Comments on Australia's Strategic Edge in 2030 (2011+)


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Introduction (The Need to do More than  Prepare for the Last Great Battle of WWII + Later indicators of security challenges in Asia) +

Addenda:

 

Introduction

The purpose of this document is to provide preliminary comments and suggestions in relation to a Kokoda Foundation publication by Professor Ross Babbage (Australia's Strategic Edge in 2030 (February 2011) which is referred to here as 'the report').

An outline of the executive summary of that report (and of other issues raised) is presented below, together with comments by other observers.

Overview: In brief the report suggested that China's growing military capabilities pose potential future threats to Australia's security that required fundamental (and costly) changes to Australia's defence planning. Several observers endorsed the importance of considering that issue, though there was both support for and opposition to the conclusions Professor Babbage drew.

The email to Professor Babbage reproduced below, is an overview of the comments in this document. It also noted; (a) the present writer's lack of defence planning expertise; and (b) that these comments are based on efforts to understand the intellectual foundations of 'economic miracles' in recent decades in societies with an ancient Chinese cultural heritage, and are limited to trying to illustrate what needs to be different in dealing with national security issues in 'Asia'  (see also Qualification below).

The Need to do More than Prepare for the Last Great Battle of WWII (email sent 16/2/11)

Professor Ross Babbage,
Kokoda Foundation

I should like to make some preliminary suggestions following your recent report on responding to potentially-major security threats to Australia posed by China’s rising military capacities. Those suggestions are outlined on my web-site in Comments on Australia’s Strategic Edge in 2030.

As I have no expertise in defence planning, my comments are based primarily on attempts to understand the intellectual basis of the ‘economic miracles’ achieved in recent decades by East Asian societies with an ancient Chinese cultural heritage. Moreover they are limited to trying to illustrate the breadth of issues that need to be considered in seeking a strategic edge in ‘Asia’. In that context possibilities (in relation to both the nature of the strategic challenge and appropriate remedies) emerge that are quite different to the ‘hard power’ options normally considered by defence planners. None-the-less considering those possibilities could be a useful exercise – because (even if the particular possibilities suggested don’t stand up to close scrutiny) they illustrate the types of possibilities that need to be considered.

In brief my preliminary suggestions are that:

  • Your report’s conclusion about the need for a whole-of-nation approach to security is sound. Thus the focus of most your report on traditional ‘national security’ capabilities is too narrow. Economic, social, governance and intellectual (ie ‘soft power’) capabilities are arguably even more important in gaining a strategic edge. Analysis of ‘hard power’ options should be used initially to show others what might be needed if ‘soft power’ options fail;
  • The PLA’s build-up described in your report suggests that China expects to be either: (a) attacked by the US; or (b) at risk of being blockaded to deny access to resources. China may fear aggressive reactions to: (a) disruption of the established democratic-capitalist basis of the international order by an emerging neo-Confucian order; and / or (b) belated recognition of how the US’s economy has been ‘attacked’ (and perhaps even how the US may have been deceived);
  • The most effective way to counter the threats posed by the build-up of PLA capabilities is probably to eliminate the motives behind that build-up. This might be achieved by (for example): promoting China’s people’s understanding of their options; increasing ‘Asia literacy’ in the West; and depriving unbalanced / mercantilist systems of socio-political-economy of the current account surpluses that they need for stability;
  • Very large defence cost savings could be achieved in the medium-long term by broadening the concept of ‘national security capabilities’. Most of what is required to ensure a ‘strategic edge’ might be more appropriately described as ‘nation building’ (eg eliminating domestic weaknesses associated with ignorance and ineffectual governance).

I would be interested in your reaction to my speculations.

John Craig

Later indicators of security challenges in Asia:

Japan

There have long been indications of nationalistic fervour in Japan (see Reverting to the Soul of a Samurai?). The latter includes reference to:

China

In March 2012 it was reported that the person who is expected to be China's president next year (Xi Jinping): (a) rejected US president Obama's proposal for a serious dialogue between US and China's armed forces; (b) is seen to tougher, more nationalistic and closer to the military than his predecessor (Hu Jintao); and (c) won't resist those who press for China to be tougher as the US is seen to be heading for inexorable decline [1]

In August 2012 a long term resident in China suggested that since its inception China's Communist Party had sought support from China's people on the basis of a vengeful nationalism.

In November 2012 it was suggested that China's new Politburo was dominated by conservative hardliners, rather than those who might have followed through on the political and economic reforms advocated by China's retiring president (Hu Jintao) .

In January 2013 attention was drawn to ASIO's concern that Australia could be the target of cyber espionage attacks that were believed to originate primarily with the Chinese Government (Joye C., 'ASIO espionage warning', Financial Review, 2-4/1/13)

In March 2013 China's ambassador to Australia outlined China's aspirations for peaceful development in an article that was superficially attractive but also replete with uncertainties because of the cultural issues that are addressed below.

In April 2013 it was suggested that though China's new president has promoted military cooperation with many countries, China's strategic ambitions and poor transparency have not changed. In the 1990s Beijing offered assurances of seeking a peaceful rise, and then from 2010 undermined their own rhetoric with escalating diplomatic incidents. This caused all countries in the region to seek closer security ties with the US and each other. China's defence budgets have increased faster than its GDP for 15 years, and its submarine program indicates that it is not merely interested in promoting regional security. The regional stampede to balance China has caused a 'diplomatic reset' by China's leaders - but its fundamental (expansionist?) objectives have not altered. [1]

In April 2013 attention was also drawn to the nationalistic aspirations expressed by the General Secretary of China's Communist Party - involving a dream of the resurgence of the 'Chinese Race'

After being appointed as party secretary Xi Jinping led Politburo Standing Committee on a tour of the The Road to Rejuvenation exhibition at National Museum in Beijing - and there promised to pursue the 'China dream' (ie the great revival of the Chinese race). The exhibition tells the epic tale of China's decline and dismemberment at the hands of foreign forces and the struggle of the Communist-led people to reclaim their national pride, dignity and power. China is seen to finally be in control of its own destiny after 170 years of struggle (from opium Wars). Modern Chinese leaders have tried to define their leadership through such slogans as the China dream - though achieving the 'Chinese races great rejuvenation' is now seen to be closer. The 'China dream' was originally the title of a book by Liu Mingfu (a PLA colonel) which addressed overcoming American hegemony and assuming global supremacy. It was initially banned, but then republished after Xi's museum visit. Its call for a revival of Spartan, martial spirit echoes the new leaderships crackdown on corruption and lavish living. The military (and its 'princeling generals') are key supporters / advisers of Xi, and China's more assertive foreign policy reflects the moralistic nationalism at the core of his statist vision. The Party's austerity program (outlined in Politburo's 'eight point regulation' aims to improve work styles and resembles the Maoist 'mass line'. In contrast to US approach this argues that China dream is a collective enterprise (ie the China dream asserts that if it is good for the country, its good for the nation and everyone benefits. This continues the cultural tradition of Eastern collectivism which holds that a big / powerful country safeguards the happiness of the people and allows everyone to share in benefits of state development. Individual dreams and state dreams are seen to be mutually related. This raises questions about whose dream matters most - the Party's or the peoples. On the Internet some Chinese dispute the 'China dream'. But others (soldiers and nationalists) embrace the dream. The China dream is a powerful method for grassroots mobilization - but the Party may not have the legitimacy / capacity to control the future. Xi's predecessor had a vision of 'China's peaceful rise'. Xi's 'China dream' may define the next decade or fizzle out. Xi is a relaxed / confident patriot who views his princeling status as mandate to rule. He is clearly different to his predecessor Hu - though both were risk averse - preserving the Communist Party's wealth and power above any other priority [1]

Anti-Western Communist Party documents show that Xi Jinping's presidency is set on a hard line against foreign influences. Officials are required to understand the harm of Western viewpoints, and emphasis the need for China to stand up to the West in becoming rich and strong. Battlefield tactics are expected to be used to defeat liberals and dissidents. China's universities have banned discussion of seven evil subjects: universal values; Western ideas of the freedom of the press; civil society; civic rights; historical mistakes of the Communist Party; crony networks; and judicial independence. China's journalists are not allowed to cite foreign sources in reports. While Xi and others have talked about bold economic reforms, it is clear that political change is not on the agenda [1]

In June 2014 it was plausibly argued that Xi Jinping's reforms had nothing to do with the economic and political liberalization that Western observers had anticipated but rather involved the re-establishment of something like China's ancient Confucian system of governance by bureaucratic elites (see The Resurgence of Ancient Authoritarianism in China)

North Korea

In April 2013 North Korea threatened to attack both South Korea and the US (An Art of War Perspective on North Koera's Threats).

CPDS Comments

CPDS COMMENTS

Broadening the Scope of National Security

The report nominates the rise of China (and the role of the PLA) as the reason for a new approach to ensuring Australia's national security, and is primarily concerned with how the PLAs' military capabilities might be countered. However the nature of security capabilities and their missions that are addressed in the report are too narrow.

Outline. The report suggests (p iii) that national security capabilities would be those concerned with: "assisting recovery from civil disasters, helping to resuscitate fragile countries and regions, contributing to border security, undertaking counterinsurgency campaigns in distant theatres, launching counter-terrorist operations and preparing to fight in the direct defence of Australia".

China's rising influence raises many questions for Australia (see China as the Future of the World - in relation to a 2003 presentation to Australia's federal Parliament by China's President Hu). For example, China seems currently to be characterised by:

  • a rejection of such Western characteristics as universal values, social equality and concern for the welfare and capabilities of individuals;
  • rule, not by law, but rather by the so-called 'Communist' Party (using a variation of the traditional methods of Confucian bureaucratic elites);
  • an economy that is orchestrated through neo-Confucian relationships amongst and with those elites (which has created what is effectively a whole-of-society bureaucracy) - rather than by decentralised profit-oriented decisions within enterprises; and
  • seeking influence elsewhere by creating behind-the-scenes relationships which lock benefited individuals / organisations into subordinate positions in that social hierarchy.

These features became far more obvious as a result of changes put into place by president Xi Jinping in 2013 (see The Resurgence of Ancient Authoritarianism in China).

A broader concept of 'national security capabilities' in particular is thus needed for reasons outlined. These include: the radically different and unfamiliar way in which 'Asia' works; the way strategy is conducted in 'Asia'; the relationship between defence and economic considerations; the need for an 'Asia-literate' assessment to realistically assess China's options and motives; and the existence of other challenges that may require more than a business-as-usual strategic response.

Firstly Understanding is Difficult. A broad approach is needed because even understanding how the dominant societies in East Asia (who have an ancient Chinese cultural heritage) work is challenging. Without such understanding it is impossible to:

  • understand why there has been cultural resistance to Western-style (eg liberal democratic capitalistic) institutions; and
  • plan a meaningful response - because one can not know even what to respond to.

Such understanding seems to be possible if the challenge is looked at from a particular perspective. Moreover doing so provides useful insights into the strengths, weaknesses and potential actions of such societies, which otherwise seem inscrutable (eg see Reading China's Mind?). And, as a primary component in traditional East Asian 'Art of War' strategies involves deception and hopefully preventing others from understanding how an ethnic community actually operates, understanding is, in itself, likely to inhibit deception and thus confer a significant strategic edge.

Brief elaboration: Understanding East Asian societies that lack the West's Judeo-Christian and classical Greek heritage, is not straight forward. Moreover a fair level of 'Asia literacy' is needed before it is even possible to understand why this is so. 

Understanding East Asia requires understanding traditions: 

  • that hold that there is little point in 'understanding' (see Epistemology: The Core Issue in Competing Civilizations and Competing Thought Cultures) - and where the traditional purpose of 'education' was to inculcate behaviours rather than enable students to 'understand';
  • where political power is traditionally wielded through controlling access to information (see China's Bigger Secret). In 2013 it was claimed, for example, that the political department of China's PLA conducts systematic programs to influence / deceive foreign leaders;
  • where the purpose of providing information is not to enable recipients to 'understand' but rather to: (a) avoid direct confrontation; and (b) induce recipients to do things that are expected to be beneficial to the provider's family / ethnic community. Thus verbal or written information provided by insiders is not reliable as a basis for Western-style understanding (but rather has the character of polite conversation / 'politically-correct' propaganda).  And where information provided is not 'true' this does not mean that it has to be viewed as a 'lie' - as others are expected to know that information will be polite / 'politically correct' rather than necessarily factual. Understanding requires looking at what is being done rather than at what is being said or at the 'face' that has been put on. Western observers were arguably unwise in not looking beyond the liberal democratic 'face' that Japan put on after WWII;
  • whose willingness to tell what Western observers would perceive as the 'truth' is also limited by a desire to: 'preserve face'; and work around problems, rather than confront them directly;
  • where insiders (unless Westernised) perceive themselves primarily as part / agents of an hierarchical family / ethnic network rather than as individuals,  and give priority to the interests of those networks over their individual interests or the interests of outsiders with whom they may have social or business relationships;
  • whose traditional 'Art of War' tactics for dealing with powerful outsiders feature deception (ie seeking to mislead them, perhaps as suggested below).
and
  • in which it is likely to be hard to tell: (a) who has the real power (where this depends on connections and access to, and ability to use, information); and thus (b) who can thus reliably say what is being done. For example, 'the oyabun (boss / leader) does not dance on stage' (ie is not obvious) is a traditional Japanese saying. And behind the Emperor (a role that apparently brought more privileges than direct influence), China's Confucian bureaucracy traditionally wielded the real (knowledge-and-connection-based) power. And the inability now of China's leaders to move beyond whatever internal consensus exists (eg in international negotiations) has been noted. Watching what is being done, is likely to be more reliable than listening to what is said by nominal leaders.
  • whose traditional approach to education involves conditioning people to behave in a particular way, rather than to understand. Encouraging Australians to 'do it' without thinking deeply seems to be reflected in:

The assumption that there is little point in seeking abstract 'understanding' has some validity in societies that have not developed the simplified social spaces that make rationality (ie the manipulation of abstract concepts as models of reality) a reasonably effective method for decision making by individuals in Western societies (given features of the latter societies such as individual liberty, a rule of law, capitalism and democracy that make Western societies into the 'realm of the rational / responsible individual' - see Cultural Foundations of Western Strengths). 

Rather than seeking 'understanding', information is traditionally used indirectly to alter individual's behaviour and whole social / economic systems, and power is not associated with making decisions but with the ability to access and use information to constructively affect the thinking and actions of subordinates within an hierarchical social network, and disruptively affect the thinking and actions of outsiders / enemies.  The result is that things tend to be done in practice before 'ideas' are expressed about what this means (which is the reverse of the Western practice). Thus when something is announced, it will be found that whatever is required to make it work is already (more or less) in place.

