The Contest of the Century (16 page)

Australia was one of the first countries to wake up to the economic potential of the Chinese boom. The signature breakthrough came in 1985, when the then Chinese leader Hu Yaobang decided to visit Australia. Bob Hawke, Australia’s prime minister, threw out the protocol of a formal visit and instead took him on a tour of the Pilbara, a distant region of Western Australia more than three thousand kilometers from Canberra that is rich in minerals. There is a famous photo of the two of them, both in white shirts without ties, standing on top of a mountain and looking across acres of red earth that have since become one of the biggest iron-ore mines in the world. In many ways, the photo was the start of the current commodities boom.

Fast-forward more than two decades, and one-quarter of Australia’s exports now go to China, its biggest market. Chinese demand not only soaks up Australian resources, but has caused the prices of those commodities to soar, too. Australia has been one of the biggest beneficiaries of China’s growth. The economy has grown every year for the last two decades, even during the financial crisis—the first time this has happened in the country’s history, and a record that no other developed economy has matched over the same period. The China market has also created pockets of huge wealth. The average price of a home in Peppermint Grove, the smart suburb of Perth in Western Australia, the heart of the mining boom, is now $5.1 million. With the possible exception of South Korea, no country is now more dependent on the Chinese economy. In Kevin Rudd—or Lu Kewen, as he is known in China—Australia became the first Western country in 2007 to have a prime minister who
speaks Chinese. Immigration has also forged a powerful personal link with China, of the sort that can start to mold self-perceptions. Mandarin Chinese has now overtaken Italian as the second-most-spoken language in Australia. Chinese tourists spend more money in Australia than do visitors from any other country.

The extent and velocity of these economic links with China are prompting some profound questions for Australia. Australia has been a loyal ally of the U.S. since the end of the Second World War, and, more than any other country in the Asia-Pacific, Australia is extremely comfortable with U.S. military dominance in the region. The last few decades have been the best in Australia’s history. It is free to trade with anyone it wants in Asia, while enjoying the political and military protection of a country with very similar political and cultural traditions. Australians, however, are starting to wonder if they can afford to remain so close to America when they do so much business with China. “Australia is having to ask itself how to reconcile its two core interests,” says Michael Wesley, former head of the Lowy Institute, the Sydney-based think tank that is one of the best sources of analysis on China. “Its security, which is tied to the United States, and its prosperity, which is ever more closely tied to China.”

Politics will follow economics—that is the core insight behind the predictions of inevitable Chinese leadership in Asia, the idea that the countries which depend on Chinese economic dynamism for their livelihood will start to bend to the political prerogatives of Beijing. If that idea is true, then one might expect to see Australia looking for some sort of middle ground. Indeed, if the Asia-Pacific region was comfortable with the prospect of China’s assuming a central leadership role, one of the early signs would be a decision by Australia to drift gradually away from its close defense relationship with the U.S.

Through one of the quirks of presidential scheduling, Presidents George W. Bush and Hu Jintao happened to visit Canberra on consecutive days in 2005, and both leaders were invited to give speeches to Parliament. These were during some of the darkest days of the Iraq War, which Australian troops were helping to fight. Bush, who lectured the audience on the fight against terror, received a reception that might be described as cordial. Hu came to Parliament the next day and gave a very
different speech, about respecting differences. “Our world is a diverse place, like a rainbow of many colors,” he said. “Civilizations, social systems, and development models, different as they may be, should respect one another, should learn from each other’s strong points.” The
Australian Financial Review
summed up the visit with the headline “Bush Came, Hu Conquered.”

The reaction to the visits was one of the signals of a deeper bout of uncertainty in Australia. At one stage, Australia’s foreign minister, Alexander Downer, referred to the alliance treaty with the U.S. as “symbolic.” The reality was very different—a treaty imposes legal obligations on both parties—but his comments caused consternation in Washington. The Chinese sought to apply subtle pressure. According to Chen Yonglin, a Chinese defector who had worked at the consulate in Sydney, senior officials in Beijing were openly suggesting that Australia could come to play
a role somewhat similar to France’s—still part of the Western alliance, but detached from America and willing to take its own path on important issues.

