Australia should recognise Somaliland, a territory that is claimed by Somalia but has asserted its independence since 1991.

No country recognises Somaliland as independent, but if Australia led in doing so it could reinforce its commitment to democratic principles, bolster its influence in the Indo-Pacific region and counter Chinese expansion. It could also secure opportunities for Australian businesses in Somaliland, Ethiopia and beyond.

Failing to recognise Somaliland would encourage developments that could only be negative for Australia. If Somaliland remains a diplomatic and strategic vacuum, Houthis, terrorist organisations, China and other authoritarian regimes will eventually move in.

Between 1827 and 1884, Britain signed treaties with various clans and established Somaliland as a British protectorate. On 26 June 1960, Somaliland gained independence from Britain but four days later started a process of voluntary union with Somalia to form the Somali Republic. However, the act of union was never formally ratified through a legal process and was rejected by Somalilanders in a referendum in 1961.

In 1991, Somaliland reasserted its sovereignty. After an impressive locally funded state-building process, it has operated as a sovereign state for more than 30 years without formal international recognition. Somaliland’s story is one of resilience and stability, contrasting sharply with the turmoil characterising Somalia. Somaliland’s consistent peaceful democratic governance over the past two decades, though imperfect, makes it a role model for the global south. It estimates its population at about 5.9 million.

Like Lithuania, Somaliland hosts a de facto Taiwanese embassy called the ‘Taiwanese Representative Office’, not the usual ‘Taipei Representative Office’. And, like Lithuania, Somaliland has been pressured by China to close the office. Chinese attempts at influencing Somaliland are reminiscent of activity in the Solomon Islands. Australian recognition of Somaliland would help counter this and head off the risk of China strengthening its diplomatic position in the Horn of Africa.

Despite being unrecognised, Somaliland has forged close relations with Britain, the United Arab Emirates, Kenya and Taiwan, maintaining a firm stance against China’s Belt-and-Road initiative. Recently, Somaliland has been more active in seeking recognition. US Congressional staff committees visited Somaliland in 2021 and 2024. Meanwhile, the US National Defense Authorization Act 2023 explores opportunities for increased collaboration with Somaliland in the Horn of Africa, Gulf of Aden and Indo-Pacific region. In the British parliament, the issue of Somaliland’s recognition has been raised several times in 2024, most recently with Defence Secretary Grant Shapps.

In January, Ethiopia and Somaliland signed a historic memorandum of understanding that, despite its rejection by Somalia, continues to progress. This agreement involves granting Ethiopia sea access in return for recognising Somaliland’s sovereignty, indicating a strategic alignment that extends beyond mere diplomatic niceties. This situation mirrors a 2016 agreement between Ethiopia and Somaliland and involving DP World to develop the port at Berbera, Somaliland. Despite facing significant opposition from Somalia, the project has proceeded. A 2023 World Bank report ranked Berbera as the most effective port in Sub-Saharan Africa.

Despite the risks involved, global firms like DP World, Trafigura and Taiwan’s CPC Corporation have invested millions of dollars in Somaliland. Recent collaboration with Taiwan has led to significant discoveries, such as a massive lithium deposit. Its exact size and economic viability have not been established, but foreign companies are already investing in the discovery. Australian mining businesses could engage in these promising ventures, as Somaliland has largely untapped reserves of oil and other minerals, such as gemstones, gold, iron ore, tin and lead.

The main argument against a country recognising Somaliland is that doing so can supposedly set a precedent that encourages secessionist movements in Africa. But Somaliland’s story is unique, because it gained independence from Britain initially as a state. Its context aligns with the principle of state continuity, as with the Baltic republics, which regained independence after the collapse of the Soviet Union. These nations were recognised based on their historical sovereignty and legal continuity, providing a precedent that supports Somaliland’s case.

If Somaliland were a mere secessionist movement, Ethiopia, with great ethnic diversity, wouldn’t countenance its recognition. But it’s not concerned.

