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January 19th 2015 print

David Archibald

China’s Dinky-di Cheer Squad

Even if you see Beijing's economic statistics as credible, which they are not, their trend says the country's "miracle" growth is tailing off. Yet here we have the likes of Malcolm Fraser stating that our future resides with the Middle Kingdom

china goosteppersA couple of years ago I attended a Broadway show directed by Jerry Seinfeld.  It was a monologue entitled “Long Story Short”.  What was remarkable about that play was that amongst the myriad number of things that could be mentioned in a history of the world told in 75 minutes, it was noted that Australia had supported the United States in every war from and including World War 1.  Even in the left-liberal heartland of the United States, Australia’s support is appreciated.

In some of those wars we were enthusiastic participants.  For example, Australian defence spending as a percentage of GDP reached 45% in 1943, when we were grateful that the United States saved us from a Japanese invasion.  We were less enthusiastic in the mid-1980s, when our contribution to one particular Middle Eastern fracas was a few navy clearance divers.  John Howard was an enthusiast and invoked the ANZUS treaty after the United States was attacked by Islamists on September 11, 2001.  The enthusiasm continues to the current day, with RAAF jets doing some desultory bombing of Islamist outposts in the deserts of Syria and Iraq.

The special relationship gives Australia a big free ride from our powerful friend.  The economy of the United States is 11 times larger than Australia’s.  As a percentage of GDP, its defence spending is 250% that of our effort. What we don’t spend on defence allows us to indulge in more lotus-eating such as the paid parental leave scheme.  We are treating the world as if Francis Fukuyama’s prophecy of the end of history had come true.

No matter what we spent on defence ourselves, it is wonderful to have a powerful friend committed to the liberal, democratic order and free passage on the world’s oceans.  The US has an arc of bases running from Diego Garcia out in the Indian Ocean to our west, Singapore to our north, a seasonal base in Darwin and a big one in Guam.  On our part, Australia is the southern anchor for our Great Friend’s keeping of the peace in Asia.  That is our role.  We hold the southern flank and make life much easier for the US.

The time is soon approaching when our commitment to the special relationship will be tested once again.  China seems intent upon starting a war with Japan and seizing a large patch of ocean in southeast Asia.  With respect to the latter, the most complete analysis of the Chinese claim is in a State Department Report No.143 entitled “Maritime Claims in the South China Sea”.  What most people don’t realise about the Chinese nine-dash-claim is that it is not so much about gaining area and resources but excluding others.  Commercial operators might not be affected and don’t care about filling in forms and asking permission to cross the sea or sky.  The Chinese claim, if enforced, would stop any other country’s warships and military aircraft from crossing the South China Sea. Vietnam, which is 1,200 km long, would be restricted to a strip along their coastline that gets as narrow as 92 km.  For Malaysia, their operating strip would be as narrow as 44 km, as shown by these maps from Report No. 143:

dash chartsThe Chinese claim to the South China Sea is meant to be a permanent and irrevocable humiliation of the countries of southeast Asia.  Notions of protecting trade routes and so on are all a nonsense.  It is all about China feeling better about itself because it is able to humiliate its smaller neighbours.

Would anybody want a friend like that?  There are some amongst us, our very own Quislings, who would have us abandon our Great Friend and hitch our wagon to the Red Star of Asia, which is supposedly rising.  Let’s examine that claim first.

The Chinese economy took off after their accession to the World Trade Agreement in 2001.  China became the world’s preferred subcontractor.  Electronic components made in Japan, Korea and Taiwan are imported into China and put in plastic cases.  The salad days of China’s export-driven growth ended in 2006, when exports as a percentage of GDP peaked at 39.1%.  That has subsequently fallen to 26.4%.  But the world can only take so much of China’s exports and that point has been reached.  China’s market share of global trade reached 12% in 2011 and has stalled at about that level.  That follows railway freight in China, which doubled between 2003 and 2011 but has stalled since.  Previous premier Wen Jiabao said in 2013 that China’s growth is “unbalanced, uncoordinated and unsustainable”.

