China refuses to be trumped


This year, China is celebrating its 40th anniversary of Deng Xiaoping’s embrace of capitalism, or as he and all who have followed him prefer, “socialism with Chinese characteristics”.

Deng’s revolution has led to a contradiction which current President Xi Jinping confirmed recently he is happy to live with. He assured Chinese business leaders that he welcomes private enterprise. In fact, he challenged the entrepreneurial spirit that Deng unleashed in 1978 to be more innovative. At the same time, he is leaving in place the undemocratic one party state.

So, Chinese socialism is a long way from Karl Marx and Lenin.

Until a couple of years back, the rest of the world was more than happy to see China throw off the shackles of outdated command economics and open itself up to the world. Australia, in particular, benefitted enormously as the Asian giant began to rapidly urbanise and industrialise. The demand for our coal, iron ore and other commodities powered our mining boom. Chinese investment also boosted our affluence and we were more than happy to reap the rewards.

But as China moved into the position of the world’s second largest economy – still a long way behind the USA but making rapid gains – the Americans became restless. They rightly saw that their dominance as a super power was under threat; not immediately a strategic threat but a threat in terms of influence and leverage around the world.

The emergence of Donald Trump and Xi Jinping changed the dynamic. Trump declared a “trade war”, whacking huge tariffs on Chinese imports and making Beijing a scapegoat for the resentment many Americans were feeling as their manufacturing jobs disappeared. American companies were more than happy to use China as the site for their factories. All the while, lower tariffs on imports from China were not reciprocated by the Chinese for American exports, something that is now being addressed – so a bit of a win for Trump.

The Chinese are worried where it could all end up, but at high powered forums and conferences in Guangzhou and Shanghai this week assured participants they are up for the challenge and will continue their economic reforms and openness to the world. In other words, they are not backing away from challenging America.

Currently a multi-billion dollar redevelopment of what is dubbed the Greater Bay Area – population 70 million, taking in the cities of Guangzhou, Shenzhen and Hong Kong – is truly mind boggling, but what is increasingly exercising some minds in Canberra and Washington is what are the military-strategic implications.

Australian business leaders at this week’s forums are not as panicked as some of the military hawks. The Chinese say they just want to keep doing business. One thing is for sure, Australia’s prosperity is intimately linked to China’s. We need to be clear-eyed and measured in our responses.

Paul Bongiorno was sponsored in China by the independent think tank, the Australia-China Relations Institute at Sydney’s UTS.

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