Australia has been ahead of the United States, for example, in recognising new states when self-determination and democratic governance have been involved, such as Kosovo and East Timor. It is time to do the same with Somaliland.

This is the second part of a two-part article on coercive threats to critical minerals supply chains and what Australia and its critical minerals partners are doing and should do to counter them.

 

China’s use of coercion to control critical mineral mining and processing projects, their output and even whole supply chains has motivated Australia and its strategic partners to take increasingly strong measures to secure alternative supply chains. Meanwhile, China’s state-linked companies continue to use multiple channels to manipulate markets at scale.

Australia and its partners need to apply more concerted action.

These actions must focus on ways to mine, process and transport mineral resources from developed and developing nations in a manner consistent with national values and sustainability standards. New supply chains are needed to meet demand for manufacture of energy and high technology products and reduce reliance on China-controlled supply. These measures are not aimed at trade bifurcation, but about setting up alternatives that promote resilient, competitive markets for investment and production.

Australia has begun to take action. In May, Canberra announced stricter criteria on foreign investment, signalling strengthened intent to counter coercive influences on Australia’s minerals projects and supply chains. Similarly, the divestment order issued in June to China-linked entities with shareholdings in rare earths company Northern Minerals demonstrated the government’s commitment to applying rules strictly and fairly.

While Australia recognises that investment by China-linked companies is essential to its mining industry, it now has the opportunity to entice other partners to invest capital and diversify the market.

This is because industrialised nations that have traditionally confined themselves to domestic mineral projects have moved to friendshoring—facilitating supply from allies as a way to reduce reliance on China and some other dominant suppliers. Both the United States Inflation Reduction Act of 2023 and the European Union’s Critical Materials Act, which came into effect this May, provide the same level of support to critical minerals projects in Australia and other allied nations as domestic projects.

Investment from allies is already starting to flow. In May, the Canadian government conditionally approved US$300 million loan funding for the Nolan’s rare earths project in the Northern Territory, adding to the Australian government’s US$553 million debt finance. The project will supply mineral resources to Canadian renewable generation manufacturing. Japanese-supported, ASX-listed Lynas Rare Earths is developing a processing facility in Western Australia and another in Texas, United States, which is part funded by the US government.

And just this month, an Australia-US joint venture was announced to develop the Donald Rare Earth and Mineral Sands Project in Victoria. Processing of rare earths will take place in the United States, while heavy minerals sands output will be processed in China.

In order to attract more investment, Australia may need to offer better incentives. While the 10 percent production tax credit aimed at reducing the costs of critical minerals processing in Australia is a positive step, Australia’s national and state governments need to offer a comprehensive package that also delivers efficient approval processes, better infrastructure, effective labour market initiatives and competitive energy supply.

Furthermore, critical mineral deposits in developing countries also must be tapped in order to meet future global demand. While Australia can tighten control of foreign investment in domestic projects, it is much more challenging to engage resource-rich nations in Africa, Asia and Latin America in well-governed supply chains that counter those controlled by China.

This can be achieved by fully implementing recent initiatives. The US-led Minerals Security Partnership and other agreements involving Australia help improve mining industry governance in  developing nations with minerals essential to supply chains. Australia’s Mining for Development capacity-building program was wound back in 2016 but has maintained some activities and networks.

The United States, South Korea, the European Union and others are also seeking to friendshore critical minerals projects in developing countries. For example, the United States is providing loan funding to an Australian company to establish a graphite mine in Mozambique to supply a US-supported, Australian-owned refinery in Louisiana.

The United States has been particularly active in countering Chinese influence in Africa. Australia should support it. Washington has attempted to broker the sale of two Canadian-operated copper mines in Zambia to friendly parties, to prevent them being controlled by China-linked interests. It is also backing a trans-Africa rail project to link the Zambia copper belt with the Atlantic coast of Democratic Republic of the Congo. Meanwhile, China is backing another rail project from Zambia to Tanzania, where Australian companies have extensive interests, including a proposed graphite mine to supply a refinery in Western Australia.

