Portents of War Between China and Japan

One Saturday evening in late January, I sat down for a quiet dinner with a small group of friends who have been back and forth to China many times since the 1970s. Each is deeply knowledgeable about China and fluent in Mandarin. None of them is what you would normally think of as being “hawkish” and none is “anti-Chinese”. On the contrary, though my affinity with them is rooted in their never having been apologists for Mao Zedong, my regard for them has been strengthened over the years by the fact that they clearly, each in his or her own way, exhibited a rich appreciation for the Chinese world.

Things that were said over that dinner, given the backgrounds of the group, were quite disturbing. There was an almost rattled sense that, over the past ten years or more, the Communist Party has been leading China in an ominous direction. They had heard more and more jingoistic and war-mongering talk from supposedly well informed and responsible Chinese business people and officials in recent years; and they expressed fears that China is preparing for war—especially against Japan. China intends to overthrow the Pax Americana in Asia and to break up America’s alliances, it was agreed.

Several of them drew attention to recent statements by Chinese military officers to the effect that China must revitalise its military traditions, since history is built on blood and thunder. One drew attention to the statement by the new Chinese president Xi Jinping to military officers that the PLA must be ready for war. Another said he had come across evidence that the Communist Party has been using front companies to buy up Chinese community radio and newspapers in Australia and elsewhere in the West and use them for Party propaganda among the Chinese diaspora. Yet another, himself of Chinese origin, said his own parents talk at home of democracy being rubbish and China ascending to a dominant position in world affairs.

It occurred to me that this conversation might provide the plot point for an espionage novel or a contemporary thriller of some kind. John Buchan’s The Thirty-Nine Steps comes to mind; perhaps because Buchan described the novel, written in 1915, as a “shocker”, explaining that he meant “an adventure where the events in the story are unlikely and the reader is only just able to believe that they really happened”. The novel is set during May and June 1914. The hero, Richard Hannay, has just returned to London from Rhodesia in order to begin a new life, when a freelance spy called Franklin Scudder calls on him to ask for help against a German spy ring called the Black Stone, which plans to steal British contingency plans for war in Europe.

Needless to say, I am not a freelance spy and I was not seeking the assistance of my friends against anything resembling the Black Stone. Nor do I anticipate any of them being pursued, like Richard Hannay, the length and breadth of the country, by the servants of a sinister foreign power. I make mention of Buchan only because the nature of the conversation that night had a dramatic character and famous novels are very often the simplest means for enlivening the imagination to the human realities of a complex situation. The point I wish to make is that that dinner conversation arose because all around the world now similar conversations are being held. There is a completely real drama starting to play out—though like a reader of Buchan you may be only just able to believe it is really happening.

Let me offer just a handful of illustrations of what I mean. In February Kevin Rudd made the portentous statement that Asia has become a tinderbox on water reminiscent of the Balkans in 1913. A leading China specialist in Sydney, Linda Jakobson, has warned that China risks lurching into war with its neighbours if it is unable to rein in domestic tensions and nationalist ambitions.

In the United States, trade and development specialist Clyde Prestowitz has warned that Chinese hacking into major US newspapers is further proof that China is acting in a warlike manner. Senior US naval intelligence officer James Fanell has declared that China is becoming dangerously aggressive and ambitious and is intent on being able to win naval battles on the high seas. The Japanese Prime Minister, Shinzo Abe, has appealed to China to show restraint in the East China Sea. India has warned that it will send naval units to the South China Sea to support Vietnam in its disputes with China over maritime territories.

In this context, a senior Chinese military officer has warned darkly that the USA is acting as “the global tiger”, leading Japan, “Asia’s wolf”, in mauling China. He has urged that Australia should not become a “jackal for the tiger or dance with the wolf”. An unprecedented number of prominent Australians are also urging very publicly that we should think long and hard before aligning ourselves with Japan or the United States against China; not just over Taiwan, but at all. Such alignment, we are told, would be contrary to our thriving trade relationship with China; would risk drawing us into an appalling and surely avoidable conflict; and would, indeed, increase the likelihood of such a conflict by stoking Chinese fears that the USA was building an alliance to contain or suppress it.

