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Australia Faces Challenging Times Caused by Deteriorating Relations with China

By James ONeill – New Eastern Outlook – 16.10.2020

A recent article published in Russia Today on 13 October 2020 by Tom Fowdy raised some very important issues affecting Australia’s economic well-being. That economic position is rapidly deteriorating as the country’s crucial economic relationship with China disintegrates at an accelerating rate. Australia’s export structure has had several distinctive features over the 250 or so years since it was first colonised by the British in the late 18th century.

Its initial role was to serve as a penal colony for people from Britain who had committed crimes, but not severe enough to warrant execution. The rights of Australia’s indigenous population who had inhabited the country for more than 100,000 years did not enter the equation. Indeed, they were not officially regarded even as human beings, that status only being assigned in the 1960s. Before then the aboriginal people had the same legal status as flora and fauna.

The defeat of the British in Singapore by the Japanese army in 1941 lead to the beginning of a move from reliance on the British for the country’s security to reliance upon the Americans. The latter’s troops arrived in 1942 and they have been there ever since.

Australia’s trading patterns showed a similar reliance upon the British until the latter’s joining the European Common Market on 1 January 1973 forced a reappraisal of that economic relationship. Thereafter, Australia’s trade shifted progressively to its Asian neighbours, a trend that accelerated in every year since the 1970s. Today, Asian nations account for the vast bulk of Australia’s trade with the world.

China, which accounted in 2019 for more than one third of the total Australian exports, was easily the biggest trading partner, accounting for nearly twice the amount of trade than that with Japan, the second most important trading partner.

Despite its geography, being a landmass immediately South of its major trading partners, the Australian political psyche has remained firmly fixed to the Anglo-United States worldview. Since the end of World War II in 1945, Australia has joined the United States in at least four major military conflicts; Korea, Vietnam, Afghanistan and Iraq, that are not only geographically remote from Australia, but also involved no discernible vital Australian strategic interest.

The fact that all four wars were based on false justifications did nothing to enhance their legitimacy. The Korean War was manifestly aimed at the overthrow of the then newly installed Communist Party in China. This was readily discernible from the actions of the Allied troops that clearly violated the terms of the United Nations Security Council resolution authorising military action (in the absence of Russia and with China’s seat still held by the Nationalists.)

The lies told about Iraq’s “weapons of mass destruction” or Afghanistan’s alleged role in sheltering the falsely accused Osama bin Laden for his alleged role in the events of 11 September 2001 are too well known to bear repetition here. What is important for present purposes is that the falsehoods and ulterior motives for the invasion and occupation of Afghanistan and Iraq did not deter Australia from either its initial involvement or its continuing role as an occupying power.

Australia similarly joined in the United States manufactured war in Vietnam, again for no discernible strategic or military interest to Australia. It was the experience of the 1972 –1975 Whitlam Labor government in Australia in response to that war that cemented the subservience to United States interests.

Whitlam had removed Australian troops from Vietnam and recognised the PRC as China’s legitimate government. Both moves met with bitter opposition by the Liberal Opposition party. What sealed the Whitlam government’s fate however, was its decision to close the American run spy base at Pine Gap in Australia’s Northern Territory. The Whitlam government was dismissed by the country’s Governor General John Kerr the day before Whitlam was to announce Pine Gap’s closure to the Australian parliament. That the base is still open (one of at least eight United States military bases in Australia) speaks volumes about the geopolitical consequences of the Whitlam dismissal.

Through these tumultuous years trade with China continued to flourish. China also became the largest source of foreign students, the largest source of foreign tourists, and the third largest source of foreign investment. In 2020 all this changed. Clearly acting as a mouthpiece for the American administration, Australia demanded an “explanation” from China at the beginning of this year for the outbreak of the Corona virus.

The accusatory tone of the Australian demand was not well received in Beijing. This began a series of economic countermeasures by China. The initially relatively small economic impact of banning wine imports was clearly intended to send a signal.

That signal fell on deaf ears. Australia’s anti-China rhetoric progressively escalated through 2020. The Chinese response was to increase the banning of Australian imports. The latest (early October 2020) was to ban coal imports from Australia. This is a market worth $US13 billion to the Australian economy. It will not be the last item to be banned or greatly restricted, with iron ore (more than US$100 billion) probably being the next commodity banned, already falling 17% each month since July.

The Covid crisis has also resulted in an almost complete cessation of Chinese student arrivals (again the largest foreign source) and an industry worth billions of dollars and thousands of jobs to the Australian economy. It would be naïve to expect those numbers to recover in the foreseeable future. The same is true with Chinese tourists, a vanishing species and again unlikely to return to anywhere near previous levels. Again, tens of thousands of jobs are lost.

The rational response by an Australian government would be to review both its policies and its rhetoric. Not only has the Morrison government shown no such inclination, it is difficult to see how it could feasibly do so without adversely affecting its close and continuing (subservient) relationship with the United States.

The memory of the fate of the 1975 Whitlam government which dared to pursue policies contrary to United States wishes continues to cast a very long shadow over Australian politics.

Fowdy suggests that Australia’s situation “might be described as the most clear and explicit reaction yet of the discomfort in the Anglo-sphere world caused by the rise of China.” I respectfully agree. The solution however, is not to try and maintain the dominance of the Western world as it has been for the past 300 years.

Instead there needs to be a recognition that the Anglo-Saxon dominance was an historical anomaly, and that the old order is resetting itself. In Australia’s case that will require some major mental adjustments.

The country has flourished in recent decades precisely because of its geography and growing trade and other links with what Australians call “the near North.” What has been manifestly lacking is the political attitudes and conduct that match the geopolitical and trade realities. Unfortunately, that adjustment may be a bridge too far for the Australian psyche. It has only itself to blame.

James O’Neill is an Australian-based former Barrister at Law.

October 16, 2020 - Posted by | Economics | , ,

1 Comment »

  1. “What has been manifestly lacking is the political attitudes and conduct that match the geopolitical and trade realities. Unfortunately, that adjustment may be a bridge too far for the Australian psyche. It has only itself to blame”.

    Unfortunately, when it comes to Politicians, Australia can match any other country on earth. Our Politicians(to use term coined by one of our EX PM’s, Paul Keating)……are “24 Carat Piss Ants”….

    Like

    Comment by brianharryaustralia | October 16, 2020 | Reply


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