Other allies have also been active. This month, South Korea signed agreements with many African nations to boost cooperation on trade, with a focus on  critical minerals. This will be facilitated by US$10 billion in development assistance over six years and US$14 billion in export financing for Korean companies.

The European Union and several African countries have signed strategic partnerships on raw materials that aim to integrate value chains, promote sustainable mineral production and build infrastructure needed for mineral development.

Australia has continued to extend its partnerships to build critical minerals supply chains that are ethical and sustainable. In May, it signed a memorandum of understanding with the European Union that included objectives to develop open, fair and competitive markets, closely cooperate on environmental, social and governance standards and promote their market recognition, and cooperate in third countries to grow minerals output and improve outcomes.

Effective action to achieve these objectives will be crucial, as will close cooperation with other countries to build alternative supply chains.

It will be more difficult to have the market for critical minerals and related products favour supply chains with strong ESG standards and associated higher prices. If achieved, full cost pricing will help to marginalise minerals that are produced less responsibly.

Overcoming China’s market manipulation across a range of critical minerals will be just as challenging, but pathways are being explored. China’s current near-monopoly in rare earths and domination of lithium processing and cobalt production enables it to influence prices at will to stifle competition. Industry figures propose international price floors for certain minerals to underwrite new, alternative supply chains. Japan and Korea have established strategic reserves of certain critical minerals to insulate their industries from market perturbations and supply disruptions.

The overall priority for Australia, as both a key critical minerals producer and a global minerals investor across developed and developing countries, must be to implement and leverage the 27 cooperation agreements it has now signed. Australia must further develop its own production, strengthen supply chain relationships with allies and work with third countries to support their entry into supply chains.  It helps that Australian minerals companies are very active in most global regions.

But perhaps Australia should also reconsider how these many agreements can be appropriately serviced. At the very least, it needs a single implementation plan that articulates agreements into domestic and international action. In doing so, priority should be given to working with partners like Japan, Korea, the United States, Britain, the European Union and Canada in a minilateral way that leverages each country’s interests and strengths.

The problem of dealing with a belligerent communist China is the geopolitical challenge of the age. Its favourable resolution will open the door to global amity. The alternative is enduring global instability, confrontation, and the risk of a major war in the Pacific, fought with nuclear weapons standing ready on a hair trigger.

After the collapse of the Soviet Union, which was studied closely in Beijing, China came to view the United States as a powerful adversary which would one day seek to impede its rise.  It adopted a policy to ‘hide its strength and bide its time’.  Priority was afforded to economic development, and the generation of a vast industrial and technological base—something  that no dictatorship had ever managed to create. At the same time, China studied US military prowess in order to better understand how the US had managed to potently network its platforms and systems on a global scale.  

After the global financial crisis of 2008, China began to act more boldly in the wake of what it perceived to be the onset of US decline, building leverage in its external relations, accelerating its military build-up, and stepping up its long march through international institutions. It then embarked on ‘national rejuvenation’, in the face of perceived US weakness. Paranoid and insecure, but at the same time overly confident, China’s belligerence increased. One of the most astute analyses of this journey, by Rush Doshi, says it all in its title: The Long Game: China’s Grand Strategy to Displace American Order, 2021.

Australia’s China policy consistently misjudged this long trend. Policy only began to harden in 2016. Then, across a range of fronts—including foreign interference, espionage and cyber—Australia ‘stood up’ to the challenge of China (see Malcolm Turnbull’s memoir, A Bigger Picture, 2020, chapter 34). We should, however, have started to adjust policy from around 2009. The key judgements that underpinned the 2009 Defence White Paper went beyond military affairs. In framing the looming China challenge correctly, it set out a strategic template that should have flowed across other national security and economic policy areas.

However, instead of seeing China as it was, official thinking preferred to see an ‘imagined China’—that is, China as the ‘responsible stakeholder’ that was emerging in the 1990s and early 2000s after the shock of the heinous massacre of 4 June 1989.  In this imagining, with the end of the Cold War, it was thought that a liberal order could be extended across Eurasia, bringing China into a global system of interconnected trade, investment and technology development, as well as into co-operative international institutions, which would somehow civilise its despotic tendencies. China’s rulers, however, saw the trap that was being set for them—the end of the communist regime, as economic liberalisation would lead inexorably to calls for political reform.