Seen in this context, the dinner conversation was not a “shocker” in Buchan’s sense. It was a taste of reality. But reality in such matters is wonderfully more complex than it is in popular novels and my task here is to address the complexity of our situation and to encourage reflection on the dilemmas and uncertainties which confront our cherished and unusual country as we look ahead.

I shall begin with a few remarks about Kevin Rudd’s suggestion that Asia in 2013 bears an unsettling resemblance to the Balkans of exactly one hundred years ago—that is, to the situation which led to the First World War. After describing the geography of current tensions between China and Japan, China and Vietnam, China and the Philippines, Rudd concluded his reflection: 

In his recent book, The Sleepwalkers: How Europe Went to War in 1914, historian Christopher Clark recounts how the petty nationalisms of the Balkans combusted with the great-power politics and failed statesmanship of the time to produce the industrial-scale carnage of World War I. This was a time when economic globalization was even deeper than it is today, and when the governments of Europe, right up until 1914, had concluded that a pan-European war was irrational and, therefore, impossible. I believe a pan-Asian war is extremely unlikely. Nonetheless, for those of us who live in this region, facing escalating confrontations in the East China and South China seas, Europe is a cautionary tale very much worthy of reflection. 

When I read these lines, three thoughts immediately crossed my mind. The first was that even a former prime minister and foreign minister who speaks Mandarin remains sufficiently Eurocentric as to find in Christopher Clark’s 2012 book his most troubling antecedent for our current situation. The second was that Rudd’s Eurocentrism reminded me of a draft paper by Gareth Evans twenty years ago, sent to me in the Defence Intelligence Organisation for comment, in which our then foreign minister declared that things were now more peaceful in Asia than at any time since the end of the Thirty Years War. I still shake my head over that observation. The Thirty Years War, of course, had not touched Asia at all. China was still ruled by the Ming dynasty at that time and Japan had just gone into its Tokugawa hibernation.

The third thought that crossed my mind was that, if you really wanted to get some depth of perspective on war and peace in Asia over the past century and the roots of present tensions, you’d do far better to read S.C.M. Paine’s The Wars for Asia 1911–1949—published late last year—than Christopher Clark’s book. Paine is Professor of Strategy and Policy at the US Naval War College. His previous work includes The Sino-Japanese War of 1894–95: Perceptions, Power and Primacy (2003), which has important lessons for strategists in the Asia-Pacific in this decade; and three edited volumes: Naval Blockades and Seapower (2006), Naval Coalition Warfare (2008) and Naval Power and Expeditionary Warfare (2011). It astonishes me that our former prime minister and foreign minister, even sitting on the back benches with a little more time to contemplate things than in his halcyon globe-trotting days, should have chosen to read Clark rather than Paine. It pains me, you might say.

Paine’s work over the past decade has been marvellously targeted at distilling from a detailed study of Asia’s recent past the possible strategic lessons for the early twenty-first century. We in Australia have spent at least twenty years—forty, if you date it from Gough Whitlam’s decision to open diplomatic relations with Mao’s China—pondering our strategic future as a European enclave in a rising Asia. We have pondered this in a rather desultory and unsystematic fashion, despite a few clarion voices urging us to think harder and deeper. And Kevin Rudd, of all people, still takes his strategic lessons from books on European rather than Asian history. It is Asia, not Europe, in which our strategic future will be decided, and Asia has its own history. Let’s study that while we can.

Paine’s central thesis, in his new book, is that Americans have for too long failed to understand the linkages between the Chinese Civil War, the Japanese invasion of China from 1931 and the Second World War, in which Japan attacked America, while the Soviet Union held aloof until Hitler had been defeated and then invaded Japanese-occupied Manchuria and seized Sakhalin. None of these conflicts, he argues, can be adequately understood unless the relationship between them is comprehended. We can add to this that the roots of present Sino-Japanese rivalry and mutual mistrust go back right through the period Paine covers in this book and further still into the era and the war covered in his book on the Sino-Japanese war of 1894-95.

