China’s Peaceful Rise? Implications For Europe

China’s Peaceful rise? Implications for Europe

Tuesday, 03 April 2012 10:08

comments 0

1820 hits

Michael Danby
Federal Member for Melbourne Ports

Speech to Polish Institute of International Affairs

Warsaw, Thursday 29 March 2012

May I begin with both a personal statement, and a reflection on one of the heroic sons of this heroic city. I come to this Warsaw not just as a friend, and as a member of the Australian Federal Parliament, and as Chair of the Joint Parliamentary Standing Committee on Foreign Affairs, Defence and Trade, but also as a proud Jewish Australian. Like many second and third generation Australian Jews, part of my heritage lies within the shifting boundaries of this country.

My father was born on Polish soil in Torun, and my grandparents, who were upright German Bourgouise, perished in Auschwitz, a camp built, conceived and maintained by that paradigm of evil, the scourge of the Swastika that established its death camps on your soil.

You will understand then why I am drawn to the remarkable story of one of your citizens, a man who passed away more than a decade ago.  In 1993 he spoke several times to memorable public meetings, in Australia, including the influential Australian group, the Australian Institute of Polish Affairs.

Jan Karski, a righteous man who in 1940 in Warsaw joined an embryonic resistance movement. Karski gathered the first incontrovertible proof of the Nazi genocide, which he reported directly to  President Roosevelt, other leading US policymakers such as US Supreme Court Judge Felix  Frankenfurter.

Another important involvement with Poland that eventually bought me here today was the men and women of the Solidarity movement, whose peaceful struggle for the rights and freedoms of their fellow citizens has made Poland the free, democratic and prosperous nation it is today.  In 1980 2 young activists from Solidarnosc Adam and Margaret Warzel came to Australia. I have been interested and   involved with Poland and  firm friends with the Warzel’s ever since.

As part of a parliamentary delegation, Michael Danby was a guest of NATO prior to his visit to Poland

So family origin, a passionate interest in history of the recent and medium past of Poland, together with Australia’s national interest brings me to you today in Warsaw. After all,  Poland is the sixth largest economy in the EU, until recently the Chair of the European Council and soon to be head of the Visnograd Group.

Australian’s now see Poland as a Central European hub for the EU. Unlike its former Soviet bloc neighbours, Poland undertook profound reforms to liberalise its economy. Prices were freed.  Markets were opened to create an attractive environment for crucial foreign investment.  Poles have the right to be optimistic about their future, even more so when you look beyond your borders to the economic chaos that is engulfing the Southern EU members.  In Poland, as in Australia, there has been no banking collapse. Built on the foundation of an independent currency and constitutional debt limits, Poland is the only EU member that has avoided recession.  As your Foreign Minister Radek Sikorski said yesterday in his annual report to the Sejm, “this is the best Poland we ever had.” (To read, click here)

Polish Foreign Minister Radoslaw Sikorski and US Secretary of State Hilary Clinton

Like Australia, the Polish Government in 2008 adopted a $31 billion stimulus plan to kickstart its economy in the face of the global economic downturn. Stimulating the Polish economy, much like we did in Australia, has meant that you have been able to withstand the economic whiplash from the financial meltdown.

It is something that you should be extremely proud of and applauded for.

In this uncertain economic time, it is extraordinary that both Australia and Poland are joined only by South Korea and Israel in being the only 4 countries to govern through the Global Financial Crisis. I am in Poland, Australia’s Prime Minister is now on her second visit to South Korea,  and our Assistant Treasurer will be leading a major economic delegation to Israel in a month because Australian’s are anxious to share experiences and learn from countries like yours.

In this context, I turn to the topic of my speech tonight.

China's: Peaceful Rise? Implications for Europe.

The rise of China within what many have called the Pacific Century poses a significant strategic and policy challenge to not only Australia, but indeed the rest of the world.  Being China’s  2nd largest trading partner, the EU will be faced with similar strategic and policy dimensions. Let me begin by outlining the policy challenges Australia faces with the rise of China.