Policy swung after 2009 to the trope of the China-centred ‘Asian Century’, which returned from the 1990s, obsolete and ill-suited to the early 2010s.  Re-reading today the Asian Century White Paper of 2012 is a telling exercise. It, and the Australia-China Comprehensive Strategic Partnership of 2014, seem a distant memory. Policy did not adjust quickly enough to the reality that the ‘imagined China’ was no more, or rather had never been. As a result, President Xi Jinping was given the benefit of the doubt after 2012. Due to this misreading of China, and timidity which was a function of our economic exposures, we lost valuable time we could have better used to enhance our resilience, diversify our trade, and build up our hard military power.

China showed its true colours through its campaign of trade coercion against Australia that began around 2018. This was political warfare, where trade was used as a weapon to attack our sovereignty. Chinese political warfare seeks to attack political and social fault lines (for instance in a federation), creating fractures and undermining national resolve, setting the conditions for eventual subjugation to Chinese interests.

Initially, however, this onslaught was treated as a cyclical, as distinct from a structural, problem. The Government adopted a stance of ‘strategic patience’, with each issue being treated separately, on their individual merits. There was a reluctance to frame the issue in terms of Chinese political warfare. The release by the Chinese Embassy in Canberra of the ’14 points’ in November 2020 was the key inflection point. Thereafter, Australia treated the trade coercion for what it was, and then Prime Minister Scott Morrison took the issue out of its bilateral framing. The high point was the discussion that he led at the G7 meeting in June 2021 on Chinese coercion and political warfare. He circulated the ’14 points’ to his fellow leaders. Great interest was shown in the Australian experience of being coerced and resisting.

There is now a risk of a new ‘imagined China’ emerging and embedding itself in official thinking. Instead of continuing to work to rally likeminded nations against Chinese coercion, as we did in 2021, the alternative approach of quiet engagement—assuming  that if only we moderate our language, then somehow Chinese belligerence will dissipate, and relations will be ‘stabilised’—might yet entrench a dangerously benign view of the China challenge in official thinking. This approach implies that the challenge is not structural, but rather cyclical, and that we can, through adroit diplomacy, enlarge the space for ‘cooperating where we can’, while minimising the space for ‘disagreeing where we must’.

In this new variation on the earlier ‘imagined China’, Chinese belligerence is excused on the basis that ‘all great powers behave so’.  This rationalisation is simply wrong and ahistorical: Bismarck’s Germany was, for instance, a far more restrained and cautious great power than was Imperial Germany after 1890.  The world paid the price in 1914.  Great powers make choices about how to behave—and should be held to account for their choices.

Worse than being wrong, excusing Chinese belligerence as being an intrinsic function of great power behaviour will lead to poor strategy. The space for Australian willingness to ‘disagree where we must’ will reduce, as our anticipation of China’s belligerent response—normalised and excused—will increasingly lead to self-censorship and reticence. This will see Australia abandon the hard-won gains of its resistance over recent years. China wants our silence—over human rights, Taiwan, territorial aggression, unsafe military activities and more besides.  We should not give it so readily.

This new version of an ‘imagined China’ also implies that it is in Australia’s interests to ‘triangulate’ a position of relative strategic safety in relation to the US and China, as if the problem is those major powers’ rivalry, and that Chinese aggression is a function of the tensions of rivalry, or a response to US attempts to deny China ‘space’ (whatever that means). We should, however, resist such equivalence. We have a stake in this contest playing out such that US primacy, including its military superiority, is maintained.

Our policy, however, appears to be one of ‘triangulating peace’ in the region, in a vain attempt to seek an ‘equilibrium’ between two competing great powers. This plays into China’s strategy of undercutting US alliance structures and security assurances. Our actual grand strategy is being conducted, thankfully, at variance with our declared policy—through contributing to the building of a US-centred system of integrated deterrence in the Indo-Pacific, the hardening of Australia as a bastion for allied warfighting operations, and the continuing integration of certain strategic functions undertaken on Australian territory into global US warfighting systems.