It’s not my intention here to provide a lecture on all this history. The chief remark I want to make concerning the relevance of the Asian wars of the first half of the twentieth century to our current situation has to do with the economic context in which those wars occurred. It is often remarked—and Rudd makes this point in his recent piece—that, on the eve of the First World War, the world economy was more globalised than it was to be again until recent decades. It is also often remarked that the Great Depression was a major cause of international militarisation in the 1930s. But seldom do we pause to study how this played out in our own region. We need to be reminded that Japan, from the Meiji Restoration in 1868 until the Great Depression, sought to emulate the West, industrialise as efficiently as possible and become a prospering and respected member of the global comity of modern states. It did, during those decades, something strikingly similar to what China has done since 1978.

As it industrialised, Japan sought resource security and markets for its manufactures. It was troubled and frustrated by the failure of the Qing empire to reform and modernise and by the chaos in China after the downfall of the dynasty. It took Taiwan and Korea from the Qing in 1895 and pursued a policy of the systematic economic development of those countries in the decades that followed. Long before it invaded Manchuria in 1931, it invested heavily and purposefully there. As Paine points out, prior to that invasion, Japan accounted for 72 per cent of all foreign investment in Manchuria, while Russia or the Soviet Union accounted for another 24 per cent. “Great Britain, the next largest foreign investor, controlled just 1%.” He then comments: “Industrial development in the rest of China lagged far behind Manchuria, which accounted for 90% of China’s oil, 70% of its iron, 55% of its gold and 33% of its trade.”

Why, then, did Japan decide to go to the enormous expense of invading Manchuria in 1931 and then the whole of China in 1937, to say nothing of then launching all-out war on the United States and trying to annex the whole of South-East Asia in 1941-42? The answer is not simple and the most far-sighted statesmen in Japan at the time opposed these steps. But at the heart of the matter lies the disruption to the global economy and therefore to Japan’s sense of economic security that came with the Great Depression, after the 1929 Wall Street Crash. Even as the Depression hit Japan’s markets in the early 1930s, there were important debates there about its options. There was general agreement that stability and prosperity in China were highly desirable. The question was how to foster them. “Many civilian leaders,” Paine points out, “recommended cooperation with the West to stabilize China gradually” and recommended domestic rather than military spending “in order to build the infrastructure and industrial base for national prosperity and for military modernization”.

But the militarists prevailed, in part because they drew upon Japanese martial traditions, but chiefly because the Great Depression made the situation seem ever more urgent and the West an ever less plausible partner. The Wall Street Crash and the protectionism that it triggered around the world resulted in Japanese exports dropping by 50 per cent between late 1929 and late 1931. In China itself, the Nationalist government steeply increased tariffs between 1927 and 1931, generating a great deal of revenue for itself but hammering Japanese exports to China. Western protectionism discredited those civilian economists and political leaders who had urged co-operation with the West for so long. Manchuria was seen by the militarists as Japan’s “absolute lifeline”. The chaos in China meant that only Japanese control there could preserve Japanese interests. There was also the danger that the Soviet Union would take it over or sponsor the Chinese communists to do so, which would have been a compound disaster.

At the height of intense national policy debates, Japanese editorials asked why it was legitimate in the eyes of the West for Britain to rule India or the United States to rule the Philippines, but not for Japan to rule Manchuria or Korea? Foreign Minister Shidehara Kijuro, Paine notes, “compared Japanese interests in Manchuria to US interests in the Panama Canal Zone, areas where neither power brooked treaty infringements”. In debates at the League of Nations, in 1933, Japanese representatives argued that a unified China had ceased to exist with the death of Yuan Shikai in 1916 and that only those in the West with little stake in China could afford to indulge in the generous fiction that China was a single organised entity. There was a serious risk of communism taking over China, they warned, and their protectorate in Manchuria could serve as a buffer against such a possibility. As Paine remarks, “There were no takers.”

