Nothing Found

Good policymaking, including strategic policymaking, requires a number of steps. There has to be an objective reason why the government should or shouldn’t act. The options then need to be identified and assessed for efficacy, cost, risk and achievability and an evaluation strategy developed. A number of recent posts advocating significant boosts to Australia’s defence spending appear to miss some of these steps.

Strategic policy formulation is different in important ways from most domestic policymaking. There’s a long delay between deciding to acquire major capabilities and being able to field them, often decades. That means the international environment into which they emerge could be fundamentally different from current circumstances or the anticipated future strategic situation. The strategic risk that the new capabilities were intended to address might no longer exist or advances in military technology in the intervening period might have rendered them inadequate.

Whether the new capabilities will prove sufficient to achieve the deterrent effect sought or prevail in conflict when the crisis comes cannot be known in advance. Testing for the efficacy of options must rely on repeated robust wargaming based on the best intelligence and research available, professional military judgement and applied strategic imagination. The closest thing to evaluation of a new capability is to benchmark training and exercises.

But addressing strategic risks is itself a risky business.

Peter Jennings has proposed 10 steps for strengthening Australia’s defence, ‘on the assumption that we will have to do more for our own security, play a stronger leadership role in the region … and position ourselves for even darker threats to our security in coming years’. Behind Peter’s assumption are two judgements: that US forces might withdraw from South Korea and Japan during the term of Trump’s presidency; and, in the longer term, that Australia may face China ‘without confidence in the US security umbrella’.

Jennings’ key suggestions are lifting defence spending to at least 2.5% or 3% of GDP in a decade; assuming a greater leadership role in regional security; entering into a treaty with Japan; engaging in a formal security arrangement with France and the UK; negotiating strategic partnerships with Indonesia and India; building a nuclear industry that’s able to support a fleet of nuclear-powered submarines; and expanding the ADF to 90,000 personal.

Paul Dibb argues that long-term defence planning should encompass maintaining readiness levels that would permit Australia to join the US in ‘military contingencies such as the South China Sea, Taiwan, the Korean peninsula, the Indian Ocean and the South Pacific’ at short notice. He says that Australia ‘should aim to reassert our influence in these areas as China moves increasingly to challenge our strategic space’. And Australia’s military capabilities must be ‘sufficient to sustain a credible deterrence posture in a deteriorating strategic environment’. That includes acquiring ‘nuclear-powered attack submarines’.

Jennings and Dibb are right that China’s emergence as the preeminent power in East Asia and Australia being left without the comfort of confidence in the US alliance are the big strategic issues. But Australia cannot materially alter the course of these events— or even mitigate the consequences—by expanding its military capability.

If, as Jennings has suggested, the defence budget were increased to 3% of GDP, that would increase the share of overall government spending on defence from 6% to around 9%. (The budget would probably need to be more like 4% of GDP with a nuclear capability.) If the funding were siphoned from the health, education and social services portfolios, for example, they would need to find around 5% in savings. Otherwise, taxes would have to increase. To be politically digestible, an expansion in defence spending of this magnitude would need to be accompanied by a robust justification. Given the opportunity cost, what would taxpayers get?

The idea that Australia would be an attractive prospect for enhanced strategic relationships with other countries denies the complexity of the issues facing those living on or near China’s borders. Many countries in the region would be reluctant to imperil their economic relationships with China by entering into a strategic arrangement with Australia that was obviously directed at China—including Indonesia and India.

Similarly, a formal military alliance with Japan (or South Korea) not involving the US makes little geostrategic sense for those countries. Such a hostile act would increase tensions in North Asia and bring on certain repercussions. Australia does not and never will have the relative strategic weight to offer much in the way of increased security for those nations.

The Europeans regard the growth of China not as a threat but rather as an opportunity. The outcomes of the recent EU–China summit reinforced the growing strategic partnership between them. Moreover, the major European nations are facing a crisis in NATO and leaning towards closer continental defence cooperation. An arrangement with Australia against China is well down their list of priorities.