We need, more than ever, deep strategic expertise, historical perspective, and a capacity to engage in contested, intelligence-informed conjecture about the China challenge. Instead, official thinking is not simply ahistorical—it is formulaic.  Abstractions (such as ‘stabilised relations’ and ‘disagree where we must’) have become the framing references for our China policy. These are talking points that do not add to public understanding. Discourse matters. Emphatic language, involving detailed public explanation, is required. China well understands ‘discourse power’, where the production and management of discourse legitimates the authority of the Party—for instance, through the ’discourse power’ that is involved in the official framing of Chinese history. Australia should engage vigorously in such discourse—contesting, for instance, the CCP notion that there are different, equally valid, ‘civilisational’ models for enshrining political and human rights. This would require disagreement with the Communist regime’s ideas, policies and practices, across a wide canvas.

Moreover, the China challenge is broken down into discrete functional components—defence, foreign policy, trade, immigration, international education, foreign investment and so on—each led by a different department or agency. To deal effectively with the China challenge, we need to see China as it is, and accept that the character of the regime matters analytically and for policy purposes. From that, we need to derive an integrated national strategy that is organised around sustaining structural competition with China, by a US-led West, with the ever-present possibility of confrontation being factored into every calculation.

On the hard security side, such an integrated national strategy would include: building rapidly the military power that we would need to defend Australia in a Pacific war; transforming ANZUS into an Australia-US warfighting alliance, and realising the technology benefits of AUKUS more quickly; building security networks in the Indo Pacific region that are aimed at resisting Chinese regional hegemony; bolstering extended nuclear deterrence against Chinese nuclear threats; improving national cyber defences; stepping up counter-espionage and counter-foreign interference operations; and strengthening social cohesion.

On the economic side, such a strategy would encompass new industrial and trade policies focused on strengthening resilience to deal with future waves of economic coercion by China; enhancing security of supply chains (for instance, in telecommunications, to avoid another 5G situation); diversifying trade, to de-risk reliance on Chinese markets; building industrial strength, including in high-end manufacturing; and hardening further the regulatory environment, especially around foreign investment and export controls.

To devise such a strategy, government structures will need to be redesigned. A dedicated policy planning staff will be required to devise the national strategy that is described above.  Once finalised, it should be presented to the Australian community, as the centrepiece of a national security statement, by way of a primetime address by the Prime Minister to the House (in a similar fashion to the annual budget).

The China challenge cannot be managed effectively by diplomats, for whom concepts such as ‘diplomatic resets’, ‘thaws in relations’, or ‘stabilisation’ are preferred. These are cyclical notions. The China challenge is, however, a structural one. As such, it can only be dealt with effectively by way of a structural response—one that is able to create new conditions. For the first time in 500 years, the West is being challenged by a Eurasian land power in China, which also possesses significant, and growing, sea power. This was not seen in Imperial Germany, Nazi Germany or the Soviet Union. Imperial Japan was a sea power, but it could not sustain land power. Unlike those earlier challengers, China is also an economic powerhouse, and the major trading partner of many nations (Australia included) in a still substantially connected world. The post-war order is crumbling, as structural forces tear it apart. This order cannot be ‘balanced’ for so long as these forces are at play.

The China challenge has to be seen in these ‘world historical’ terms—a concept that would be familiar to students of dialectics, which would include graduates of the CCP Central Party School. US strategy towards the Soviet Union in the 1980s had a structural, ‘world historical’, character. Fashioned by then President Ronald Reagan, Secretary of State George Shultz, and Secretary of Defense Caspar Weinberger, it was designed to create new conditions after decades of confrontation, and then coexistence, during the Cold War. The nations of the West could do this again by working in concert, shaping their domestic and external policies (to the extent required to sustain structural competition with China), and deterring hostile Chinese actions through collective defence. China cannot be stronger than the aggregate weight of the US, Europe, Japan, India, Australia, South Korea, and others. In the long run, it will lose any structural competition against such an assembly of democratic power, especially given its long-term disadvantages such as population decline; the middle-income trap; a significant debt overhang; a lack of natural allies; political rigidity; and dependence on imported energy, resources and food.

