Denis Bright invites consideration of China’s pragmatic quest for policy momentum in both domestic reform and foreign policy. China maybe one country that is pragmatically seeking alternatives to the template model of politics based on a strengthening of corporate influence and deference to the military industrial complexes.
As financial volatility engulfs the entire global economy, China is still in a comparatively good position in both economic development and leadership in international relations. What policy agendas are viable as the Year of the Monkey commences?
1 China in Global Volatility
New Year in China brings economic growth prospects of around 7% in domestic and international markets which are predominantly capitalist in orientation. Both the US dollar and the Chinese Yuan are overvalued and downward adjustments must be anticipated in 2016. Within China itself (and ironically in the US as well), there are profound discrepancies in living standards.
New policy paradigms are needed in urban, regional and environmental planning in both China and the US. The mutual problems should invite symbiotic responses between the economic superpowers.
While China has run down almost a third of its massive foreign currency reserves in the past year to protect the Yuan, US financial institutions are in need of greater equity for their own sustainability.
The dispersed $1 trillion in Chinese foreign reserves would go a long way to expand peaceful development programmes in both rich and poor countries alike.
The worst financial corrections in a generation have given China new opportunities to expand domestic consumption and to diversify the direction of output away from traditional industrial and service sectors.
Modest success has been achieved in this direction with the Chinese-based Asian Infrastructure Bank (AIIB) which commenced operations on 16 January 2016. It has thirty foundation members including Australia and the UK. Most countries along the Silk Road to Europe are members including Iran, Turkey, Kuwait, Israel and Saudi Arabia.
China’s overseas financial sector activity is most welcomed in countries like Saudi Arabia which have been hit by deflationary pressures and low commodity prices. President Xi Jinping’s visit to Egypt, Saudi Arabia and Iran in late 2015 came at a very strategic time.
Trade is making friends of potential adversaries and it is significant that Israel has joined the AIIB and welcomed Chinese technology in its public transport networks.
All of the strategically based countries at the end of the Silk Road can only benefit from greater involvement in the AIIB. Most, but not all, the countries in Southern Europe, the Middle East and North Africa are foundation members already.
2 China as part of the solution in international relations
During times of global financial challenge, China has emerged as a stabilizing influence in international relations. The main challenge ahead is the threat of a return to a conservative populist administration after the US Presidential elections.
Without this negative circuit-breaker to more peaceful international relations, it is likely that China will be called upon to manage North Korean assertiveness and build bridges with Russia to ease the Syrian crisis through intervention by the Security Council.
China seems to have weathered the potential storms posed by both the election of Prime Minister Wen in Taiwan and the challenge posed by the Trans Pacific Partnership (TPP) Agreement which currently excludes both Taiwan and China.
China has become so pragmatic in its economic reform programme that it could expect a unity ticket with Taiwan on membership of the TPP.
3 Australia’s window of opportunity
Australia after the accession of Prime Minister Turnbull has indeed proved more Whitlamesque than expected in his government’s engagement with China to assist dispute resolution in East Asia and specifically in the easing of tensions on the Korean Peninsula.
It is a credit to the growing profile of Chinese diplomacy that both Korean states were separately represented at China’s military parade on 3 September 2015 to mark the 70th anniversary of victory against Japan. To have centre-right South Korea President Park Guen-hye on the scene was quite amazing.
Shannon Tiezzi’s reporting of the seating order at this event for the Diplomat is also significant:
On September 3, while Chinese troops and military equipment paraded through Tiananmen Square and Xi Jinping delivered a ringing rebuke of Japanese military aggression, South Korean President Park Geun-hye watched from a position of honor on Tiananmen Gate. During the parade, Park sat to the left of Xi’s wife, Peng Liyuan, who was herself sitting to the left of Xi. Russian President Vladimir Putin was seated on Xi’s right.
If South Korea under a centre-right government can make such overtures on the world stage, so can Australia under the federal LNP.
To its credit, Australia has significant equity in the Chinese-based AIIB and at levels comparable to both South Korea and Indonesia or 3-4% of total foundation shares.
This is a far cry from the old days of provocatively choosing best friends in Asia as promoted by Prime Minister Abbott.
With the $1 trillion reduction in China’s foreign currency reserves in the past year, Australia has missed out on opportunities to attract some of this equity into our own sovereign wealth funds like the existing Future Fund of Australia, or Bill Shorten’s proposed Infrastructure Australia Fund.
China’s diplomatic initiatives showed no limits as the New Year approached.
The territorial disputes shared by both China and Taiwan over claims to islands in the South China Sea were also hosed down at the APEC Economic Leaders Meetings in Manila in late 2015.
Despite the gloom promoted on eyewitness news programmes by repetitive coverage of negatives, the underlying foundations of New Year in 2016 are quite exciting. Cheers to the Year of the Monkey which might only be upset by the election of a maverick populist president in the US.