But the biggest problem with the proposals for greatly enhancing defence expenditure and pursuing alliances against China is that the outcome is almost certain to be perverse. Overtly taking steps clearly hostile to China, no matter how they’re dressed up, would simply be a provocation. And it would be delusional to think that China would stand idly by and watch Australia’s endeavours.

Not only does China have greater military capability than Australia at present, the gap will grow almost exponentially as time passes. China’s diplomatic influence greatly outweighs Australia’s because of its economic strength, foreign investment, infrastructure development under the One Belt, One Road policy, and trade arrangements. Not just Australia’s security, but its prosperity as well is likely to suffer as a result of such aggressive policies.

Expanding defence expenditure and aggressively seeking alliances against China doesn’t stand up on efficacy, cost, risk and achievability grounds. And that’s even before the feasibility and acceptability of acquiring a nuclear capability is addressed.

Defence experts tend to be worst-case tragics. If they’re given the lead on policymaking, they’ll almost always prioritise fighting the next war over building the next peace.

Arrangements between sovereign states fall into one of two broad categories (putting colonialism and suzerainty aside): hegemony and balance of power. Is Australia facing a succession of hegemons or a world in which there is no hegemon and the great powers seek a balance of power?

Ian Clark suggests that, more than possessing military power and economic weight, being a hegemon ‘is a status bestowed by others, and rests on recognition by them’. Foremost among ‘the attributes of the putative hegemon’ are ‘the perceptions and responses’ of the other states. International leadership amounts to hegemony, ‘when foreign elites acknowledge the leader’s vision of international order and internalise it as their own’.

On that basis, the US has long been a hegemon. The US designed the postwar international system. The liberal values and market capitalism that underpin the international order have been the shared and unquestioned assumptions among political elites in Europe, Australia and elsewhere. The liberal international order’s most enthusiastic promoters have often been outside America, although the hegemonic blueprint was initially expounded internally in key documents like NSC 68. That document described US policy as ‘designed to foster a world environment in which the American system can survive and flourish’.

The Australian government’s 2017 foreign policy white paper shows strong alignment with what have been US international values. President Barack Obama’s 2015 national security strategy expressed the belief that ‘sustained American leadership is essential to a rules-based international order that promotes global security and prosperity’ and the conviction that the ‘question is never whether America should lead’ but how it leads. Those sentiments permeate the white paper. The legitimacy of US hegemony is in the bone marrow of Australia’s political elites.

Canberra’s strong identification with US hegemony explains the widespread consternation at the US’s waning status. Over and above security norms and trade rules concerns, there’s a visceral dread that a Chinese hegemony would require a radical transformation in Australia’s political zeitgeist and the adoption of an unpalatable set of new governing concepts. Traditional political language wouldn’t be able to provide a coherent account of the new international environment. There would no longer be an assumption that liberal democratic values and human rights are universal, or that markets should necessarily operate with minimal government interference.

The rate of decay of the US’s hegemonic status is accelerating. Not its economy or its military power, just the hegemonic leadership it offers through a set of values and behavioural norms with which the elites in other large economies can align themselves. Maybe it started under President George W. Bush, but under President Donald Trump the multilateral liberal consensus that legitimised US hegemony is quickly disappearing.

Trump has abandoned the Paris climate and Iran nuclear agreements and incited a trade war. He hasn’t just failed to condemn heinous human rights abuses, and valorised illiberal autocrats in Vladimir Putin, Xi Jinping and Kim Jong-un, but seems to have implicitly acknowledged Russia’s annexation of Crimea. When that’s added to the evident domestic erosion of liberal values, the US is exposed as a nation that bullies and no longer leads by example.

But fears of China becoming a hegemon are unrealistic. Even in decline, the US will persist as the most significant single economy and the major military power for many decades to come. In addition, the European Union will remain an important global economic and security player.

Europe won’t establish the same relationship with China that it had with America. Transatlantic relations will remain important, but Europe will no longer accept US hegemony. It will seek to balance US power through closer economic and security relations with Asia. The growing closeness in the strategic and economic interests of China and Russia is forging a large geographic area in Eurasia that’s increasingly impervious to US influence.