In an economic context this approach to using information enables 'economic miracles' through stimulating simultaneous and complementary changes in all parts of an economic system (eg under the 'vision development and administrative guidance' that was method originally used by Japan's Ministry of International Trade and Industry to accelerate economic development in the decades following WWII, and similar methods that seem likely to have been used by local officials in China more recently). It does not suffer the limits to central economic planning that apply in Western societies where: (a) the process is distorted by interest group politics; and (b) 'planners' try to make decisions on the basis of their own (overly-simplified) understanding without access to the dispersed information held within the economy itself (see Industry Policy).

A more detailed attempt to provide a basis for understanding the intellectual foundations of societies with an ancient Chinese cultural heritage is in East Asia in Competing Civilizations.  The latter includes an outline of the background to the suggestions outlined here, and suggests amongst other things that such societies can be likened to whole-of-society bureaucracies, where the methods that can allow Western bureaucracies to be effective in managing very complex issues (ie consensus and collegiality) are the basis of the whole society, not simply those components subject to serious market failures.

The need to be aware of different ways of thinking and doing things is suggested in Look at the Forest, not Just at the Trees.

The fundamental source of centuries of resistance to Western influence (which is only comprehensible from an understanding of how East Asian societies traditionally operated) has revolved around the West's primary emphasis on individuals and universal values rather than on ethnic communities / tribes (eg see Cultural Foundations of Western Strengths and compare this with the character of societies that operate on the basis of quite different intellectual traditions - see Epistemology: The Core Issue).

Secondly a broad approach is vital also because there is traditionally no separation in (East) 'Asia' between military / security activities and everything else (eg economic strategy, social relationships and even the activities of organised crime).

Elaboration: In 'Asia' it has been said, ‘everything is the same’ – military, business, social and even criminal linkages are all part of the same strategic process; orchestrated by the same people to have complementary and mutually reinforcing goals (ie traditionally, under Confucianism, the process is orchestrated by bureaucratic elites who are selected on the basis of their excellence in managing information, and thus their ability to influence others’ thinking and actions. And in China since the late 1970s it seems that the so-called 'Communist' Party has taken on this role - a fact that was made much more obvious in 2014 - see The Resurgence of Ancient Authoritarianism in China).

A likely rationale for a Confucian system was presented by Henry Liu in The Abduction of Modernity (2003). Order within the society as a whole (built on the order that exists with families / communities) is seen to be of primary importance. Western societies are seen to be 'barbarians' because weapons were invented and used which enabled common folk to challenge those they should have acknowledged as their aristocratic superiors - a view which was a bit simplistic for reasons suggested in Cultural Foundations of Western Strength: The Realm of the Rational Responsible Individual.

As noted below, the primary goal of 'commercial' success in East Asia appears to involve boosting national power - in a manner like that of the mercantilist strategies that prevailed in Europe in the 18th centuries. Those outsiders engage with in business dealings (or as employers, employees or friends) may be discretely playing a 'Game of Thrones' rather than simply engaged in profit-seeking commerce.

There is also a need to recognise that:

  •  Because of the precedence given to the strength of ethnic communities over the welfare of individuals, outsiders developing relationships in the region need to consider 'what' (rather than 'who') they are developing a relationship with. The 'what' may be good or bad, but its unlikely to be possible to determine which it is simply from interactions with the 'who';
  • organised crime (eg Triads and Yakuza) appears to act as the private armies of ruling elites in enforcing domestic discipline (one claim the present writer recalls reading was that Japan's Yakuza played a role in resolving disputes like that of lawyers in Western societies) and in undertaking clandestine nationalistic operations (see Seagrave S., 'Lords of the Rim' which pointed to Triads' support for China's Diaspora in seeking to exert political and economic influence across SE Asia as an extension of 'China', and The Dark Side). A cultural perspective on this emerged from assertions in October 2013 that the owner of a Chinese company was respected by subordinates as a 'war lord' because of his success in business, politics and the underworld [1]. It is not sufficient merely to collect intelligence about East Asian organised crime groups in relation to their criminal activities.
  • the strategic process might involve providing benefits to individuals and organisations within Australia who are in a position to influence: (a) their networks; or (b) public opinion  (eg see illustration). 

Moreover the essence of traditional 'Art of War' strategy is deception and undermining the capabilities of outsiders, as well as 'winning beforehand' (ie implementing a goal in the real world before it is announced - and hopefully before enemies even suspect it). And in pursuing a goal, one could start by doing something completely unrelated to that goal (so that those looking for problems in that area will see nothing). Consider the Japanese game of Go – in which attacks occur randomly on a large board, and one secures a position by building two interlinked ‘circles’, and then uses this base to move on. Also strategy plays out over VERY long time scales – decades or even centuries – so that others forget about the context in which current events need to be viewed. Extremely long-term strategies might be organised by, for example, recruiting young people to pursue the goals of their elders.  In Japan it is understood that the 'Tale of the 47 Ronin' is the most popular folk story. It concerns masterless samurai who pretended dissolute living for decades in order to gain a chance to avenge themselves on the enemy who killed their master.

The goal of 'Art of War' strategies can be likened to confronting enemies with a situation a bit like that of a spacecraft crossing the 'event horizon' of a large black hole. Initially those in the spacecraft experience nothing different - though the reality is they have passed under the influence of gravitational field so intense that nothing can escape - and by the time they realize that there is a problem it is too hard for anyone to do anything about it.

This is not the way things work in Western societies, but highlights the need for security considerations to cover a broad range of issues (as the report seems to conclude).

In particular there is a need to closely observe what is actually being done, and not be misled into believing that what is said realistically describes what is happening.

Also 'Asia's' traditional (Art of War) approach to strategy primarily involves 'soft power' techniques (ie 'to win without fighting is best' - perhaps by encouraging enemies to become dissolute or make mistakes) and these can't be satisfactorily countered solely or even primarily by 'hard power' (ie military capacity). Those 'Art of War' traditions also emphasise 'winning beforehand' (as well as other tactics that need to be seriously considered).

Under East Asian traditions power in exerted not by the Western method of making decisions on the basis of rational understanding, but rather by control (by highly educated elites) of the information that subordinates use as the basis of decision making (see comment on power and China's Bigger Secret). It was suggested in late 2013 that China was extending such methods into the international arena.

Chinese government is working to ensure a positive image - allegedly partly by using methods of control it has traditionally used at home in other countries. This reflects a multi-layered system for censoring unwanted news and stifling opposing viewpoints. Suggested methods include: direct action (obstructing news gathering / preventing publication and punishing disobedient media); providing carrots / sticks to encourage self-censorship; indirect pressure through satellite firms and foreign governments; and cyber-attacks not directly traceable to China. China Central TV (founded in 1958 mainly for propaganda) has expanded internationally. [1]

In 2014 it seemed that those methods were being used to create a new China-centred international order - ie via the BRICS.

Thirdly a broader approach is needed because there is a parallel economic contest between 'Asia' (notably Japan initially and now also China) and the West (especially the US) which: (a) has features that are poorly understood because of the general lack of strategic Asia-literacy amongst economists, defence planners and others who have struggled to understand what has been going on in terms of often-inapplicable Western concepts such as a rule-of-law, democracy and capitalism; (b) involve non-capitalistic 'commercial' goals that are oriented more to boosting national power, rather than to benefiting citizens (eg as investors / consumers); and (c) clearly impacts on the resources that can be available for military assets - and is thus ultimately likely to be the key strategic consideration.

Elaboration: The system's of socio-political-economy that have emerged across East Asia (and ultimately in China) are variations on the methods that were the basis of Japan's pre-1990s 'economic miracles' (see Understanding East Asia's Neo-Confucian Systems of Soci-political-economy). Those systems have advantages in accelerating economic change through leadership by social elites in economic 'learning'.

However they are macroeconomically-unbalanced in that they require a domestic demand-deficit (which some have labelled a 'savings glut') because national savings are devoted (on the basis of consensus by social elites and their subordinates) to investments aimed at boosting market share / cash flow (rather than seeking profitability for independent enterprises - which is the capitalistic alternative). Under the prevailing Western-style 'capitalistic' / profit focused international order those systems have been vulnerable to financial crises (as shown by the Asian financial crisis of 1997) and their stability has depended on the willingness and ability of trading partners (especially the US) to: provide excess demand; tolerate large current account deficits; and continue increasing debt levels indefinitely. These arrangements arguably constitute a novel form of protectionism that is not recognised due to the inability of Western analysts to conceive of the communal discipline that is needed to allow this to emerge (see Resist Protectionism: A Call that is Decades Too Late); and were a significant factor in the GFC (see Impacting the Global Economy).

Those systems of socio-political-economy are not necessarily 'economically aggressive' (ie intended primarily to weaken others' strategic positions). In one respect they may have been the best economic options available because of cultural constraints (eg see Understanding the Cultural Revolution). Moreover trading partners have a choice as to what effect those methods have. Those methods result in a domestic demand-deficit in 'Asia' and others (eg US) only got into a position of ever increasing debt by being willing to use their domestic economic demand to sustain global growth despite demand-deficits elsewhere. 

However when those systems of socio-political-economy are simply not understood, others make themselves vulnerable (see Babes in the Asian Woods).

Moreover there are indications that those methods may have been intentionally 'economically aggressive' - and that the country that the West perceives as the 'good cop' in East Asia (Japan) may have played a much longer and ultimately more significant clandestine role on the basis of traditional 'Art of War' tactics than China, the country now often perceived as the 'bad cop' (see Coalitions of Interest below)

The most significant of these indications is that Japan adopted a democratic capitalist 'face' after WWII when its political and economic reality was quite different - and the 'dark side' of Japan apparently continued to exert powerful behind-the-scenes influences. Japan's governing Liberal Democratic Party in the post-WWII era was neither liberal, nor 'democratic' in a Western sense. Autocratic power in government resided with the bureaucracy (a Confucian tradition) and the LDP comprised representatives of virtually all influential groups so that consultations were held within the Party, resulting in consensus, rather than through debate in the public domain (a practice which in 2011 appears to be being considered in China as the means to give effect to top-level proposals to allow 'democracy').

Japan's post-WWII economic model has been suggested (by a close observer) to have originated with the Japanese military in Manchuria in the 1930s (a contention which the present writer has no basis for assessing). The multi-$bn 'slush fund' for Japan's Ministry of International Trade and Industry (whose role was to orchestrate accelerated economic learning through an apolitical strategic management process - ' vision development and administrative guidance', in fact traditional Confucian methods) was held by Ryochi Sasakawa: (a) a suspected Class A War criminal in 1945; (b) a notorious ultranationalist with strong influence over Japan's Yakuza gangs; and a vocal admirer of Admiral Yamomoto. Yamomoto had not only led Japan's raid against Pearl Harbour and and push south in Asia towards Australia, but also apparently argued that Japan could not win a 'war' against the US. In this regard, consider:

  • In an account of the campaign against Japanese forces in Burma in WWII [which the present writer can no longer locate], Sir William Slim noted the tactical advantage that his forces had because of their ability to make quick decentralised decisions, where his Japanese opponents were much slower to do so because of  their 'consult with everyone' approach to making decisions. The latter is useful in mobilizing an entire community for long term strategy, but not in short-term military operations;
  • The existence of a strong social hierarchy also seems to prevent timely responses to unforeseeable potential disasters;

In Outliers Malcolm Gladwell suggested that planes crash after a common sequence of minor issues (eg slightly bad weather, a touch behind schedule, a tired pilot) but that the primary cause is the breakdown in communication amongst the flight crew. Moreover a high Power Distance Index (PDI) compounds this failure to communicate. 'Power distance is concerned with attitudes with hierarchy, specifically how much a particular culture values and respects authority.' Between 1988 and 1998, Gladwell noted, Korea Air had a crash rate seventeen times higher than a comparable airline such as US carrier United Airlines. Cockpit crew were too polite to question the authority figure directly when they noticed something wrong. When they tried to express a level of dissent, they did it cloaked in polite language. The 'black box' recording of a Korean Air crash in Guam demonstrated how politeness can be deadly. A subordinate to the captain hints there is a problem. The pilot hints back he is on top of it. The subordinate hints a little stronger that perhaps the problem might command more of the captain's attention. The captain misses the hint again and hints back he has it all under control. Eventually the subordinate got to the point - and tried to save the plane, but it hit a mountain before his action mattered. The US is not a classless society, but no cultural respect for authority rules American behaviour. This rebelliousness turns out to be an asset. The cause of most airline crashes is not mechanical but cultural (ie an inability to get the message through when things are going wrong), 

  • There is a radical difference between the Western approach to 'war' (which Japan had apparently adopted in seeking to expand its influence prior to 1945) and traditional East Asian 'Art of War' tactics - which involve an emphasis on deception and on 'soft power' / non-military tactics in order to (hopefully) 'win beforehand'.

A Japanese-led contest for control of the global financial system has now apparently been underway for decades though it has been invisible to Asia-illiterate Western observers, though it has possibly had spin-offs that have had significant effects on the world's political and economic history (eg see An Unrecognised Clash of Financial Systems and Focusing on Japan and the GFC).

Furthermore Japan would have to have realised that its financial systems were incompatible with internationally accepted financial / economic arrangements (and required trading partners to continually incur increasing debts) well before 1990, and yet said very little. Reference to Japan as a non-capitalist market economy (by Eisuke Sakikabara, Japan's 'Mr Yen') was as close as Japan went to alerting others (and he did not explain the consequences any more than Western observers understood what he was talking about).  And Japan subsequently provided behind-the scenes encouragement to the US Federal Reserve to ease monetary policy excessively and dangerously (as evidenced by Alan Greenspan's frequent reference to the need to ease policy to avoid the risk of deflation, a risk that Japan faced but the US did not). 

From the point of view of defence planning the economic contest is critically important because: (a) the US’s economic capacity to support its military capabilities (which are overstretched) is likely to be severely constrained as a result of the ever increasing debt levels that are needed to sustain growth in the face of demand deficits elsewhere; and (b) the PLA’s build up (supported by China's rapid growth) is being effective in eroding US capacity to deploy forces in the region.

The fact that Japan has reportedly acquired a strategic position in the production of many components that are vital for a modern economy (and that the US's capacity to operate independently no longer exists) should also be noted [1]

In fact the economic contest is arguably the most important strategic consideration. It was, after all, the failure of the Soviet economic model (rather than military defeat) that brought an end to the Cold War. And, as suggested below, the nature of the economic contest needs to be recognised in order to understand likely motives for the PLA build-up.

The US Federal Reserve has apparently started trying to counteract mercantilist economic strategies - through quantitative easing that is likely to stimulate 'carry-trades' into emerging economies and thus boost their asset values and demand levels - ie to 'do unto others as others have long done to the US' (see Currency War).  While the US has also started talking about an unwillingness to permanently be the 'consumer of last resort' (see US Backing Away from Bretton Woods) and the US president has called for new emphasis on innovation to strengthen the US economy, this is unlikely to be sufficient unless measures to accelerate system-wide economic learning (which are equivalent at the level of industry clusters to innovation within enterprises) are put in place that could work in a democratic environment (eg as suggested in an Australian context in A Case for Innovative Economic Leadership). Those methods potentially provide much stronger support to individuals and enterprises in addressing new opportunities and should also provide scope for faster discovery of commercially relevant solutions to social and environmental challenges.