The context of Australia's perspective of our  relationship with China is through the alliance we share with the United States of America.  We have fought in every conflict alongside the US since WWI  where at the  Battle of Hamel when the Australians first entered the fray under the generalship of Australia’s Sir John Monash. Like Poland Australia’s key strategic partner is our superpower ally, the United States.

Australia's  shared interests with the United States in national and global security is symbolized through our hosting and increased supporting of the United States strategic capabilities.  Perhaps the most important satellite and radar base (Pine Gap) outside of the US is based in  remote central Australia. Many of you may note that this Aus/US  bond was cemented further with the announcement by President Obama when he visited Australia at the end of last year. He said  that the United States will (following a five year build-up) deploy 2,500 Marines to Darwin, the capital of Northern Australia, as a centre of operations in Asia as it reasserts itself in the region. It is also worth noting that there are reports this morning that Australia may host further military and strategic capabilities with the US in the Cocos Islands.  (Please see The battle for the Pacific by: Cameron Stewart, Associate Editor, The Australian, March 29, 2012)

Chinese naval helicopters hover above one of China's new Jiangwei-class frigates

Click on the map to enlarge

Both Australia and the United States welcome the emergence in Asia of a stable, peaceful and an economically prosperous China. Australia provides an assortment of elements that can be imported, the majority of which is iron ore, coal and crude petroleum.  In general Australia’s raw material it is 1/3rd cheaper than China buying from Brazil.  The prime differential is obviously transport costs.

Let us understand the dimensions of the economic development that we are talking about. Our former Foreign Minister Kevin Rudd outlined this in his Address to NATO’s North Atlantic Council in Munich this year when he said:

In 1982, on current prices, China's economy was less than 9 per cent the size of the US. 30 years later, again on current prices, China's economy is half the size of the American economy. By 2016, it will be more than four fifths the size of the US, and growing rapidly – and by the end of the decade likely comfortably surpassing the US. On other measures that take into account the buying power of the yuan versus the greenback, the Economist reports that China will pass the US within the next 5 years…

He continued setting Beijing's rapid growth in a regional context:

But China isn't the whole story. The prospects and promise of India are also being transformed as its economy develops and diversifies.

India's economy is structured quite differently from China's, and its future development will likely be different as well. The Indian economy will, however, become a formidable force for the region and the world. Moreover, a range of other countries across Asia are crossing development thresholds as well.

Australia's near neighbour, Indonesia is growing rapidly, and is likely to be a US $1 trillion economy by 2013. Nouriel Roubini predicts it could be in the top ten economies by the end of the decade. And arguably the world's 6th largest economy by 2030.

Australian Prime Minister Julia Gillard and US President Barack Obama addressing Australian and US troops in Darwin November 17th 2011

Last year President Obama pointedly chose the Australian Parliament to express a new American doctrine in the Asia Pacific. He said at that time, “I have directed my national security team to make our presence and mission in the Asia Pacific a top priority. As a result, reductions in US defence spending will not - I repeat, will not - come at the expense of the Asia Pacific… We will preserve our unique ability to project power and deter threats to peace. We will keep our commitments, including our treaty obligations to allies like Australia. And we will constantly strengthen our capabilities to meet the needs of the 21st century. Our enduring interests in the region demand our enduring presence in this region.”

As former Australian Foreign Minister Kevin Rudd noted:

……The acceleration of military spending has been much higher in Asia. China's spending is up by 335 per cent for the decade to 2010. Russia is up by 368 per cent. India by 183 per cent. That increased investment means regional militaries having a longer reach. It means greater buying power for new technology, and faster deployment of updated equipment. It potentially means greater capacity to deny access to strategically or economically important parts of Asia. And it means the development of non-conventional capabilities, like cyber attacks, that have the potential to be used in asymmetric warfare....

Interconnectedness of Europe and the United States with Asia is growing rapidly. 50 per cent of all global merchant traffic passes through the waters of the South China Sea. 85 per cent of South Korea's energy is imported. Japan's imports are on a similar scale. 90 per cent of China's crude oil is imported. India more than 81 per cent.  Asia's sea lines of communications with the rest of the world are therefore not just important, they are fundamental to Asia's economic future.  Europe has some $860 billion in trade with the major economies of North East Asia, much of it transiting through the South China Sea. According to the US Energy Information Administration, over 60,000 vessels pass through the Straits of Malacca each year, carrying up to 14 million barrels per day of oil....

