Obama return has Chinese flavour

By Professor John Kane, School of Government and International Relations

WhileObamawasbeingre-electedin theUnited States,the Chinesewereinstalling a new leadership team in a mannerthatwas, for all its visible pageantry, much more mysterious and secretive.It is worth asking what theseeventsmean for Australia in its relations with both countries.

America’sso-called ‘pivot to Asia’willno doubtcontinue.

The Obama administrationhasidentifiedthe Asia-Pacific regionas the principal arena for dynamic development in the twenty-first century,and the Gillard government has echoed thisview inits recent‘Asian Century’ white paper.Australia is, of course,verystrategically situatedin theregion.

We mayrecallthat General Douglas MacArthurchose Brisbane as hisheadquartersin 1942 to plan the alliedfight-back against Japan, a periodthatmarkedthedecisive shift of Australian security dependency from Great Britain to the United States eventually formalised in the ANZUS treaty of 1951.

The pivotmay beaboutmore than security,but itiscertainly about that too.

Military senditivities

Thisisasensitive matter,as shown bycertainregionalreactions to this year’s announcement of US marine rotations in Darwin.

Obama’s Ambassador to Australia,Jeffrey Bleich, was on ABC televisionthe morning after the electiondefending the enhanced relationshipin terms of food security, disaster management, regional transit security — anything butcontaining China.Chinathinksotherwise.

Such sensitivitiespoint to the peculiar nature of thechallenges, both economic and strategic,thatfaceAustraliafollowing Obama’s victory and China’schange ofleadership.

Australia has always regarded itself as a vulnerable, under-populated outpost of western civilization in a heavilypopulated,potentially hostile part of the world, thus its insistenceon thecentralityof the American alliance.

The announcement of marine rotations was comforting to the Australian establishment becauseChina’s rise,combined with America’s recent economic woes, hadcausedanxiety about the continuing capacity of the United States to play itsaccustomedrole.

WitnessGillard’s emotional address to the US Congress on March 9, 2011, in which shespoke of an “indispensable allianceandhistorical partnership of shared values and shared goalsbutalso tellinglyinserteda pep talk to the faltering hegemon to continue believingin itself andits historic role.

Thisimplied uncertainty about Americanpoliticalwill wascoupledwith implied uncertainty about Chinese intentions.Gillardnoted that Australia’s relationship with China was, like America’s, “important and complex,as indeed it is.

Chinese investment

China is now Australia’s main trading partner. If wehaveweathered the economic downturn better than most it was becausewehad becomeessentiallyavast mine feeding theseemingly (until recently)insatiable Chinese appetite for raw materials, especially iron and coal.

We have receivedbillions of dollars in Chinese investment, accepted70,000 Chinese students a year intooureducation system, and welcomedhalf-a-million Chinese tourists annually. Chinese investment has significantly altered the economic power balance within Australia from the south-east to the west and north. Chinese businessmen now sit on the boards of Australia’s largest corporations.

And yet underlying Australian indebtedness is a deep sense of unease about Chinese influence, evident most recently in the arguments over Chinese investments in arable land and Cubby Station.

The same uneaseismanifest at governmental level in quiet and not-so-quiet hedging moves accompanyingincreasing trade ties, each of whichhas drawnAustralia ever closer to the United States in matters of security and shared intelligence.

In March 2007,wesigned a security pact with Japanand, a few months later, attendedthe first(secret)meeting of the Quadrilateral Initiative between Australia, the US, Japan and India.The2009 Australian defence planning document,Defending Australia in the Asia-Pacific Century, foreshadowedhuge expenditure (which may or may not ever occur) on jetfightersand submarineswhile making itclear that the principal potential adversary was China.

A similarambivalenceaffects manyother countries as China extends and deepens its aid, trade and investment reach around the globe.

A combination of rising economic dependence on China and continuing or growing reliance on the US for security guaranteesseems tobea recurring pattern, especially in the Asian region.

Long range ambitions

The ambivalencemanycountries feel toward the American big brother is generally less than that felt toward a China whose long-range attitudes and ambitions, and the values underpinning them, are yet to become quite clear.We can guess, but we do not really know what China’s new leaders have in mind for their country, whether greater liberalisation or not, but it isunlikely that the final shape of modern China’s soul will be discernible any time soon.

But ifuncertainty andsecurity dependency inevitably casts the US in a continuing world leadership role, it is a role complicated by straitened circumstances and by America’s own deepeconomic entanglement with, and ambivalence toward,China.

The main taskObamafaces, as American voters affirmedduring the election,was the same one he facedfour years earlier −torevivethe US economy. Yetit is not clear that his administration really knows how to do that.FederalReserveBoardchairman, Ben Bernanke, ispresently conductingan undeclared currency war against the Chinese yuan, hoping to devaluethe dollar toimprove US exports, lower the huge trading deficit with China,and kick-startUSgrowth.

But currency wars, as history shows, are a very last ditch and dangerous means.

Meanwhile China isitselfexperiencing apossible asset-bubble implosion and aslowing of growth, with analready noticeable impact on Australian mining prospects.

TheEuropean Unioncanoffer no help in recoveryas itremains mired initsowncrippling debt problems. (The morning after Obama’s election stock markets plummeted on bad news from Europe.)

The global economythusremains intensely fragile, and the US economy, for all its travails, still lies at the heart of it. This makesObama’s taskalargeone. Ifhe fails we here in the Lucky Country, with most of our eggs in one basket, willneedto show we are more than just lucky,andhaveour ownreservoirs ofresilienceto draw upon.