Fourthly, the scenarios about China’s future that are outlined in the report (p9-10) are inadequate because they do not reflect an Asia-literate interpretation of options that are available to China (concerning which China's Development: Assessing the Implications attempts, undoubtedly inadequately, to paint a picture). 

Not only are China's strengths not understood without an Asia-literate view of strategy, but so also are weaknesses which might cause the wheels to fall off China's economic or political wagons (eg see Heading for a Crash?). There are many dimensions of potential weakness, of which the most critical is dependence on the willingness and ability of trading partners to sustain ongoing current account deficits (and thus increasing debts). And, even if this could be overcome, a more fundamental constraint involves the lack of feedback from consumers to producers which was the reason that 18th century mercantilist economic models failed in the face of capitalistic alternatives which did benefit from that feedback (see Balancing Supply and Demand).

Fifthly, discerning China’s motives in developing the PLA’s capabilities requires attempting to understand what is going on from an 'Asian' point of view. The build up described in the report suggests that China expects that over the next decade it will either be: (a) attacked directly by the US using state of art weapons (or perhaps nuclear weapons); or (b) at risk of losing access to natural resources (as Japan was in the 1930s), so that there is a need to launch expeditionary forces to ensure access to key resources. Under the latter scenario Australia would clearly be a key target, as it was in WWII.

More particularly, there is a need to consider why China might expect to be either attacked or blockaded. Possible motives that can't be discerned from a conventional viewpoint are that a violent reaction (especially from the US) may be feared to:

  • the growing visibility and influence of a new neo-Confucian international order which can be expected to disrupt the global order based on Western-style democratic capitalist principles that the US has underpinned since WWII. This could be an updated version of Japan’s ‘Asian Co-prosperity Sphere’ perhaps organised in something like the way China maintained an international order prior to the expansion of Western influence (see  Creating a new Confucian Economic World?)
  • belated understanding of the unbalanced mercantilist systems of socio-political-economy by which the US's economic strength has been challenged (and perhaps even discovery that the US has been deceived by Japan - an ally who might have played a double game as suggested below).

Finally it is noted that the PLA's rising power is not the only significant factor that is likely to disrupt 'more of the same' security strategies. Though the present writer has not studied the way they have been taken into account in prior work, it is noted that a 'business as usual' approach could be disrupted by:

In anticipating what the world / region will be like in 2030 (or 2040), it is not sufficient to simply project current trends as the report tended to do.

The report concludes that there is a need for: ‘mastery of strategy at the highest strategic level’; 'a culture of whole-of-nation national security’; and ‘fostering exceptional military and civilian leadership’ (pp x-xi).

However in suggesting this the report seems to be limiting its proposals to traditional 'national security' functions (eg diplomacy, military capabilities). However what is arguably needed is for those involved in traditional 'national security' functions to help others with knowledge and skills relevant to social, economic, governance and educational functions to realize that: (a) what they are doing has national security implications; and (b) if they are not successful than major national security threats will emerge, requiring costly and complex 'hard power' responses.

A case for a broader concept of 'national security capabilities' can also be made in relation to the threats posed by Islamist extremists - where national security could probably be promoted more quickly, effectively and cheaply by discrediting the ideologies of the spiritual leaders of those who advocate terrorism (see Discouraging Pointless Extremism).  This mainly requires initiative in the academy, rather than on the battlefield.  More generally a case can be made that much of the potential for conflict in the world arises as a result of failure to seriously consider the consequences of differences in cultural assumptions (see Competing Civilizations). The greatest potential to boost Australia national security probably lies in motivating university humanities and social science faculties to pursue such issues.

Coalitions of Interests?

To state the obvious, the PLA’s increasing military capacity is primarily a consequence of China’s economic growth. Large sums are made available by China’s government to the PLA, and the report suggests that these are being spent in ways that would constrain US military activities in the Western Pacific.

There is in fact a sense in which China's goals in developing it’s economy seem to be: firstly to finance the PLA's modernisation and expansion; secondly to boost the position of those with linkages to the so-called 'Communist Party'; and only lastly to improve the welfare of China's people. It can be noted that the PLA's resources are increasing either a bit, or a lot, faster than China's GDP (depending on which data are relied upon), and the share of GDP flowing to households remains quite low (except for those with 'Communist Party' connections some of whom have become extremely wealthy).

It can also be noted that, while this is a matter beyond the present writer's knowledge, a pro-China western resident has suggested that since its inception the Chinese Communist Party has  encouraged China's people to feel aggrieved about what has been done to them and presents itself to, and seeks support from, them as the instrument of vengeance.  

Moreover, while the present writer has little knowledge of China's political factions, it seems that China’s economic development is likely to be being led by traditionally ‘commercially-oriented’ groups with strong southern China (and offshore Chinese) links. Those groups were arguably the most suppressed under Mao. After his death they perhaps entered into a 'deal' with the PLA (who were presumably the stabilizing influence in the post-Mao era). The bargain may have been that the commercially oriented groups would be allowed to control the 'Communist Party' (and thus China's Government) in order to implement a modified version of the model of socio-political-economy that Japan had pioneered, providing this produced the resources needed for a military build-up which the PLA had desperately wanted to fight the Cold War when China was in the grip of Mao's version of Communism.

The report suggested (p30) that the PLA is showing thinking similar to the Japanese Imperial Army in preparation for Pearl Harbour. This may be no coincidence, because there is a plausible basis for suspecting (though no certainty) that China may have entered into a coalition arrangement with Japan in the 1970s on the basis of their shared interests (ie China's efforts to find an alternative to democratic capitalism through Communism, and Japan's efforts to create a Neo-Confucian order which apparently offered a path to economic prosperity without democratic capitalism). If so, then the PLA may now in effect be ‘Japan’s army’, and the potential conflict with the US and its allies that could emerge might well be viewed as ‘the last great battle of WWII’.

 Broader Resistance to Western Influence?: The PLA is probably not Australia's only security challenge. It would be wise to consider what has been happening in China (especially what has happened since the late 1970s) in the context of a much earlier resistance to Western influence over recent centuries that has been led by Japan (ie by Japan's ultranationalists and bureaucratic elite, who at least until the 1980s, remained very influential perhaps because they operated in at least some respects under an imperial mandate like that under which East Asia had been administered for centuries prior to Western expansion).

The possibility that a truly 'new' Japan has been created as a result of its disastrous economic experience since the early 1990s also needs serious consideration.

Good Cop - Bad Cop?

Ross Babbage's report focused on China, yet it is possible (though not certain) that Japan is also a major (perhaps the major) player doing a ‘good cop’ routine, while China plays the ‘bad cop’ (eg see Japan’s Predicament). The latter focuses on post-1990 developments yet it is worth recognising that:

  • Japan (like other nations in East Asia) has a cultural tradition that is radically incompatible with Western systems in terms of the nature of knowledge; power; governance; strategy; and economic methods / goals) - see East Asia: The Realm of the Autocratic, Hierarchical and Intuitive Ethnic Group?.  Problem solving in Western societies depends on the use of abstract concepts – and social, political and economic institutions exist that allow abstract concepts (such as universal values, truth, law, profitability) to be effective in problem solving because of Western society's Judeo-Christian and classical Greek cultural heritage. Those 'liberal' institutions (which are based on the notion that people are individuals rather than parts of a 'tribe') furthermore depend on the presumption that widespread Christian adherence provides that ethical behaviour are most appropriately assured by individual consciences responsible to God - rather than requiring family, communal or state coercion   (see Cultural Foundations of Western Progress: The Realm of the Rational / Responsible Individual). This is anything but the case in societies with an ancient Chinese cultural heritage. Key issues are the absence of any belief in, or reliance on, the use of abstract concepts in East Asian thought and the presumption that compliance with others' expectations (rather than independent decisions) is required for ethically-satisfactory behaviour. As a consequence such societies traditionally lacked social, political and economic institutions in which abstracts (eg individual rationality or profitability) could be used reasonably reliably. Emphasis was rather placed on consensus within an hierarchical ethnic community - with members of those communities subject to community pressure to play their part in that consensus without individually seeking to 'understand' it. Also information was traditionally used primarily by a society's elites as something like propaganda to influence the behaviour of their associates, subordinates and enemies rather to boost their understanding - this being the same way information is used in East Asian 'education'. Notions such as universal values, equality under a rule of law, and concern for the welfare and capabilities of individuals had no part in those traditions;
  • When nations in East Asia have opened to international trade and been successful – some variation of the traditional methods whereby those countries functioned in the centuries prior to Western expansion were part of the process. There was arguably no alternative because of the lack of the cultural preconditions that liberal Western-style institutions required (eg see reasons suggested in Understanding the Cultural Revolution Needed to Adapt to Western Financial Systems, 1998);
  • After Japan had been forced to open to Western influences by Commander Perry from the United States, the ruling Shoguns were displaced in favour of renewed Imperial rule to resist Western influences. The Meiji Restoration was forced by the Yakuza (Japan's organised crime groups) presumably because their traditional respected social role (eg as enforcers of social discipline on behalf of the ruling regime) would be disrupted under the rule of law that Western influences sought to promote;
  • Japan then moved heaven and earth to resist Western expansion (including playing a major role in WWII).  One of Japan's main tactics in the 1930s and 1940s was to seek to gain military control of China (which Japan portrayed at the time as 'Japan's big brother') to add weight to Japan’s effort to create an 'Asian Co-prosperity Sphere';
  • ultranationalist factions (with strong Yakuza links) who pursue themes of racial / cultural superiority have continued to play, an influential role in Japan while hidden in the shadows (see The Dark Side of Japan). The latter referred to:
    • reports of ongoing insistence on Japan's uniqueness and superiority in Japanese universities in the 1980s [an emphasis which the present writer has never seen any reference to being eliminated];
    • the reported popularity of the 'Tale of the 47 Ronin' - which concerns masterless samurai who pretend dissolute living for decades to gain an opportunity to kill their dead master's enemy;
    • the lack of any sense of universal ethics - obligations exist only to those to whom one has a relationship;
    • the need to consider the nature of traditional East Asian Art of War strategies (eg their emphasis on deception; getting close to enemies (which discourages them from looking at what is going on behind the scenes); holding up a 'mirror' so that when others look they see a reflection of themselves);
    • Japan's post-WWII mercantilist economy strategy (ie one concerned with building national economic power, rather than creating opportunities for citizens as as investors / consumers) - and the apparent involvement of ultranationalist / Yakuza factions (presumably empowered by an Imperial mandate) in funding special economic development projects for the Ministry of International Trade and Industry and in coordinating government / business relationships;
    • the apparent expression of support for Japan's 1930's militarism and ultranationalist agenda's at the top levels of Japanese government that has continued to the present - combined with an executive reinterpretation in 2014 of Japan's war-renouncing constitution to reverse its intent;

An aside: if one goes to the Peace Memorial in Hiroshima and looks at the translation of the reasons that it is believed that the US chose to bomb Hiroshima, the preferred reason is that this was an opportunity to experiment with the effect of nuclear weapons on a previously undamaged city (ie the fact that Hiroshima was the HQ of the Japanese 5th Army which had rampaged across Asia was apparently considered to be of secondary importance). The memorial in Hiroshima may not be to Peace.

  • Admiral Yamamoto (who commanded Japan's attack on Pearl Harbour and planned an invasion of Australia) reportedly believed that Japan could not win a war against the West (in relation to which observations about the limitations that wide consultation imposes on field initiative may be noted);
  • In the post-WWII era, Japan was governed by a (so called) Liberal Democratic Party. While this appealed to US sentiments, Japan’s government was neither liberal nor democratic (see above). Japan was (for reasons suggested below) governed from 1945 (behind a democratic 'face' that allowed elected politicians many benefits) by its bureaucracy - presumably operating under some sort of imperial mandate. This was likely to have included many of the same bureaucrats who had stimulated Japan’s militaristic expansion in the 1930s (see why this was likely). Occupation forces eliminated Japan's more obvious militarists - without apparently considering that they might be the symptom, rather than the source, of influences that were centred elsewhere (eg in the 'belly' of Japan whose consensual conclusions traditionally give direction to bureaucratic elites and were influenced by the ultranationalist Yakuza - who (as the accepted enforcers of social discipline on behalf of the imperial system they had created at the time of the Meiji restoration) had a great deal of influence at, and spoke for, the grass-roots of Japanese society). Japan's post-WWII arrangements could be explained by assuming that ultranationalist / Yakuza influences orchestrated a 'new' Meiji-like (but behind-the-scenes) restoration of imperial authority (as they would presumably have seen Japan's defeat in WWII as like the situation Japan faced after the Shoguns had proven unable to resist Western influence);
  • Japan’s post-war economic miracles were achieve through a variation of the Confucian methods of bureaucratic governance on behalf of emperors by which much of Asia had been governed prior to Western expansion (see Understanding East Asia Neo-Confucian Systems of Socio-Political Economy). This included bureaucratic guidance by Japan's Ministry of International Trade and Industry in accelerating market-oriented economic learning (a process that would not work in a truly democratic / interest-group-focused environment - see Economic Solutions are Beyond Politics, 1996), supported by a bureaucratically controlled banking system which provided funding to increase national economic strength but little regard to profitability. These methods have parallels with the way in which governments finance wars by selling war bonds and leads to / requires the favourable international financial imbalances that contributed to the GFC (see Impacting the Global Economy). For decades before China had any significant role, Japan's economy had  involved mercantilist distortion of its financial system like that that emerged later in China as the basis for friction with US related to trade and financial imbalances (eg see Mikuni's Why Japan can't deregulate its financial system, 2000). And, as seems normal in East Asia, there was no such thing as a market that was free of a nationalistic political agenda (see In East Asia Deals Always Involve Politics);
  • there are hints that the system of socio-political economy that allowed Japan's economic miracle was orchestrated behind the scenes by Japan's ultranationalist factions. For example:
    • Eammon Fingleton suggested (on what evidentiary basis is unknown) that Japan's post-war economic methods had been developed by Japan's military in Manchuria in the 1930s. He also suggested that Japan encouraged the use of those methods by various societies in East Asia with compatible cultures - ultimately including China in the late 1970s; and
    • funding for special projects by Japan's Ministry of International Trade and Industry (which took the lead in stimulating accelerated economic development) was apparently provided by Ryochi Sasakawa - reportedly a notorious: ultranationalist / Yakuza boss; suspected war criminal who had worked with Yakuza organizations building infrastructure in Manchuria in the 1930s to facilitate Japan's invasion; outspoken admirer of Admiral Yamamoto (who had led Japan's attack on Pearl Harbour and military expansion into Asia); and top-level post-WWII 'kuromaku' (ie facilitator of relationships amongst Japan's government, business and ultranationalist faction) - a top-level fixer role which in Japan presumably implied that he had gained a mandate from Emperor Hirohito (see The Dark Side of Japan in Australia? below).
  • In the 1970s and 1980s there was a vigorous (virulent?) economic competition between the US and Japan (who was clearly seeking to become No1 economically). However 'the wheels fell off' in the late 1980s when the Japan's distorted financial system collapsed under the strain of trying to win economically;
  • the incompatibility between the Western-style international financial systems and the non-capitalistic financial system that had been a component of Japan's economic 'miracle' in the decades after WWII led to increasing tensions and problems in the global financial system from the 1970s (see A Generally Unrecognised Financial War?) - though the significance of these was not understood because the neo-Confucian foundations of Japan's system of socio-political-economy were kept hidden. Ultimately however those incompatibilities became a serious obstacle to global economic growth - because financial repression to protect the suspect balance sheets of financial institutions under neo-Confucian systems meant that global growth could only be sustained if their trading partners were willing and able to tolerate large current account deficits and rapidly rising public and private debts (see Structural Incompatibility Puts Global Growth at Risk, 2003+);
  • In 1989 observers with a sympathetic anthropological orientation suggested that Japan had maintained its traditional culture and ways of doing things virtually unchanged despite being exposed to western influences;

"Japan has adjusted so well to Western influence that it has beaten others at their own game. Despite its initial mistake of emulating the colonial powers, Japan changed and adapted rapidly. However Japan remains the same on the inside as it has been for thousands of years. It is run according to a jealously-guarded set of concepts that Japan defends from any contamination. More than any other Pacific people, Japanese have retained their original culture and distinctive way of doing things. Many people and cultural influences came to Japan from China - though Japan's isolation allowed them to take their own distinctive form" (Thorpe A., and Raymond R., 'Man on the Rim', Angus and Robertson, 1989)

A 'New' Japan?