President Obama carefully approached the question of China’s rise in the region. He said, “Australia, the United States, all of our nations - have a profound interest in the rise of a peaceful and prosperous China, and that is why the United States welcomes it. We've seen that China can be a partner, from reducing tensions on the Korean Peninsula to preventing proliferation. And we'll seek more opportunities for cooperation with Beijing, including greater communication between our militaries to promote understanding and avoid miscalculation.”

Chinese  Government reaction was swift. Government spokesman Liu Weimin said the next day, "It may not be appropriate to strengthen and extend this military alliance. Whether it suits the common interests of countries around the region and the whole international community remains under question."  (Please see Michael Danby's analysed a Chinese Think Tank’s insistence that China should exert more political muscle in Australia)

I think the strategic lesson, together with the pragmatic view of this rebuke, was best put by Dr. John Lee, one of Australia's leading experts on China. He said, “…the Chinese buy commodities from Australia not because they like our policies, but because they have to. Our commodities tend to be around a third cheaper than other competitors because of our location…They cannot jeopardise that for domestic reasons. So, it's very aggressive talk, but there's not much they can actually do.”

We should reject the notion that by embracing China economically we must acquiesce to a process of Finlandization; even encourage a strategic draw down of the United States in our region.

We must avoid pitfalls of both unnecessary confrontation and unprincipled appeasement. We should not treat China and the United States as if they were no more than a pair of traditional great-power rivals competing for territory or markets, about whom we are neutral.

China’s political system represents an amalgam of the traditional Confucian paternalism and the police apparatus of the Soviet Union.  Maintaining and strengthening the all powerful party and state negates the rights of the individual. It is ruled by an interlocking alliance of party, state, military and business elites. (Please see 'The princelings fight for China's crown' by John Garnaut' SMH (excerpted from the prestigious US monthly Foreign Policy) Beijing March 31, 2012)

Chonging Party Clique

Bo Xilai with his wife Gu Kailai Please see 'Chinese politician Bo Xilai's wife accused of murdering UK businessman'	Son of the Communist nomenklatura Bo Guagua, Bo Xilai’s son, held champagne parties at Oxford and drove a Ferrari

For all its improvement economically, which has brought a billion people out from abject poverty, China is run by a regime whose sole priority is the perseveration of the power of China’s Communist Party (CCP). The fall of Bo Xilai , the Chonging party cheif who might have been one of the most powerful figures in China as part of the all powerful 9 member CCP Standing Committee underlines the brutality of its leadership, whether in subterranean struggles between relative liberals like Wen Jiabao and neo moaists like Bo Xilai.

CCCP liberals?

Wen Jia Bao	Hu Yaobang	Zhou Ziyang

For both strategic and economic reasons,  Beijing supports and protects a group of dreadful authoritarians, such as North Korea, Burma, Sudan, Zimbabwe.

Its continued veto’s at the Security Council regarding issues such as Iran’s pursuit of nuclear capabilities, on Syria and on Sudan has been met with fierce rebuke. While we welcome a prosperous China, we must continue to hold them accountable for supporting these regimes. Its cruel repression of the peaceful culture of Tibetan Bhuddism. Together with  the fact that China executes more than any other state  underlines the brutality of communist power. The Chinese communist party and abuses on human rights, stifles free speech within China, including  jailing the Noble Peace Prize  Laureate Liu Xiaobo and its imprisonment  and harassment of  its  elites like artists Ai Wei Wei, show that the regimes ugly side affects Han Chinese as much as minorities.

So what does this all mean for China’s largest trading partner, the European Union?

