Oz Blog News Commentary

The China-US cold war commences! Was Turnbull the first victim?

October 10, 2018 - 22:44 -- Admin

As I predicted a few months ago, the US security apparatus is going after China relentlessly, mainly in order to have something to do. As I predicted in 2012, Australia is firmly behind the US and the wider Western alliance that will eventually form a block against China.

The main reason the new cold war was inevitable is that the Americans have been used to being top dog in the world and the reality is now that they are the second economy in the world, well behind China in trade, but also in manufacturing and, increasingly, R&D. The Americans are a proud people with the world’s most powerful army and security apparatus so of course they were going to try and compete at some point. They have just entered the denial stage that they in fact are less important than the Chinese, so there’s a long way to go before they calm down.

What is amazing is how long it took for the Americans to go after China. Basically it is far too late now to stop China’s rise. 20 years too late. It makes it a bit of a rearguard action that is thus probably limited in scope. China has in a way been extremely fortunate that the US was occupied with its war on terror and other relatively minor adversaries because the Chinese economy meanwhile modernised and outgrew that of the US.

The immediate causes are varied and can be gleamed from the speech by the US Vice-president that announced the new cold war. Pence basically accuses the Chinese of meddling in other countries’ affairs, which is probably true but no different from what any other major power does. Indeed, the Chinese have cause to interfere with the US, at least in their eyes: the Chinese leadership was truly rocked by several New York Times articles on the financial affairs of the top Chinese leaders, something that was of great personal importance to those leaders. The West underestimates just how crucial ‘face’ is in Chinese culture and how the Chinese leaders will have ascribed those articles to the US administration rather than merely to journalists. Those articles will have prompted a whole machinery to gear up to try to disrupt the NYT, US politicians, and Western opinion on China in general.

The Chinese also have form when it comes to adopting technology, with many joint-ventures ending up with the foreign partner handing over their IP to Chinese companies that subsequently start to compete with them. This tactic has been supported and encouraged by Chinese leaders for decades now, and it has worked very well for them to the chagrin of American businesses. Too bad, too late.

Of course the Chinese embassies try to keep the large Chinese diaspora and recent migration waves in line, though the object is not so much the disruption of foreign countries but the prevention of internal unrest due to dissent brought in from outside China. To the collectivist Chinese mind set, this is entirely appropriate and crucial for their internal harmony. Western complaints about this are going to be fruitless.

On the side of the Americans, it was already clear after the collapse of ISIS in Syria that China would be the next meal-ticket for the US security apparatus and planning indeed immediately commenced, as one could read from the US strategic defense report of 2017.

I think that the US security apparatus worried for a while that Trump might not be totally on board with their designs and hence authorised the New York Times leak in which the only clear policy stance was the commitment to the Western alliance and the opposition to China/Russia. I interpreted that high profile leak as a clear message to the rest of the US administration that whatever Trump might tweet or say, the next enemy is China/Russia and everyone had better fall in line. It worked like a charm. A month later, Trump is on board and Pence declares a cold war.

Australia was caught by surprise a bit by the push towards a cold war that kept growing throughout 2018, and the elites were split over it because of conflicting interests. On the one hand, the business elites did not want a Cold War because they benefit enormously from the Chinese via mineral exports, visa tourism at our universities, Chinese tax evasion funneled into Australian property, and burgeoning Chinese tourism. China is Australia’s biggest business partner and money talked. On the other hand, the Australian security apparatus is joined at the hip with the Americans and was more than keen to sign up, sensing a good excuse for more powers and budgets. Via Peter Dutton and others, they talked.

Those who doubt that China has been on the Australian defense radar for years need only reflect on the supposed purchase of submarines for more than 50 billion dollars, a project for which the lobbying started years before the first contracts were signed in 2016. What were they for? Their purpose is to torpedo Chinese vessels in harbours like Shanghai.

The split between these opposing parts of the elites that rule Australia then played itself out. Malcolm Turnbull came down on the side of business and called for a calm and neutral strategic position with respect to China. The security apparatus and hardliners in the Liberal party grumbled, but could not on their own topple him and the anti-China chorus subsided.

Then Rupert Murdoch, himself closely aligned to the US administration, flew in and helped orchestrate Turnbull’s downfall. Coincidence? Perhaps, but I suspect Malcolm is the first Western leader to lose his position in this new Cold War. His successor has been quick to fall in line with the security apparatus, meaning that the business interests have lost. The anti-China chorus is rising once more and this time there is no-one to stop it.

One wonders whether the ALP leadership has already done a deal in the background to support the new Cold War. If they haven’t already, they will soon.