Saturday, April 5, 2014

Prime Minister Tony Abbott caught in tough Asian trade winds

Australia lags fourth behind the economic might of China, Japan and Korea and should know its place, say some Chinese analysts.

Tony Abbott's trip to Asia is shaping up as his most important and challenging as Prime Minister so far - a visit that, coming early in his leadership, could come to define Australia's place in the region and his credentials as a statesman, diplomat and trade negotiator.

In crossing Japan, Korea and China in a week, Abbott is visiting three of our largest trading partners and export markets; a combined population of 1.5 billion, a combined GDP of $15 trillion, a collective juggernaut responsible for close to a fifth of the world's trade.

But the region is fraught with political and strategic tensions. China's territorial aggression in the East and South China seas has its neighbours nervous, amplified by a strategic military ''pivot'' back to the region by the United States. 

Japan's resurgent nationalism has seen ties with China and South Korea worsen, not least after Prime Minister Shinzo Abe visited the controversial Yasukuni Shrine in December, seen by its Asian neighbours as a potent symbol of its atrocities committed during World War II.

Just this week, South Korea was forced to fire back after North Korea launched a series of rockets into South Korean waters, in keeping with a pattern of military provocation that has seen Kim Jong-un's volatile regime threaten to ramp up its nuclear tests. Meanwhile, the crisis in Crimea is forcing an off-guard Beijing to do a head-check in the other direction.

''I think this is the most important trip because apart from anything else, the China-Japan dynamic is going to be our biggest foreign policy challenge this year … and north Asia is loaded with strategic tensions,'' says Rory Medcalf, the director of the international security program at the Lowy Institute.

Peter Drysdale, head of the East Asian Bureau of Economic Research at the Australian National University, says the interdependence of the three Asian economic powerhouses only underlines their collective importance and means Australia has to view the relationships as a whole rather than individually.

''The importance of the visit extends well beyond the importance of the individual bilateral relations because the three economies are such a big important element of the global economy now,'' he says.

Abbott is bringing a remarkable show to town. Along with an already unprecedented delegation of ministers and state premiers, travelling with him to China will be more than 30 of Australia's biggest names in business, including billionaires Kerry Stokes, Andrew Forrest and James Packer, BHP Billiton chief executive Andrew Mackenzie, Woodside Petroleum chief Peter Coleman, ANZ's Mike Smith, Westpac's Gail Kelly and Ian Narev of Commonwealth Bank.

Trade Minister Andrew Robb will be wrangling a 630-strong trade mission across four cities - Shanghai, Beijing, Guangzhou and Chengdu.

It is an ambitious logistical undertaking which, in the Prime Minister's words, tries to show that Australia is again ''open for business'' and to seize on the opportunities Asia's surging middle class presents for our suppliers of services, agriculture and resources.

On this trip, Abbott will sign a free trade agreement with Korea and finalise the terms of one with Japan. The missing piece in his ''trifecta of trade'' remains the free trade agreement with China, but public statements from Premier Li Keqiang and China's Ministry of Commerce indicate that this year's negotiations will be the last in the drawn-out, nine-year process, although most likely not without significant concessions from Australia over investment threshold barriers and the movement of labour.

In the background will also be talks on progressing the Regional Comprehensive Economic Partnership, a huge undertaking centred on the ASEAN-member states as well as Australia, China, India, Japan, Korea and New Zealand - covering about half of the world's population and 70 per cent of Australia's goods and services exports.

In an Asia Society speech in Canberra last month, aimed largely at an audience in Seoul, Tokyo and Beijing, Abbott highlighted the importance of maintaining regional stability.

''Australians are only too well aware that our prosperity depends upon the continued growth and strength of China, Japan and Korea. But for their part, China, Japan and Korea are among each other's largest trading partners, too. Anything that damages any of them, damages all of them,'' he said.

''It would be an unspeakable tragedy were this ever to be jeopardised by territorial conflicts based on the shadows of the past.''

Critics have already made unflattering comparisons to John Howard's economic-led policy towards Asia, noting that a decade on, China's surging influence on the world called for a more tactful approach.

''Since John Howard's day, China's leaders have made it plain that a good economic relationship depends on the development of a satisfactory rapport on political and strategic issues, and they are especially allergic to outside pressure for political reform,'' says Hugh White, the head of strategic studies at the Australian National University.

''Abbott's 'trade now, friendship later' model is not acceptable to them.''

