Login
iscover
In the era of renewed great power competition, the whole-of-nation economic and industrial capacity will provide all competing nations with key strategic advantages over their competitors and Beijing has taken note of this, with the economic and industrial indicators hinting that the rising superpower is planning something big.
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
For many historians, strategic thinkers, and political decision makers, the horrors of the Second World War could accurately be seen as the final, most painful stages of labour before the birth of the new world order.
As the fires of war were finally subdued, bringing the conflict to an end across Europe and the vast expanse of the Pacific, men and women across the globe collectively breathed a sigh of relief, as the carnage and horrors of the previous six years were replaced by a renewed sense of optimism and hope.
In taking stock, the allies, namely the United States and the Soviet Union, who had emerged utterly triumphant, stood unquestionably atop the ashes of formerly great imperial powers, bringing to an end the age of imperial conquest and ushering in a new period of opportunity and competition.
This intense competition saw vast arsenals of weapons developed and fielded, proxy conflicts fought across the Asian, African, and South American continents and intriguing mutual games of espionage between the two camps, as former KGB officer Yuri Bezmenov explained, to engage in “ideological subversion” in an attempt to convince the other side of their opponent’s own benefits.
The competitions between the ideologies of liberal democratic capitalism and the revolutionary doctrines of Marx, Lenin, Stalin, and Mao would come to characterise the latter half of the 20th century and set the stage for the world we find ourselves in today.
While the collapse of the Soviet Union in the last decade of the 20th century coming as somewhat of a surprise to many strategic thinkers and political leaders, the world embraced the “new world order” and the triumph of liberal democratic capitalism over the horrors of autocratic tyranny in this end of history, something we now know is fraught with hubris.
As the US-led world order completed a self-congratulatory lap of honour and took to expanding democracy across the world, particularly in the Middle East, the former Soviet bloc licked its wounds and began the long, arduous journey back towards relevance and a position of prominence on the global stage.
This time however, the new revolutionary world order would not be led in major part by Russia, rather it would be spearheaded by Mao’s China, an economic, political, and strategic juggernaut that studied the lessons of history, has never quite recovered from its “Century of Humiliation” at the hands of colonial empires, and has its eyes on usurping the global status quo.
No matter where one looks, the post-Second World War economic, political, and strategic order is in varying stages of retreat, decline or stagnation and is, more generally, under siege. Declining confidence in the capacity, commitment, and unity of the United States to act as the world’s hegemon and security benefactor, coupled with the economic decline and stagnation now ravaging the Western world in the face of a boisterous, invigorated, and dynamic Chinese-led bloc, spells trouble.
Across Australia’s own northern and eastern approaches, Beijing’s influence peddling and expansionist ambitions in the Pacific, coupled with the new scramble for Africa and the mounting economic, strategic, and political partnerships established through new, multilateral international organisations, namely the BRICS organisation, are gradually stepping up their assault on the global order our own nation has become increasingly dependent upon.
Despite the protestations of some recent US administrations and like-minded nations across the globe that the “adults are back in charge”, it is clear that the pre-eminence and the legitimacy of the United States’ position as the “leader of the free world” is abject free fall.
Now there are concerns around Beijing’s stockpiling of critical industrial and societal inputs with one question: why are you stockpiling these items if you’re not planning for war?
Hidden treasure
Contemporary economies and industries, despite the globalised nature of the world economy depend upon fundamental inputs like coking coal, iron ore, rare earth elements, phosphates and oils separate to the demands of the consumer economies that dominate much of the developed world.
Recognising the vulnerability of these systems, Beijing has been quietly building its critical stockpiles of key industrial and economic inputs, leveraging its growing transactional relationships across Central Asia, Russia, and Africa to secure supply chains, while equally skirting global financial norms to limit the efficacy of Western sanctions.
Highlighting this push by China, Gerard DiPippo, senior economics fellow at the US-based Centre for Strategic and International Studies (CSIS), states, “Beijing is already taking multi-year steps to insulate the Chinese economy from external vulnerabilities. Technological and material self-sufficiency are primary goals of China’s 14th Five-Year Plan (2021–25) and achieving a high degree of self-reliance is the ‘essence’ of Xi Jinping’s new development dynamic.”
Unpacking the central pillars of this push, DiPippo identified the central priorities including industrial policies focused on eliminating foreign dependencies across the value chain, efforts to identify and mitigate vulnerabilities to US sanctions and organise its bureaucracy for the imposition of countersanctions, Beijing has expedited efforts to reduce China’s dependency on the US dollar for international finance via renminbi internationalisation, stockpiling critical supplies, especially commodities and technological inputs that China imports, and trade policies to foster greater global reliance on Chinese exports and investment policies to tie key foreign firms to the Chinese market.
Giving a sense of the scale of Beijing’s existing stockpiles is Gabriel Collins of Rice University in Texas, who explained to The Economist, “Energy is a good place to start. China imports nearly three-quarters of the oil it uses. The substance accounts for only 20 per cent of the country’s energy use, but it would be crucial to any war effort. Military vehicles run on it, as do the lorries that transport supplies. If China were to start increasing its reserves – it currently has enough to last three months at today’s consumption rate – that would be one of the best indicators that it is preparing for war.”
