Recent calls for concern by MP Andrew Hastie and new reports from ASPI and the US Studies Centre (USSC) have re-ignited fears that Australia is inadequately prepared to defend itself against China’s growing power. This fear is sometimes sensationalist: recent headlines have called for Australia to ‘ready for war’ and outline China’s efforts to turn Australia into a ‘vassal state’.
It is important not to underestimate China – or more specifically, the Chinese Communist Party (an important distinction). Yet it is equally important not to overestimate it, because doing so means we may fail to prepare for the full range of possibilities. The costs of maintaining an authoritarian system of government means Beijing must project most of its power inwards rather than outwards. Beijing is also facing economic and demographic problems with potentially catastrophic outcomes.
To be clear, there is plenty to be concerned about now. CCP influence operations in Australia and elsewhere are well-documented, including methods of ‘political warfare’ that aim to subvert the West’s unity and strategic position. Many of my own articles have focused on how the CCP’s ‘left of boom’ activities are undermining US military primacy and Australia’s strategic position in the South Pacific with little resistance. Discussions of China’s strategic threat also often reference the CCP’s systemic domestic human rights violations and Orwellian methods of governance.
It is also true that the Chinese Communist Party’s attempts to grow its power overseas come as US primacy is appearing to wane. The USSC report argues that the ‘US armed forces are ill-prepared for great power competition in the Indo-Pacific’. Meanwhile, ASPI notes that ADF numbers in the NT are at an 11-year low.
Yet there are a number of reasons why our concerns should remain balanced. First, the costs of authoritarianism actually limit the CCP’s ability to project power abroad. Beijing spends 20 per cent more on internal security than it does on the military, a cost that has tripled since 2007. Recent unrest in Hong Kong is evidence of the difficulties of maintaining autocratic control. This raises questions over whether Beijing will be able to sustain the costs of regional hegemony whilst simultaneously projecting the bulk of its power inwards to control its own citizens – a burden that democratic states do not face.
Second, China is facing the very real risk of economic stagnation. The country’s stock market was last year’s worst performer globally and the economy is now growing at half the rate of the last two decades. Manufacturing activity is contracting, retail and property sales are slowing, and the country is approaching the ‘middle income trap’ with a financial sector that has been described as a ‘Ponzi scheme’.
Third, the costs of internal security and economic stagnation will both be exacerbated by an impending demographic downturn. China’s fertility rates are below replacement and the country is set to be the world’s most aged society by 2030, entering ‘unstoppable decline’ whilst GDP per capita rates remain low. In other words, the country will get old before it gets rich, placing great strains on social stability.
In short, the CCP is having to project ever more power inwards as China enters a period of economic stagnation and demographic decline. Underneath all this lies a risk that the Chinese people will withdraw the ‘mandate of heaven’ and enter sustained revolt; something that has occurred a number of times throughout Chinese history when the government has been unable to provide for the people. There would likely be a brutal response from the CCP.
This would have severe consequences. As Mike Scrafton recently wrote, the Australian economy would then be ‘in tatters’ with a ‘crumbling’ strategic environment as China imploded, probably with catastrophic loss of life. In his words, “the world would be desperate for the ‘stability’ at which it is so easy to scoff.”
We are right to be concerned about the CCP’s growing power in Australia and elsewhere. We are also right to prepare as necessary, as Hastie argues. But we should not be blind to alternative possibilities. China may not become the threat many fear – and that could bring equally dire consequences.
Updated 22 August