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Let’s be honest with ourselves, Australia’s utter economic dependence upon China is a crisis of our own making – COVID-19 has simply removed the blinders for a nation that needs to wake up to itself, accept the responsibility for its actions and aggressively chart its own path forward.
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Like any abusive relationship, the mask has finally slipped. The global and regional impact of COVID-19, combined with an increasingly belligerent, manipulative and coercive Chinese regime, has revealed that Australia's "primary economic partner" is little more than a bully.
Australia's economy and its public face a seemingly insurmountable series of challenges that threatens to leave the nation floundering amid a sea of emerging regional and global giants, each of whom are at various stages of strategising their way to prosperity and stability in the post-COVID world.
This new reality comes as a shock, particularly as Australia as both a continent and a nation is unique in its position, has enjoyed relative geographic isolation from the flashpoints of global and regional conflagration of the 20th century.
Blessed with unrivalled resource wealth and, despite public commentary an immense industrial potential, the nation has enjoyed the benevolence of the post-Second World War order, caught up in the promise of easy wealth generation through unfettered globalisation, economic neo-liberalism and the "end of history".
Amid this flurry of economic transformation propelling once 'developing' nations onto the world stage, the world's established powers, including Australia, now face a new paradigm, one committed to undermining and influencing the very fabric of Western democracies and the economic, strategic and political order they are built upon.
As Australia has sought to push back against a rising level of economic, political and territorial expansionism at the hands of President Xi Jinping's rising communist China, the nation has drawn the ever growing ire of its "primary economic partner" as it seeks to exert its influence and "manage" the public perception through economic, political and societal coercion on a massive scale.
The latest such barb in the simmering tensions comes from one of the official Chinese Communist Party (CCP) mouthpieces, the Global Times in an opinion piece by Beijing-based academic Yu Lei, titled 'Australia risks backsliding into a poor country in Asia Pacific', a very clear throw back to the now infamous line coined by late-Singaporean prime minister Lee Kuan Yew.
Indeed, Yu states, "Further decoupling with China will not send China back to poverty, but will only make former Singaporean Prime Minister Lee Kuan Yew's famous statement more likely to come true: that if Australia doesn't open up its economy and reduce unemployment, it risks becoming the 'poor white trash of Asia'."
All of these factors combine to form one absolute realisation: Australia's record period of economic stability and prosperity buoyed by the immense mineral and resource wealth, combined with the benevolence of the post-Second World War political, economic and strategic order, is at an end – it's time to adjust accordingly.
There is some valid criticism
It would be very easy to take the comments of Lei personally and much of the media commentary around the statement has done just that, rather than looking for some of the valid criticism evident in the Global Times piece.
In particular, Yu makes valid points regarding both the economic and societal impacts of COVID-19 upon Australia, stating, "As Australia suffers soaring unemployment, an old and worn-out railway system, a network speed far slower than other Asian countries' and halted development plans."
Each of those points are incredibly and increasingly valid critiques of the predicament Australia finds itself facing – indeed just today, the NSW government has announced that it plans to build an extension of the Metro network to include links between Kogarah and Randwick and Malabar or La Perouse to Green Square, all of which is expected to be completed by 2041 and 2056, respectively.
Turning to the National Broadband Network, Australians are frequently frustrated by the costs, delivery time frame and service provided by what was billed as the largest overhaul, modernisation and expansion designed to bring the nation's communications network into the 21st century, using just these two examples it's clear that there is validity in Yu's statements.
Responding to those challenges requires a paradigm shift in the nation's thinking, planning to navigate this increasingly contested, trying period, with government required to play a more direct agenda setting role, leaving less to the mantra of "she'll be right" and the ideology of "the free market will solve all of our problems".
Now, that doesn't equate to protectionism, despite what Yu states: "Some Australian politicians' intent to decouple from China economically – to use the Chinese market but reject all Chinese products and investments in a bid to contain China's economic development – is absurd. This will only hurt Australia's national interests and people's wellbeing."
This rhetoric has been repeated by a number of prominent Australian business people, all of whom have extensive and entrenched relationships with Beijing and a personal financial stake in the continuation of the relationship, despite the abusive nature of it.
What it does require is a consistent, considered and detailed plan to fully leverage the industrial, economic and societal potential of the continent and the Australian people, all of whom are crying out for greater leadership, something that Peter van Onselen expands upon in an opinion piece for The Australian titled 'Coronavirus Australia: Virus induced recession will require our political leaders to lift', where he states:
"Today’s national accounts data confirms what we already unofficially knew: Australia is in recession for the first time since the early 1990s. The longest run of economic growth is over, courtesy of the global pandemic.
"Even if Australia remains the lucky country during this sort of period, and does better than nations around us, a global depression would drag all nations down. Including ours. And if the depression gave way to global conflict Australia would inevitably be drawn into the fray.
"But whether this recession becomes a depression or not, generations of Australians not used to tough times are about to experience something they perhaps never expected to. Something they may not be ready for.
"The recession will harm various generational cohorts: older Australians will find themselves retiring with less savings than they might have expected to. Middle aged workers will face a new level of job uncertainty. And younger Australians will find even getting a job in the first place more difficult than they ever would have imagined it to be.
"Equally, the political class will need to lift its standards if it is to fulfil its historic duty. Reform and skilful policy positioning will be necessary if government’s are to make the best of a bad situation. It won’t be enough for leaders to merely preside over the tough times and hope that the automatic stabilisers in the economy do their job and help edge the country towards recovery."
