The Australian

By John W.H. Denton
Chairman, BCA Global Engagement Task Force

Australia can play a crucial role in the smooth rise of a global superpower.

One of the most important foreign policy issues facing Australia is the future of relations between the US and China. By continuing to build our relationship with China, Australia can play a role. It is imperative that there is continuing engagement at the highest levels of government. For this reason, a visit to China by Julia Gillard should be among her highest priorities for the new year.

With the US our most important ally, and China our largest trading partner, any significant change to the relationship between the two must have implications for our security and economic prosperity. I believe the leaders of the US and China can forge a constructive and peaceful future, and will be able to overcome the challenges that inevitably arise when two world powers seek to maximise their influence in a region. But I readily acknowledge there are different views about this.

For example, Australian National University professor of strategic studies Hugh White, in his recent Quarterly Essay and in The Australian, said that China’s rapid growth will, if it lasts, “reshape the way the world works’’.

He argued that if the US fails to accommodate China’s rising power within Asia, there is the possibility of “hostility’’ between the two powers.

This year John Mearsheimer, a professor from the University of Chicago, put it more forcefully. He said “China cannot rise peacefully’’ and that it is inevitable that “intense security competition’’ will arise between China and the US. This is because China, for security reasons, will want to be the dominant power in Asia, and one way to achieve this would be to push the US out.

Australia has a vital interest in debating these issues to ensure that government and business are well informed when developing policies and actions that affect this area.

One reason I believe stability can be maintained is that China’s rise is built on a remarkable degree of economic integration with the US and its allies. The US is the most important export market for Chinese industry, buying 18 per cent of all Chinese merchandise exports. This is in contrast with the negligible levels of trade between the US and the former Soviet Union. Between the early 1970s and the late 80s, trade between the Soviet Union and the US represented 1 per cent of total trade for each power. As a result, there was no significant economic counterweight to strategic tensions during the Cold War.

China has given no indication it will be expansionist like global powers who sought increased territorial control or influence. Beyond Taiwan and its current national boundaries, the history of modern China does not suggest a desire for territorial expansion.

At the same time, China’s economic interests provide an incentive for the nation to remain on peaceful terms with major trading partners, even though one or more of them might be a rival power.

Despite these strong economic links, if a serious regional security issue arose China would, naturally, be expected to put political considerations before its economic interests. Therefore, Australia’s challenge must be to work with other nations to reduce the risk of this occurring.

Policymakers in Australia and the US must be careful that strongly held views about how China might conduct itself don’t become a self-fulfilling prophecy. In other words, if the West develops policy only on the basis that China is expected to be a threat in the future, China may be justified in responding accordingly. This is the wrong approach.

It is worth reminding ourselves that China is engaging quite broadly with the world. An important example is in the area of education. Last year 118,000 students from China studied in Australia and the number of Chinese students participating in international education in Western nations continues to grow.

Australia’s relationship with China has come a long way in recent years. Nonetheless we must continue to develop and support policies that contribute to China’s great ability to play a constructive and engaged role in the world. This does not mean we should make any unnecessary concessions to China. But it does mean we should continue to engage in constructive and positive relationship building as a means of securing our interests. In seeking to meet this objective, we should pursue two priorities.

First, Australia must continue to develop our economic relationship with China.

If we are to do this effectively, there must also be continuing engagement at the highest levels of government. There has not been an Australian prime ministerial visit to China since 2008. It is important that this be a priority for the Prime Minister in her first year in office. The relationship with China is such that personal engagement by heads of government is vital to ensuring that our economic and broader relationship continues to grow. Notably, US President Barack Obama visited China late last year. And British Prime Minister David Cameron visited Beijing last month. Both were accompanied by very senior business delegations and emphasised trade and investment links. A visit by Gillard in the coming months would have the support of business. In fact, we regard it as necessary for the development of commercial relationships.

We should also extend Australian “soft power’’. This requires us to build deeper and more effective relationships. In the first instance, this needs to occur between governments by engaging China in multilateral and regional institutions, and at a bilateral level.

At the same time, there is an important role for business leaders, academics and other private sector organisations and individuals to contribute to our soft power efforts through engagement with our counterparts in China. Some examples are the recent Business Council of Australia’s Australia–China CEO Roundtable event, as well as activities linking business leaders from Australia and China in the G20 and in the APEC Business Advisory Council.

China can rise peacefully. There is a crucial role for government policy. The US and its close allies, including Australia, need to be thoughtful and creative in using soft power to encourage a future in which China can play a constructive role as a global power.