As hegemonic bonds loosen, Europe will try to balance the US with China and offset China with the US and Russia; Russia will try to balance the US with China and check China with Europe; and China will try to balance the US with Europe and Russia. In this situation, states like Turkey, Nigeria, Japan, Canada, Iran and, in particular, India will manoeuvre to advantage.

In the face of such competitors, China will never rise to the level of postwar dominance that the US achieved under the banner of leader of the free world when it was able unilaterally to dictate the rules of international interaction. Nevertheless, in some regions China might approximate a hegemon. But the US will remain the primary factor in the strategic calculations of all other great powers.

As US hegemony recedes, Australia will be left facing a world of balance-of-power arrangements, but one unlike anything seen before. Yet Australia need not fear being forced to kowtow to China or to become the antipodean version of socialism with Chinese characteristics. Nor will it need to become a militarised continental fortress primed to repel assaults by a Chinese suzerain seeking tributary states. The emerging international environment will likely be in some form of equilibrium without a smothering hegemon.

Small, agile and capable states like Australia will have to move among great-power alignments to seek their advantage. Positing Australia’s quandary as choosing between China and the US is simplistic. Australia need not fear the passing of the hegemon if it can find the statesmen and diplomats who are alive to new opportunities and unafraid of China’s shadow.

Some strange things have been said about the Australia–China relationship during recent weeks.

Some commentators have blamed the Turnbull government for mishandling relations with Beijing and for making too much of a fuss about China’s militarisation of the South China Sea.

John Howard has suggested that, while there will always be differences between the two countries, current tensions could be remedied by face-to-face meetings between the national leaders. Bob Carr has said that critics of Beijing’s influence operations in Australia want to spark a new cold war.

The reality is that all of these perceptions are flawed. The Center for Strategic and Budgetary Assessments (CSBA) in Washington released a new report, Countering comprehensive coercion, which makes clear that China has been conducting political warfare–type operations against Australia for over a decade. So it’s time for Australians to understand that it’s not a question of whether we want to fight such battles. The communist regime in Beijing is already doing so against us. The most important question is how we can best defend ourselves.

There’s a great deal of evidence on the public record for all to see. Senior officials have told parliamentary committees that subversion and influence operations are now more intense than at the height of the Cold War in the early 1980s. There are reports of Chinese students being tasked to suppress anti-Beijing views; the Chinese Communist Party’s funding of business people, politicians, trade unionists and others who then argue Beijing’s case; large-scale media operations including Beijing-produced monthly supplements in major Australian newspapers; extensive cyber operations against Australian governments, corporations and research institutions; aggressive attempts to recruit spies and agents of influence; and operations by an increasingly powerful Chinese military to establish footholds in important locations in the Pacific and Indian oceans.

Some Australians assume that the Chinese regime’s operations in Australia are simply a succession of isolated or random incidents. The reality is that the Chinese agencies conducting these operations are tightly controlled by the Communist Party leadership. The primary organisations of relevance—the United Front Work Department, the Propaganda Department, the Ministry of State Security, and the political warfare and propaganda divisions of the People’s Liberation Army—are all directly controlled by the Politburo Standing Committee, chaired by Xi Jinping.

The Chinese regime is highly motivated. It’s driven by a powerful narrative that seeks to overcome what the Communist Party sees as China’s ‘century of humiliation’ or subservience to the West and delivers the ‘China dream’ of restoring the nation’s international pre-eminence. At last October’s National People’s Congress, President Xi emphasised his determination ‘to restore China as a global leader in terms of comprehensive national power and international influence’.

The regime in Beijing is committed to building China’s international power to rival and then surpass that of the United States. China’s leaders of the 1980s and 1990s who spoke of ‘a peaceful rise’ and of Beijing ‘biding its time’ are long gone.

A feature of Beijing’s operations against Australia and its allies is that they’re a reflection of the regime’s oppressive surveillance operations and police-state behaviour at home. Within China there’s no independent rule of law, little respect for human rights and no tolerance of dissenting behaviour. Many thousands of citizens are arbitrarily detained in ‘re-education camps’. The same culture of aggressive intrusion, heavy-handed interference and disrespect for international law characterises many Chinese agency operations in Australia and throughout our region.

