China and America are squaring off. We really don’t want to get caught in the middle.
People are talking a lot about the brewing economic war between the US and China.
Australia should be worried. Very worried.
There has definitely been a change in stance in Washington. I guess a few people were wondering if it was just Trump’s style of random policy making, but it is now clear that it is much deeper, wider and more thought out than that.
The key indicator was a speech by Vice-President Mike Pence a couple of weeks ago. In it he outlined ‘the administration’s approach to China’ and made it clear things will be going in a very different direction from here.
It builds on a slew of American policy documents such as the National Security Strategy of December 2017, the unclassified summary of the 2018 National Defence Strategy, and White House and Pentagon statements on Chinese theft of American intellectual property. This coordination goes to prove that despite the carnival antics of the President, serious policy work is still getting done.
And Pence made a big deal about the theft of intellectual property. Until now, the world has been focused on the trade imbalance between the two giants, but Pence made it clear that Washington is pissed about “industrial scale” IP theft.
And it’s not small bickies either. The White House Office of Trade and Manufacturing Policy said that ‘estimates of the cost of trade secret theft alone range between $180 billion and $540 billion annually’—that is between 1% and 3% of US gross domestic product.
That’s massive.
And to Pence, it amounts to a flagrant economic act of war. As he said, “the Chinese Communist Party is turning plowshares into swords on a massive scale.”
Biblical.
He also said that China was trying to influence US politics, and desperately wanted the US to have another – any other – President.
This is an idea that Trump himself has been building, so I don’t know how much credibility is has. But it is also hard to imagine that China is not meddling in US politics, since every nation does to some degree or the other.
And China certainly has the motive.
But at any rate, the thrust of the argument is clear – China is America’s biggest concern right now. It’s almost on the verge of being labelled a ‘rogue state’.
I wonder if Aussies really get the implications of this.
America and China is a rock and hard place that we don’t really want to get caught between.
China is now far and away our biggest export market – for just about pretty much everything we produce, from commodities to tourism.
The US is our biggest investor, and still the cornerstone of our defence and security position in the region.
What would happen if we were forced to choose between the two?
It’s not hard to imagine. The US is already starting to demand more from their allies. The recently renegotiated North American Free Trade Agreement (NAFTA) effectively gives the US veto rights over any trade agreements Canada and Mexico want to sign with China.
Or what happens if America decides to push for multi-lateral trade sanctions, like they did against Iran?
Are we really in a position where we could say, ‘Yeah, nah, we’re not going to follow your lead on that one. We just like the money so much.’
And we’re certainly not in a position where we’re going to rip up 60 years worth of ANZUS treaties and go and run for cover under China’s skirts.
So I’m not sure our politicians or anyone is taking this seriously enough.
If we get caught between this rock and a hard place, Australia is going to get hammered.
It could require some very fancy footwork indeed.