This is not the time or place to explore all that followed in Asia from Japan’s fateful decision to annex Manchuria. I have made these few observations simply to invoke the strategic past that does—unlike the history of the Balkans one hundred years ago—sit at the root of our current dilemmas and dangers in this part of the world. China in our time is engaged in very much the same kind of enterprise as was Japan before the Great Depression. It has been industrialising as rapidly and efficiently as it can as a matter of closely guided state policy. It has been seeking ever greater access to natural resources and markets for its manufactures. It has, to a considerable extent, at least until 2008, seen itself as emulating the West in these respects. And it has become part of a globalised economy that has encouraged and, so far, largely welcomed its economic rise.

Where Japan invested in Manchuria, China is investing in Africa, Latin America and, to the greatest extent possible, Australia, in extractive industries and the infrastructure that goes with them. If you have not done so already, I urge you to read Dambisa Moyo’s Winner Take All: China’s Race for Resources and What it Means for Us, published in 2012. The scale of what is happening is breathtaking and we are a significant, but ultimately a relatively small part of the picture. Our economic and strategic future is bound up with all these things in a way that even our more thoughtful citizens and public figures seem only vaguely to have grasped. Ever since 2008, of course, we have been forced to contemplate a possible unravelling of the global economy and a few voices have muttered ominously that this could lead to a reprise of the calamities of the 1930s and 1940s. But there were wars in Asia before 1911, which had a rising Japan defeat first China, in 1894–95, and then Russia, in 1904–05. These were not triggered by economic depression. They were triggered by economic rivalry.

These are the kinds of antecedent we need to bear in mind as we debate our own country’s strategic future and security dilemmas. These are the true antecedents to the tensions we are seeing now in Asia. These are the historical realities which loomed behind my Thirty-Nine Steps sense of my dinner table conversation in late January. Yet I am not predicting the outbreak of a war in Asia in 2014. I am, as a consultant in deliberative process and decision theory, more than usually aware of the pitfalls of breezy or dramatic predictions, especially, as they say, about the future. It is, rather, my habit to encourage people to be cognisant of complexity and of the ways in which the future is not predictable, but is subject to all manner of hazards and is shaped by the very choices we make, often in ways we have not so much as contemplated. I want, therefore, to talk briefly about scenarios rather than predictions.

There is a very fine analyst of the psychology of predictions and political judgment, named Philip Tetlock. He likes to describe analysts as falling somewhere on a spectrum between what he calls—echoing Isaiah Berlin—hedgehogs and foxes. A hedgehog, in Tetlock’s terms, is someone confident that their intuitions or expertise enable them to see the future and warn, rally or deter others. A fox, on the other hand, is someone who is cautious, sceptical, inclined more to circumspection than assertion and intrigued by the complexity more than impressed by the apparent simplicity of things. I am a fox, to an almost pathological extent. I am profoundly sceptical about all passionate convictions, dogmas, ideologies and inspired intuitions. I place a premium, for just this reason, on the subtleties and intricacies of things; on the importance of considered choices and the value of relentless cross-examination of assumptions.

It was in this spirit that, almost a decade ago, I criticised the widespread tendency to what I called a “Linear Ascent Model” (LAM) regarding China’s prospects. My close reasoning on the subject is set out in the third chapter of my 2005 book, Thunder from the Silent Zone: Rethinking China. China has continued to grow rapidly since the book was published, but the complexities and divergent possibilities to which I drew attention then have only increased and now, more than ever, we need to think in terms of various different scenarios in imagining the consequences of our choices and the range of our options. If I may be allowed to quote myself—a different self, after all, as I have learned a great deal since I wrote Thunder from the Silent Zone:

