During my current visit to Australia in support of the 27 September Williams Foundation Conference, I had a chance to talk with Ross Babbage, who is the Chief Executive Officer of Strategic Forum Pty Ltd and a Non-Resident Senior Fellow of the Center for Strategic and Budgetary Assessments in Washington DC. During my last visit we discussed his latest book which focused on the challenge of deterring China and avoiding the next World War.
I asked him to provide an assessment of what progress has been made in Australia in focusing on the China threat and, indeed, on the broader challenge of the 21st century authoritarian powers seeking to reshape the global system to their advantage.
He started by underscoring what he sees as major progress in Australia recognizing the multi-faceted challenge which the Chinese Communist Party-led China poses to Australia’s way of life. Compared to five years ago, there is now widespread recognition throughout Australian society of the broad challenge. This has been most notably demonstrated in the strong resistance of the Australian public to Chinese actions during the pandemic and it is also clear from shifts in Australian public opinion polling.
But this does not translate in Babbage’s assessment into agreed agendas on what to do in response to the Chinese challenge. Rather, economic and political interests are interpreting the challenge differently and to their own perspectives. This makes it difficult to have a consensual response on all aspects of policy towards China.
The Australian government and the ADF have recognized the need to broaden their working relationships throughout the region, not just as a junior partner of the United States, but as a democratic actor in its own right. We have seen the ADF expand its engagements in Indonesia and Malaysia, for example, and there is a growing effort to strengthen the cooperative relationships with Japan, South Korea and India.
Babbage also noted that Australia is expanding defence and security cooperation with the Philippines which is to the benefit of all democracies defending their interests against China. He underscored that the United States has a long history with the Philippines. But Australia’s relationship with the Philippines carries fewer domestic sensitivities for Manila and so Australia has more flexibility than the United States in dealing with some issues.
He characterized the Australian approach in the region as follows: “There has been progress in building a loose network and coalition of Pacific nations who are really wanting to reinforce their own security, independence and sovereignty and are very happy to work with Australia.”
One area of concern has been to ensure security of supply in raw materials. And here there has been significant progress among the allies and partners in shaping common approaches and framing ways to work together. He cited the “Indo-Pacific Economic Framework for Prosperity Agreement Relating to Supply Chain Resilience” as an example of progress in this area of cooperation.
An article in The Diplomat characterizes the effort:
“Building supply chain resilience has become a shared objective for many Indo-Pacific countries that experienced supply chain disruptions and recognized the vulnerabilities therein because of overdependence on a single source: China…
“According to the U.S. embassy press release, the IPEF Agreement has several different institutional components — including the IPEF Supply Chain Council, the IPEF Supply Chain Crisis Response Network, the IPEF Labor Rights Advisory Board — that are each tasked with a specific agenda.
“The IPEF Supply Chain Crisis Response Network is supposed to put in place an emergency communication network for IPEF members to enlist support in case of a supply chain disruption. The network will aid in information-sharing and cooperation among IPEF partners, with the goal of providing for “a faster and more effective response that minimizes negative effects on their economies.”
“Similarly, the IPEF Supply Chain Council is supposed to institute an arrangement among IPEF partners in order to establish “sector-specific action plans for critical sectors and key goods to enhance the resilience of IPEF partner’s supply chains, including through diversification of sources, infrastructure and workforce development, enhanced logistics connectivity, business matching, joint research and development, and trade facilitation.”
Ross Babbage argues that such agreements, although important, will not solve the raw material dependence problem for Australia or the United States. The core problem is rooted in the atrophy of the resource processing and manufacturing industry in Australia and the United States. The processing of raw materials within an allied context is crucial. Simply having or acquiring raw materials that are then processed by the Chinese who have built significant processing capability, hardly solves the problem.
The scope of the problem was highlighted by Babbage in the following terms: “In 2004, the United States had nearly twice the manufacturing output as China. By 2019, China had nearly twice that of the United States. In Australia, it is the same story. Around 1960, about 24% of Australia’s output by value came from the Australian manufacturing sector It’s now some 5%. Australia and the United States have both decimated many of their manufacturing capacities.”
“There is a pathway for allied industrial recovery but it requires energetic cross-domain initiatives by all of the Indo-Pacific allies.”
We need to remove barriers to investment to build back our manufacturing base. But there are many obstacles to progress, largely political and regulatory. The contrast to China’s approach is stark. For example, while Australia moves away from the use of coal, purportedly to attenuate climate change, China is building coal powered plants at a rapid rate. In recent months Beijing has approved an average of two new coal fired power stations and commenced construction on a third every week.
It will be difficult to deal with these issues unless we shape new mechanisms to frame policy debates. We tend to get stuck into social media framing events, rather than scoping out the nature of long-range problems facing our society and initiating sensible solutions.
I am working on a project with my friend and colleague Dr. Harald Malmgren which we call Beyond 2024: Dealing with the Critical Issues Which are Re-Shaping America’s Role in the World.
This will not be for faint hearted to read. We are in a new historical era and not of our own making.
How do we shape effective policy based on global realities not social media exchanges and political posturing?
This is a major challenge facing the liberal democracies. And it is central to any fully effective alliance between the United States and all of its Indo-Pacific allies.
Featured Photo: Moscow. March 20 – 22, 2023. Meeting of Chinese President Xi Jinping and Russian President Vladimir Putin. Silhouette of Chinese President Xi Jinping and Russian President Vladimir Putin