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8 December 2021

With Greg Earl

Democracy summit

More than 100 countries will join the US-sponsored online Summit for Democracy on Thursday, which was one of the key international relations commitments made by Joe Biden during his presidential campaign last year.

In the run-up to a proposed second gathering next year, the United States is likely to place new economic sanctions on human-rights violators around the world and take various measures to support democracy advocates.

Such actions are in keeping with Biden’s declaration, made shortly after taking office, that “democracy doesn’t happen by accident”. “We have to defend it, fight for it, strengthen it,” he said at the time.

But after a long series of leaders’ summits with modest outcomes, and with declining support for Biden at home, there are concerns that the summit will only create tensions over how participating “democracies” were selected. It may also raise questions about the health of America’s own democracy.

Much of the debate about the summit’s inclusiveness turns on whether United States foreign policy should be based on values or interests, and it is most clearly being played out in South-East Asia – a region from which the United States invited only four of eleven countries: Indonesia, Malaysia, the Philippines and Timor-Leste.

Due to its growing rivalry with China, the United States says it wants to build deeper relations with South-East Asia. Yet Thailand, Singapore and Vietnam, with which it has forged significant relationships (some newer than others), didn’t make the cut.

The South-East Asia situation underlines how democracy can mean different things to different people. Regular elections are being held in most countries in the region, but with some increasingly illiberal or manipulated outcomes. This trend may continue over the next year if elections in the Philippines and Malaysia see the return of political forces from their less democratic pasts.

Australia should support the summit, but it should also make the case that democracy in developing countries is best nurtured with grassroots assistance rather than outside pressure.


Asian power

The Indo-Pacific appears to be becoming more bipolar, according to the latest Lowy Institute Asia Power Index. The region’s two superpowers – the United States and China – have remained relatively dominant, while mid-level powers have lost ground.

The key finding of the index is that the United States, under the Biden administration’s more engaged foreign policy, was one of the few countries to increase its overall power in 2021.

Most countries lost power due to the impacts of COVID-19, including China. Despite this, it has managed to maintain its lead over the rest of the region.

One interpretation of these findings is that the relative decline of the United States is not a steady one. Another is that China’s domestic challenges and turn inwards may stymie its trajectory towards clear regional dominance.

But the average changes in the positions of Asian countries over the past four years – as calculated by AFA Weekly from index data – lend weight to a more concerning interpretation.

The countries that might be expected to counterbalance the powers of China and the United States – thus creating a more multipolar region that could manage the superpowers’ rivalry – appear to be losing power. Putting the United States aside, Japan, India, Malaysia, South Korea and Singapore suffered the largest average decline over that period.

Apart from Vietnam, which had the largest average rise, the countries that rose in power – Brunei, Sri Lanka and Nepal – are small and would not play a significant role in a multipolar system.

Australia has backed the growth of a more multipolar Indo-Pacific by supporting the Association of Southeast Asian Nations, focusing on “minilateral” meetings with countries such as India and Indonesia, and participating in the Quadrilateral Security Dialogue, although this also includes the United States.

The trends revealed by the index suggest this sort of work needs to increase if there is any chance of establishing a multipolar system that can manage the US–China rivalry.


Didi leaves NY

Last Friday, Didi Chuxing – China’s equivalent to Uber – said it would switch its stock exchange listing from New York to Hong Kong following pressure from Chinese regulators.

The company was only listed in New York in June, when it raised US$4.4 billion – more capital than any Chinese company has raised in seven years and a rare recent example of positive economic engagement between China and the United States.

The company’s delisting follows a broader crackdown by China on financial technology giants that challenge the power of the Chinese Communist Party and Xi Jinping’s campaign to build a more self-sufficient economy.

A recent report from the US–China Economic and Security Review Commission suggested that the United States should restrict American business investments in response to Chinese restrictions.

However, despite the growing US–China rivalry, many Western investors still want exposure to Chinese consumers and economic growth. It now seems likely they will have to pursue that through Hong Kong.

Recently, Australian governments and businesses have been focused on diversifying trade in order to be less reliant on China, but a natural complementarity between the two economies suggests a significant amount of trade is likely to continue.

This week marks twenty years since China joined the World Trade Organization and reshaped the world economy with its cheap, high-volume exports. Efforts to decouple Chinese and Western capital markets show how much things have changed since then.

 

This is the last AFA Weekly column for this year. Thanks for reading. Next week, we’ll send you the AFA Weekly annual index.

Happy new year.



From AFA13: INDIA RISING?

A free extract from “Seeing China Coming” by James Curran

“If Australia’s engagement with Asia was Paul Keating’s ‘magnificent obsession’, Indonesia was its lodestar. In April 1992, Keating made Jakarta his first international visit as prime minister. He had told Hawke in their contest for the Labor leadership throughout 1991 that the country was more important than Africa or the Commonwealth, and in an interview with journalist Laurie Oakes in the middle of that year he was clear that strengthening ties with Indonesia would be his foreign policy priority.”CONTINUE READING

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Weekly round-up

Biden boycotts Games no one was going to anyway

“While Sports Minister Richard Colbeck initially explored the idea of attending, the hostile political environment and China’s extreme response to the pandemic have made it impossible.” Michael Smith, The Australian Financial Review [$]

Solomon Islands security – blame and breakable gifts after the riots

“Many of those families with Chinese retail businesses that were burnt down in the riots had a loose relation to the state ... They provided an easy scapegoat for the broken trust between Solomon Islands citizens and the government over the unpopular switch in bilateral relations from Taiwan to China in 2019 and the perceived rise in secrecy, corruption and repression of free speech.” Anouk Ride, Australian Outlook (AIIA)

It’s in Australia’s interests to make things right with France

“There is every reason for Australia to seek to reconstruct a strategic direction in which France’s interests and our own are again in alignment.” Stephen Loosley, The Strategist (ASPI)

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Increasingly illiberal Thailand

“The Thai state is increasingly intolerant of dissenting voices. But, instead of ending opposition, the government’s tightening restrictions will drive contrarian voices underground.” Craig Keating, The Interpreter (Lowy Institute)

Discord threatens the Duterte dynasty

“The Duterte dynasty is in disarray. The other influential political clans of the Marcoses and Arroyos have been attempting to reclaim supremacy. But these disagreements may just be an opportune smokescreen.” Makoi Popioco, East Asia Forum

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