Yet, in the end, the very opposite has happened. Trade with China has boomed, investment from China has boomed, the Australian economy has boomed, yet Australia has not only decided to maintain its ties with the U.S., it has actually strengthened them. In late 2011, Barack Obama visited Australia to announce that up to twenty-five hundred U.S. marines would be deployed to the country, part of an expanded defense alliance between the two countries. “Our enduring interests in the region demand our enduring presence in this region. The United States is a Pacific power, and we are here to stay,” he said in a speech to the Australian Parliament, which received a standing ovation.

Of course, a couple of thousand marines will not alter the strategic balance in Asia, but the politics are very important. Australia is defying the apparent logic that China’s economic size will give it political influence. Canberra sees that China’s military buildup could undermine the stability of the region’s economy and believes a robust American military presence is the best way to fend off that prospect, a bulwark against the worst instincts of a more powerful China. As Kevin Rudd told Hillary Clinton, the goal should be to integrate China into the international community
“while also preparing to deploy force if everything
goes wrong.” The U.S. marines are an insurance policy for an uncertain future.

Australia has also been one of the first Western countries to start thinking long and hard about what it means for a democracy to be so economically close to the authoritarian Chinese state. In 2009, Stern Hu, a China-born Australian citizen working for the mining multinational Rio Tinto in Shanghai, was arrested on charges of stealing state secrets. At the time, Rio Tinto was also involved in a tense commercial dispute with Beijing over iron prices, lending a heavy political hue to the arrests. The charges were later reduced to stealing commercial secrets, and Hu received a ten-year jail sentence. Hu admitted to taking bribes, but few in Australia believed he would have been prosecuted had his company not been involved in a difficult argument with the government. A month later, Beijing launched a fierce lobbying campaign to change the program of the Melbourne Film Festival to exclude a film about Rebiya Kadeer, an exiled activist from the heavily Muslim province of Xinjiang in northwestern China whom Beijing accuses of sowing ethnic unrest. When that pressure was ignored, four Chinese films were withdrawn from the festival. The dispute sent a chill through parts of Australia about the implications of growing Chinese influence. “The Chinese embassy told me I had to justify my actions including the [Xinjiang] film in our programme,” Richard Moore, the head of the festival, complained. “But, hey,
we are just an independent arts organisation and it is our programme!”

Australia will continue to be an important weather vane. Although the beefed-up alliance with the U.S. has broad political support, there are also important and influential critics. Former prime minister Malcolm Fraser has denounced the U.S. approach to China as a rerun of Cold War–style “containment.” He derides Washington for thinking of Australia as a “strategic colony, taken for granted, total support for whatever the United States may do.” The most articulate criticism of U.S. policy in the region has come from Australia, by the former government adviser-turned-academic Hugh White. In a 2010 essay “Power Shift,” he argues that if the U.S. does not find a way to accommodate China’s interests in the region, it will slip into an open confrontation with Beijing. “As China grows,
America faces a choice of Euclidian clarity,”
he writes. “If it will not withdraw from Asia and if it will not share power with China, America must contest China’s challenge to its leadership.” Canberra’s role in all this, White says, is to help persuade Washington that it must accommodate China. Australia’s debate on how to deal with China is not for the fainthearted. Greg Sheridan, the foreign editor of the newspaper
The Australian
, called White’s essay
“the single, stupidest strategic document ever prepared in Australian history” and an exercise in “appeasement.” Discussions about the relationship with the U.S. will long reverberate, but that does not detract from the basic message behind the new deployment of marines. Australia has decided that, for the next generation at least, it will continue to bet on the U.S.