In place of the LAM, we should think of four models for change in China over the next generation. These might be labelled mutation, maturation, metastasis and militarisation. None is linear and none entails an uninterrupted ascent to a Chinese-dominated 21st century. Mutation would involve a fundamental reshaping of the polity to cope with internationalisation and a complex economy. Maturation would involve a flattening of the growth curve, but only to a level enabling China to cope with the enormous demands of a population that is unlikely to stabilise short of 1.7 billion by mid-century. Metastasis would occur if the multiple and formidable challenges facing the Chinese polity prove overwhelming and result in a collapse of the undertaking to modernise a unified China … The fourth model, militarisation, would involve a nationalist effort to cope with the stresses of rapid change and uncertainty through a massive increase in military power, much as Germany undertook before 1914 and Japan before 1941.

China’s economic growth over the intervening years is prima facie evidence for a linear ascent; as is the continued and determined monopolisation of political power by the Communist Party. But there are many other variables at work, and choices made in the immediate future will contribute to shaping which scenario looks more plausible.

The upheaval in China this time last year, when Szechuan kingpin and would-be neo-Maoist Bo Xilai fell from grace, exposed, writes John Garnaut, in his pungent book The Rise and Fall of the House of Bo, “a world of staggering brutality, corruption, hypocrisy and fragility”. In fact, anyone who cared to look closely rather than avert his eyes had known this for many decades. But none other than Premier Wen Jiabao warned that the political demagoguery of Bo Xilai and his ruthless abuse of power were proof that China must democratise or face the danger of another catastrophe like the Cultural Revolution, which would undermine much of what has been gained in recent years. This was a glimpse through a window onto a possible metastasis scenario. Meanwhile, Chinese military expenditures have burgeoned even faster than its economy and the hawkish rhetoric of some of its xenophobic nationalists, military and civilian alike, points to a possible militarisation scenario. The exhaustion of its export-led growth model and the acknowledgment that it needs to transition to a different, domestic-consumption-led model, point to dilemmas in macro-economic policy that could usher in a maturation scenario, if not a metastasis one.

What of mutation? The perennial question in the West since the days of Hu Yaobang in the mid-1980s has been when and how will China turn away from dictatorship to democracy. Xi Jinping’s ascent to the presidency late last year has brought the usual round of pious hopes that he will find a way to reform and open the polity; but it is far from being a good bet. Indeed, such is the mood in much of China now that a political leader seeking to liberalise and to exercise greater restraint in relations with Japan and the United States might find himself at some risk of suffering the fate of liberal-minded Japanese leaders of the 1930s—assassination at the hands of nationalist and militarist fanatics. The fate of Japanese Finance Minister Takahashi Korekiyo is particularly poignant in this regard. Having stabilised the Japanese economy in the early to mid-1930s, despite the Great Depression, he argued strongly against the rapid increase in defence spending and was murdered in February 1936 by soldiers screaming “heavenly punishment”.

In any case, Xi Jinping, despite his genial smile, good English and familiarity with the United States, is no reforming liberal. Shortly after assuming the presidency, he took all members of his politburo with him to the bizarre museum the Party has built in Tiananmen Square—the museum of national humiliation and revival. He pointed out to them the exhibits showing the arrival of the Jesuits via Macao in the sixteenth century and how this had been the beginning of the infiltration and humiliation of China by the West. He pointed out the exhibits showing the Japanese invasions of China and the unfounded assertion that they had been defeated by the Communist Party with a little bit of help from a few “good” Nationalist generals. The Americans, he said, then became the enemy. “Against this external enemy,” he told China’s inner group of top leaders, “we must stick together.”

We are faced, right now, not only with uncertainties in the relations between our Asian neighbours, but with considerable uncertainties about the behaviour of China and its capacity to handle its sudden rise to relative prosperity. We cannot afford to assume that all will be well, since it is becoming distinctly more bellicose. But neither would it make sense for us to assume the worst. Indeed, it isn’t even clear what the worst would be. It has, however, been disturbing in recent years to see so many prominent Australians band-wagoning on the presumed China express and declaring that the commodities boom would go on for decades, that China will dominate the twenty-first century and we need to come to terms with that; that we should edge away from our alliance with the United States because it entails too great a risk of antagonising China; and even that China could soon replace the United States as our “great and powerful friend”.