Another thing about China’s growth: it may be illusory.

We don’t have to spend too much time on economic statistics to divine China’s future.  All we have to do is note what the Chinese themselves are doing, which is leaving.  As John Lee notes, the richest 1% of households (2.1 million out of a total of about 520 million households) own 40-50% of the country’s total real estate and financial assets.  This is the result you would expect from a state-sanctioned kleptocracy.  These wealthy people are voting with their feet.  In a survey last year of almost 1,000 Chinese, each worth over $16 million, nearly two-thirds had made arrangements to leave the country permanently or were planning to do so.  This group is particularly well-informed on China’s prospects, with 90% of the 1,000 polled being officials or members of the Chinese Communist Party.  These are people who have stolen what they can and now think that wealth preservation is more important than hanging around to steal some more.  When the rats are leaving the ship, why would our Quislings have us clamber aboard a junk that is settling in the water?

But it is worse than that.  The sudden increase in Chinese aggression in the Senkakus in late 2012 was about the time that Xi Jinping became General Secretary of the Chinese Communist Party.  He is now also President of the People’s Republic of China, Chairman of the Central Military Commission and Chairman of the National Security Council.  Tony Abbott was quite pleased that President Xi, in his address to the Australian Parliament after the Brisbane G20 meeting, said that China was on track to become a liberal democracy by 2050.  At home in China, he is doing the opposite.  In a number of edicts, he has tacked hard left politically and is railing against foreign influences in Chinese society.  Under the guise of fighting corruption, he has instituted a reign of terror equivalent to the Stalinist purges of the 1930s.  Or perhaps they are just recycling more recent Chinese history.  To quote long-time China watcher Anne Stevenson-Yang in late 2014:

What’s really going on is an old-style party purge reminiscent of the 1950s and 1960s with quota-driven arrests, summary trials, mysterious disappearances, and suicides, which has already entrapped, by our calculations, 100,000 party operatives and others. The intent is not moral purification by the Xi administration but instead the elimination of political enemies and other claimants to the economy’s spoils.

Given that President Xi is quite happy to kill thousands of his countrymen to consolidate his political position, the lives of foreigners would be the merest trifle.  We should not be trying to get closer to these people.  Selling them some iron ore is enough.  But our Quislings would have us abandon the United States for the world’s largest mafia operation?  And some who should know better have said some unfortunate things.  Ms Julie Bishop, our Foreign Minister, has been quoted as saying:

“When asked about the significance of China’s SAG (surface action group in the Indian Ocean) deployment, Australian Foreign Minister Julie Bishop said, “The United States has long been the single greatest power in the Pacific, in Asia, in fact globally. … But we recognize that there are other countries that are emerging as stronger economies, other countries are building up their militaries. … So we are in a very different world. It’s a changing landscape and our foreign policy must be flexible enough and nimble enough to recognize that changing landscape.”

No, Ms Bishop, China does not have a bigger economy than that of the United States. The relative size of their economies is possibly most accurately captured by their respective oil consumption figures, China’s 10 million barrels per day versus the United States’ 18.5 million barrels per day.  China’s economic effectiveness is diluted by hundreds of millions of rural peasants who make only a small contribution to the economy.  But no matter what economic facts and trends portend, throwing our lot in with China will end badly for us, and could very well be the end of us.

That said, there is a historical symmetry to the debate.  Prior to World War 2, Prime Minister Robert Menzies was nicknamed “Pig Iron Bob” because he exported scrap iron to Japan that was used to make bombs to kill Chinese.  Now the left in this country is saying that our iron ore exports to China are so important that we should abandon our relationship with the United States, and the Chinese will be using some of that iron ore to make bombs to kill Japanese.