The CSBA report tracks the development of these Chinese operations and includes a revealing discussion of translated papers from a United Front Work Department conference that was conducted in 2015. In these and other documents, the Chinese have no hesitation in describing their operations against Australia and other allied countries as ‘political warfare’. Indeed, Xi has talked openly about these political warfare operations being one of his ‘magic weapons’.

This Chinese campaign is a major challenge for the Australian national security community and, indeed, for Australian society at large. The communist regime has been actively exploiting the openness and freedoms that are part of our DNA. What’s more, all indications are that these hostile operations are likely to be intensified in the period ahead and will be sustained for many years.

The CSBA report starts a discussion about what we need to do.

First, more Australians need to do their homework. While these developments are well understood by our national security officials, many people in business, education, the media and elsewhere have yet to appreciate the nature and scale of the challenge, and quite a few are in a state of denial. These regime operations present a serious threat to our sovereignty and to the freedoms most of us cherish.

Second, we need to appreciate that in the face of this political warfare campaign, it cannot be business as usual. The Turnbull government’s tightening of counterespionage legislation will help, but it’s not enough. We need to work hard with our allies and partners to devise means of defending ourselves against these political warfare operations. We also need to deter Chinese escalation and impose costs on Beijing for continuing its coercive operations.

Perhaps the biggest challenge of all will be to properly brief Australians and organise citizens to play their part in defending our democracy. Beijing is leveraging trade, investment, financial, political, diplomatic, news media, social media, educational, social, cyber, espionage, military and paramilitary and other instruments to coerce Australian compliance. Australia’s heavy reliance on diplomacy and military instruments, with modest economic and aid activity, is clearly being overwhelmed. Developing an effective national response will require national leadership and sharpened priorities for relevant government agencies.

Australia needs to lift its game. There’s a great deal to do.

Australian defence white papers come along occasionally and foreign policy papers are rare, but each year Canberra produces a geoeconomic report card.

Although the federal budget is an intensely domestic creature, the Treasury documents always offer a snapshot of global wealth and power.

The strengths and culture of the Treasury department—plus the series of budget statements and papers—give the geoeconomic commentary a permanent place. Treasury owns the right and uses it. Governments, prime ministers and treasurers come and go. Treasury endures, guarding and wielding its annual right to pronounce on the domestic and global economy.

Despite its dour image, Treasury’s geoeconomic ideology is liberal internationalist with an optimistic faith in free trade and globalisation.

Australia’s 2016 Defence White Paper and the 2017 Foreign Policy White Paper were rendered in dark colours. The contrasting Treasury view is brighter. In Treasury world, the US is great and China is wonderful.

The geoeconomic report card on the outlook for the international economy is always in Statement 2 of Budget Paper No. 1. Australia enters its 27th consecutive year of economic growth. The domestic good times have rolled so long they’re the norm, part of the national expectation. Yet nearly three decades without a recession is a record for Oz that reaches towards a world record.

With 2.¾% growth this financial year (2017–18), Treasury predicts 3% for the next two financial years, helped along by the international upswing: ‘Global growth has risen to its fastest pace in six years, with widespread strength across both advanced and emerging economies … Overall, the global cycle is better synchronised than it has been for some time.’

When I started jumping into Statement 2 back in the mid-1970s, the Treasury geoeconomic hierarchy had the US firmly on top. Today there’s a lot more jostling. Through the 1980s and 90s, Japan came close to sharing the top spot with the US.

Then the China express roared into Oz. In the first decade of this century, Treasury embraced purchasing power parity (PPP) in preference to the US$ exchange rate beloved by American firsters. The purpose was to emphasise China’s arrival in second spot, overtaking Japan. By 2006, Treasury was using PPP to rank China as the second largest economy and India the fourth largest, to dramatise far-reaching changes in global power.

In this decade, Treasury hasn’t been mentioning the purchasing power measure, perhaps because PPP says China overtook the US to become the world’s top economy in 2014. No need to rub it in. And for much of this decade, the Treasury geoeconomic discussion has started with China anyway.