Food security is another central pillar of Beijing’s resilience priorities, with the superpower stockpiling vast amounts of wheat (often Australian), maize, rice, and soya beans as both direct feedstock for livestock, namely pigs and chickens, and wider public consumption, with many in the senior levels of Chinese leadership and older parts of the society having lived memory of Mao’s famines and the Great Leap Forward.
“Whereas fuel would be needed to power China’s war machine, food must be procured to sustain its people. China imports more agricultural produce than any other country. Obsessed with food security, it already has enormous stockpiles. In 2021, an official said its wheat reserves could meet demand for 18 months. Over the past decade, China has greatly increased its purchases of wheat, corn, rice and soya beans,” The Economist states.
Again, to give a sense of scale, as it stands, Beijing currently has sufficient stockpiles of soya beans for the country’s pig supply for just under two months in the event of conflict, which is critical when one considers that 60 per cent of meat consumed in China comes in the form of pork.
Shifting gears towards critical metals and raw resources including gold, copper, lithium, palladium, germanium, platinum, beryllium, and gallium among others, all of which are critical for basic electronic sub-componentry, microchips, jet engines, laser systems, guided missiles, car batteries, and a host of dual-use technologies, analysis reveals that Beijing is maximising its position of control over the refining process for many of these critical materials.
The Economist articulates this, stating, “Changes in China’s exports would be a more visible indicator. It might become more reluctant to part with the rare-earth metals crucial to many technologies. China has a near-monopoly on many of these. In July, it announced export controls on gallium and germanium, two metals used in chips. This was part of its tech battle with America, though, not a sign of a looming hot war.”
What to watch for in the final countdown
While we’re not quite at zero hour, we are getting close and there are some important developments for analysts to monitor as tensions across the Taiwan Strait in particular continue to evolve and deteriorate, particularly as Beijing steps up its “exercises” in and around the water and airspace of Taiwan.
DiPippo identifies a number of key factors that could precipitate potential Chinese actions against Taiwan, or more broadly other tactical and strategic priorities in the Indo-Pacific, including:
- Imposition of stronger cross-border capital controls, including in response to apparent capital flight from elites.
- A freeze on foreign financial assets within China.
- Rapid liquidation and repatriation of Chinese assets held abroad, including sales of US bonds (concerningly for Australia, this could include “privately held” real estate assets).
- A surge in stockpiling emergency supplies, such as medicine or key technology inputs.
- A suspension of key exports, such as critical minerals, refined petroleum products, or food.
- Measures to reduce demand or ration key goods, especially imports like oil and gas.
- Restrictions on outward travel for Chinese elites or high-priority workers.
Adding further complexity for China watchers, DiPippo adds, “China’s short-term economic actions might not offer conclusive or specific warnings about Beijing’s military intentions. Economic indicators would need to be paired with other signs, such as PLA movements or domestic propaganda, to determine Beijing’s military intentions.”
This is particularly relevant when considering similar recent hostile actions, namely Russia’s most recent invasion of Ukraine in February 2022 and the preceding build ups between the 2014 invasion of the Donbass, again explained by DiPippo, who said, “Moscow’s financial measures after the 2014 sanctions were designed to harden Russia’s financial system to potential sanctions (“fortress Russia”), including by accumulating international reserves, diversifying away from US dollar assets, and increasing fiscal savings through conservative budgeting. The Russian government attempted to reduce dependencies on foreign hardware and software. In 2018, Moscow announced a program to achieve self-sufficiency in domestic agriculture.”
However, it is important to understand that such measures, if implemented by Beijing, could be seen as largely defensive in nature, in a similar nature to those actions taken by Russia, which DiPippo explains as, “Russia’s attempts at financial hardening and economic self-sufficiency were treated as defensive.”
Final thoughts
Importantly, in this era of renewed competition between autarchy and democracy, this is a conversation that needs to be had in the open with the Australian people, as ultimately, they will be called upon to help implement it, to consent to the direction, and to defend it should diplomacy fail.
Dr Ross Babbage of US think tank Center for Strategic and Budgetary Assessments said, “I think what we’ve got to show what’s the vision for Australia, you know, what can we achieve and what you know if we go on the trajectory we are on at the moment. I’ll tell you what, you know, a lot of people, a lot more people in a decade’s time are likely to be either in really dumb jobs or maybe not have jobs at all, and in the society be a lot weaker and will be a lot less prosperous.
“So what we want to say is, look, there’s plenty of scope for doing more and smarter things, encouraging investment to do that, and then there will be some very, very interesting additional jobs and opportunities, a lot of high tech, and so on, I can tell you that, you know, talking to foreign investors, they’re quite keen on principle to work here, and do a lot more here and provide a lot more good jobs for Australians,” he explained.
This requires a greater degree of transparency and a culture of collaboration between the nation’s strategic policymakers and elected officials and the constituents they represent and serve – equally, this approach will need to entice the Australian public to once again invest in and believe in the future direction of the nation.
In the second part of this short series, we will take a look at the corresponding yet equally scathing commentary in recent days highlighting the growing strategic and military decline of Australia despite the rhetoric of recent months.
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