A case was made in 2014 that Japan had fundamentally altered and embraced a truly liberal democratic system of political economy. 

The standing ovation that Japan’s Prime Minister, Shinzo Abe, gained from Australia’s parliament in 2014 will generate some resentment in China. China overtook Japan as Australia’s largest trading partner in 2007 – but Australia’s prime minister sees Japan and Australia’s ‘best friend in Asia’. Japan will be Asia’s most advanced / capable economy for decades – and is more important than China is in supplying capital and exporting innovations. It has a larger middle class and domestic consumption level. And Japan’s armed forces are still more than a match for China’s. As China’s power grows, its regional impact will depend on how it is governed. Japan’s political evolution and successful rise since WWII will provide an example of why liberal democracy remains the best option in Asia. Some see liberal democracy as a Western construction unsuitable in Confucian societies. But robust democracies in Taiwan, South Korea and Japan disprove this – in addition to democratic yearnings in Singapore and Hong Kong. Neither Confucian values nor ‘Chinese-ness’ are incompatible with liberal-democratic political reform. On the contrary Confucian societies – with their emphasis on social order, filial loyalty, learning and hard work – that pursued democratic reforms are the richest in Asia. In Japan a well-functioning multi-party system took time to take hold. However Japanese government put liberal institutions in place that have worked well. After WWII election laws were relaxed to allow universal suffrage. Freedom of association and unions were permitted. Peasants were given genuine land ownership. The dominance and power of the pre-war Zaibatsus (industrial and financial conglomerates linked with the imperial government – were wound back. A private sector was allowed to thrive and drive economic activity and innovation. Powerful economic classes independent of the government for opportunities and successes emerged. These conditions allow liberal democracy to thrive – a lesson for the Chinese Communist Party. In China the state has increased while the private sector retreated from the mid 1990s. Prior to that private initiative had driven economic growth in China. Sine mid-1990s SOE have driven economic activity – which prevented the emergence of a powerful economic / entrepreneurial class independent of government. SOE’s role in China now exceeds that in Japan at any time. China’s problem is that (except for oil-rich Middle Eastern states) the 30 countries that went from middle-income to high income status have adopted the same liberal economic and democratic political institutions. But China’s political class knows that this would undermine authoritarian politics. This affects future order in Asia – because the liberal order that underpins Australia’s past, current and future prosperity demands that private commercial and economic interest be separated from political, strategic or regime interest. Great powers must forfeit their capacity to engineer economic outcomes – and instead facilitate legitimate competition. Submission to the rule of law is not natural for any government – but is practised and entrenched in free markets overseen by liberal democracies, accountable to the law and people – but much less so in state-led economic and authoritarian systems. China argues that every country should determine its own pace of economic and political reform. However China is the authoritarian extreme in a region where every other major country has become a liberal democracy. Australia’s decision to move closer to Japan mirrors that in every maritime country in Asia. Australia is moving with, rather than against the crowd. It is to be hoped that Japan inspires the future blueprint for China.  (Lee J. ‘Abbott right to push for closer ties with Tokyo’, The Australian, 9/7/14)

While the emergence of a truly 'new' Japan would be a very welcome development, there are some reasons for caution. These suggest the need to look behind the increasingly liberal 'face' that Japan has presented to the world to determine whether it reflects what is really happening.

Reasons for caution include: 

  • the deception involved in Japan's post-WWII pretense of a liberal democratic system (see above). Japan's bureaucracy orchestrated market-oriented economic 'miracles' using a variation of traditional Confucian methods of government. It could only have done this under a mandate from Emperor Hirohito. Economic 'miracles' can be achieved by what might be called 'strategic market management' which involve stimulating market-oriented learning by whole economic systems (eg by methods suggested in Developing a Regional Industry Cluster). However this can not work where the process is subject to democratic (ie interest group sensitive) oversight. Accelerating market-oriented economic change would have been impossible in Japan if the bureaucracy were actually accountable to a democratic (and thus interest-group-focused) government (see Economic Solutions Appear to be Beyond Politics). A notorious ultranationalist / war criminal facilitated behind-the-scenes relationships between Japan's government, business and ultranationalist - while controlling a huge slush fund from gambling on speed-boat racing for use on special economic projects. Again this could only have been possible under a mandate from Emperor Hirohito. There has been no subsequent transparency from Japan about that likely deception;
  • the massive cultural obstacles to the genuine adoption of the sort of liberal democratic arrangements that the above article suggests have been put in place since 1990 (eg see Understanding the Cultural revolution Needed in East Asia to Adapt to Western Financial Systems, 1998 and Competing Civilizations, 2001). For example:
    •  a rule of law (along with other liberal Western-style institutions) creates a framework within which responsible individuals can make decisions on the basis of a rational understanding of their environment without having to second-guess the reactions of the powerful. Traditional Japanese culture distrusts 'understanding' (because liberal social institutions in which rationality might work reliably have not been created) and relies instead on consensus within an ethnic hierarchy.
    • The essence of Confucianism involves a rejection of the concept of universally-applicable laws governing individual's behaviour. Confucian obligations to others depend on who they are and how one is related to them;
  • the difficulties that Western observers' have in gaining 'understanding in East Asia, eg because there is no reliance on 'understanding' and information is traditionally provided to influence others' behaviours rather than to enable them to 'understand' (see Why Understanding is Difficult);
  • the emphasis that traditional Art of War tactics place on deception and (for example) 'holding up a mirror' so that when others look at you they see a reflection of themselves; 
  • Japan’s response in the 1990s to the financial crisis that emerged in about 1989. Japan's financial system was not reformed. Doing so would have caused its (presumably imperially-mandated?) bureaucratic elites to lose their power to allocate resources in what their business subordinates perceived by consensus to be the national interest - and also perhaps cause Japan's economy to collapse altogether. Rather Japan:
    • indicated an intent to 'internationalize' - which could imply: (a) changing Japan domestically to conform with dominant international practices; or (b) seeking (behind the scenes) to create a world more compatible with Japan's domestic practices; or (c) a bit of both;
    • created massive amounts of credit at near zero interest and spent heavily on infrastructure (including 'bridges to nowhere') and exported credit to the world through carry trades (because Japan's distorted financial system directed credit only to production and not to consumption - thereby preventing the availability of cheap credit from increasing domestic demand). The carry trades had the effect of  enabling Japan's export-led growth to continue to some extent by stimulating asset bubbles and excess demand elsewhere - particularly in the US. This process and the adoption across Asia of variations of the methods Japan had used to achieve 'economic miracles' contributed (presumably inadvertently) to the Asian financial crisis of 1997 and ultimately to the global financial crisis of 2008;
    • became the US’s new best friend in Asia. ‘Getting close to ones enemies’ (which discourages them from looking closely at what is happening behind the scenes) is a classic Art of War strategy. In the 1980s analyses of the 'dark side' of Japan were frequently published - but this virtually ceased in the 1990s; and
    • encouraged the US Federal Reserve to adopt easy money policies. US Fed chairman, Alan Greenspan, frequently argued the need to easy money policies to overcome the 'risk of deflation' - which was a risk that Japan faced, but that the US did not. The consequence for the US of adopting the role of 'consumer of last resort' when trading partners adopted repressive financial systems (ie directed credit into production but not into consumption so as to ensure favourable international financial imbalances) was that the US built up large debts and eventually created the asset bubbles that triggered the global financial crisis (see Impacting the Global Economy). The US Federal Reserve eventually started copying the process of creating huge quantities of credit and exporting it to the world (perhaps 'to do unto others as others had been doing to the US'??) and this further increased global reliance on demand stimulated by asset bubbles (see Currency War);
  • recent indications that Japan's financial and business dealings remain incompatible with a liberal market economy;  
  • Japan's renewed risk in 2014 of a financial crisis (similar to that which China faces) because of the concealed bad-debts of its non-capitalistic financial system and the heavy government debts that have been needed to sustain growth over the past 2 decades (see Japan's Predicament). This could potentially create social and political instability like that that resulted from the Great Depression, and motivated / permitted Japan's militarists to seize power in the 1930s;
  • the uncertainty about the position that Japan's prime minister (Shinzo Abe) takes. He is often seen to have militaristic and ultranationalist leanings (eg he: presented Japan's WWII actions in Asia as part of a 'great cause' (ie to liberate Asia from Western colonisation and imperialism); encouraged the production of text books to present that view to Japanese youth; shouted 'banzai' ('Long live the Emperor') at a ceremony to mark the end of US occupation of Japan; upset neighbouring states by visiting the Yasukuni Shrine which is seen as an ultra nationalistic theme park); and praised Japan's WWII war criminals for sacrificing their souls to create the foundations of Japan. Observers have different opinions (both of which are possible) about whether such actions are mainly to gain the support of nationalists in Japan or to lead Japan again down the path of militarism and ultranationalism.

In order to determine whether Japan's 'new' face reflects the underlying reality it would be desirable to (say):

  • consider the content of material in Japan's universities by translating text books - noting the reported emphasis on racial and cultural uniqueness and superiority in the 1980s.  The reported support by Japan's prime minister (Shinzo Abe) for a new school text book which puts a 'noble cause' interpretation on Japan's militarism in the 1930s and 1940s needs consideration in that context;
  • examine the role of Japan's bureaucracies - ie are they now genuinely responsible to the people's elected representative or do they continue to govern Japan in collaboration with ultranationalist factions operating under Imperial mandate as appears to have been the case prior to the 1990s;
  • investigate whether undisclosed activities by such groups to achieve ultra nationalistic aspirations (such as those speculated below in Other Possibilities)  might still affecting international affairs - for reasons suggested in Look at the Forest Not at the Trees. Analyses of the 'dark side' of Japan were frequently published in the 1980s - but this ceased in the 1990s either because the 'dark side' had been suppressed domestically in Japan or because no one thought it still needed to be investigated;
  • seek feedback about the reality of a 'new' Japan from within East Asia - while making allowance for the region's chronic distrust of Japan as a bye-product of its history.

Other Possibilities

Some possibilities (which are by no means certainties) that could be examined to determine the realism of Japan's 'new' image include:

  • Japan (or someone) may have initiated steps that could allow control of China. Japan’s tactic for gaining control of China in the 1930s involved seizing the Emperor – in the expectation that this institution (which epitomised spiritual leadership in Japan itself) could command allegiance in China. In the early 1990s (soon after Japan internationalised its strategy) a new religion emerged in China, Falun Gong, which Chinese authorities have vigorously sought to stamp out – allegedly because it endorses restoration of Imperial rule in China (according to an apparently 'with-it' Chinese guide on a tour of Beijing in 2004). That outcome (which corresponds with Japan's preferred system) could have some appeal in China’s people because of the corruption and wealth mal-distribution associated with the (so-called) 'Communist' regime. Falun Gong is apparently like some earlier spiritual movements in China, which have at times been associated with revolution. The possibility that Falun Gong could be a ‘stalking horse’ which could be used at some time in an attempt to gain direct control in China by restoring imperial rule should neither be ignored nor assumed to be certain;
  • Islamist extremists might (or might not) have been encouraged by Japan’s bureaucracy and ultranationalists to attack the US partly to divert attention from the clash of financial systems which potentially was far more significant (eg see Eurocentric Aspirations in a World of Rising 'Asian' Influence). Reasons to suspect that this could be possible were outlined in Attacking the Global Financial System? (2001).
Examples: The latter noted, for example:
  • The potential mutual interest of Japan’s ultranationalists and Islamists in eroding the effectiveness of the prevailing international order based on Western-style democratic capitalist principles, and thus facilitating a return to power by traditional social elites  (though the nature and aspirations of +those elites would be different) by removing democratic accountability to an electorate comprising 'everyman' and the need under capitalism to use national resources primarily to meet the demands of citizens as consumers;
  • in an early video which rationalised Islamist attacks on the US, Bin Laden referred to the WWII US nuclear attack on Japan as one justification. This is an agenda of Japan’s ultranationalists, and in each other instance the justifications that Bin Laden alluded to apparently reflected the agenda of some group that Al Qaida had been negotiating with.
  • North Korea's threats to attack both South Korea and the US in 2013 might (or might not) be part of a larger agenda in which others have been involved (see 'Art of War' Speculations about North Korea's Threats). For example, both North Korea's threats and the ‘friction’ / sabre-rattling between Japan and China that had been emerging for a few years might (or might not) have been intended to justify both Japan and China increasing their military capabilities. Moreover the nationalist rhetoric that is emerging increasingly from Japan's leaders - including attempts to justify Japan's colonisation of Korea and invasion of China as part of a 'noble cause' parallels nationalistic rhetoric from the secretary of China's Communist Party about the 'Great Chinese Race' (which is the same supposed 'Han' race that nationalists in Japan and North Korea claim allegiance to). However it is also possible that the Japan / China friction is real, and reflects (say) Japanese concerns about the implications of China's rising economic and military power given a potential Chinese ambition to gain vengeance for injuries Japan inflicted prior to and during WWII (or for the political and economic difficulties arguably generated in China by its adoption of a variation of the neo-Confucian methods that had been the basis of Japans' pre-1990s' 'economic 'miracle');
  • changes in Australia in recent decades have significantly undermined its ability to respond to challenges from Asian authoritarianism - which may (or many not) simply be a product of the Asia-illiterate naivety of Australia's leaders and academics without external encouragement. For example:
    • politicisation of public services has deprived elected governments of any serious 'reality check' on their political agendas on the basis of accumulated knowledge and experience (see Decay of Australian Public Administration, 2002 and On Populism, 2007). The fact that the secret of maintaining power in China reportedly involves ensuring that competing factions remains relatively uninformed needs to be noted in this respect (see China's Bigger Secret) ;
    • the dominance that 'post-modern' ideologies have gained in university humanity and social science faculties. Those ideologies basically involve the view that 'truth' is primarily a matter of opinion - a view that: (a) corresponds to core elements of East Asian cultures; (b) discourages any serious attempt to explore the practical implications of cultural differences - including the very significant differences between Western and East Asian cultures; (c) leads to 'academic' support for ignorance that has serious adverse consequences (see Eroding the West's Cultural Foundations and Cultural Ignorance as a Source of Conflict); and (d) is naive - because even though there are limits to truth and rationality there is great practical value in 'approximate' truth (see The Advantages and Limitations of Rationality);
  • a coalition between Japan and China to promote a new international quasi-Confucian economic order might (or might not) have been emerging in 2014. The changes put in place in China in 2013 seemed to confirm that China's (so-called) 'Communist' Party had transitioned in the post-Mao era into the top level in a bureaucracy governing China under something like the Confucian traditions through which China had been governed on behalf of emperors for centuries prior to Western expansion (see The Resurgence of Ancient Authoritarianism in China). At the same time China seemed to be seeking to create a new international trade / tribute regime similar to that by which Asia was controlled prior to Western expansion (see Creating a New International 'Confucian' Financial and Political Order?). As the latter noted: (a) power would be developed within such a system by helping to achieve the goals of powerful interests within other nations (eg amongst the BRICS) or economic groups (eg along the 'Maritime Silk Road' or through the Shanghai Cooperation organisation); and (b) China was playing this role particularly with respect to emerging economies. The parallel between this process and Mao's reported strategy [1] of capturing the country-side and thus leaving his Nationalist rivals surrounded in China's cities (which depended in many ways on the country-side) might be worth considering. Also the possibility (which is anything but a certainty) that a 'new' Japan might be seeking to play a complementary role with traditionally developed economies should not be neglected;
  • Someone might (or might not) have encouraged various countries to object to the collection of strategic intelligence that had contributed to US-led efforts to support the development of a liberal (ie democratic capitalist) international order since WWII (see Smarter Authoritarians?) ;
  • a Malaysia passenger jet was shot down over Ukraine in July 2014- and this led to mutual blame between the Ukraine (which tends to have European / US backing) and Russia [1]. While an incident related to an on-the-ground conflict is most likely, an external party could potentially have had an interest in promoting conflict between Russia and Western nations.