This year, though, the hierarchy used in Statement 2 was the US, China, India and Japan:

United States: ‘Strong growth’ with unemployment at 4%, ‘around multi-decade lows’. Donald Trump got his tax cuts. Increased demand and capacity constraints spell more US imports and inflationary pressure. Fiscal stimulus (let ’er rip, says The Donald) pushes against Fed Reserve monetary tightening, ‘heightening the downside risks’. The danger of a Trump tariff/trade war escalating causes ‘uncertainties for both the US and global outlook’.

China: Experienced stronger than expected growth in 2017, driven by robust consumption and a pick-up in exports. Despite the good near‑term outlook, growth in China is expected to moderate over time below the current annual target of 6.5%. China wants to rein in risk in the financial system, deal with industrial overcapacity and clean up its environment. The Treasury conclusion is that Beijing must manage the transition to ‘quality growth’ while facing ‘geopolitical tensions’.

India: On the rebound after a disrupted 2017, India is forecast to reclaim its title as the ‘world’s fastest growing major economy’ in 2018. The Treasury conclusion: ‘External factors such as higher oil prices and rising protectionism present risks to India’s economic growth.’

Japan: Eight consecutive increases in quarterly GDP represent ‘the longest run of growth in almost 30 years’. Unemployment is close to its lowest since the 1990s. Still, demography is destiny: ‘In the longer term, Japan’s demographic challenges remain substantial.’

Over the past five years, Treasury has changed the emphasis of its reporting on what it still quaintly describes as ‘Other East Asia’. More focus is given to the ‘ASEAN-5’, comprising Indonesia, Malaysia, the Philippines, Thailand and Vietnam. This has delighted half of ASEAN, while miffing some others of the Other, especially South Korea and Taiwan.

Skipping past the Treasury paragraph on ‘the euro area’ and Brexit, Southeast Asia now gets its own treatment as an important element of the geoeconomic ecology.

ASEAN‑5: Broad-based growth will continue. More trade‑exposed economies (particularly Vietnam, Malaysia and Thailand) have benefited from the global pick‑up in global trade, given their significance in global supply chains. The Philippines is also on the up. Treasury summation:

As globally integrated economies with large trade exposures, these economies are particularly susceptible to the risk of rising protectionism as well as moderating growth in the Chinese economy and the pace of monetary policy normalisation in the US.

Treasury often mounts the soapbox for a mini lecture. Last year’s lecture was on global trade growth, 2016 was economic transitions in China and Australia, and 2015 was India’s growing potential as a partner. This year it’s the importance of trade to the global economy. The name ‘Trump’ doesn’t appear in the mini muse moment, but it’s all about Donald:

The increasing integration between countries means that significant changes to trade policies in one country, especially a large and globally integrated country, are likely to affect many other economies around the world. This increases the uncertainty around the effects of any rise in trade protectionism.

Even Treasury is a little Trump-ed.

A flurry of attacks on the Turnbull government’s handling of the Australia–China relationship has captured the media’s attention. First a columnist for the Financial Review on a Fortescue-funded trip to China’s Bo’ao Forum punched out three stories critical of the government’s ‘considerable anti-China rhetoric’, citing businessmen and nameless Chinese officials.

In due course, China’s ambassador granted the Australian an interview in which he stated that ‘systematic, irresponsible and negative remarks’ had harmed bilateral relations. ‘It is detrimental to the image of Australia in the eyes of the Chinese public. It is something that neither side would like to see,’ Ambassador Cheng Jingye said.

On Monday Kevin Rudd told Sky News that Prime Minister Malcolm Turnbull thinks it’s smart to ‘publicly punch the Chinese in the face’. That night Bob Carr of the University of Technology Sydney’s Australia–China Relations Institute echoed Rudd’s comments on ABC Radio National, but not without falsely and recklessly claiming that former Turnbull advisor John Garnaut had described Chinese students as ‘representing a threat of ethno-nationalist chauvinism’.

But how much truth is in these characterisations of the Australia–China relationship? The common factor is that they appear to absolve or ignore any blame the Chinese government might bear for the current state of relations. We seem to have forgotten what was evidently a key impetus in the Turnbull government’s decision to introduce legislation to counter foreign interference: the Chinese Communist Party’s (CCP) interference in Australian society and parliamentary sovereignty.

