Hugh White's willingness to admit his mistakes and revisit his assumptions is admirable. His error in predicting that China would punish Australia by withholding final agreement on the FTA out of displeasure with the Abbott Government's pro-US and pro-Japan tilt is understandable. After all, Beijing has been in a combative mood lately, threatening and coercing its neighbours in a bid to broaden its sphere of influence. In this case, though, as Hugh said, it seems Xi Jinping has sought to charm Canberra out of Washington's orbit rather than bully it out.
But to me, the mystery is not why Beijing opted for carrots in this case rather than sticks. As Malcolm Cook explained, withholding the FTA would have damaged the domestic economic reform agenda which is at the centre of Beijing’s concerns. Rather, the mystery is why Beijing has used sticks against other regional powers lately, and indeed why it bothers with the stick at all.
Let's assume that Hugh's overall assumption about China's ambition — that it seeks to reorder the region with itself in a lead position and the US no longer the strategically dominant force — is correct. It is not clear why China has decided that coercion and punishment are the most expeditious means to that objective.
Take Taiwan, for instance. The trajectory of the Chinese economy has led to a substantial growth in economic ties with Taipei. It has also led to growth in Chinese military capabilities which has seen the cross-Strait balance shift dramatically in Beijing's favour. In turn, this has led to a decline in the credibility of America's security assurances to Taipei – it is getting harder and harder to believe that the US would intervene on Taipei's side in a conflict between China and Taiwan, because the costs would likely be so high for Washington.
From a Chinese perspective, that's a major advance for its Taiwan policy. Yet it is hard to argue that it came about because China either threatened Taiwan or offered it carrots. The economic forces that Beijing unleashed through its reforms have taken care of most of it. [fold]
So when the long-term economic trends are so favourable to China, why does it bother to impose itself in the region? In the case of the Australia FTA, why would it feel the need to cajole Canberra away from Washington? If it waits, and grows, time will surely whittle away at the problem, forcing Canberra to equivocate here and there, slowly loosening Washington's grip. More broadly, if China can maintain its political unity and a decent rate of economic growth, then surely much of the work towards achieving its desired stature in the region will have been done.
I don't mean to suggest that China could feasibly return to its Deng-era 'hiding and biding' strategy. It is asking too much of Beijing to consciously choose to remain a second-rate strategic power as it rises to economic pre-eminence (in any case, as a major actor on the world stage, China has more responsibilities now). So China could continue to increase its military capabilities commensurate with its growing GDP, and it could lay out a strategic and foreign policy vision consistent with its size. But it could do these things without consciously frightening the region's horses. Given the scale of China's economic rise, even such modest steps alone would be earth-shaking enough.
So why does Beijing have to go beyond that? Why press territorial claims in the East and South China Seas? Why unilaterally declare an air defence identification zone and move oil rigs into waters claimed by a neighbour? Why consistently increase defence spending over and above GDP growth?
Perhaps such a policy will get China to the position of regional pre-eminence it seeks a few years earlier, but at what risk?
Photo by Flickr user nist6dh.