Australia, China and the US pivot to Asia

Tom Orsag looks at the US military’s efforts to face China, and the implications for Australia

Last November, Foreign Minister Julie Bishop summoned the Chinese ambassador to protest China’s move to control the Senkaku islands, five uninhabited islands disputed with Japan. This was a very public decision to side with the US and Japan against the rising power of China.

Since the collapse of Russian power with the disintegration of the USSR and the end of the Cold War in 1991, the US has been the world’s sole superpower. The American ruling class, including Presidents George Bush Snr, Bill Clinton, Bush Jnr and Barack Obama, have operated with one long-term political goal—to stop the emergence of a superpower rival.

While the US still faces international rivals, witness the present clash of the West with Russia over Crimea (see p13), the most likely challenger to the US on a global scale is China.

Economic and military competition have been inter-related features of the world economy since the great powers began carving out colonies and spheres of influence over the last few hundred years.

While US economic power is in decline relative to its rivals, militarily the US still outweighs the ten next strongest countries combined.

Its military power has been seen most recently in the invasions of Afghanistan and Iraq and NATO’s intervention in Libya. The setbacks for American imperialism in the Middle East and the emergence of Asia as a growth area of the world economy has brought a reappraisal of the US’s strategic interests.

In November 2011 President Obama spelt out a new “Pivot to Asia”, in a speech delivered to the Australian parliament. He laid out plans to reposition the US military, declaring “our presence and our mission in the Asia-Pacific a top priority”.

This move reflects the US ruling class’s concern that China’s fast-growing economy will allow it to become a more dominant international power.

Geoffrey Garrett, Professor of Political Science at the US Studies Centre at Sydney University, wrote in the Financial Review, “The real reason for Obama’s regional bullishness is his belief that the US’s biggest asset in the Asia-Pacific is its dense network of allies (like Australia, Japan, the Philippines, South Korea, and Thailand), new partners (India and Indonesia) and new friends (Vietnam and potentially even Burma).”

Australia is seen as a key partner in this effort. Successive Labor and Liberal governments have maintained US spy bases and now a permanent base for US marines and supplies in Darwin.

The US has even lifted its 30 year-old ban on New Zealand ships visiting US ports, imposed because New Zealand would not allow visits by nuclear-armed US warships.

US decline and China’s rise

At the end of the Second World War, the US created 50 per cent of the world’s industrial output—cars, steel and manufactured goods.

By the mid-1980s this had fallen to 25 per cent, with the German and Japanese economies emerging as economic rivals.

In the past 30 years it is the Chinese economy that has grown dramatically. China became the world’s fifth largest economy in 2005 and overtook Germany in 2007 to become the third largest. In 2010, China pushed Japan out of the position it held for 42 years to become the second largest economy in the world.

Since 2008, China has been the largest trading partner of both Japan and South Korea, displacing the US in both countries.

China’s demand for raw materials has also resulted in closer ties with countries in Africa and Latin America, further challenging US influence internationally.

As China’s economic strength increases so does its political clout and it chafes at the existing world order dominated by the US.

This is the same process of imperialist rivalry that led to the First World War, as Japanese PM Shinzo Abe noted in his speech at Davos in January, when he compared the tensions created by the rise of China to those between Britain and Germany prior to the First World War.

Chinese expansion?

Historically, China has been a self-contained continental power. However, as China globalises, its maritime expansion becomes necessary to protect its sea-going supply lines and its economic sphere of influence in north and south-east Asia.

As China has projected its power globally, the US, quite hypocritically, has accused China of aggression.

China’s regional expansion has however resulted in a series of tensions with countries like Japan and the Philippines over disputed islands and rocky outcrops like the Spratlys in the South China Sea.

Some estimates have China’s military budget as high as $200 billion a year, but this still pales beside US spending of $527 billion.

Nonetheless, China has launched its first aircraft carrier, and is developing missile systems able to sink US carriers at distances of hundreds of kilometres—and push the US’s military reach back further from China’s coast.

In January last year, James Fanell, intelligence chief for the US Pacific Fleet, which commands six aircraft carrier groups, told a San Diego conference that China’s “expansion into blue waters is largely about countering the Pacific Fleet”.

