AP (UK) Breakfast Discussion with John Howard, former PM of Australia

The US relationship with China – a perspective by John Howard former PM of Australia

The former Prime Minster of Australia, John Howard, spoke at an Atlantic Partnership event on Tuesday 16th July on the subject of the US relationship with China.

Mr. Howard began by mentioning the results of a recent poll by the Lowy Institute, a think tank in Australia. The results of the poll showed that an overwhelming majority of Australians thought that China was the most important country economically to Australia. However, when Australians were asked to indicate on a barometer scale their attitude to other countries, the three most favourably perceived were Britain, Ireland and the US. This is a reminder that the relations between nations are built on a variety of factors, not just economic factors.

US and China

Clearly the relationship between China and the United States is the preeminent relationship in Asia. Australia has a great interest in this relationship. China is overwhelmingly Australia’s biggest export destination. Australia’s exports to China have increased 5 fold in the last 15 years.

However, Mr Howard warned us not to be too mesmerised by China. China is very powerful and very conscious of her growing power in the world. As we have witnessed from history, as a country grows in economic strength they take it upon themselves to upgrade their defence hardware capability befitting an emerging power. China is clearly doing this. However, we should not assume that China wants to engage in a conflict at the present time. China is too preoccupied with managing internal issues to be concerned with external threats. Whilst there is some concern about tension between China and Japan, this is a long-standing dispute, with a well know history.  Japanese economic presence in China is significant and will ensure tensions between these two countries remain in check.

Demographic challenge

When the history of the last 30 years is written the main economic story will not be the global financial crisis, according to Mr Howard, but the liberation of poverty of hundreds of millions of people through competitive capitalism and globalization. When that history is written people will give, rightly, credit to China’s achievements. Despite all of the impressive economic growth, China faces two main challenges. First, of course, is demography because of the one child policy. China is an ageing country and you will not be able to turn that around within a generation.  This contrasts strongly with India where the age cohort of 15 to 25 year old in India is the largest anywhere in the world. This cohort exceeds the total population of Indonesia, which is a reminder of how young India is compared to the ageing population of China. China will have to put increasing resources into looking after people moving into old age in the future.

Enrichment vs Authoritarianism

The other challenge facing China is how does it balance the economic enrichment with its continued political authoritarianism. If you have been newly liberated from poverty in your lifetime, you will probably put up with being told what to do politically. However, will the next generation of Chinese who will take the economic liberation for granted.  Will they adopt such an accepting attitude towards political authoritarianism?

So in amidst all of this natural bedazzlement of China’s rise and how very important it is to all of our countries, not least Australia because of the huge export dependency it has on China, we have to avoid being too mesmerized.

US in the Pacific Region

President Obama’s recently used the expression ‘pivot’ to describe the presumed change in attitude of the United States towards the Pacific region. Mr. Howard was surprised that the United States considers it is pivoting towards Asia. He was under the impression that the United States had had a very large presence in Asia since at least 1945. The United States have fought to major land wars in Asia in the period since World War 2.   The Americans have been involved in the Pacific for a very long time. 2,500 Marines rotating through Darwin is hardly an act of belligerence. And they will remain involved for the reason that just about every country in the region (Singapore, South Korea and Japan) want them to remain involved.

We also have to avoid being persuaded by so-called experts or commentators that there is inevitability in some kind of clash between the United States and China. One of Australia’s obligation in the region, besides protecting its own national interest in the region, is to do what it can to lower the temperature where it looks to be rising between China and the United States. A considerable amount has been achieved between those two countries, despite what has been said, to lower the temperature. The issue of Taiwan is now very different to how it was when Mr. Howard became PM is 1996.  The Clinton Administration and the Chinese Government’s relationship over the Taiwanese straits was very difficult. However, over time this temperature has lowered. The Bush administration deserves some credit for this reduction in tension. In 20 years time, Mr Howard envisions a Hong Kong style arrangement for Taiwan.

There is room for both the United States and China in this part of the world. This idea that we face some kind of choice that is regularly trotted out in commentary in Australia is a fallacious proposition. Mr Howard considers himself an optimist – albeit a guarded optimist – about relations between China and the US. It’s in the national interest of both countries to retain stable relations. China is an enormous buyer of American treasury bonds and the market between the US and China is huge.