The basic point is that it should not be assumed that what seems to Western observers be happening in East Asia is not necessarily what is actually happening. The region does not traditionally work in a straight forward way. It is understood that in Asia it is normal to assume that when things go wrong, that one's enemy is likely to be responsible. It would not be expected that it would usually possible to trace how whatever went wrong was made to happen.

Efforts to look behind the scenes (based on attempts to understand the region in its own terms and the use of methods such as those suggested above) are needed.

 

China's so-called 'Communist' Party reportedly used anti-Japanese rhetoric connected with Japan's WWII actions in Japan as a means for building nationalistic support in the post Mao era [1]. While this might well have been a 'front' to prevent domestic opposition arising to a coalition agreement between social elites in Japan and China, the latter is no means certain. If so the 'vengeance' that the Communist Party has been promising China's people may be against Japan for the deaths of tens of millions of Chinese in the 1930s and 1940s - though nationalist rhetoric emerging from top-level Chinese sources could have many meanings.

Moreover there were grounds for suspecting in 2012 that any 'coalition' arrangement between Japan and China's (so-called) 'Communist' Party that emerged in the 1970s might be fracturing - because of adverse consequences that this might have created for China (see Friction between China and Japan: The End of the Asian 'Century'?).

In relation to Japan's activities it is also worth noting that in the 1980s ultranationalist / Yakuza linked factions appeared to have a significant (but generally unrecognised) political and economic influence in Queensland. Influence was gained by facilitating Japanese investment in resource and tourism projects, though it possible (probable?) that activities that have security implications were also involved

The Dark Side of Japan in Australia?: In the 1980s Yohachiro Iwasaki developed a close relationship with then Queensland premier (Joh Bjelke Peterson) after proposing a resort in a somewhat improbable location in central Queensland. He then apparently introduced his friend, the notorious ultranationalist Ryochi Sasakawa (a suspected Class A war criminal in 1945), who:
  • according to Kaplan and Dubro (in Yakuza) had become one of the three main post-war 'kuromaku' in Japan (ie fixers of relationships between government, business and the Yakuza - Japan's ultranationalists organised crime gangs - a role that presumably implied an Imperial mandate) - with multi-$bn annual income from speedboat racing to fund MITI’s special projects;
  • was vocal admirer of Admiral Yamamoto who had commanded Japan’s Pearl Harbour raid and planned the proposed invasion of Australia (involving an overland thrust south from Darwin and a series of 'hops' down the east coast);
  • help maintain Queensland's Bjelke Peterson government in power in the 1980s by facilitating economically-significant Japanese resource and tourism investments; and
  • made numerous ‘state visits’ to Queensland during the 1980s coinciding with visits by thousands of young Japanese on the Shin Sakura Maru - a ship whose name, 'New Cherry Blossom Ship', has interesting connotations - given that 'Cherry Blossoms' are traditionally associated with the samurai and Yamomoto's raid on Pearl Harbour was by the 'Cherry Brigade').

The present writer found himself up to his armpits in allegations of yakuza and ultranationalist involvement on taking on a lead role in organising concept development on behalf of the Queensland Premier’s Department for a MITI sponsored project, the Multi Function Polis (MFP).

That vague and apparently benevolent proposal for a 'centre for technological and cultural interchange' was apparently mainly intended to facilitate the creation of a Japanese 'colony' in Australia (because the only real interest was in developing a SE Queensland site to which large numbers of Japanese could be attracted). A large Japanese community would have been necessary for any significant Japanese influence in Australia, as individuals, who tend to be strongly motivated to conform to others' expectations, ‘go native’ (and thus cease to be truly 'Japanese') unless supported by a large group.

It also seemed that Sasakawa was also supporting development of the infrastructure that would have facilitated Yamomoto’s 1940s’ plan for the invasion of Australia (ie a string of airports at resorts down the Queensland coast (some at locations that made little sense for tourism), and the railway line south from Darwin that EIE encouraged by initially proposing to finance the project). EIE was a Yakuza organisation (according the NSW Bureau of Criminal Intelligence) and also Sasakawa’s front in proposing the MFP. Iwasaki and EIE were 'special' according to a Japanese contact with whom the situation was discussed, and who then refused to elaborate on what 'special' meant. An EIE representative gave a formal presentation on the MFP to a Queensland Government organised group in which he rudely implied that Australians would not cope in an Asian environment - a rudeness that is apparently significant in Japan as noted below. 

Sasakawa and Iwasaki (both about 90 and since deceased) had apparently worked together in association with Yakuza organisations involved in developing infrastructure in Manchuria which had facilitated Japan’s 1930s’ invasion. According to various sources Yakuza are:

  • unlike other Japanese in not being polite;
  • nationalistic gangsters whose predecessors initiated Japan's modernisation in the 19th century by sponsoring the Meiji restoration (presumably because Western influence implied a rule of law under which Yakuza would cease to have a respected role in Japanese society);
  • enforcers of social discipline in Japan on behalf of the state (playing a role somewhat like lawyers in Western societies); and
  • dominant in Japan’s construction and leisure industries.

Sasakawa's role in Manchuria and his role in controlling a slush fund for MITI special projects are suggestive, though not conclusive, noting Fingleton's view (which the present writer can't confirm or disprove) that the methods that MITI used in orchestrating Japan's post-war economic miracle had been developed in Manchuria by the Japanese military in the 1930s.

It is unclear what Australia’s intelligence community made of this. Alan Wrigley (former head of ASIO) took control of the MFP project, and appeared to try to close it down. The present-writer's whistle-blowing on prior Yakuza / ultranationalist influence in Queensland and apparent involvement in the MFP proposal (which made the front page of Brisbane's Courier Mail) didn’t seem to be officially appreciated (and resulted in subsequent exclusion from all meaningful work). An internationally known economist with whom the MFP project had been discussed, expressed surprise at the present writer's 'extremely racist' reaction to the situation, until someone in the Asian studies faculty of his university told him that 'Professor, you are the new boy on the block'.

Queensland's newly create CJC’s criminal intelligence group said (privately) that when the Bjelke Peterson government departed, organised crime linked to police protection and Yakuza seemed to be replaced by those with Mafia and Triad connections. Both the new police commissioner and the head of CJC seemed to take a strong interest in organised crime. The former apparently reported possible corruption by a senior minister and then appeared to be framed for corruption before being sacked. The first CJC head (the present writer seems to remember without being able to now locate the reference) reportedly later commented on an unnamed government being controlled by organised crime.

Queensland subsequently trended even more to the autocratic crony capitalist style that had started in the 1980s (see Reform of Queensland Institutions - or a Rising Tide of Public Hypocrisy?) complemented by suspect capital accounting (see About the 2009-10 Budget and Recovering from Queensland's Debt Binge) - both features that the present writer associates with, though are by no means limited to, neo-Confucian influences.

There is also a need to think critically about Australia's coalition of interest with the US (and other traditional allies) - because their actions and judgements (like Australia's) are anything but perfect or problem free (eg consider Fatal Flaws). While Australia's security planning is conventionally based on its alliance with the US (so that measures designed to limit US action in the Western Pacific upset Australia's conventional strategy), any actions to boost US prospects in the region through collaboration should be accompanied by efforts to ensure that what is being supported is in the best interests of the whole regional community. Some suggestions about ways in which initial US initiatives to address perceptions of growing security risks in Asia might be modified are in A Better Australian Response to US Defence Proposals?

Suggested Strategic Response

The defence build-up in Australia which is suggested in the report should not be the first strategic option considered, because (in the face of nuclear armed states elsewhere) China’s goal in building up the PLA is most likely to defend itself (and its allies). Moreover its perceived need for such costly and sophisticated defences probably relates to an attempt which is being made to create a neo-Confucian international order (ie an international regime that would allow authoritarian / communitarian 'Asian' models of socio-political economy to be effective, while at the same time disrupting the established global order based on democratic capitalist principles).

A better solution to this potential standoff is probably to make China’s heavy investment in the PLA pointless, by exposing the limitations of the neo-Confucian international order that it is presumably intended to defend. This might be achieved by:

  • ensuring that ordinary Chinese are made aware that, under an elite controlled system of socio-political-economy, their hard work would never produce much benefit for themselves (see Creating a New Confucian Economic World). China apparently maintained tributary relationships with other states prior to European expansion, under which the 'tributaries' provided nominal 'tribute' to China's elites and received significantly greater material benefits in return, because China's elites ensured that China's people worked hard for limited reward (a situation that also seems to characterise modern China noting the limited return available on savings and the limited share of China's income available to households);
  • supporting efforts by those in China who want to develop a system of political economy that does not depend on authoritarian control by neo-Confucian social elites. It is possible that South Korea's example might be worth considering. The apparent ongoing interest in more egalitarian outcomes for China as an alternative to the elitism implicit in the methods that have been the basis of it rapid economic modernisation can be noted (see Communism Versus Confucianism: The Continuing Contest in China);
  • promoting understanding in Western societies of how ‘Asia’ works so as the limit scope for manipulation.  Real Asia-literacy is a strategically critical requirement because policy makers are at risk of dangerous miscalculations in its absence (see Risks from Asia-illiterate Policy Making in Babes in the Asian Woods). Moreover given widespread understanding of how influence is exerted, individuals would have a choice as to whether or not they are manipulated;
  • blocking the protection which is provided to unbalanced mercantilist financial systems by current account surpluses, by (a) restricting the availability of credit for consumption; and (b) boosting productivity, and thus incomes (using methods suggested in China may not have the solution, but it seems to have a problem, which also refers to other similar options). The outcome would be significantly increased: (a) savings; and (b) exports as a percentage of GDP;

Australia and US's regional push, email sent 19/11/11

Michelle Grattan
The Age

Re: Gillard goes 'all the way' with Obama's big regional push, The Age, 18/11/11

Your article raised questions about whether Australia or the US was most enthusiastic about closer military engagement.

I suggest looking at Ross Babbage’s Australia’s Strategic Edge in 2030 (which I have partly summarized in Comments on Australia's Strategic Edge in 2030). It specifically suggested the need for US engagement in Northern Australia, because of growing apparent belligerence by China’s PLA. I got the impression that this reflected Babbage’s close consultations with officials in Canberra. Given that growing belligerence and: (a) the increased likelihood of breakdown of global order because of economic stresses (and US / China economic tensions in particular) and (b) Asia’s dependence on some Australian resources, there is good reason to be concerned about potential invasion threat to Australia in (say) 10 years for the same reason that Japan attempted this in the 1930s. There is thus a defense case for creating a situation (through a training base for US forces) to create a situation in which an attack on northern Australia is also an attack on the US.

My commentary on the situation basically suggested that the proposed response to the situation envisaged by the defense establishment in Australia (and US) would be far too narrow and ham fisted to be effective – reflecting the pervasive lack of Asia-literacy in both systems. Some recent suggestions about alternatives tactics that might be more effective (by altering the economic context which determines future levels of military power) are in Getting out of the Economic Quicksand.

John Craig

  • demonstrating that liberal societies do not have to suffer widespread moral dysfunctions – as such failings seem to provide strong motivations for resistance to liberal institutions (and not only in the Muslim world). This could be achieved by: (a) reminding churches that success in their mission of bringing more abundant life to individuals is also important in creating a social environment that supports liberal legal and governance institutions; and (b) reminding the community generally that liberty depends on responsible individual morality;
  • reducing the economic role of financial services - because, when money becomes the focus of the economic game rather than merely being the means of keeping score: (a) instabilities can be induced;  and (b) rational action by individuals is disrupted rather than facilitated.

Though it was written with another purpose, the suggestions in A Nation Building Agenda probably constitute a reasonable first draft of the broad range of changes and capabilities that Australia needs for security in 2030. This refers, for example, to: better internal and external support to the political system; stronger efforts to access external intelligence; improved Asia-literacy; and much better methods for economic development. 

Very large cost savings could probably be achieved in the medium-long term by broadening the approach to national security away from primary reliance on military capabilities.