The reference to the collapse of the Soviet Union is not meant to suggest that China also has to collapse into chaos. What it does mean, however, is that the West has to do more than coexist in a state of détente with China. Coexistence with a regime that is both party and state, which is obsessed with regime security and domestic control, and which mobilises the economy and the population in the service of a constant state of aggressive domestic and external struggle, is not sustainable, being neither stable nor durable. China’s strategy of perpetual struggle against the West, and liberal capitalism—and here a line can be drawn connecting Lenin, Stalin, Mao, and now Xi—will not change. In a stalemated duel of indefinite duration, a point of friction will eventually escalate to confrontation, conflict and potentially war. With no lived experience of how best to navigate the risk of global war—last confronted in the mid-1980s—accepting this stalemate would be to invite permanent instability and worse.

Coexistence with a moderated and restrained China—the China that would have emerged perhaps if the modest political reforms of Zhao Ziyang (Premier 1980-87) had been pursued—would on the other hand be more sustainable. Without overly prescribing a specific end-state, the West has to apply enough structural pressure on China that its choices are affected and its behaviour moderated—ideally without conflict. To avoid the latter, it is imperative that both sides agree on principles and procedures for managing points of potential miscalculation—especially in relation to incidents at sea, in the air, in cyberspace and in space. This was done during the Cold War. Similarly, the Cold War did not preclude US-Soviet cooperation on arms control and disarmament.

Western strategy should, however, set a higher objective than simply avoiding conflict, and otherwise coexisting. It should have as its objective the structural creation of new conditions, and a different future. In that future, China would be a respected, leading participant in a revitalised liberal economic and security order, with the risk of war returned to levels not seen since the early 2000s. Global attention would then be able to be turned to critical planetary issues such as climate change, artificial intelligence, poverty, global financial stability, pandemic prevention, and so on. Dealing with the China challenge therefore means changing the future. Not doing so will heighten the risk of confrontation, conflict and possibly war, as coexistence in an unstable equilibrium simply defers catastrophe. Structural competition, and deterrence of Chinese aggression, would on the other hand represent the safer longer-term bet, and lead to a better, more stable, equilibrium. 

On the auspicious occasion of the visit to Australia of Premier Li Qiang, the Australian Government should take the opportunity to start to boldly set out this better vision for the future—not just in terms of the bilateral relationship, but more crucially in relation to the Indo-Pacific region and the world order. Here are some points that the Chinese side may wish to consider, all of which are suggestions for how China might help to build that better world. China should:

• Renounce the use of force, and ‘grey zone’ methods short of war, to achieve its political objectives in relation to Taiwan. It should cease practising cross-strait attacks and blockades, and other preparations for war in 2027. It should commit to peaceful and unforced dialogue on cross-strait issues.  

• Renounce the use of force and ‘grey zone’ measures to resolve territorial differences in its maritime periphery (especially in the South China Sea, where it should cease its militarisation of reefs and features, and the East China Sea), and on its land borders (especially with India). Were it to do so, China would significantly enhance peace and security in the Indo-Pacific region.  

• Cease supporting Russia’s illegal and immoral invasion of Ukraine. China should put limits on its ‘no limits’ alliance with Russia, which will otherwise be emboldened to further threaten the peace of the Euro-Atlantic region.  

• Direct the People’s Liberation Army to cease its unsafe and unprofessional actions at sea, in the air, and elsewhere; and engage in the development of meaningful risk-reduction and confidence-building mechanisms.  

• Improve transparency in relation to the PLA Rocket Force, especially in relation to Chinese nuclear planning and doctrine, strategic nuclear stability, and the governance of the PLARF—the latter in light of corruption concerns, which undermine international confidence in China’s stewardship of nuclear weapons.  