David Kelly, a Beijing-based research director at China Policy, said Howard, after a slow start, quickly became an astute operator in Asia and was able to largely maintain bipartisanship at home. Abbott for now, represents a step backwards.

''We still talk this silly mercantilist talk,'' he says. ''Why does Abbott think the world is impressed to hear that we are a nation of philistines who simply want to make a buck?''

If Abbott's declaration that Japan was Australia's ''best friend in Asia'' when meeting Abe on the sidelines of the APEC summit in Bali in October ruffled a few feathers in Beijing, the decision to ink that mateship in a trilateral strategic communique together with the United States was seen as an affront.

That cascaded into a full-blown diplomatic spat when Australia decided to haul in the Chinese ambassador in Canberra, Ma Zhaoxu, to express its concern over Beijing declaring an air identification zone over islands in the East China Sea that were subject to a long-running bitter dispute between it and Japan.

''China can understand Australia for its support of the US and Japan,'' says Han Feng, a researcher at the Chinese Academy of Social Sciences, the country's premier think tank with close affiliations to the central government. ''But calling in the ambassador is hard to fathom. In diplomacy, calling in an ambassador is a big deal.''

When Foreign Affairs Minister Julie Bishop met her counterpart Wang Yi in Beijing in December, she was given a public dressing-down in full view of an enthralled media expecting little more than the standard grip and grin for the cameras for the start of the inaugural foreign and strategic dialogue between the two countries, part of the expanded bilateral architecture clinched by the Gillard government last year.

That encounter was later described in a Senate estimates hearing by Peter Rowe, a senior bureaucrat with the Department of Foreign Affairs and Trade, as the rudest thing he'd witnessed in 30 years.

Hou Minyue, an international studies professor at the East China University, says compared with the economic might of China, Japan and Korea, Australia lags in clear fourth position - and should know its place.

''For this No. 4 country, if you can play well with these nations, why don't you do that?'' Hou says. ''Why do you have to be on the side of one of the three?''

Song Xiaojun, a former People's Liberation Army strategist, sums up a popular if hawkish view in China on Australia's dilemma in the region.

''It's not China who lives in a tangled mess, but Australia,'' he says.

''China lives a very comfortable life. We lower our GDP perspective to adjust to the growth outlook. But when our economy goes down, even just 0.1 per cent, ASEAN countries and Australia find it hard to tolerate.

''China just wants to go about our business peacefully. If you want to make trouble, please go ahead. If you want to approach issues in the Asia-Pacific with a traditional mindset, you go ahead. We will develop under our own framework of new relationships between great nations.''

Sources in Canberra and Beijing suggest that the diplomatic fury has largely evaporated, for now. Abbott has recalibrated his language in recent weeks, and decisive moves to support Chinese search-and-rescue efforts over the missing Malaysia Airlines flight 370 have been warmly received in Beijing.

But far from an ill-timed gaffe, the warm embrace of Australia's long-standing Japanese friendship increasingly appears to be a deliberate foreign policy stance.

As one senior DFAT source put it, Abbott doesn't share the reverence or ''preoccupation about China that Kevin Rudd had'', and is seeking to rebalance Australia's previously neglected relationship with a Japan self-conscious of its comparatively waning economic might.

''My predecessor, John Howard, often remarked that Australia did not have to choose between its history and its geography,'' Abbott says. ''My message is that making new friends doesn't mean losing old ones.''

During Tony Abbott's previous official visit to China, the then leader of the opposition sought to define the bounds of a more assertive foreign policy, one which would challenge the ruling Communist Party to loosen its grip on political power and curb its territorial aggression in regional disputes.

In unusually open and strident remarks for a foreign political leader on Chinese soil, Abbott made note of the fact that despite being increasingly wealthy, educated and free to live and work where they pleased, Chinese people could still not choose their government.

''As prime minister, I would hope for political reform to match China's economic liberalisation,'' he said, addressing a business breakfast in Beijing two years ago.

Before he arrives in Hainan for the Boao conference on Wednesday, and before he takes his seat at a state dinner with Xi Jinping in Beijing on Friday, he will be given plenty of opportunity by an expectant travelling media pack to expound on his views.

''The Prime Minister has got to negotiate Japan and Korea before he gets to China, on-script and off-script,'' Drysdale says. ''So it's shaping up to be a visit that steps back and basically underscores much broader strategic issues.''

No comments:

Post a Comment