Australia’s Quisling Central is something called the Australia-China Relations Institute (ACRI) based at the University of Technology Sydney.  It was launched on May 16, 2014 and the hapless Ms Bishop was there to fawn over the Chinese.  It is amusing to note that she urged “China to work constructively and cooperatively to resolve tensions in our region” when China itself is the source of 100% of those same tensions.  ACRI was possibly set up with one purpose – winkling Australia out of our defence alliances with Japan and the United States ahead of the Chinese attack on those countries.  Thus, seven months after founding, ACRI came out with a survey it commissioned saying that 71% of Australians thought that Australia should stay out of any war between China and Japan.  We don’t know whether that number is true or not depending upon the wording of the questions asked.  No matter what the words used, it is push-polling.  ACRI is trying to alter the political landscape in the aggressor’s favour.  The poll is another confirmation that China is planning to attack Japan – why otherwise would they do it?

The benefactor that funded the founding of ACRI is a Mr Huang Xiangmo of the Shenzhen-based real estate developer Yuhu Group.  He and his group funnelled $350,000 to the ALP in 2012-13.  Perhaps it was coincidence, but perhaps not, because in 2013 the Gillard Government started a thing called the Australia-China Security Dialogue.  While the Chinese political system is endemically corrupt, we try to be transparent.  Thus one can find reference to the donation made by Mr Huang to our Minister for Social Security, Scott Morrison, of a Mont Blanc pen valued at $330.

ACRI is led by Bob Carr, but he is not Australia’s wrinkliest Quisling.  That title goes to Malcolm Fraser who wrote a book called Dangerous Allies in which he called for Australia to cut its close ties to the United States.  The benefit of Malcolm Fraser’s opinion is that he is an extremely reliable counter-indicator.  Just as global warming was a litmus test for our politicians – the ones who believed in it were the easily deluded fools, Fraser has consistently been on the wrong side of history.

This is a serious matter. My prediction: China will attack Japan and the United States.  For those worried about Australia’s trade with China, you need not be concerned.  There won’t be any.  The protagonists will be sinking each other’s ships as fast as they can. Japan has the second-best navy, after the United States, in the region and will be effective in blockading China.  There will be a great many dead, all on China’s head.  We will be tested, and if found wanting in our relationships with Japan and the United States, will become a defence orphan.  An intelligent left-wing friend of mine is of the opinion that it wouldn’t matter if we spent 15% of GDP on defence – if we don’t have nuclear weapons, we are effectively undefended.  Either way, our days of eating lotus flowers are over.  Gird your loins and summon up the blood.  War is being thrust upon our true friends, and upon us.

 

David Archibald, a visiting fellow at the Institute of World Politics in Washington, D.C., is the author of Twilight of Abundance (Regnery, 2014)

 

Comments [2]

  1. en passant says:

    David,
    Excellent analysis that gives the lie to two of the great economic myths of the 20th century: that globalisation would result in an interdependence that would make wars difficult and that improving the wealth of China and others would ‘civilise’ them.
    Unfortunately, i was out of step as i thought moving our manufacturing offshore weakened Oz, enriched a few and weakened our self-sufficiency. The countries that manufacture things win wars – as the USA (and Australia) proved in WW2. We may prove this true again, but this time Oz can no longer manufacture guns, planes and ships economically.
    I think it is time to reappraise the sale of Oz assets and our immigration policies (not specifically because of the Chinese, but) on a wider basis.

  2. Jody says:

    I’ve been concerned for quite a while because of the vast expanses of unoccupied buildings in China. This cannot last and is the canary in the coalmine about the real economic “health” of China. As is suggested in this article, we cannot trust the Chinese to tell us the facts – but they are owed money by the United States and this makes the dynamic more ‘interesting’ and unpredictable.

    Meantime, the Chinese understand this and are busy buying up vast tracts of Sydney real estate. I don’t think Australia needs to be a manufacturing country to produce planes, submarines and armaments; the Chinese are going to win any war economically anyway.

    The horse has bolted on immigration policy!