De-globalisation is reshaping our world

In the AFR I write today that if you believe the excerpts from John Bolton’s new book on his term as national security adviser to President Donald Trump, the putative leader of the free world is as mercenary and capricious as the worst possible caricatures, and is fundamentally undermining the US-established western liberal-democratic order. This of course is creating openings for its existential strategic rival, China, which President Xi Jinping has failed to capitalise on. Read the full column here or AFR subs can click here. Short excerpt below:

In one telephone call between Trump and Xi, the former celebrity apprentice host “stunningly turned the conversation to the coming US presidential election, alluding to China’s economic capability and pleading with Xi to ensure he’d win,” Bolton claims. “You’re the greatest Chinese leader in 300 years!” Trump allegedly told Xi, “amending that a few minutes later to ‘the greatest leader in Chinese history’.”

In another classic anecdote Bolton recalls that “when Xi said he wanted to work with Trump for six more years…Trump replied that people were saying that the two-term constitutional limit on presidents should be repealed for him”. (In 2018 Xi removed the two-term limit on Chinese presidents to become a leader for life.) A master politician, Xi responded by saying that “the US had too many elections he didn’t want to switch away from Trump, who nodded approvingly”.

This stuff is frankly hard to make-up: it is like watching the brilliant 2004 satire Team America: World Police recast in 2020.

And yet you would be disappointed if you had hoped to see some desperately-needed error-correction from Xi to resist the seemingly inevitable Western decoupling of supply-chains from China, which combined with huge demographic headwinds, massive excess capacity, weak per capita incomes and miserly consumption demand, fundamentally threatens the Middle Kingdom’s long-term prosperity and the Chinese Communist Party’s (CCP) legitimacy.

We’ve had the fast-tracking of the new national security laws in Hong Kong that will finally give the CCP complete control over that recalcitrant democratic isle. What was once Asia’s premier financial centre is all but dead as a dodo, creating an enormous opportunity for Australia and Singapore as top talent and valuable capital flee from the authoritarian regime.

Concurrently, the PLA appears to have provoked military conflict with its nuclear neighbour India at 14,000 feet (4,300 metres) along the contested border at Ladakh, which has resulted in more than 63 casualties between the two armies (and if you believe the Indian press, as many, if not more, on the Chinese side).

The worst military skirmish between China and India since 1967 has unsurprisingly pushed the latter further into the eager embrace of its quadrilateral partners, Australia, Japan and the US, including a new “Comprehensive Strategic Partnership” between Australia and India that will involve defence cooperation focussing on the Indo-Pacific region, which is looking like it will become the new Middle East.

The Indian government is now flagging that it will ban Chinese companies from supplying any telecom equipment to state telcos and may prohibit private mobile operators from using gear provided by Huawei and ZTE. Sound familiar? The UK and Canada have recently canvassed similar decisions following in the footsteps of Australia and the US.

After the border stoush, state-owned Indian Railways scrapped project contracts awarded to Beijing National Railway Research and Design Institute of Signal and Communication Group in another example of Chinese-induced decoupling.

A new and emboldened political consensus in the US that China is an unambiguous strategic threat that must be actively thwarted has seen no less than three aircraft carriers deployed to the Pacific and the first US military flight over Taiwanese territory (claimed by the Chinese) since 2015.

Misguided Chinese attempts to engage in economic coercion with Australia by threatening tourism, education, beef, barley and coal exports have been completely counterproductive, precipitating an unprecedented public resolve from the prime minister and foreign minister that they will resist Chinese efforts to undermine the liberal-democratic trading system with a coalition of like-minded developed nations.

In an important new speech, foreign minister Marise Payne was remarkably direct when declaring that “it is troubling that some countries are using the pandemic to undermine liberal democracy to promote their own more authoritarian models”. “As Prime Minister Morrison said in March of this year, there are some who believe liberal democracies and free societies cannot cope with these sorts of challenges,” Payne continued. “We will prove them wrong here in Australia.”

Payne expressed deep concern that “we have seen disinformation pushed and promoted around the coronavirus pandemic and around some of the social pressures that have been exacerbated by the pandemic”, highlighting a European Commission report that “concluded foreign actors and countries – in particular Russia and China – had carried out targeted disinformation campaigns seeking to undermine democratic debate and exacerbate social polarisation, and improve their own image in the COVID-19 context”.

Payne went on to say that she’d been “very clear in rejecting as disinformation the warnings of the Chinese Government that tourists and students should reconsider coming here because of racism”. "The disinformation we have seen contributes to a climate of fear and division when, at a time like this, what we need is cooperation and understanding."

Finally, she revealed that Australia had co-signed with 131 other countries a statement in the UN warning that COVID-19 had “created conditions that enabled the spread of disinformation, fake news and doctored videos to foment violence, to divide communities”.

All of this explains why we are very focussed right now on relations between China and the West, and what this portends about the future.

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