Source Documents +

Source Documents related to Australia’s Strategic Edge in 2030

Outline of Executive Summary

In 2030 timeframe ADO will need to deal with: help in civil disasters and in resuscitation fragile countries / regions; help in border security; counter-insurgency campaigns in distant theatres; launching counter terrorist operations; and direct defence of Australia. Security environment will be different due rise in China’s People’s Liberation Army (PLA) and China’s more assertive behaviour – and this requires refocusing Australia’s defence capabilities despite the many opportunities to work cooperatively with China. The PLA’s rise is associated with: sophisticated surveillance and targeting systems; missile systems; submarines; surface vessels with cruise missiles; better aircraft; missile defences; space warfare capacity; cyber capabilities; a sophisticated command and control network; and nuclear weapons. This challenges assumptions that are the basis of Australia’s and allies’ security planning – related to security of the US and its allies in space and Western Pacific. Planning needs to start now for capabilities needed in 2030. US capabilities are constrained by GFC. US Department of Defence is however working to counter the anti-access area-denial capacity of China and Iran. Australia can’t ignore this. By 2030 PLA will pose direct threat to Australian sovereignty – and many of PLA’s capabilities are being spread throughout South and SE Asia – thus changing the environment for future military operations. Thus ADF won’t have numerical superiority, and will have lost technological edge. Australia’s national security community will need to be different – focused on applying asymmetric leverage – either in collaboration with US or independently (eg because US might be distracted elsewhere). Four options are available (a) modernised general purpose force (as in 2008 National Security Statement and 2009 Defence White Paper) – which would offer only limited leverage against great powers; (b) build stronger regional alliances – which assumes that they share Australia’s concerns about the PLA; (c) reduced dependence on US combined with heavier investment in asymmetric military capabilities – an option that would be effective but relatively expensive; and (d) developing capacity for asymmetric leverage in close collaboration with the US. The latter would involve heavy investment in: regional engagement; cyber capabilities; underwater systems; advanced air combat; and next generation special forces. Key effect of PLA’s expansion is to make US operations in Western Pacific more risky – and Option 4 would allow Australia to offset this. This option would also be costly. Option 4 is favoured, though a lot more work is needed on it (and plans could usefully be reviewed every 3-5 years). There is also a need for: mastery of strategy at highest strategic level, as well as at campaign level; general acceptance of asymmetric thinking; evaluating total force capacity, rather than individual elements; fostering innovation; seeking efficiency / effectiveness in overhead functions; resilience; building a culture of whole-of-nation national security planning; and fostering exceptional military / civilian leadership.

Other Key Points in Australia’s Strategic Edge in 2030

China’s surging influence has been based on its economic success, and this has gained more attention than its military development (p1). Various different responses to China’s development seem to be envisaged by others – and this paper proposes both economic cooperation and a broader security approach towards China (p2). This implies the need for a more sophisticated approach – and to be able to do more than one thing at a time, as doing only one of these could be risky (p3). This paper focuses only on China’s military challenge, as many others have written about economic / political relationships (p3-4). China is close to being able to deny US and allied forces access to Western Pacific – thus eliminating a fundamental assumption in Australia’s security planning. US Defence Planners are developing counter-strategies (p4). Australia faces key questions about China’s 2030 capabilities; how US and other allies will respond; options for a ‘strategic edge’; and whether modernisation of Australia’s defence forces would be enough (p7). National security planning requires looking many years ahead – and this is not easy (p8) During that time scale, continued stresses in the Middle East and Africa can be expected – while China will be most powerful state in Western Pacific and the main strategic rival to US (p9). Strategic thinkers see four scenarios for PRC in 2030-2040 period: (a) continued rapid economic and military growth – 20% (p9); (b) slower and broader growth – 60%; (c) much reduced growth and military modernisation with serious internal problems – 15%; and (d) serious internal disturbances which result in attempts by government to build nationalist sentiment by focus on external challenge (p10). In defence planning it is not only necessary to consider the probability of outcomes, but the severity of consequences. Thus the prospect of a much stronger PLA potentially impacting on Australia needs to be considered (p11). China’s rising power has been driven by rapid economic growth – with high levels of economic integration with Western Pacific neighbours (eg 30% of Japanese companies manufacturing output comes from China). China’s defence spending has grown faster than economy – and is now 10 times that in 1989 (p12) and likely to continue growing at 12% pa for 20 years. US concerns are with character of China’s defence spending as well as with its size (p13), in terms of (a) strategic nuclear forces (p14); (b) wide-area surveillance and targeting (p15-17); (c) new missiles (p17-20); (d) larger modern submarine force (p20-21); (e) stronger surface forces (p21-22); (f) new advanced fighter bombers (p22-23); (g) modernised air defences (p23); (h) space warfare capabilities (p24); strong cyber capabilities (p24-25); and hardened command and control. Analysts have sought to understand the goals of China's defence investment. These include (a) keeping PLA happy with political leadership (26); the opportunity created by economic success; the need to ensure raw material sources; preventing other's interfering in China strategic interests; an ambition to restore China as a great power / civilization. Emphasis has shifted from major land war to ensuring security of access routes and undertaking distant peace-keeping - eg related to piracy  (p27). The main focus of 'Far Sea Defence' is to prevent foreign forces operating in western Pacific - possible a result of Taiwan Strait crisis of 1996. Reference is often made to 'offshore defence' and to 'assassin's mace'  (p28) - which suggests an interest in using surprise strikes in asymmetric manner to cripple a superior enemy. Main elements of PLA strategy seem to involve: blind US / allied surveilance and disrupt command / control systems; launch surprise / pre-emptive attacks on US, Japanese and other forward allied forces;  (p29) and long range attacks (eg on US West Coast or Australia). It then seems to be assumed that US and allies would be forced to negotiate regional withdrawal and accommodation with Beijing. This bears strong resemblance to Japanese Imperial Forces strategy in 1941-42 (30)  ---- incomplete

Other Observers' Comments on Australia’s Strategic Edge in 2030

Australia’s Strategic Edge in 2030 by Ross Babbage has near mathematical elegance. He wants Australia to do to China what China is doing to US (ie make it dangerous for US forces to operate in Western Pacific). China uses asymmetric warfare methods to do this (eg via cyber warfare, space warfare, submarines and missiles) – an anti-access denial strategy. Western way of war depends on vast flows of digital information – so destroying satellites prevents this. Missiles would also prevent access to Western Pacific by US carrier groups – and could attach Guam and Okinawa. Babbage argues that PLA’s build-up has changed strategic environment – thus threatening US military superiority and Australia’s security. Australia can help overcome this by hosting US forces here, and by developing Australia’s own asymmetric approach to china. He suggests build-up of cyber-war capabilities to protect own assets and perhaps attach Chinese systems. Buying nuclear submarines from US would be better than developing Australia’s own. They are very effective, would reinforce US capabilities and would be easier to keep operational. Babbage does not advocate conflict but argues that nuclear submarines would be an effective deterrent. Babbage would also seek missiles that could be launched from ‘arsenal ships’. Creating US bases in Australia would increase the likelihood of US involvement if Australia were threatened. If Australia has a real prospect of doing significant damage to China, conflict would be much less likely to occur. Babbage’s description of what China has done to strategic environment deserves most attention. He sees this rising PLA as most serious challenge Australia has faced since WWII. He does not speculate on China’s motivation for PLA build up – as this can’t be known, could change. Military capabilities have seldom been acquired without being used in China’s history. China is seen to have developed capacity to destroy US sanctuary in space; in Guam; in Japan. Surface vessels 1200km from China’s coast are no longer safe. China alone amongst nuclear powers plans to double or triple its nuclear weapons by 2030. Australia is already in range of many weapons. US is developing its own counter-plans. China is active in cyber war – with thousands of infiltration daily – and this could have major effects. Babbage’s paper should be the starting point for a broad national debate. (Sheridan G. ‘Time to beat China at its own game’, The Australian, 5/2/11)

Australia needs a 40% increase in defence spending because of increasingly militaristic China, which shows strategic thinking similar to Japan’s preparations for Pearl Harbour. The Kadoka report details increased Chinese military spending, and suggests how Australia should arm (eg with nuclear submarines and arsenal ships) to resist it). Paul Dibb (ANU) suggests that this proposal would be a bad idea (Nicholson B., ‘Chinese military plans like Pearl Harbour’, The Australian, 8/2/11)

National security policy is too important for federal ministers to stay silent when bad ideas are put forward. Foreign Affairs minister (Kevin Rudd) and Defence Minister (Stephen Smith) should reject proposals by Ross Babbage that Greg Sheridan reported on. It turns reasonable concerns about China’s military expansion into virtual hysteria. Proposals are ill-defined / uncosted, and would be counter-productive or dangerous. 2009 defence white paper set out costed and coherent policy. Babbage proposes increasing white paper’s finding of the need for Australia to have independent military means to ‘impose substantial costs on a major power adversary operating in our approaches’. Such proposals to rip an arm of China could provoke Beijing. Rudd and Smith should say that Australia will neither appease nor provoke China – and argue that its military build up enables China to defend itself and also support US in dealing with serious military threats in Asia-Pacific. Babbage reportedly does not believe that US / China conflict is imminent. His proposals lack details and costings. He proposes increased cyber-warfare capacity, which white paper already proposes. Babbage is concerned about China’s military expansion and aggressiveness, but assumes this is only about countering US naval assets, whereas there are other goals. Pentagon argues that China’s main aim is to fight and win short duration conflicts against high-tech adversaries along its borders – but has little ability to sustain military power at a distance. Though the latter capabilities are being created, they won’t be effective until the 2020s and are undermined by inferior national defence industries. Rudd and Smith should insist that Australia’s most rational response to China’s military expansion is to strengthen US alliance, and go ahead with planned re-equipment. No senior official has yet endorsed Babbage’s arguments (Dibb P., and Barker G., ‘Panicky response would harm our interests’, The Australian, 8/2/11)

Kokoda Foundations, Australia’s Strateigic Edge in 2030 shows flaws in Defence White paper process. That prcess was better than its predecessors, but inadequate and never kept to by governments. There is rather a need for a formal strategic intelligence estimate of possibilities and best responses. All countries need this to prevent emergence of another Cold War (James Neil, Flawed Process, The Australian, 8/2/11)

Ross Babbage argued at one time that Australia needed the military strength to ‘rip the arm off’ any major Asian attacker – and now suggests this in relation to China. Launching 'Australia's Strategic Edge in 2030' he described this as response to rapid growth of PLA. China’s expanding capabilities mean that: assured access to space and air in Western Pacific is no longer available; key US bases are at risk; Australia’s allies could fall into China’s sphere; China’s reach will extend to near Australia over the next 20 years. Report is based on consultations with those concerned about China, but Babbage assumes full responsibility. Babbage demolishes fundamental assumptions about Australia’s security (*eg US operational sanctuary in space, security of US bases in Japan / Guam, uncontested US shipping and air access to Western Pacific). He suggests in response: seeking nuclear not conventional submarines; building stealthy arsenal ships; reconfiguring army for long-range special force operations; create deeper partnership with US; and make large cyber / space warfare investments. This would make dealings with china difficult. Babbage will stir debate. (Dobel G., ‘Rip off a Chinese arm;, The Interpreter, 7/2/11)

Babbage’s report suggests China’s military build up constitutes the biggest threat Australia has faced since WWII, and that there is a need for strong deterrence power which is not currently available. PLA has acquired modern combat aircraft, a substantial submarine force and surface fleet, advanced missiles, modernised nuclear force and growing ability to wage war in space and cyberspace. China has defence white paper, but has not explained strategic rationale for acquiring such an extensive range of capabilities. Babbage suggests that China does not seem to understand that war with US would not finish quickly. Strategy of taking out US bases in a few hours seemed like Japanese strategy around 1940. Some Chinese strategic writing was like Japan in lead up to Pearl Harbour. China seems to be naively assuming that US would just go away – and this is unlikely. (Blenkin M. China biggest security challenge since WW2, 7/2/11)

Governments around the Pacific are preparing for war with China at some future time. Most people are unaware of this – but preparations are being made (for example) in India, Vietnam and Australia (one of whose strategic advisors has just suggested acquiring nuclear submarines). Behind closed doors there is fear of China – who doubt the peaceful rise of the world’s most powerful totalitarian state. China is doing the same as everyone else – arming themselves. In 2005 a Chinese general threatened a nuclear response to US positioning guided missiles to target China. China would expect all of its cities east of Xl’an to be destroyed – while the US would lose hundreds of cities. Professor Ross Babbage’s report argued the need to prepare to counter a Chinese Pearl Harbour like strike. (Birmingham J. ‘Why we’re all up in arms over China’, The Age, 8/2/11)

Qualification
Qualification

These observations are based on an attempt to understand the intellectual basis of the models of socio-political-economy that have permitted rapid advancement (ie economic 'miracles') in societies with an ancient Chinese cultural heritage (initially Japan and ultimately China) - see brief summary in East Asia in Competing Civilizations. These observations could easily contain misperceptions, as they are based only on information that has been available to the present writer.

They were not based on formal 'Asian studies'. Rather the possibility that quite different intellectual traditions to those of Western societies were involved emerged from: (a) experience and study of bureaucracy and of strategic management in government and economic affairs (see also Background notes in Competing Civilizations); (b) a detailed examination of what was said about Japan; and (c) direct exposure to what appeared to be undesirable influences in Australia that Australians generally did not recognise.

When examined from this viewpoint much of what was said about arrangements in East Asia seemed much easier to understand than when examined in terms of Western practices.

While there have been some opportunities to get feedback from others, these have been limited because few seem to have been interested. Mainstream (eg economic and political) analysts have viewed 'Asia' through parallels with Western societies, which provides little basis for understanding. And students of the humanities, who presumably should have been concerned with the practical consequences of cultural traditions, appear to have been off on a post-modern 'trip' (see Competing Civilisations).

Addendum A: Ignorant Diplomacy Sill Risks Catastrophe

Ignorant Diplomacy Sill Risks Catastrophe - email sent 23/6/12

Max Suich,
c/- Editor, The Australian

Re: Diplomacy that led to Human Catastrophe, The Australian, 23/6/12

I should like to submit that your useful account of the role that tensions over ‘race’ played in the lead up to WWII missed the most important point – namely the incompatibility between:

  •  the international order established on the basis of cultural traditions that had allowed Anglo-Saxon empires to be successful; and
  •  the radically different order that would have been (will be) associated with the ‘Asian Co-Prosperity Sphere’ that a frustrated Japan sought China’s support in establishing through military methods after WW1, and through more traditional long-term ‘Art of War’ tactics after WWII.

The primary source of past (and potential future) conflict did (does) not lie in Western racism, so much as in East Asia’s deliberate inscrutability (ie preventing others understanding one’s ‘shape’) and the failure of students of the humanities and social sciences in Western universities to try to understand (because understanding is hard, and domestic ‘racism’ is a much softer target). This was disastrous because with understanding differences can be managed, but without understanding differences become ‘racism’.