But as Rory Medcalf from the Lowy Institute wrote in September 2010, “Beijing’s naval modernisation is the response of a vast trading power to deep insecurity about its supply vulnerabilities.”

Australia: ruling class quandary

The Australian ruling class has always pursued its own interests under the umbrella of a more major imperial power; firstly Britain and then, beginning in the Second World War, the US.

In the past these military alliances were coupled with strong economic ties. The rise of China however has separated that connection, with China becoming Australia’s key economic partner and the US the key military ally. China now buys one-third of Australia’s exports.

Foreign policy expert Professor Michael Wesley has noted that more than half of Australia’s trade passes through the contested area of the South China seas. Any outbreak of armed conflict there would “destabilise” Australian trade.

Yet militarily Australia has locked itself strongly behind the US. Geoff Raby, the former ambassador to China, argued Australia’s 2009 Defence White Paper, “was read and understood by media in both Australia and China as being about the ‘China threat’.”

Although Australia relies on exports to China to keep the Australian economy afloat Julie Bishop pointedly ignored the facts to declare the US, not China, to be “our single most important economic partner” during her US visit in January.

In February, Bishop was publicly rebuked by China’s Foreign Minister over Australia’s decision to side with the US over the Senkaku Islands. Australia is also extending military links with India, another key country in the US’s plan to contain China.

While managing the relationships with China and the US is creating some diplomatic tensions, overwhelmingly, the Australian ruling class favours continued support for the US alliance to bolster its own imperialist interests in the region.

In her first public meetings in October 2013 after her fall as PM, Julia Gillard said securing annual high-level talks with China was her “biggest foreign policy achievement”, and that Canberra and Beijing now have “a new special relationship”. Yet she was the PM who invited US troops to Darwin.

In October, Anthony Bergin, deputy director of the Australian Strategic Policy Institute, a Defence Department-funded think-tank, wrote in the Sydney Morning Herald that Australia should welcome the “US pivot” with open arms, “As a pivotal power strategically located on the hinge of the Indo-Pacific…we should think big when it comes to our place in the world.”

For now, the tensions over China in Australian politics have mostly been focussed on economic concerns.

Corporate boss Kerry Stokes owns the Seven West media conglomerate and Westrac, a mining services company in WA. But he also has a Westrac China arm investing in China’s construction industry and joint venture TV interests. Kerry Stokes responded to the agreement to post US troops in Darwin by saying he was “physically repulsed” and that it was “disrespectful” to “lecture” China on human rights.

The Abbott government has maintained the previous Labor government’s ban on China’s Huawei Technologies bidding for work on the National Broadband Network (NBN). Yet it also hopes to finalise a free trade agreement with China by the end of 2014, although this, in turn, may fuel concerns about easier Chinese investment in real estate and Australian agribusiness.

US fans the flames

The US’s efforts to bolster alliances in the Asia-Pacific are fuelling militarism in the region. In Japan, previous limits to Japan’s military are being hammered away at by its ruling class, who see an expanded military role as a way of countering its declining global economic significance.

Japan’s PM Shinzo Abe is an ultra-nationalist and his government’s policy on China reflects that. One of his first decisions was to increase the Japanese Defence Budget for the first time in 11 years.

The Trans Pacific Partnership Agreement (TPP) (a free trade agreement being secretly negotiated between US, Japan, Australia, New Zealand, Malaysia, Singapore and six other countries) is the other element of the US’s Asia pivot. It is seen as an important step to link the US to the growing economies in the Asia Pacific.

Until now, China had been quite deliberately excluded from the TPP. But in an attempt to outflank China’s own Regional Comprehensive Economic Partnership (RCEP) negotiations, President Obama has recently invited China to join the TPP. China however is unlikely to accept the invitation given the enormous advantages the TPP would give to US corporations.

Meanwhile, the TPP also has the potential to have a significant detrimental impact in Australia. Among other things, it potentially gives greater power for global corporations over domestic law, threatens internet freedom, food labelling, aspects of the Pharmaceuticals Benefit Scheme and the ability to develop and market generic drugs.

The Abbott government is taking Australia deeper and deeper into the US alliance, feeding a local arms race and regional military tensions while boosting corporate power.

It is an alliance we have to demand be broken.


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