Writing is on the wall
It is clear that Australia's economic dream run has come to an abrupt end, nowhere is this more evident than in the nation's ongoing trade dispute with Beijing, which has seen a range of Australian exports targeted ranging from barley and wine, through to cheese and meat.
These efforts by Beijing to force compliance in the aftermath of the Prime Minister's global leadership calling for an international inquiry into the origins of the pandemic reveal that despite protestations to the contrary, Beijing expects Australia to bend the knee or be punished.
Yu articulates an interesting counter point, stating, "There are few signs that Australia intends to stop provoking China, or to attempt to ease escalating tensions. Instead, its insistence on continuing along the US' lose-lose path toward decoupling will undoubtedly cause huge damage to its already severely injured economy.
"If decoupled from Australia, it won't be difficult for Chinese products and investments to find new markets and investment destinations. However, it won't be so easy for Australia to find a comparably large export market, or a supply of high-quality and cheap imported goods, or a strong group of investors to replace China's."
Beijing's efforts to force compliance and submission should not be taken as "out of character action" as we have seen the global power flex its muscle and assert its willingness to coerce nations in the south Pacific, Indian Ocean, central Asia and Africa through a targeted 'debt diplomacy' leveraging the full spectrum of state power, under the constantly expanding concept of 'grey zone tactics'.
Rather, these actions and the increasing willingness to target Australian exports should be seen as a "writing on the wall" moment, forcing the nation's political leaders to break from the abusive relationship and take more direct actions, not only to significantly limit our economic dependence on China, developing relationships in the region, but also investing in the industrial capacity of the nation.
Now, many will say Australia "cannot compete" against the lower cost manufacturing hubs of the globe, which is true when measured against low cost, cheap, disposable consumer goods, the likes of which flood shelves at Kmart, Target and the like.
This point becomes less valid when looking at value add manufactured goods, particularly as Australia pioneers key processes like digital design, additive manufacturing, 3D printing and human-machine teaming in this sector – a simple and demonstrable example is the employment of similarly priced and skilled labour forces in the US and western Europe.
Once again, van Onselen provides some additional insight on moving the nation forward, stating, "The risk is that our political leaders just aren’t up to the challenge. The Coalition can’t let itself become an old fashion conservative government unwilling or unable to embrace reforms.
"The base electoral success of merely presiding in office and defeating Labor at the ballot box would represent myopic short-term thinking that would see Australia lose its competitive advantage globally, not to mention make any recovery slower than it otherwise should be.
"This happened when the Fraser government was in office and missed its chance to reform the national economy in the wake of the early 1980s recession.
"Equally, Labor cannot let itself become wedded to old fashion policy scripts that defined the party a generation ago. For a start doing so could consign Labor to the wrong side of the treasury benches for a generation, perhaps even dividing the party in opposition, just as Labor was during the Menzies years. It must be prepared to challenge its past to shape the party’s future, like Bob Hawke and Paul Keating did in the 1980s."
Masters of our own destiny
For far too long Australia has deferred to the leadership and guidance of others, preferring to be shaped by the economic, political and strategic realities of the world.
In doing so, as a nation we have failed to reach our true potential, we have failed to become the masters of our own destiny and we have failed to bend the majesty and potential of the continent to our will, often leaving the nation equally as vulnerable to domestic shocks as it is to global ones.
As Australia and the globe enter what could be the single greatest economic depression since the Great Depression of the 1930s, Australia has two choices, be defined by the global shocks and continue to limp along as our regional neighbours surge ahead, or, grasp the reins and drive our own future.
There are some models to follow, ranging from the New Deal of US president and wartime leader Franklin Delano Roosevelt or, looking more closely to our regional neighbours, South Korea's recently announced 'Korean New Deal', which leverages the length and breadth of state power to develop an economic transformation strategy for the 21st century.
In order to achieve this Australia must not only embrace the very real potential of becoming the "poor white trash of Asia" as so eloquently established by Lee Kuan Yew and again by Yu.
But, Australia should also use such an outcome as a rallying call, a wall against our back to unify and pull the nation in a common direction, shaking off one of the very apt criticisms of Australian policy making: the fact that public policy-making decisions are based on the comparatively short election cycles and further impacted by conflicting jurisdictional interests and actions.
In light of this, it is time for Australia to plan for the next 15 to 20 years, not the next term of state, territory or federal government, providing policy consistency, vision for the public and surety in a period of global and regional turmoil.
Each of these contribute to the nation's sovereignty and security at a time when many of the principles that Australia's post-Second World War public and strategic policy is based upon coming under threat – serving to make Australia a more reliable economic, political and strategic partner amid a period of great power competition.
Furthermore, it serves to make Australia more resilient to man-made and natural shocks, resistant to coercion, economically competitive and robust at a time when the Australian public are calling for leadership, forward planning and vision.
Your thoughts
Australia is defined by its economic, political and strategic relationships with the Indo-Pacific and the access to the growing economies and to strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.
Indo-Pacific Asia is at the epicentre of the 21st century’s era of great power competition and global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.
Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia.
Australia is consistently told that as a nation we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry – but what if it didn’t have to be that way?
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific and what you would like to see from Australia’s political leaders in terms of shaking up the nation’s approach to our regional partners.
We would also like to hear your thoughts on the avenues Australia should pursue to support long-term economic growth and development in support of national security in the comments section below, or get in touch with
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.