We have already seen tensions between China and EU. The European Union has taken China to the WTO six times since China joined in 2001. And earlier this year China’s State Council ( cabinet), said that Chinese airlines were banned from taking part in the EU Emissions Trading scheme unless given government approval.  In March this year, Louis Gallois, the chairman of Airbus’ parent company, European Aeronautic Defence and Space Co, expressed publicly that he was concerned that a $12 billion order for 24 Airbus 330 long-haul planes to be sold to Chinese airlines was in danger because of EU ETS disputes. EU trade commissioner Kart De Gucht last month canvassed a number of trade disputes with China. Already 6 times Europe has taken China to the WTO mirroring the increasing assertiveness of Japan who recently took Beijing to the WTO over its profits and pricing of Rare Earth.

Japan takes China to the World Trade Organisation

Nothing illustrates the tension between Europe and China more than the arms embargo that has been in place since the 1989 Tiananmen Square protest. China has requested several times that the arms embargo be lifted.  Divisions within Europe regarding the lifting of the arms embargo are well known, with France arguing for several years that it should be lifted according to human rights advances in China, while Britain and others are firmly in favor of the embargo remaining.  Of course pressure also comes from the United States, who we know are in favour of the arms embargo remaining due to its commitment to its allies, like Australia, in the Asia-Pacific region. Japan has also indicated its opposition to the lifting of the embargo.
The arms embargo has been in the spotlight of late, given the lending of billions to Europe by Beijing to assist with the Financial Crisis.  Last November when the EU asked Beijing to invest in the European Financial Stability Facility to provide the resources that would be required to rescue a major EU member, many human rights activists at the time feared that in response to providing financial support for European nations, Beijing would ask for the embargo to be lifted.  Just this week Ireland and China signed a trade deal where Irish Prime Minister Enda Kenney stated that he supported the lifting of the arms embargo.

China is no longer the isolated regime and nation it once was. Its emergence as a world power must come with its acceptance that there are international principles it must meet.    As such short term economic benefits should not have primacy against the long term responsibilities of the West to uphold and assert its democratic and human rights traditions. It is a truism that debtors tend to speak softly to their lenders, and this may never be moreso than in the midst of the European financial crisis.

Hope of the future, hope of the past?: Communist Party leader Hu Yaobang (centre) with his recruit Wen Jiabao (far right), who became premier.

Nevertheless, as difficult as it may be, a line should be drawn. The need for financial capital should not carry with it a concurrent willingness to draw down on any country’s moral capital.

China is now the EU's 2nd largest trading partner behind the USA, and the EU's biggest source of imports by far.  Certainly it will require dexterity to ride the Chinese dragon. At the bottom line Europe should look for a relationship based on mutual recognition, respect and equality. A stronger relationship with China is not incompatible with traditional EU alliances, just as Australia must negotiate its relationship with China and yet maintain its traditional alliance with the U.S.  After the underlying economic reality is that the US has $550 billion of direct investment in Australia  versus  Chinese growing but more limited direct investment at 20 billion in Australia.

Increased trade with the West should be seen as a great positive, not just for the mutual economic benefits, but also as an opportunity to bring China into the world community. It is axiomatic that trade promotes peace, whereas isolationism promotes conflict. To reiterate a phrase from the Cold War, commerce and co-existence are natural partners. Secretary Clinton recently remarked that a thriving America is good for China, and a thriving China is good for America. It might be said that a thriving China and America is good for Europe as well. And just as naturally, as engagement increases, so will the number of issues on which there is disagreement. This is not to be feared, for in truth it is sometimes a question of mathematics, because more is on the table.

Poland may have some views on whether an officially communist regime like China is just  another  country, just another the equal. Each member of the EU has the option of reacting to Beijing in different ways,  individual ownership of foreign policy is a sovereign right of EU members, but acting seperately that China will seek to leverage advantages where they can be found – if you like, to divide and conquer. This is a lesson of the Asia Pacific as well. Kevin Rudd concluded that the rise of China had costs as well as opportunities:

….Our common challenge through this evolving institution is to help ensure that the rise of China is accommodated peacefully within the global and regional rules-based order; that India is encouraged to play its full, natural role as a major democratic power in Asia; and that the rest of Asia is able to preserve its sovereignty and maximise its prosperity in the process.

The great George Orwell was always firm on the totalitarian temptation, lets hope the graffitist wasn’t right about China