN leaders’ week, was a key breakthrough. Getting something like “five eyes” levels of official machinery and informal understandings behind the Quad, for us, should be a key goal; because if the question is China, the answer is India. The Indo-Pacific needs two democratic superpowers, not just one.
Then there’s the Foreign Investment Review Board, now more able to scrutinise overseas purchases, case-by-case, from a “yes to investment but no to control” perspective. It’s right, too, that officialdom, including our security agencies, is now highly focussed on Chinese influence-peddling at every level, from undergraduates, to the senior reaches of business, to parliament itself.
This will need deft handling, though, to avoid calling into question the loyalty of the hundreds of thousands of people from China who regard themselves as Australian.
Now, apart from it being too short, I have very few regrets from my time as PM. Probably the biggest, though, is that we did not move more swiftly to strengthen the navy.
Yes, we are now embarked on what government ministers call the largest peacetime build up in our history; but while it might be the largest, it’s also the slowest.
Meanwhile, the rapidly growing Chinese navy has more than 300 vessels, including four nuclear missile submarines, six nuclear attack submarines and 50 conventional attack submarines, with a new generation of nuclear subs likely to start building within about five years. There’s the Russian Pacific Fleet, too, with 23 submarines, many of them nuclear.
Hence, we need more ships and we need them soon. But in particular, we need more submarines and we need them now.
Armed forces, especially naval power, can’t be summoned up in days, weeks, months, or even years to meet a sudden emergency. Australia will face whatever peril emerges in the next several decades with the military forces that the government orders now.
Two gnawing worries should be: that our new submarines won’t even start to arrive for 15 years; and that, by then, they will already have been superseded.
If it’s only nuclear submarines that are good enough for the French to operate, why are we buying, from them, something that they wouldn’t use themselves? And why are we taking years to redesign a French nuclear sub to something inferior to what exists now?
I hesitate to question a process that took so long even to begin – and what’s in train is better than the procrastination that preceded it – but hope we are exploring with the French the possibilities of simply taking an already-designed nuclear submarine.
And if that’s a step too far for them, I hope we are exploring with our most intimate allies, America and Britain, off-the-shelf options for getting new strategically more capable submarines much, much quicker than currently envisaged.
At the very least, we need a plan B in case the current one turns out to be as fraught as the Collins project.
And yes I confess that my original intention, until derailed by the politics of South Australia and by a better appreciation of their operational limits, was simply to order the submarines that Japan is confident can cope with Russian and Chinese competition.
I know that it’s been a long and convoluted process to get even to where we are, but if the end result is still not what we need, then there’s still more to do, because it is the absolute duty of this generation not to leave our successors without the means of their own defence.
It’s our own self-respect, rather than the expectations of America, or the rise and rise of a much more assertive China that should drive our acquisition of armed forces that are more self-sufficient, and have somewhat greater cyber and strategic strike capability.
Our country has to be capable of inflicting severe damage on any adversary – and that almost certainly means increasing military spending beyond two per cent of GDP.
Now, when your biggest trading partner is also a big strategic challenge, living with trouble has to be taken for granted; unless you change your economy or change your polity, neither of which should happen.
We will need to become less starry-eyed about the Chinese government and the Chinese system without losing our engagement with the Chinese people. We will need to maintain our China trade and much of our Chinese investment while preserving our independence.
It won’t be plain-sailing but we just have to get used to it.
Like most MPs, I routinely went to large and enthusiastic Australian-Chinese community events.
The Chinese government used to regard overseas Chinese as having ratted on their country, but now regards them as potential agents of influence; even though, at least early on, many of them left China to avoid communist rule.
I suppose that a few might regard themselves as Chinese living in Australia, and most would be quietly proud of modern China’s economic achievements; but nearly all would consider themselves 100 per cent Australian with no more divided loyalties than a former Kiwi who still barracks for the All Blacks.
We should not assume that Australians of Chinese ancestry would more readily be agents for China in Australia than agents for Australia in China.
It’s noteworthy that there are few wealthy Chinese who don’t seek to acquire assets in countries like Australia. For these people who know China best, apart from a Western passport, their most prized possession is a Western education. This is hardly a sign of total confidence in China’s future or of unmixed faith in its values.
Confucian culture, no doubt, could teach modern Australia a thing or two about respect for tradition. As a conservative, I appreciate that!
But I also have no doubt that modern Australia could teach China no end of a lesson about personal freedom and the rights of minorities. Again, we should not assume that Chinese people somehow gravitate to authoritarian forms of government.
Hong Kong’s persistent attachment to the rule of law; Taiwan’s swift evolution into liberal democracy; and even Singapore, with its blend of Chinese culture, market freedom, and British justice, show that the illiberal gene is in the DNA of the communist party, not China.
There might only be 25 million Australians and we might sometimes, as a nation, fall short of being our best selves; but we should never underestimate the gravitational force of the Australian way of life.
Why do we attract so many migrants and would-be migrants? Why do so many visitors decide they’d like to stay? Because there is a warmth and decency to Australians and a zest and welcome in the way we live that no one and nowhere else can quite match.
I suspect that we will now always have China on our mind; but that shouldn’t unduly worry us, let alone turn us into some kind of modern tributary state.
Britain might largely have left our region; America is no longer the sole superpower; but we are here to stay as a champion in our region for the liberal democratic values that have so shaped the modern world for the better.