My interpretation of your article: Australia’s hostile, clumsy and rarely coherent policies towards Japan after WWI have parallels with current policies towards China. Geoffrey Blainey (in Causes of War) argues that Australia played a significant part in events leading to the Pacific War with Japan (eg with disputes over raw materials access; market competition leading to trade war; hostility based on racial pride and imperial alliances). Australia confronted Japan, the then new Asia / Pacific power, with careless hostility based on excessive faith in a declining ally. This is relevant again today in relation to China – though there are differences (eg China is not the dissatisfied militaristic nation that Japan was). Australia was a vociferous partner with UK / US before start of Pacific War, and had been antagonistic towards Japan from 1919 (eg by vetoing Japan’s request to be recognised as an equal with Anglo-Saxon empires in foundation documents of League of Nations). This compounded resentment of discrimination against Japanese in immigration, trade and investment, and boosted the position of militarists and nationalists in undermining relatively liberal forces in Japan. Billy Hughes had a major role in this – and exploited Australians’ nationalism, convictions and prejudices. He gained support for protecting the White Australia policy and opposing concessions to Japan (ie though Japan’s original demand for recognition of racial equality had been reduced in League of Nations preamble to recognising equality of nations, he vetoed this). Historians have written about this (eg Naoko Shimazu and Neville Meaney). Meaney suggested that Hughes believed that Japan’s proposals were intended to knock down the walls of the White Australia policy. Shimazu argues that this reinforced Japan’s rejection of the West and the search for an independent path that led to invasion of China and ultimately to war in the Pacific. Carl Bridge, by contrast, sees the Paris Peace Conference as Hughes’ finest hour, producing outcomes that advanced Australia’s long term interest. However, like Hughes, he paid little attention to the advantage that militarists and extremists gained from this in Japan. This helps sustain the assumption that Australia had no role in the origins of the Pacific War. Hughes embodied British race patriotism – and this was appreciated in Australia, and continued by Menzies. Meaney sees this as failure, while Shimazu notes that an arrogant and immature Japan felt that it had to prove in Asia that it was not less than the West. Japan was not fighting for universal racial equality (as it discriminated against others in Asia), but for itself as the leader of Asia. The final wording of the equality clause was like ‘all men are created equal’ – though Hughes disagreed. There were negative consequences for Australia of Hughes’ veto (eg UK support for Japanese territorial expansion to placate Japan). Some in Australia saw Hughes action as consolidating all of Japan behind the imperialists, and proposed measures to avoid offending Asian nations and to ease immigration restrictions.. Hughes rejected the latter, and praised the US Exclusion Act (which paralleled the White Australia policy). In 1931 Japan’s Kwantung Army falsely accused Chinese dissidents of armed rebellion and used the incident to seize Manchuria (and create Manchukuo). Japan’s civilian government (which Hughes had not supported) was undermined. Japan was then on a war footing – and this increased its obsession with resource security. In 1937 after several years of creeping military takeover of northern China, Japan launched a full scale invasion of China. Might Japan have been diverted from the militaristic cause by granting the racial equality clause or would this have merely encouraged Japan to believe that it should have a sphere of influence in Asia (like the European empires)

The real point at issue in Japan’s search for ‘racial’ equality was not about race, but rather about the capabilities of different cultures. Yet this was not perceived, because Western observers viewed ‘Asia’ through the lens of the universalism of Western social, political and economic institutions, while traditional East Asia Art of War tactics emphasise deceiving others about what is going on.

Australia’s current prime minister has commissioned the production of a White Paper on the (possible) Asian century, and this seems to be based on the same ignorance about what is different about East Asia as led to the pre-WWII frictions described in the above article. My reasons for suggesting this, and an attempt to identify what is significantly different about societies that have an ancient Chinese cultural heritage, rather than the West’s classical Greek, Roman and Christian heritage, is in An Asia-literate Approach to 'Asia'. The latter suggests, for example, that:

  •  an 'Asian century' implies that intuitive, hierarchical and autocratic ethnic groups would prove better able to deal with ongoing economic and political challenges than rational / responsible individuals operating within the framework of individual liberty, a rule of law, democratic governance and profit seeking enterprises that Western societies have adopted;
  •  this represents the practical consequence of a different approach to epistemology (ie a rejection of the reliance on understanding and rationality that has been the foundation of Western strengths).

An attempt to consider the geo-political implications of the modern version of the tensions with Japan that gave rise to the Pacific War is in Comments on Australia's Strategic Edge in 2030. The latter includes:

  •  The Need to do More than Prepare for the Last Great Battle of WWII, which implied (as your article does in a different way) that post WWII frictions have parallels with those after WW1;
  •  Suggestions about why it is difficult to understand societies whose strengths and weaknesses are based on their rejection of the relevance of understanding;
  •  Reference to the present writer’s exposure in the 1980s to Japanese ultranationalist factions, with close connections to the Japanese state, who seemed to be still trying to win WWII; and
  •  Suggestions about a strategic response which emphases ‘soft power’ methods to defuse tensions.

I would be interested in your response to my speculations. 

John Craig

Addendum B: Soft power: Active as well as Passive

Soft power: Active as well as Passive - email sent 14/6/12

David Smith
University of Sydney

Re: Has Australia fallen for Obama’s soft power?, The Conversation, 13/6/12

I interpreted your article as implying that ‘soft power’ is passive (ie related to others having a favorable impression of a nation). However I suggest that ‘soft power’ can also be (and needs to be) active.

My reasons for suggesting this are implied in Comments on Australia's Strategic Edge in 2030 (2011). This suggests, in relation to defence considerations in an ‘Asian century’, that:

  • Inhibiting outsiders’ understanding on how you operate is a conventional East Asian ‘Art of War’ tactic – so gaining such understanding is a necessary ‘soft power’ tactic;
  • The main thrust of traditional ‘Art of War’ tactics involves ‘soft power’ methods – so as to weaken others internally;
  • There are active ‘soft power’ tactics that could be used to reduce in reducing the potential for conflicts.

Active ‘soft power’ methods that might have been used to defuse the risks associated with violence by Islamist extremists were suggested in Discouraging Pointless Extremism (2002).

I would be interested in your response to my speculations.

John Craig

Addendum C: A Better Australian Response to US Defence Proposals?

A Better Australian Response to US Defence Proposals? - email sent 2/8/12

Harley Dennett

Re: Nuclear drumbeat grows as US eyes Australia, Crikey, 2/8/12

Your article suggested that proposals from the US Center for Strategic and International Studies for basing nuclear-powered aircraft carriers in Western Australia may have had more US government support than Australia’s Defence Minister (Stephen Smith) acknowledged.

Whether or not this is correct, I should like to suggest for your consideration that the US’s apparent intention to respond to China’s rising military capacities and militarism by increasing its ‘hard power’ assets in the Asia Pacific region (including some in Australia) would not only be expensive but also relatively ineffectual. That the US has such an intention is implied by various recent proposals in relation to locating forces in Australia, and reportedly also by discussions between Australian defence analysts and their US counterparts.

A better alternative, involving a primary emphasis on a soft power response, is suggested in Comments on Australia's Strategic Edge in 2030, The latter (which comments on what seems to be an Australian analyst’s response to information from US analysts) suggests that the US and Australia may have been suckered for decades by traditional ‘Art of War’ methods, which primarily involve the use of ‘soft power’ – because: (a) the possibility that such games may have been being played was not considered; and (b) there was no awareness of even what to look for due to a pervasive lack of Asia-literacy.

If Australia wants to assist the US in countering China’s rising military capacity and militarism, the most effective way to help would be to boost general understanding of traditional strategy in East Asia – perhaps by methods like those suggested in An Opportunity to Boost Asia-literacy.

John Craig

Addendum D: Beyond 'The China Choice'

Beyond 'The China Choice' - email sent 14/8/12

Hon Paul Keating
c/- Editor, The Australian
[Not for Publication]

RE: A case for Chinese legitimacy, The Australian, 11/8/12

Your overview of The China Choice (by Professor Hugh White) suggested that China’s authoritarian system of government should be accepted as legitimate because it has been successful in lifting huge numbers of people out of poverty very quickly. The problem is that this achievement (like the economic ‘miracles’ in other East Asian states) has apparently involved a neo-Confucian system of socio-political-economy that: (a) makes global economic growth unsustainable; and (b) is alien to prevailing international political and economic institutions.

Whether Australia should promote such systems to the world as legitimate / desirable is more complex than was indicated by your article (or apparently by Hugh White’s book). Geopolitical issues related to East Asia need to be considered in terms of how things have traditionally been done in that region, rather than by assuming that something like Western-style institutions, methods and motives are involved.

My interpretation of your article: At the start of 20th century Europe ran the world – through British and German empires. Within 40 year this was torn apart by two world wars. Now the issue is Deng Xiaoping’s restoration of China’s economic power. Can the world adjust to centre of global economic power in Asia? Hugh White, in The China Choice, points out that the US never faced a country as rich and powerful as China (eg USSR never matched US) – and wealth gave power. China’s military has long been preparing for war with US, and US’s military is now making similar preparations. Conflict could arise at short notice. China won’t do what Japan did – become a strategic client of US. US must recognise that the shift in the economic situation leads to a strategic shift also. Asia’s stability can’t be ensured by a non-Asian power – a point made by a former US national security advisor (Zbigniew Brzezinski). The failure of US wars should convince US that wars on Asian mainland are unwinnable. Stability in Asia requires constructive regional relationships, not divisive external linkages. US should not be drawn into Asian wars unless these involve countries with which the US has treaties. The US needs to decide what characteristics of China pose a threat, and which can be accommodated. China needs to be encouraged to participate in the region, without dominating it. If either the US or China says that Australia has to choose between them, then Australia does have to choose. Australia doesn’t want to make such a choice, and in a cooperative structure would not need to do so. Thus Australia needs to convince the US that it needs to adapt to China’s rise. For more than a generation Australia has not engaged in serious debate with US – but has simply cooperated with US foreign policy. China’s rapid rise demands more than that. Asia will be safer place with ongoing US engagement – but as Australia’s trade is increasingly with north Asia (especially China) a cooperative US / China structure is in Australia’s interests. This requires recognising China’s legitimacy, its great power prerogatives and the legitimacy of its system of government. This is not possible if only democracies are considered legitimate. While peace prevails amongst democratic states, Kenneth Waltz argues that structure of international policy is not transformed by internal changes in states. China has been criticised on the basis of human rights and values, though the human condition has improved across China. US president Obama argues that prosperity without freedom is just another form of poverty, though China has achieved the largest and fastest increase in human material welfare in history. This is discounted by those who simply pursue human rights issues. Peace is a value also – so reducing the risk of war is desirable. The China Choice is an exceptional synthesis of the arguments and influences that bear upon the future of the Pacific.

While the following is anything but the last word on the subject, I suggest that a cooperative structure in the Asia Pacific can’t be achieved simply by (say) convincing the US that China’s system is legitimate because:

  • Cultural differences (and more particularly the failure of students of the social science and humanities to consider the practical consequences of those differences) have been a major factor: (a) in the relative economic success and failure of different societies; and (b) in international tensions / conflicts (see Competing Civilizations, 2001+). The latter included: (a) speculations about the intellectual foundations (and consequences) of East Asian economic ‘miracles’ (which China finally copied); and (b) an outline of the origin of the ideas presented here. The former suggested, for example, that East Asian economic ‘miracles’ have been built on an approach to knowledge, power, governance and economic goals that is different to that underpinning Western success and power in recent centuries (which was achieved because Western political / economic institutions enabled initiative by responsible rational / responsible individuals);
  • Understanding those differences and their practical consequences is quite difficult (for reasons outlined in Understanding ‘Asia’). And few, if any, of the analysts who seek to offer prescriptions in relation to the response by Australia or the US to China’s rising economic and military power seem to have bothered trying to understand (see Risks from Asia-illiterate Policy Making). For example:
    • Zbigniew Brzezinski’s argument (that the US should play a mediating role in Asia) is unrealistic, because what he suggests is impossible without a deep understanding of how and why East Asia works (see US can't play a 'conciliation' role in Asia without understanding it). Likewise Australia can’t play a mediating role between the US and China (as Hugh White apparently suggests) without a serious effort to understand East Asia (see Can Australia Help China and the US to Get Along?);
    • A real ‘Asian Century’ (ie one in which East Asian traditions were globally dominant) would imply that political and economic institutions that are built around the notion of responsible individual liberty (such as egalitarian citizenship, independent business enterprise and democratic politics) would no longer have a significant role (see What does an 'Asian Century' Imply?);
  • Economic ‘miracles’ in East Asia have involved non-capitalistic financial systems in which major business investments are made by state linked-enterprises with limited regard to expected profitability and draw on national savings mobilized by state-linked banks. Thus those systems:
    • Are incompatible with sustainable global economic growth, because those systems require large domestic demand deficits (which some have labeled ‘savings gluts’) to avoid the need for international borrowing. It has only been the willingness and ability (to date) of their trading partners (especially the US) to continue increasing their debt levels, that prevented: (a) the global economy from stagnating because of inadequate total demand; and (b) the ‘miracle’ economies from suffering financial crises like the Asian financial crisis of 1997 (see Are East Asian Economic Models Sustainable?, 2009); and
    • Constitute a generally unrecognised form of industrial protectionism, which economists would regard as undesirable if they understood (see Resist Protectionism: A Call That is Decades Too Late , 2010);
  • China (like Japan) is facing a severe economic reversal because such financial arrangements seem unlikely to be viable in future, and this financial vulnerability may well be exacerbated by the response that others will need to take in their own interests (eg see China may not have the solution, but it seems to have a problem). And in China’s case political instability is also a real risk because the methods it used to emulate Japan’s economic ‘miracle’ have created the world’s most extreme wealth imbalances, and this is so incompatible with China’s nominal communism that another Cultural Revolution against China’s Confucian social elites has been seen as a real possibility (see Heading for a Crash?);
  • The methods of collaboration that are used under East Asian neo-Confucian systems involve collaboration amongst subordinates within a social hierarchy. This is not compatible with collaboration under the prevailing international institutional framework (see Eurocentric Aspirations in a World of Rising 'Asian' Influence, 2011). International collaboration that is compatible with China’s domestic political system would probably involve something like the China-centred trade-tribute system that existed in Asia prior to Western expansion (eg see Creating a New International 'Confucian' Political and Economic Order, 2009);
  • The US’s response to the challenge to the West’s global dominance from East Asia has been very slow to emerge, and thus remains clumsy and unsophisticated at this stage. It was slow presumably because:
    • the challenge emerged quite rapidly, and the US was focused on a ‘war against terror’ (which may or may not have been the result of an intentional tactic – see Attacking the Global Financial System?, 2001);
    • there is (as noted above) a pervasive lack of deep understanding of what is different about East Asia, despite the West’s very long military, diplomatic and economic engagement in the region - so domestic politics dominates over the national interest;
    • US monetary authorities (ie the US Federal Reserve under Alan Greenspan) apparently expected that financial markets would force changes to East Asian financial systems that required large ‘savings gluts’, and in 2008 were clearly very surprised when a financial crisis emerged first in the US;
    • the US Government seems to be conditioned to think about geopolitical issues primarily in terms of military capacity, and this is clearly only a small part of the equation in the Asia Pacific (see Comments on Australia's Strategic Edge in 2030, 2011 and particularly A Better Australian Response to US Defence Proposals? ).