The case of former Labor senator Sam Dastyari is only the best-publicised example. Dastyari courted hundreds of thousands of dollars in political donations from Huang Xiangmo, a Chinese citizen and property developer, going as far as providing Huang with counter-surveillance advice and contradicting Labor’s policy on the South China Sea. These events not only compromised the integrity of our political system, but also laid bare and took advantage of gaps in our laws that the proposed legislation seeks to combat.

While donating over a million dollars to both major political parties, Huang Xiangmo was president of the Australian branch of the China Council for the Promotion of Peaceful National Reunification, an organisation run by the CCP’s United Front Work Department. In 2016, the Council even printed Huang’s smiling visage on the cover of its official magazine, Reunification Forum. The accompanying article praised Huang for his ‘broad influence in Australia’s overseas Chinese world, political world, business world and scholarly world’.

The United Front Work Department coordinates a system for undermining opponents and supporting allies through manipulation, deception and reward that’s known as the United Front. Xi Jinping has referred to this system, which originally helped the CCP undermine the Kuomintang and ultimately seize control in 1949, as one of the party’s ‘magic weapons’. This magic weapon is now being used across the globe in countries such as Taiwan, Australia and Canada, to name only a few examples.

The United Front and the CCP’s propaganda system also seek to establish influence over Chinese diasporas. Here in Australia, large numbers of Chinese newspapers and radio stations have been purchased by Chinese state media. Financial pressure is exerted on Chinese media outlets that remain critical of the CCP.

As Sinologist John Fitzgerald points out, the CCP’s plans to mobilise Chinese-Australians for political purposes assume that the primary loyalties of Chinese-Australians lie with the People’s Republic of China. That’s probably not true, and most Australians of Chinese heritage weren’t born in the Chinese mainland. Nonetheless, CCP United Front and propaganda efforts are widespread in Chinese community groups and media, and constitute deliberate interference that could drive a wedge between Chinese-Australians and the rest of the nation if allowed to continue.

In addition to this interference, the CCP appears to be engaging in its own campaign of anti-Australian rhetoric to weaken Australia’s willingness to confront CCP interference. In the process, the CCP has sought to characterise the Turnbull government’s response to foreign interference as ‘anti-Chinese racism’, blurring the line between Chinese people and the CCP.

Following isolated assaults on Chinese students in Australia, the Chinese embassy posted an alert on its website and across Chinese media stating, ‘All Chinese students in Australia are warned to be on the alert for possible threats to their safety.’

Many were led to believe that Chinese students in Australia faced a wave of racially motivated violence connected to similarly motivated legislation. After working to generate fear and anger among parents, China’s consular officials in Melbourne encouraged local contacts to communicate their concerns about racial abuse to the Australian government. By John Fitzgerald’s reckoning, this strategy had ‘the implied threat that students would stop coming if the government did not change its tune’.

More recently, a few dozen Chinese students hoping to pursue graduate studies in Australia had their visas significantly delayed. Chinese state media first broke the story and the delays were framed as a political act related to tensions between Australia and China. ‘I’ve already given up on Australia … and I advise others who want to pursue a PhD degree to be cautious and choose [your destination country] wisely,’ one anonymous student told the Global Times, a Ministry of Propaganda outlet.

The CCP is clearly aware of the social and economic importance of our universities, and in these instances appears to have sought to influence Australian politics by threatening the flow of Chinese students.

There is much to be criticised in the Turnbull government’s management of our relationship with China. At times the government has been inconsistent, with ministers contradicting each other. It has been provocative, as in the case of Concetta Fierravanti-Wells’s comments on China’s influence in the Pacific region. And it has been clumsy, as in Turnbull’s proclamation in Mandarin that ‘the Australian people stand up’. Criticism of the legislation should also be welcomed, and the concerns many journalists and academics hold as to its implications are important.

But CCP interference is real, not mere rhetoric, and it’s the central reason for bilateral tensions. Mistakes in how the China–Australia relationship has been managed shouldn’t lead us to lose sight of that crucial fact. Until we confront this interference, Australia cannot claim to have a healthy relationship with China.