Basking in Asia's economic halo

Lowy Interpreter

What is there not to like about the White Paper on the Asian Century? It is above all a feel-good document: historically we have done well in our relationships with Asia; we have the advantage of proximity; a large component of our population is of Asian descent; we are well equipped with relevant skills; we have various attributes and resources that Asia needs; and our economic track-record is one many would like to emulate.

If anyone didn't already know that we have the good fortune to be next to the most economically vibrant region in the world, this document sets out the full measure of our luck. In a world of miserable growth rates and dysfunctional politics in advanced countries and basket-case failed states among the developing countries, Asia represents a uniformly positive picture. Thanks to its past growth, it is now large enough to cast a halo of economic opportunities over any country that happens to be nearby.
All we have to do is keep on this same path: honing our economic credentials, tweaking our diplomacy and enlarging the exchanges of young people. We'll ride this Asian wave for decades to come.

This is the nature of the white paper and it's difficult to know what else it could have been or done in the circumstances. It would be amazing if the authors had been able to come up with a radically new viewpoint: we've been thinking about these issues for decades. Nor is there room for dramatic new policy initiatives, in a budget-constrained world.

The risks, problems and trade-offs are equally well known, and it would cast a gloomy shadow over this positive outlook if the document dwelt in detail on all the things that might go wrong, the policy dilemmas and the delicate paths our diplomacy will have to tread.

It would have been unhelpful, for example, to go deeply into the vexed security issues raised by the Hugh White debate. It would be equally unhelpful to agonise too much over the challenge of straddling our relationship with the US (our historical best friend) and China (our biggest trading partner). If in the past we have tended to view Asia through the US prism, this is not the place to sort out whether the future lies with Asia alone or with the Asia Pacific. We know without reminder, for instance, that we have little to offer on issues such as South China Sea disputes. We know we will often be treading on eggshells to keep a balance between Japan and China.

Even confining ourselves to economics, focusing on the positive and downplaying the difficulties has some attraction. The Doha Round trade negotiations can rate a positive mention without the need to say that it is effectively dead. The Trans-Pacific Partnership can be held up as a high quality trade model without mentioning that the bar is set so high that our main trading partner will not be able to join in the foreseeable future.

Of course we can still talk trade with China through the regional arrangements. Regional integration is easy to talk about but hard to implement, partly because China is an elephant in the canoe, hard to accommodate because it is so big, confident, powerful and ready to right perceived historical wrongs. But why fret about these problems when Australia, as a late arrival in these regional arrangements, can be no more than a bit player in resolving these difficulties? Why spend time lamenting that we were slow to join the ASEAN sphere and are not part of the Chiang Mai Initiative, the basis of much regional economic dialogue?

From Australia's internal policy perspective, there are unresolved issues in foreign investment. China understandably looks to Australia to provide an important element of resource security, but if this is given in the form of foreign ownership, the scale of the Chinese resource-security objectives and the uni-dimensional resources focus will run up against domestic sensitivities. With resource policy spread between federal and state levels, there are many opportunities to offend foreigner investors while at the same time selling our birthright for a mess of pottage. But the white paper is not the place to resolve this.

When it comes to our close neighbour Indonesia, we are still groping to find substantive dialogue issues which are not tension riddled crisis resolution, whether it is boat people or drug convictions. We know that Papua is waiting to destabilise the relationship in one way or another. The live cattle debacle was a reminder that mutual incomprehension still characterises this relationship.

Australian business still finds Indonesia an uncomfortable environment. The inhibiting travel advisory has finally gone, but now business has to worry that the Australian legal system will prosecute them for business practices which are the norm not just in Indonesia, but just about everywhere in Asia. There seems no way to raise the tone and quantity of journalistic reporting.

Long ago, wise heads developed the view that the best we could hope for is that there would be enough ballast in the diplomatic relationship to see us through these tribulations. What more can be offered?

If the white paper sounds complacent, there is certainly a realistic prospect that Australia will be borne along in the slipstream of this historically unprecedented burst of economic growth that began with Singapore, Taiwan, and Hong Kong in the 1960s and still has far to run in the unfinished growth stories of China, India, Indonesia and our other Asian neighbours. It will be up to others to explore the detail of what might go wrong, and what more could be done to smooth this ride.

Originally published by The Lowy Institute publication The Interpreter. Reproduced with permission.