• Cease the warlike deployment of its cyber weapons on to US and other critical networks, in anticipation of conducting destructive cyberattacks during conflict, which would not meet the international standards of proportionality and military necessity. It should also cease supporting or enabling malicious cyber actors, especially where the cyber-enabled theft of intellectual property and trade secrets is involved (it promised Australia in April 2017 that it would do so), and should more genuinely cooperate in efforts to tackle cybercrime.  

• Cease interference in foreign democratic processes, in universities, and in foreign domestic communities, as well as foreign interference through social media platforms such as TikTok and WeChat. It should cease the transnational repression of Chinese people living abroad, especially where they are citizens or residents of other countries. It should cease spreading the techniques and technologies of repression to authoritarian regimes (for instance, mass surveillance systems).  

• Respond to concerns about human rights and political freedom, including with respect to Hong Kong, Xinjiang, Tibet, Inner Mongolia, religious freedom, and media freedom. China should release all political and arbitrarily detained prisoners (including Australian Yang Hengjun), and dismantle its internment camps and forced labour programmes. Reform should also include the development of an independent judiciary and the entrenchment of the rule of law as a restraint on the arbitrary exercise of executive power, and a check on human rights abuses.  

• Account for the origins of COVID-19, which caused such catastrophic global economic and social damage, and acknowledge the conduct of any dangerous biological research.  

• Broaden the sources of advice to Xi, and increase the contestability of that advice, as a solvent against ‘groupthink’, especially in external affairs. Foreign think tanks, such as the Australian Strategic Policy Institute, journalists, and academics should be allowed to operate freely in China.  

• Improve the business climate in China, such that foreign businesses can assist China with its economic transformation, in areas such as decarbonisation, clean energy, digital services, health and aging. This will require the stringent enforcement of international intellectual property laws, improved legal protections for foreign businesses in China, and the removal of the CCP from much of China’s economic life. 

• Relatedly, reduce risk in high-technology supply chains (for example, in telecommunications), and reverse security laws that require businesses to support Chinese intelligence interests, so that democratic nations can more readily trust and utilise Chinese technology and innovation.   

• Cease using trade as a coercive political weapon, as it has against Australia, the Republic of Korea, Lithuania, and others, which increases distrust about China as a power that is willing to turn economic linkages into political weapons. China should abide by international trade rules, as required by virtue of its World Trade Organisation membership, which was granted in 2001 by the international community in good faith on the understanding that China would benefit from open trade, and that it would not engage in coercive and predatory practices. 

• Improve the transparency of the Belt and Road Initiative and other development and investment schemes, which are marked by poor outcomes, and which typically undermine sovereignty, including in the Pacific.  

  

By addressing these issues, and working amicably with the global community, China would make a decisive and beneficial difference to the state of the world, and would enhance its place in it. It would be a respected, leading nation. Global economic integration, to the benefit of all humankind, would intensify, and geopolitical tensions would abate. That would be a China, and a world, that would be worth imagining.

Successful structural competition with China will see the world order transformed. Peace and stability will ensue. In dealing with China, rather than shrinking the space for disagreement—or, worse, falling silent—Australia should rally with likeminded nations in an epic contest with China, with victory as the goal.

Xi Jinping Thought (XJT) is now the principal ideology governing China. It carries deep implications for the ways democratic nations deal with the country in an increasingly confrontational era of strategic competition.

Yet this ideology promulgated by President Xi Jinping is rarely analysed in any depth in the West. It is superficially understood, commonly misinterpreted, or even dismissed as an insufficient vision for national development to replace the ethos of the era of opening up and market reform.

XJT is a sprawling concept. Among its main ideas is that China must strengthen the party and itself by ‘waging great struggles, building great projects, promoting great enterprises and realising great dreams.’ Reminiscent of the language of Chairman Mao, these so-called Four Greats generically refer to China undertaking big development efforts, to the expansion and outward movement of enterprises, and to dreams of the country taking a new great leap forward in socialist modernization—all under the supreme leadership and guidance of the Chinese Communist Party (CCP).

