Ineptitude shows China threat exaggerated

We fret and worry about the Chinese threat, but events of the past week must make any observer question China’s diplomatic and economic competence. And further wonder whether “the rise of China” is a bit like “the Soviet menace” – a house of cards that can come tumbling down any minute. 

And make us further wonder whether a fearful Australia is squandering too much treasure on meeting an exaggerated threat.

The two events were the Chinese-inspired announcement to expand the BRICS grouping and the publication of a new official Chinese map of the South China Sea.

BRICS stands for Brazil, Russia, India, China and South Africa. It is an odd group of supposedly middle powers, but it comprises nothing much more than an annual meeting. There are no formal monetary, trade, or treaty obligations or commitment to any ideals such as democracy and the rule of law, as with, say, NATO or the G7.

Now Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have been invited to join BRICS. It would make an odder group still – a collection of autocracies and once-were autocracies. They are only united by a negative – a desire to see the end of the dominance of the US dollar as the currency of international trade..

So here is China at once trying to seduce other countries to form a bigger block as a counter-weight to the US dollar and US hegemony generally but at the same time publishing the new map.

The former official map of Chinese claims in the South China Sea had nine dashes. The new one has 10. Both the old and new maps are offensive to Japan, Vietnam, the Philippines, and Brunei. But the new one adds some land claims to both Indian and Russian territory.

Of course, the events can be seen as yet more examples of Chinese aggression and expansion without force of arms. But they also reveal diplomatic ineptitude of the first order.

It undermines the aim of the BRICS expansion to bolster a development bank and ensure that the “market share” of the US dollar in world trade fell. It seems that neither the Chinese nor Russian leadership understands that currencies are utterly dependent one thing: trust.

Trust comes not just through large economies or volume of trade, but through long experience of traders not losing through capricious or arbitrary actions generated by governments but benefiting from the rule of law and market forces.

China will dominate the new BRICS. But it will not be very solid and not have any substantive mortar to bind it. It might get some oil money from the UAE and Saudi Arabia. But where is the trust if the leading country has territorial claims against others which will not be settled by the rule of law, as evidenced by China’s arbitrary refusal to adhere to the ruling of the Hague Permanent Court of Arbitration over the Philippines’ South China Sea claim.

More importantly, who would trust the currencies of any of those nations. The Saudi currency is the most stable of them, because it is tied to the US dollar. All of the others are subject to government manipulation or serial victims of chronic inflation.

China has also displayed its ineptitude in international financing with its Belt and Road initiative. Hawks have accused China of deliberately lending money to basket-case economies to build key ports and railways so that it can take them over. 

In fact, the initiative proves China is not very good at doing due diligence and lends money to places like Zambia and Sri Lanka on terms which cause defaults leaving China with rubbish assets. Those countries then turn to the IMF to bail them out. The IMF should not have a bar of it. Why should taxpayers of western democracies hand money over to countries so that they can repay China?

The unpredictability of autocracies undermines the performance of their economies and the stability of their currencies. So, there is no threat from an expanded BRICS.

Unfortunately, autocracy makes the world less militarily secure, but only up to a point. We have seen Russia invade Ukraine on the say so of a single autocrat. We have seen China’s land grabs in the South China Sea.

But autocracies make for inept government. No-one around the autocrat dare challenge the autocrat’s policy directions, urge caution, suggest alternatives, or tweak and improve courses of action. We saw that sort of ineptitude with Russia’s failures in Ukraine.

So, do we seriously imagine that China is ever going to invade Australia? And do we seriously want to spend Australian blood and treasure defending Taiwan? Defending democracy in another hemisphere is not a central national security matter for Australia. We do not care less about democracy in Africa, and in the latest batch of defence and security reviews we have by quiet omission announced that we no longer care about democracy in the Middle East – after disastrous forays in Afghanistan and Iraq which achieved worse than nothing.

In this environment, do we need nuclear submarines, let alone a nuclear-submarine industry? Ten years ago, that would have been seen as fringe opinion verging on lunacy.

Let’s face it, if Labor had won the 2019 election, there would have been no AUKUS or nuclear submarines. Even now, there is no social licence for them. Many in the Labor Party are opposed, as are many in the wider community.

There are other more pressing national-security priorities: dealing with climate change; decarbonising; and removing our reliance on imported fuel. Incidentally, much of our imported refined fuel is made by third-party countries from supposedly sanctioned Russian oil and we cannot do much about it because we have been stupid enough to shrink our refining capacity to near nothing. 

The price tag on the submarines goes ever upward while their technological superiority and usefulness goes ever down.

President Ronald Reagan claimed that a US arms race forced the Soviet Union into such high military spending that it was destabilised and the communist regime collapsed.

What an irony, then, if a similarly US-inspired arms race over Taiwan, diverts so much of the Australian public purse as to make the task of Australian Governments to deliver on its social contract to provide infrastructure, health, and education near impossible.

President Dwight Eisenhower in his 1961 farewell speech presciently warned against allowing the acquisition of too much power and influence by the military-industrial complex both via the back door and through misplaced scare campaigns.

We should take note.

Crispin Hull

This article first appeared in The Canberra Times and other Australian media on 5 September 2023.