December 2009 - January 2010


Rudd’s China policy

By Hugh White
Illustration by Jeff Fisher.

The big story of 2009 has been the economic downturn, better known as the Global Financial Crisis, and the biggest part of that story has been the continuing upswing of China. Its ability to keep growing at 8 or 9% has so far saved the world from a much longer and deeper crisis, and saved Australia from recession. This has interesting and lasting implications far beyond economics. Future historians may well mark 2009 as the year in which the political and strategic implications of China’s remarkable growth at last became clear – for the world as a whole, and for Australia specifically.

It’s taken a while. In the 1980s, as China started to grow, we in the West made two reassuring political and strategic assumptions. The first was that China could only keep growing if it became more liberal and democratic. The second was that if China didn’t play by our rules we would exclude it from the game: we could control China’s growth by controlling its access to the markets, finance and technology it needed, and that only the West could provide.

If these assumptions were correct, China’s growth would have posed no challenge to the Western-led global order that has served Australia so well. But today, both assumptions look false. Sixty years after the communists seized power in 1949, China has been a market economy longer than it was a Marxist one. And twenty years after it faced its last serious test in Tiananmen Square, the Communist Party seems as firmly in control as ever. It appears that a Leninist one-party state can manage a successful market economy, after all. Likewise, back in 1989 the world was willing to ostracise China for the way it crushed dissent in Tiananmen, but today such measures are unthinkable: China is simply too important to the world economy. China has in fact made itself essential to everyone’s economic, and hence political, survival.

This means that in the last decade especially, while America has been preoccupied with its War on Terror, China has not just grown rich. It has grown strong – quietly moving to the centre of the global power stage, and doing so very much on its own terms. Suddenly Washington finds that its most important relationship in the world is with the unreconstructed communists in Beijing, as talk of a ‘G2’ and a ‘Chimerican’ global order attest. All this raises new and uneasy questions for Americans about the future of their global primacy, which only a decade ago seemed set to last indefinitely.

It also raises new, uneasy and especially acute questions for Australia, because we are in the front row of this issue. China is our biggest customer, and our resources are vital for its economy. We are in Asia, and our future depends on our engagement with it. But we see ourselves and are seen by others as the local champions of Western values and assumptions. We are America’s closest ally in Asia, and rely on them for our security. But will that always be the case? Might China soon be Australia’s most important international relationship? And if so, how would we manage it?

It seems like a propitious moment in Australian history to consider these questions. Our prime minister knows more about China than any of his predecessors, and probably more than any other Western leader, past or present. But in fact it turns out to be an awkward time. Rudd’s fluency in Mandarin has not prevented 2009 being a difficult year for relations between the two countries. Like everything else these days, Australia’s buoyant economy, and hence Rudd’s buoyant poll ratings, are Made in China, and he knows it. A series of mostly minor issues has overshadowed dealings with Beijing and highlighted the deeper challenges we face as we learn to live with China’s power. The Stern Hu case, Chinese investment in our mining sector, China’s problems in Xinjiang, its objections to the visit of activist Rebiya Kadeer, and the clumsy wording of the new Defence White Paper have made the relationship difficult to handle at a time when managing it well – and being seen to manage it well – has been more important than ever.

Canberra can really only be blamed for the Defence White Paper, which combined a little sensible strategic analysis with a great deal of wishful thinking, jingoistic populism and fiscal fantasy. The other issues proved hard to manage for the government because each of them brought Australians face to face with the new realities of Chinese power in ways that surprise us, but should not. We have been quick to assume that the Australian economy will continue to thrive on China’s meteoric growth, but slow to recognise the ineluctable political and strategic consequences of that growth for Australia.

Those consequences are among the biggest changes in Australia’s international environment since European settlement. But Australians tend to avoid asking how we should respond to China’s growing power, and instead prefer to remind one another why we do not want to. Australians do not seem to fear China, but we do find it a country hard to like. Its amazing achievements – truly ‘making poverty history’ for hundreds of millions of people – excite little admiration when weighed against some real, but arguably less significant, injustices. No influential element of the domestic political spectrum could be called ‘pro-Chinese’. No one much likes the idea of living under China’s shadow.

Whether or not we want to live with a powerful China is beside the point. If we want to keep trading with China, we have to learn to live with its power. We might not need to do that entirely on China’s terms but we cannot expect to do it entirely on our terms either. We are going to need to ‘accommodate’ – an uncomfortable word, almost a synonym for appeasement, but those who reject it need to explain what they intend to do instead.

Of course, many people still doubt that China can keep growing. They may be right. China’s rise could well falter for any number of reasons: political, ecological, strategic or economic. I’m sceptical of those who are too sure that it will, because I suspect their confidence may at least partly reflect an inability to imagine a world no longer dominated by our closest friends. We see this as the natural order. But why should it be? China was the largest economy in the world for centuries before Europe’s industrial revolution, and now with its own industrial revolution it is simply catching up again.

Great political leaders reshape national debates to address new realities like this. This should be Rudd’s moment. He understands how China’s rise changes our world. He understands that this is not simply a matter of China being ‘a threat’, because he can see that China’s power could be peacefully accommodated in a new regional order. He understands that whether China becomes a threat or not depends at least as much on decisions made by others – including Australia – as on the decisions made in China itself. He understands that how well Australia fares in an era of Chinese power depends on the choices we make about how to adapt to such change. And he understands that Australia has seldom, if ever, faced a more complex and important diplomatic challenge than playing its part in all this.

And yet he will not explain this to Australians. He has hardly spoken a word about the real issues in Australia–China relations. For all the talk about making the tough decisions in the nation’s interest and shaping long-term policies to meet long-term challenges, Rudd’s government has so far spent its time and energy on short-term reactions to transient political imperatives. His foreign policy agenda has focused on trophies like a seat on the Security Council, which is a symbol of what he calls “activist middle-power diplomacy”, not its substance.

Real, substantial middle-power diplomacy is just what we need now, based on a deep national consensus about what outcomes we want. But substance is hard. Like most of us, Rudd does not like telling people things they do not want to hear and is reluctant to explain the tough choices we face. He is reluctant to say that our America alliance might be worth less in future, or that we might not be able to dictate the terms of Chinese investment as we wish.

In Rudd’s case, this natural reluctance is amplified by something more specific. He fears that, because he knows China so well, he will be seen as too close to it. He fears being accused of being on China’s side. This means that for Rudd, speaking Chinese turns out to be a liability. It may turn out to be irrelevant as well. As China’s power grows, managing the relationship will be less and less about explaining to the Chinese what we want, and more and more about deciding how to respond when they tell us what they want. That means that Rudd’s most important contribution will not be to explain Western perspectives to the Chinese in elegant Mandarin, but to explain the new realities of power to Australians in plain English.

Hugh White

Hugh White is an emeritus professor of strategic studies at the Strategic and Defence Studies Centre, Australian National University.

Cover: December 2009 - January 2010
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