It is a totalising ideology that enshrines the absolute leadership of the party over the state constitution. There is no state separate from the party. The decisive function of the market, a key aspect of the reform era, is now subservient to XJT and the party cells that are embedded in businesses and required to guide them.

Strategic competition with China encompasses global economics, finance, and global governance models, including contestation over the directions of institutions such as the UN, World Trade Organization, World Health Organization and World Bank. It also extends to multilateral and bilateral trade dealings, cyber development, defence alliances and soft-power relationships. There is no longer any significant area that is not heavily contested, including space.

The implications are that those who simply (or unquestioningly) want business with China to return to what they think of as normal (that is, as it was in the defunct market-reform and opening-up era) and who are not recognising the realpolitik of XJT are either wilfully blind, making serious miscalculations, or both. This applies more than ever to those celebratory moments when China makes a trade concession (or removes a coercive measure) to one of its minions. Dealing with a relentless and emboldened Middle Kingdom must start with a recognition and understanding of the realpolitik of XJT.

XJT, incorporated into the CCP constitution at its 19th Party Congress in October 2017 and consolidated in 2022, now represents China’s state ideology. It encompasses the interrelated narratives of building a moderately prosperous society, deepening economic reform, governing the nation according to law, and tightening party discipline. Xi’s philosophy is projected  globally through Chinese enterprises being encouraged to develop abroad—especially under the Belt and Road Initiative.

‘Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’ is tied to a dream of national rejuvenation by 2050 that includes reunification with Taiwan. The overall goal is to create one patriotic people: united by one party, one ideology and one leader. With Xi officially at the core, ideological indoctrination is firmly controlled by the CCP emphasising strict discipline and a highly centralised hierarchy. Indoctrination through XJT is regarded as ineffective if it is not all encompassing. That is to say, it must penetrate civil society completely and be embedded in minds from an early age.

Making China great revolves around the supremacy of a CCP that can guide everyone everywhere in all policy areas. This cannot always work in a nation of so many people, and frail edges have appeared since the end of Covid-19 pandemic controls in late 2022. Xi and Putin have further affirmed their no limits partnership, but Xi’s global vision embraces a principle of China First—for China to be the world’s top power by mid-century.

The realpolitik of the CCP’s totalising grand narrative places the party at the centre of economic and technical development, social cohesion, law, and governance. CCP supremacy is presented as the only way to realise the Chinese Dream. With this totalising discourse, however, a climate of fear and control has arisen, like a dangerous phoenix not seen since Mao’s cultural revolution era. As with any totalising discourse, there is no room for dissent on decided policy—as revealed in the silencing of Chinese legal rights lawyers, citizen journalists and other activists. Indeed, senior business leaders have been disappeared to make examples for others and ensure compliance.

This rule-by-fear element has affected China’s outwards expansion, especially since its loss-of-face when a UN arbitral tribunal ruled unanimously against it in 2016 in the Law of the Sea case Republic of the Philippines v the People’s Republic of China. China’s more assertive approach to its neighbours and the rest of the world have since become clearer, with what it calls US hegemony perceived as its enemy number one.

In short, China’s reform and opening-up era is over. The core factors that characterised it—political stability, some ideological openness and rapid economic growth—are unravelling. Economic cleavages have widened despite the party’s rhetoric around ‘common prosperity’. Ideological indoctrination has deepened along with digital surveillance of the general population. China’s messaging about its peaceful outward expansion under an authoritarian leadership model is inconsistent.

That narrative is no longer convincing to anyone other than diehards still convinced the reform and opening-up era can yet prevail. This is wishful thinking. China has greatly enhanced its technological capacities, significantly enlarged its arsenal of weapons, and successfully landed spacecraft on the moon and even Mars. There is no longer a business-as-usual environment when engaging with China because all Chinese enterprises must fall into line with the requirements of XJT and the supremacy of the CCP.

Sleepers awake.