In producing a new Defence White Paper in 2009, the Rudd Government finds itself addressing a momentous question at an awkward time. The question is how China’s rise affects Australia’s long-term security. If it is addressed squarely, the question has large and unsettling implications for every aspect of Australia’s strategic posture, including our alliances, partnerships and regional diplomacy. Most importantly for the Defence White Paper, it may have major implications for the kinds of armed forces Australia needs.

There is never a good time to address questions like this, but 2009 is proving especially awkward. The global economic crisis has made it harder than ever to detach long-term decisions about defence objectives and funding needs from short-term fiscal pressures. After a decade of swelling budgets, spending money on Defence has become hard again.

At times Prime Minister Kevin Rudd probably wishes that he had left his Defence White Paper until his second term, as his predecessors Bob Hawke and John Howard did.

Some voices in government have no doubt been suggesting that the whole thing should be shelved until after the global economic crisis, because the sharp decline in the government’s fiscal position makes it impossible to frame credible defence-spending projections. That is not necessarily true. The most important decisions in the Defence White Paper concern major force-development projects that span decades and take several years to get moving. They would have big implications for defence budgets 10 and 20 years from now, but add little to this year’s budget and forward estimates. That means the government could separate, to some extent, its short-term fiscal policy and its long-term strategic policy. It would be possible to commit to further sustained increases in defence spending over the long term, and at the same time hold down or even cut spending in the next few years. This would be awkward to sell politically, and would limit future fiscal flexibility if the downturn proves to be longer and deeper than ministers now expect.

But if the government is confident about Australia’s long-term economic prospects, it would be foolish to determine long-term defence policy to fit short-term fiscal problems.

It might be tempting to think that the global economic crisis has shelved the question, because it has put China’s rise on ice. That would be wishful thinking. China’s economic growth and the present economic crisis operate on very different timescales. Even a severe global recession or depression is measured in years: China’s rise is measured in decades.

The deeper forces driving China’s rise will most probably persist long after the present crisis is over. And the long-term effects of the crisis could amplify, rather than reverse, the long-term shift of economic, political and strategic power towards China.

That historic power shift is what makes the rise of China so important for Australian defence policy. Other security issues may seem more pressing from day to day — global terrorism and natural disasters, Afghanistan and Iraq, Timor-Leste and the Solomon Islands, the perennial question of Indonesia. A lot of debate about defence policy in recent years has focused on how we should judge their relative significance. But as I have argued in an earlier paper in this series, the rise of China is different from all of these. It is the issue which will do most to shape Australia’s strategic environment and defence needs over the next few decades. The prime concern is not whether China will pose a direct threat to Australia as its power grows. It is the way China’s growth is fracturing the foundations of the old Asian regional order which has ensured our security in recent decades, and the deep uncertainties about what the new order which will emerge might mean for our security.

From any perspective, China’s rise is the most consequential long-term trend in the world today — economically, environmentally, culturally and strategically — and it probably constitutes one of the great transformations in history. As China’s economic weight grows to challenge that of America, we are probably seeing the end of the age of Western strategic primacy in Asia which began with the Portuguese over 500 years ago. The end of the Vasco da Gama Era has been prematurely predicted often enough over the last century, but never before on such a solid basis — the seemingly inexorable shift of sheer economic strength.

This Asian Century will have profound implications for Australia’s place in the region, and may carry new and large strategic risks: a revolution comparable in its consequences for Australia to the long collapse of British power.

Of course there is no certainty. We cannot be sure that China will keep growing over the next few decades, nor what that would mean for Asia’s future and Australia’s security. However, there is a strong and growing consensus that China’s long-term growth can and probably will be sustained, with immense political and strategic implications in Asia.

Kevin Rudd certainly sees things this way. In several major speeches in late 2008 Rudd made it clear that he regards the rise of China as the single most important factor shaping Asia’s century and Australia’s a focused force. How big the implications for Australia’s defence turn out to be depends on many things. Most of all, it depends on the major powers themselves. How will China use its power, and how will the US and Japan respond?

These are difficult questions. The major powers have immense incentives to preserve the peace and stability which has served them so well since the early 1970s. They could certainly find a way to do that, but they would need to build a new and quite different set of relationships with one another. That will only happen through careful, deliberate and often difficult compromise. They may fail, and failure is more likely if they do not realise how big the risks and consequences of failure are. Asia is not predestined to relive Europe’s tragic history of major-power competition, but neither is that fate impossible. Conflict is not inevitable, but history teaches how easily and how badly these transitions can go wrong.

Only time will tell, but strategic policy cannot wait until the future is clear. Australia faces two urgent policy challenges over coming years. One is primarily diplomatic, the other is primarily military. The diplomatic task is to do whatever we can to promote the evolution of a new stable order in Asia that minimises the risk of conflict, and maximises Australia’s opportunities and options. This is arguably the biggest and most demanding diplomatic task Australia has ever faced, requiring new and sometimes unfamiliar modes of thought and action. The Rudd Government’s Asia-Pacific Community concept is perhaps a first step in the right direction, but much more will be needed as Australia seeks to influence and adapt to a changing Asia.

This diplomatic challenge deserves and requires intense and detailed study. But it is not the subject of this paper. We are here focusing on the second challenge, which is to respond to the possibility that notwithstanding our best diplomatic efforts, the new Asian order turns out to be more strategically risky than the old one. The defence policy task is to consider what kinds of forces Australia might need if that happens, and start to build them. This may be more urgent then many people assume. We do not know how quickly Asia might change: the region could be very different even a decade or two from now.

Defence capability meanwhile takes a long time to build, and must last a long time. Decisions taken in the 2009 White Paper will do a great deal to determine the armed forces Australia will have in the very different Asia of 2040. So while there is no need yet to rush, nor is there time to waste. The sooner Australia can start adjusting its strategic policy to Asia’s transformation, the easier and less disruptive that adjustment will be. Ministers, therefore, do not have the luxury of thinking that they can leave this momentous question to their successors.

Read the full Lowy Institute paper here.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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