We surely must seek, quietly and systematically, to ensure that we will remain secure and at liberty to make our way in the world regardless of what China does or wishes. Given all the uncertainties, both immediate and longer-term, this is a serious challenge and not one we can have any confidence in our present government delivering. I should add that that statement is not a politically partisan one. There is little reason to be any more confident of the Coalition than of the current government in this regard. Over-reliance on commodity exports to China has skewed our economy. We have profited very considerably from it, but have largely squandered the proceeds. We have seen many European states and the Americans all but bankrupt themselves by giving greater priority to welfare entitlements and pork-barrelling than to investment and innovation, yet we are doing the same. We have swung erratically from a systematic upgrading of our defence forces to a draconian reduction in defence expenditure without any serious rationale being offered for the swing other than a preference to increase welfare measures at a time of shrinking revenues while abandoning even the attempt to balance the budget.

When I contemplate the nation in 2013, I see incoherence and disarray as regards both national security and macro-economic policy alike and it makes me increasingly uncomfortable. This is because I have a deep-seated dislike for intellectual incoherence in general, but also because I see the current state of affairs as rooted in laziness, self-indulgence and political myopia. All this would be discomforting even if the international scene was rosy. That it is happening at a time when there are growing regional tensions and most of our neighbours are rapidly increasing their military capabilities, while China shows a considerable inclination to puff out its chest and insist on its prerogatives, is even more discomforting. I fear that we are adrift and that no prospective helmsman is at hand to steer the ship of state back to a sound course.

I was running a defence-related workshop late last year when it was announced that Duncan Lewis had stepped down as Secretary of Defence. I and those with me were dismayed at this, since Mr Lewis is universally held in the highest regard and it was perfectly clear that his departure—though cloaked in a diplomatic appointment to Europe—was because of his unwillingness to accept the reckless cuts to the defence budget just announced by the Gillard government. There was some consolation in the thought that the competent and clear-headed Denis Richardson was replacing him, but no one could envy Mr Richardson his task.

It is to be hoped that current tensions will not erupt into a conflict whose escalation might get out of hand. It is to be hoped that the wrenching changes in commodity markets, including China’s recent announcement that it intends to sharply reduce its coal imports, will not so undermine Australian solvency that we get ourselves into budgetary difficulties. It is to be hoped that the government which comes to office next September will both command a workable legislative majority and will devise, if it does not yet have, serious plans for both investment in economic infrastructure and the funding of a coherent and sustained national security policy. It is to be hoped that the tax-and-spend mentality which has taken hold in Canberra does not take us further down the path followed by all too many OECD countries over the past generation—entitlement-based consumption funded by ballooning national debt and shrinking national productivity.

It is to be hoped. But neither national security nor economic planning should depend on hope. They should be based on preparedness to face foreseeable challenges and the development of a capacity for resilience in the face of the unexpected or seriously threatening challenges. While recent developments in Asia do not point unambiguously to looming conflict, they do point to various dangers and uncertainties. These are compounded in our case by our enormous exposure to the consequences of possible conflict to our north, because so much of our prosperity now depends on trade with the newly wealthy states of East Asia and on the security of the sea-lanes that pass to them through the Indonesian archipelago, the South China Sea and the East China Sea.

Our economic good fortune since the 1980s may explain but cannot excuse our collective loss of cohesion and seriousness in recent years, as regards both our economic future and our national security. I had hopes, in 2007, that the incoming Rudd government would reinvigorate both. I was disappointed. The Gillard government has been even worse. And the Abbott-led Coalition has not persuaded me that it will rectify things. That is why my hope has gradually become unease.