A few points arising from Hugh White’s Quarterly Essay
Hugh White in his excellent Quarterly Essay (Issue 39; 2010) discusses changes which could occur in the balance of power in Asia as a result of an increasingly strong China. Much of the essay is predicated on the probable decline of American influence in Asia and this is an important matter for Australia as our present Asian strategic outlook depends on a strong American presence. It is becoming obvious that Australia must look to developing near-neighbour relations for itself rather than relying too heavily on the Americans. Almost certainly our future Asian foreign policy will be a combination of independently developed co-existence with our Asian neighbours and an acceptance that America is an important player in the region rather than the important player.
It is certain that America will want to stay an influential power in Asia if only that its entire west coast faces the region’s most powerful countries: China and Japan, and one of the world’s most problematic: North Korea. Of course Australia (and America) will also need to include India in future economic and political considerations. So far neither has taken much notice of the sub-continent’s emergence. To return to China, it appears inevitable that China could quite quickly become a dominant country in south-east Asia; Australia’s front yard.
However let us re-consider the potential rise of China (and India) more pragmatically. We know that China is emerging largely as a result of re-directing its workforce from agrarian/subsistence to a more heavily industrialised economy. Hugh White makes the point that many workers can make a strong economy just as effectively as can possession of valuable resources. He also says this will force more emphasis on internal political considerations in China as an increasingly literate and upwardly mobile population seeks to have more say in its affairs. This is not a matter to be taken lightly and may in fact have a considerable bearing on how much of China’s economic strength can be directed toward external policies which influence its neighbours. There are two other imperatives which will direct China’s internal development: the need to house and service its new workforce properly, and the availability of fossil fuels.
China’s largest cities mostly lack basic services considered essential in the west. Water can be undrinkable, electricity supply erratic, sewage treatment primitive, public transport marginal, overcrowding chronic and air quality unhealthily poor. The present generation of new city dwellers will see their living arrangements as more satisfactory than those they left in the villages, but the next will demand to be accommodated rather more salubriously. This will be expensive and will consume a considerable part of GDP. More importantly it will be expenditure which will not register on China’s overseas image to the same extent that defence expenditure does for instance. Rather like re-stumping the house, it will help secure the future for very little apparent difference in outward capability. Of course increased domestic expenditure will increase, or rather secure, productivity as the workforce sees better living standards for its labours. Nevertheless a significant part of the Chinese economy will need to be directed internally if the country is to rise to prominence internationally. Chinese people will expect a decent standard of living with some luxury as the rest of us do. Money spent at home can not be spent securing influence abroad.
The argument over the occurrence or not of climate change is irrelevant for emerging third-world countries. If they are to emerge they must consume energy but the world has to reduce per capita use of fossil fuels if only to husband resources. Thus countries like India and China find themselves having to invest in expensive alternative energy strategies knowing that countries like Australia and, especially, America owe their present economic strength to the over-exploitation of carbon resources.  Whether or not this is ‘morally’ right is irrelevant: lucky western countries got in first. For emerging economies to go about using fossil fuels at the rate western countries have in the past will be self defeating because the resource will run out quicker or become prohibitively expensive to extract due to inaccessibility. Thus continued unsustainable use of fossil fuels will cause all economies to suffer but especially the more vulnerable newer players.  
Emerging economies will have to spend a greater proportion of GDP on energy resources, per capita, than their emerged competitors did at an equivalent time in their development. The consequence; emerging economies will have less money to spend securing an international presence. We can discount the possibility that China (or India) would behave aggressively to ensure energy imports. The Chinese are far too wise to embark on an energy-acquiring war as large-scale war would wreck a developing economy.
China has suddenly appeared as an economic powerhouse as has India. This probably means we weren’t paying sufficient attention over the last decade or so and have only lately noticed things we should have noticed earlier. They are quite different to the so called Asian “Tiger Economies” of the past as their economic status is not built on debt; in fact China is a lender. However the appearance of China (and India) as important world economies has been aided by both countries spending less at home than they should have. This has had the effect of creating at least a two-level society in both countries; those who are part of the money miracle and those whose labour make it possible. Also neither country has made realistic provision for the impending shortage of fossil fuels and the virtue of using less of them. Both these factors will require significant spending to overcome; spending which will reduce available funds for building international influence
11th Sept 2010