G'day, and welcome to the eleventh edition of Mundo.
In this edition I analyse a rocky phase of the Australia China relationship, and break down Australian prime minister Scott Morrison's Anzac Day speech from last weekend. To my non-Australian readers, Anzac Day is an annual day of remembrance for Australians and New Zealanders who served and contributed in conflict. It's a deeply significant day to Australians, and this year it assumed a new dimension through our collective efforts to contain the coronavirus.
Approximate reading time: 5 minutes.
Is COVID-19 changing Australia's relationship with China?
Strains in the Australia China relationship were laid bare this week, after China's ambassador criticised the Australian government's calls for an international inquiry into the origins of COVID-19. Ambassador Cheng Jingye's thinly disguised threat of consumer boycotts on Australian goods in China prompted a diplomatic fracas, and an array of strongly worded editorials in China's state media.
It's not 2008 anymore
This latest episode provoked by the COVID Crisis follows a continued deterioration in the bilateral relationship. It could solidify as the new normal for the next year. It contrasts with the pragmatic economic posture struck by the two countries following the 2008 financial crisis, which I analysed in depth in my LSE master's dissertation. This divergence is driven by a global political and economic system fraying from U.S.-China friction, and a shifting economic relationship between Australia and China. Falling commodity prices, shifts in China's economic profile and souring Australian public opinion have re-balanced the monopoly power of a "Resource Coalition" of economic winners from China's 2008 stimulus, superseded by suspicion and hawkishness in Canberra.
Political actors have also been critical in this shift. Donald Trump's long-held protectionist views manifested into a full scale trade war with China through 2019, alongside overt calls for countries to reject Chinese 5G technology and infrastructure projects through China's "Belt and Road Initiative". In 2008, Xi Jinping and his assertive China vision were years shy of his ascent to power. Australia transitioned through the aftermath of the financial crisis from a nuanced China view under Kevin Rudd to unreserved economic opportunism under Tony Abbott. Rhetoric swung sharply against China with Malcolm Turnbull following revelations of concerted efforts from the Chinese Communist Party to influence Australian politics.
This virus has complications
The COVID Crisis has brought further rancour to the Australia China relationship, to a point where political considerations are dominating economic interests. Part of this is due to the Chinese economy's significant evolution since the heady days of booming natural resource demand following the financial crisis. Much of this demand was triggered by China's colossal economic stimulus in 2008, which channeled buckets of capital - 13% of their GDP at the time - into hard infrastructure projects.
This time, however, China has restrained from flooding their economy with broad stimulus. This is because most of the hard infrastructure - the roads, ports, and rail lines needed by China to support its current stage of development are already built. The extraordinary surge in debt from the 2008 stimulus also weighs on Beijing's leaders as a ticking bomb of financial and political instability. Deleveraging has been a core economic focus since 2015. This debt burden makes additional infrastructure investment less effective in stimulating economic growth. Less appetite for infrastructure investment, plus plummeting demand across the rest of the world for China's factory goods means less demand for Australian resources, and less political attention to the Resource Coalition as a pathway to Australia's post-COVID economic recovery.
In Australia, a perception from the "inter-crisis years" between 2008 and 2020 is that Australia's ever-deeper economic relationship with China exposed it to "political capture" from Xi Jinping's ambitious China agenda. The revelation of the Chinese Communist Party's political influence strategy in Australia in 2016 was a watershed moment in Australia's social discourse, and it continues to colour the bilateral relationship today.
With Donald Trump's increasingly bellicose posture to China through 2018-19, Australia, as a longstanding U.S. ally, fell under increasing domestic and international pressure to take a firmer China position. The optimal strategy of balancing the United State's military protection with China's economic opportunity was increasingly difficult.
This culminated with several rounds of diplomatic sparring this week. The Chinese ambassador's mention of consumer boycotts was a wedge between Australia's China friendly business leaders, and an increasingly bi-partisan hawkish polity.
A tough time for Aussie business in China
All of this means a more fraught business environment for Australian firms with Chinese commercial interests. In this environment, there is now a real risk of Chinese economic sanctions and unofficial boycotts of Australian goods. Powerful business interests will busy themselves with Canberra's political elite, coaxing them to soften their tone to China, lest they suffer the economic consequences.
Many businesses will continue efforts to expand their export markets beyond China to insure against rising political risks, a trend that the Australian government has endorsed by pursuing a collection of new free trade agreements. It's not clear that new markets will replace forgone opportunities from China's enormous economy, however. Export market diversification is also incentivised by the extreme uncertainty that hangs over the global economy in the coming 6 to 24 months from fears of recurrent coronavirus waves.
The art of the speech
Ever since I was a grubby Nudgee boarding school kid packed into our grandstand to hear our school's spirit leaders before a sporting match, I've been fascinated with the power of speeches. In the last few years, I've been fortunate to write speeches for others, and deliver some myself.
Political judgments aside, I was impressed with Australian prime minister Scott Morrison's Anzac Day Dawn Service speech last weekend. No good speech is so without a sense of occasion, and the still, pre-dawn ambience of the Australian War Memorial in Canberra was a sombre backdrop to speak to a nation in duress at an uncertain time.
There are a number of techniques and devices that speechwriters use, and Morrison's speech contained quite a few.
The speech opens with a subtle nod to the opening lines of Australia's national anthem:
Australians all, lest we forget, for those who were so young, have made us so free.
He uses short, punctuated phrases to convey a sense of drama and importance:
At our Australian War Memorial — on Ngunnawal land, in our nation’s capital — our most sacred place.
He uses cadence, repeating the opening words "we hear" through several sentences, while evoking rich imagery:
We hear sounds of landing boats quietly rowing ashore.
We hear the deafening hum of the engines of the Lancaster bomber...
He uses triplets, removing the conjunction (in this case, "and", for added impact):
We hear [1] nurses and medics …
[2]… coast-watchers and stretcher-bearers …
[3]… chaplains and peace-keepers.
He then moves through a few stories, using the final one of Corporal Matt Williams to draw a metaphor of the Anzac spirit for resilience in our current lives. He concludes this with another triplet, balancing the final two lines of it in harmony:
Because we’re all in this together.
We always have been.
We always will be.
He finishes with a poignant metaphor:
...we grasp this torch and raise it high again…...lighting up this Anzac dawn.
You can watch the speech here.
Links
My friend and former colleague Danny Russel has a great piece in the LA Times covering rumours of Kim Jong Un's health. He argues that true or not, North Korea has a combustible succession problem.
My LSE friend Aljoscha Nau published a strong argument for free(er) trade and WTO reform as the fastest way to a post COVID global economic recovery.
The political fallout from the US Government's Paycheck Protection Program mentioned in Mundo #10 has spread to start ups - Start-Ups Pursue ‘Free Money’ With Relief Funds, Prompting Backlash - NYT.
Please feel free to send through your own thoughts and articles to me. Forward this along to others who might find this an interesting read. Stay calm, think of others, stay healthy. Mitch