Saturday, August 9, 2014


We've got to understand China - any way we can.

The cover of 
Steve Lewis & Chris Ulhmann's book 

And doing so sometimes requires desperate measures . . . like reading fiction. 

This column in today's Canberra Times is a shameless plug for my friends' book . . . 

                                       UNDERSTANDING CHINA - ANY WAY WE CAN

No one doubts the rise of China is the biggest strategic issue Australia faces: the only difference is how to deal with it.
In articles dealing with this issue it’s normally around here, in the second sentence, where invective takes over from rational debate. Otherwise polite, intelligent people begin foaming at the mouth, shout incoherently and have to be held back by others lest they ''go'' the normally benign, bespectacled academic who holds a contrary view.

When you’re dealing with China everyone suddenly becomes an expert and every analyst has their own solution. This is normally combined with a concomitant refusal to accept alternative solutions for dealing with the ''Middle Kingdom''. Oh, and that's the other rhetorical trick you'll notice when discussing China. The use of historical references, or maybe the word ''dragon'' inserted high up, as if throwing in a couple of magic words will somehow invest your particular theory with credibility allowing it to overcome any rival. The problem is, of course, that we’re all groping in the dark.

The issue convulsing China at the moment is a fierce anti-corruption campaign. It started being driven from the highest level, which makes sense. The distribution of wealth has become significantly more unequal. Today the top one percent earn more than a third of the country's income (and, perhaps more significantly, hold its assets and power). For those who like numbers this can be expressed in terms of a Gini coefficient. If everyone owned the same amount of property, this would be ''0''; if one person owned everything the coefficient would be "1". 

The US National Bureau of Economic Research says that in 2000, our wealth coefficient here in Australia was .622. Back then China’s was .55, which was itself a dramatic rise from .45 in 1995. But the situation today is far worse with a Gini greater than .73. Wealth is hugely concentrated and it’s not flowing to the poor. The implications of this are both urgent and obvious.

Although the superpower has prospered mightily, the benefits of this development are not being shared equally. More critically, although the pace of expansion has slowed significantly since 2008, concentration of greater wealth in the hands of fewer people (and families) is increasing. This undermines the basic foundations of prosperity and stability. It's a dangerous cocktail. One theory behind China’s bellicosity towards its neighbours is that those in power are seeking to unify the country by fueling xenophobia. Others suggest it’s got more to do with those in power eliminating domestic rivals. Or perhaps it really is an attempt to crush corruption – we just don’t know.

Dramatic internal change is accompanied by a revolution in the way Beijing is dealing with the world. China is demanding ... well what, exactly? The superpower is refusing to be bound by international legal norms and throwing its military and economic weight around. Territorial disputes with Japan and Vietnam; using Cambodia as a proxy to disturb south-east Asia’s unity; using weapons radar to illuminate other countries vessels, a preliminary activity before firing missiles. Yet there seems to be no coherent approach. It’s difficult to know what or who (if, indeed, any one person is responsible) is driving such events.

In 2002, US Secretary of Defence Donald Rumsfeld insisted knowledge could be divided into three categories: known knowns (what we know), known unknowns (what we know we don’t know), and unknown unknowns (what we don’t know we don’t know). Critically, he ignored the most dangerous possibility of all: what we think we know (but actually don’t). He assumed he understood the mind of Saddam Hussein when he didn’t have a clue. Today the danger is that we think we comprehend what’s going on inside Zhongnanhai, the Communist Party’s headquarters set in the old Imperial Gardens of the capital. We don’t.

Is the new leadership team using the current anti-corruption drives as a way of purging past opponents or is it struggling to assert control over a movement that’s developed a life of its own and now threatens the stability of the state? Are offshore territorial disputes part of a strategic plan to expand China’s dominance, or might they become flashpoints for a terrible war; one as senseless as the one that erupted a century ago when a young, emotional student killed an angry, proud Archduke?

Asia remains more relevant to Australia than concerns about the terrible cycle of hate, viciousness and killing convulsing the Middle East. We need to engage, understand what we can, and keep away from the vortex. ANU Professor Hugh White’s China Choice ignited an intellectual debate. It’s important his thesis is challenged (even if his critics are occasionally wrong) and it’s vital that we engage and understand our new geo-strategic reality.

And that’s my way of getting round to plug a new book by Steve Lewis and Chris Uhlmann, The Mandarin Code. It’s pure fantasy – but it deals with the reality of a changing world and gets us thinking about the issues we need to be grappling with. People in every country just want to get on with life as best they can. To do that we need to know more; not less. And it’s always good if understanding can be served up as entertainment.


  1. Could it be that the aim of the LNP is to have a Gini index close to that of our major trading partner, China?

  2. Yes!!!
    Dear Zoe, I was just thinking about you before I read your comment. I'd love to meet. Could you give me an email at