SWORD LAKE

The first time I visited Vietnam was as a tourist, and for a day or two my wife and I went to what seemed to us the obvious sites in Hanoi. We strolled along wide avenues still lined with trees the French had planted when they were the colonial power, and whiled away an afternoon in street-side cafés. Our hotel, the Metropole, was an imposing colonial building with a white façade, green shutters, and wood paneling that had been the focal point of French society in the city in the 1920s and 1930s. It was very proud of the fresh croissants it baked for breakfast. The next day, we went to the “Hanoi Hilton,” the Hoa Loa Prison, where John McCain spent some of his five and a half years as a prisoner of war after his plane was shot down during the Vietnam War. It was built originally by the French, but the North Vietnamese used it as one of the main places for detaining captured American servicemen. Now it is a museum, its walls covered with photos of McCain, whose hair turned prematurely white in captivity.

It took a day or so for us to pick up on something that we would have known if we had been a bit more curious before arriving. However much the Vietnamese detested French colonialism, and however many millions had died in the war with the U.S., these had in many ways been but passing episodes in a much longer history of defending the country’s sovereignty. In that longer story, the principal antagonist was China. Half a mile from our hotel was the Hoan Kiem Lake, a shimmering
pond filled with water lilies that forms the focal point of the city center. It is also a somewhat mawkish memorial to the struggle against China. The name means “Lake of the Restored Sword,” a reference to the legend that Emperor Le Loi was handed a magic sword which he used to fend off the Chinese invasion during the Ming dynasty in the early fifteenth century. Near the shore on the east side, there is a small island accessible by a red bridge. It houses the Ngoc Son Temple, built a couple of hundred years ago to honor a thirteenth-century general who helped defeat the Chinese Yuan dynasty. A couple of miles away, the Hai Ba Trung neighborhood in central Hanoi is named after two sisters who led a three-year-long rebellion against Chinese rule in the first century
A.D
. When we mentioned that we lived in China, several people immediately informed us how many times China had invaded Vietnam over the years, even if they sometimes offered different numbers.

In the annals of China’s imperial history, Vietnam is the one that got away. The Han dynasty occupied a large part of what is today’s Vietnam in the second century
B.C
., and China retained control of the country for most of the next thousand years. Vietnam eventually prized itself free from the Chinese embrace, but that long history has left traces of a sense of entitlement in China.
A caption at the Shaanxi History Museum in Xian, one of China’s premier collections of antiquity, reads: “Until 200 years ago, Vietnam was part of China, and even today in the homes of Vietnam people you can see Chinese characters.” Like all such histories, Vietnam’s links with China are full of complexities and discontinuities. Although it was Le Loi’s victory in the fifteenth century over Ming invaders that cemented the independence of Vietnam, the decades that followed his triumph were the high point of Confucian cultural influence in Vietnam. But the Hanoi tourist sites underline the broader point; a significant slice of modern Vietnamese identity is rooted in the struggles to maintain autonomy from China. The anxieties stirred in Vietnam by the rise of China are in one sense the direct opposite of the response in Australia. Whereas Australia fears the end of a historical era it has been comfortable with, Vietnam fears a return to an older historical pattern it wants to avoid.

Vietnam is, therefore, one of the most interesting fault lines along the rise of China. More than any other country in the world, Vietnam has
a political system that looks very similar to China’s—an all-powerful party that is still run on Leninist principles but which has dumped Marx and embraced the market in a bid to modernize its economy and society. The Communist Party ties run deep. In his somewhat intimidating way, it was this spirit of fraternal political unity that Chinese Foreign Minister Yang Jiechi was trying to appeal to in his diatribe in Hanoi. Vietnam also knows that China’s economy is one of the main potential growth engines that can drive its own prosperity. Huge public investments in the southwest of China are driving new road and rail links down into northern Vietnam, cementing the economic connections even further. A new high-speed train will soon link Hanoi to Nanning, the capital of the border province of Guangxi. Yet Vietnam is the country where China’s great-power posturing is provoking deeper existential angst than almost anywhere else, as a new era of geopolitics collides with some very old Asian histories. Vietnam is thus an important barometer for both the mounting Asian backlash against China and the intricate balance of power that is taking shape in Asia. Hanoi believes it can both integrate its economy with China and seek new friends to help restrain China. Vietnam is working to have it both ways.