Thus there is probably a need for a much deeper assessment of the issues than appears in your introduction to The China Choice.

Moreover, it is arguably not sufficient merely to seek a more cooperative approach amongst states in the Asia Pacific. Humanity faces many challenges (including economic stability, peace and environmental limits) that can’t be resolved so long as the focus is on who is the ‘top dog’, rather than on what social, political and economic system is most likely to lead to those challenges being successfully met. Despite Francis Fukuyama’s proclamation of ‘The End of History”, the post WWII global order built on Western style democratic capitalist principles (and with US leadership) has continued to be at risk even though the long Cold War against Soviet-style Communism was won (eg see The Second Failure of Globalization?). The latter addressed:

It might thus be better to promote a more cooperative approach globally, if this offered a reasonable prospect of reducing the particular risk of rising tensions in the Asia Pacific. Some, undoubtedly inadequate and now-quite-dated, speculations about how this might have been achieved were in A New 'Manhattan' Project for Global Peace, Prosperity and Security (2001). This suggested a process to raise awareness of the issues that needed attention to create an international environment in which all might reasonably hope to succeed, and a process whereby all participants could develop a response within frameworks that reflected their own cultural traditions. Some parallel speculations (in Competing Civilizations) concerned changes to Western-style democratic capitalism that might be considered in such an environment.

I would be interested in your response to my speculations.

John Craig

Addendum E: Friction between China and Japan: The End of the Asian 'Century'?

Friction between China and Japan: The End of the Asian 'Century'? - email sent 28/9/12

Greg Sheridan
The Australian

Re: Beijing worrying many neighbours, The Australian, 27/9/12

Your article noted that China is pursuing territorial claims (including one that risks conflict with Japan) with unusual and unexplained aggression. I should like to suggest a possible (though by no means certain) scenario under which this could presage the end of the Asian ‘Century’ – at least in the sense that this would involve ‘Asian’ leadership in a Western-style democratic capitalist international environment.

This requires considering that China may face difficulties in the presently-unstable international economic environment that are not apparent without taking account of characteristics of the neo-Confucian systems of socio-political-economy that Japan first developed and that have been the basis of economic ‘miracles’ across East Asia, ultimately including China.

My interpretation of your article: For the first time in many years China is pushing territorial claims in the East China Sea (ie a dispute over the Senkaku / Diaoyu Islands which Japan has administered) and South China Sea (ie claiming sovereignty over the whole sea to the coastal waters of The Philippines, Vietnam and Malaysia). This is being done aggressively (eg with coast guard fleets violating other’s territorial waters, and violent anti-Japanese protests). The dispute with Japan is exceptionally dangerous – because both countries have roughly equal military strength and Japan has a giant economy and is a US ally. US policy towards China has changed under President Obama. The first phase (offering many concessions to China) achieved nothing, and in 2010 China started bullying many of its neighbours. The US then became more hard headed, and Obama announced an economic and security ‘pivot’ towards Asia. Finally it has been seeking to engage positively with China – and to encourage China to take a greater international role. Beijing’s motives for its current behaviour are perplexing. Comments from Singapore’s Institute for SE Asian Studies (Rodolfo Severino) are that pushing China towards legal adjudication / clarification on its South China Sea claims would harden China’s claims. Zheng Yongnian (East Asian Institute) drew attention to China’s nationalism, and the leadership transition in China. China’s government has fanned nationalism - which has created an independent force within China. Increased democracy in China would thus lead to more chaos / violence, and perhaps international conflict. China’s development is not unique. Like other countries in East Asia it has engaged in government-led / sometime ruthless capitalistic development. However in China there has been no parallel social development. Thus Chinese people feel insecure. Most people are impoverished. The government is not respected – because of corruption. If China were a democracy, Chongqing Party boss Bo Xilai would be elected president – because of his populist style and direct income redistribution. Much of what he did was illegal – but this is not unusual, as there is little respect for law in China. Leftism and nationalism have deep roots in China, but liberalism does not. China’s biggest task is to develop its middle class. At present government is strong / rich, while people are weak / poor. Middle class has no institutional protection. China could experience social chaos. There is a race between reform and social uprising. Growing the middle class is needed, as otherwise democratisation could make things worse. Most of the dynamics that govern these matters are internal to China, so China’s politics are the worry.

The situation needs to be considered in context. The global economy is in a perilous state. Europe is in recession, and instability threatens because of the debt / deficit exposure of many governments. The US is also facing its ‘fiscal cliff’ which will lead either to a serious recession or financial market concern about escalating US government debts [eg see 1]. Japan faces government debts that are 200% of GDP. China’s massive investment program to maintain growth since the start of global financial crisis (GFC) is recognised to be unsustainable. While many emerging economies have been doing fairly well, they (in common with Australia) have generally done so on the basis of strong export demand. Though the reserve banks of major economies are boosting liquidity, it is anything but clear where the demand to sustain future global growth can come from.

[Note added later: Increasing liquidity through quantitative easing by reserve banks does not automatically increase demand - especially where:

In this environment China (and also Japan) are facing serious risks. These risks include, but go beyond, the issues mentioned by the Singaporean experts that your article outlined. A key point is that the rapid economic advancement that has been achieved in East Asia (including Singapore) has involved neo-Confucian systems of socio-political-economy which are anything but ‘capitalistic’ (ie they are not driven by a search for profit by independent enterprises – but rather by a state-driven goal of boosting the economic power of ethnic communities). The financial institutions in affected economies would suffer crises (like the Asian financial crisis of 1997) unless domestic demand is suppressed to the point that current account surpluses make it unnecessary to borrow in capitalistic / profit-focused financial markets. The resulting demand deficits (‘savings gluts’) are macroeconomically unsustainable, and compensating for this has been one significant factor in the heavy debts that their trading partners have incurred and also in causing the GFC (see Impacting the Global Economy).

Speculations about China’s predicament now that this strategy is becoming unsustainable are outlined in Heading for a Crash or a Meltdown? The latter suggests that China’s problem is not just financial and economic, but that for various reasons the neo-Confucian system of socio-political-economy that has been the core of its rapidly developing economy since the late 1970s is an obstacle to developing solutions. Japan, it can be noted, is also approaching a financial crisis – because it is on the point of incurring current account deficits and thus having to borrow externally with a non-capitalistic financial system.

This may be significant in relation to the emerging frictions between China and Japan because:

  • A close observer of East Asia (Eammon Fingleton) has suggested that Japan played a significant (but undisclosed) role in introducing into China a variation of the neo-Confucian system of socio-political-economy that had been the basis of economic miracles elsewhere in East Asia. And there are reasons to suspect that Japan and China might have been motivated to enter into a cooperative arrangement at that time – ie a shared desire to create an international economic and political order that was not based on Western-style democratic capitalism (see Coalitions of Interests?);
  • One of the two main factions contending for future control of China (ie that centred in Shanghai, and closely aligned with China’s Diaspora) seems likely to have played the major role in operating that Japanese-sponsored system in China (see China’s Political Tensions).

If so then confrontation with Japan could be expected not only to divert the nationalism of China’s people towards support for the Communist Party but also to undermine the position of factions within the Party that are most closely associated with the economic methods that were adopted from Japan - and which have now created: (a) obstacles to China’s future economic progress; and (b) commercially-focused social elites and wealth imbalances that are incompatible with China’s nominal ‘communism’ (and which Mao’s cultural revolution had sought to purge from China).

Thus conflict with Japan could perhaps be regarded as an effective proxy for civil conflict within China.

There are many other interpretations that could be placed on current events. For example China-Japan tensions could be:

  • simply intended to unify China's people in a common cause;
  • related to contests for control of China's communist party [1];
  •  the outcome of an agreement between China and Japan to demonstrate to others in Asia that an alliance with the US is worthless - assuming that China's pressure will Japan to capitulate [personal communication];

However, no matter what the basis of these tensions, it is strongly suggested that what is different about the way things are traditionally done in Asia needs to be considered in seeking to understand, rather than trying to understand in terms of Western concepts (such as capitalism and democracy) which don’t have anything like the same implications as they would in the West (eg see Embracing Asia Requires Understanding). In particular, it would also be desirable to recognise that traditional Asian Art of War tactics feature deception – so what seems to be happening (or is said to be happening) may not be a reliable guide to what is actually happening.

John Craig

Addendum E: Nationalist rumblings in Japan

Nationalist Rumblings in Japan - email sent 13/12/12

Professor Tessa Morris-Suzuki
ANU

Re: Japan’s paradoxical shift to the right, Inside Story, 6/12/12

I should like to draw your attention to some speculations about the possible influence of Japan’s ultranationalist factions, which your article suggests are again making an attempt to gain power in Japan.

My interpretation of your article: Nationalist political factions have re-emerged in Japan, which could be troubling for the region. Three years ago the Democratic Party government after years of LDP dominance brought hopes of real two party politics. But this experienced difficulties because of: (a) the earthquake / tsunami which damaged nuclear power industry; and (b) the character of politics in Japan (which is closed / cliquish so that grassroots social movements don't trust it). Vacuum is being filled by groups exhibiting alarming nationalism. Tokyo governor (Shintaro Ishihara) proposed purchase of islands in East China Sea, which (a) generated conflict with China, and (b) diverted attention from nuclear industry problems. Ishihara is notorious racist / sexist / homophobic. Japanese people feel the need for strong leadership. Osaka mayor launched Japan Restoration Party (espousing nationalist, neo-liberal economics and political system changes - a single chamber parliament and a directly elected PM). He also endorses the need for dictatorship, and criticises apologies for abuse of 'comfort women'. Hashimoto's policy of phasing out nuclear weapons ended when Ishihara emerged as Restoration Party's leader - advocating acquiring of nuclear weapons. Abe has emerged as head of LDP - with similar views on 'comfort women' and nuclear weapons. All these groups endorse expanding Japan's scope for military action - and this would escalate tensions in Northeast Asia.

By way of background I note that I had some involvement in the 1980s in concept development for the MITI-sponsored Multi-function Polis project (to establish a centre for cultural and technological interchange), and:

  • Thus put in a good deal of effort trying to understand the intellectual foundations of the economic ‘miracles’ that Japan had pioneered (see East Asia in Competing Civilizations for an outline of the conclusions);
  • Immediately found myself up to my armpits in allegations about the involvement in the development of the MFP proposal of yakuza and ultranationalist factions (under Ryochi Sasakawa) who seemed to be both: (a) extremely well connected into the Japanese Government, and possibly playing a key role in organising Japan’s economic ‘miracles’; and (b) still trying to win WWII – see The Dark Side of Japan in Australia?).

As a consequence, I have taken a somewhat cynical view of events over the past couple of decades. Some speculations about the possible effect of behind-the-scenes influence on Japan by ultranationalist factions are in:

  • Unrecognised Clash of Financial Systems – which:
    • suggested that the incompatibility between Western-style international financial institutions and the methods that had been the basis of Japan’s post-war economic miracles (which were allegedly eventually introduced to China by Japan) may have had a significant effect on global history; and
    • referred in passing to indicators of the continuing significant influence in post-WWII Japan of ultranationalist factions (see The Dark Side of Japan);
  • Coalitions of Interests? (in Comments on Australia’s Strategic Edge in 2030) which: (a) notes that Japan’s primary tactic in seeking to establish an Asian Co-prosperity Sphere in the 1930s and 1940s involved an unsuccessful effort to mobilize China’s support (see Broader resistance to Western Influence?); and (b) tries to draw conclusions about Australia’s appropriate response to autocratic East Asian states.

These speculations are clearly not the full story (or even adequate in themselves). However I submit that they such possibilities need consideration, and would thus be interested in your response to my speculations.

John Craig

Addendum F: Looking for meaning in war warnings from Asia

Looking for meaning in war warnings from Asia - email sent 25/3/13

Ambrose Evans-Prichard
The Telegraph

Re: The dangerous drift towards world war in Asia, The Telegraph, 24/3/13

You are getting into deep waters – and those waters are murky. I should like to suggest considering the possibility that the ‘war’ issue in Asia might not be the one that is most obvious – and which was the subject of your article.

An alternative scenario was the subject of Comments on Australia's Strategic Edge in 2030 (2011). The latter was a response to earlier concerns about the implications of China’s rising militarism that apparently originated in US defence circles. It advocated a soft-power response to what seem to be war rumblings in Asia.

It was based on:

At the very least three scenarios need to be considered: (a) there could be a risk of war between China and its neighbours (including Japan); (b) Japan and China could be colluding with the intention of engaging jointly in military adventures against the US; and (c) there may be no real war risk, but rather a ploy to ensure that a military bias dominates US foreign policy in Asia. The lunatic threats currently emanating from North Korea (arguably a Chinese vassal state) suggest to me that the ‘war in Asia threat’ is more likely to be a deception than a reality.

John Craig

Addendum G: Whose intentions: Kim's or China's?

Whose intentions: Kim's or China's? - email sent 4/4/13

Greg Sheridan

Re: Hard to fathom Kim’s intentions, The Australian, 4/4/13

There is a possibility that your article did not consider plausible – namely that China does actually have a great degree of behind-the-scenes influence in North Korea. And, if so, then what has happened perhaps involves encouraging an unstable (virtually lunatic) regime to threaten attacking others in the expectation of thereby boosting China’s global status (ie its shift towards a new ‘Middle Kingdom’ role) by encouraging (perhaps forcing) the US to rely on China to bring what is in effect China’s ‘attack dog’ to heel.

This scenario is anything but certain – but it should not be ignored. ‘Art of War’ precedents in history might usefully be researched.

John Craig

Addendum H: An Art of War Perspective on North Korea's Blustering >>

An Art of War Perspective on North Korea's Blustering - email sent 5/4/13

North Korea’s threats to attack the US and others seem incomprehensible to Western observers.

However the real problem may be that such observers can’t see the forest for all of the trees (ie particular threats of war).

Some speculations about: (a) the nature of the ‘forest’ (ie the big picture) that might make it easier to understand the ‘trees’; and (b) about the desirability of a serious soft power response are on my website. The source of the problem may lie in the influential neo-Confucian networks that have been responsible (behind the scenes) for orchestrating economic ‘miracles’ in East Asia who now find that their efforts are likely to result in failure.

John Craig


'Art of War' Speculations about North Korea's Threats [Working Draft]

Background: The present writer's background for these speculations includes a lot of study of what has been written about Japan as the basis for a possibly-successful effort to 'reverse-engineer' the intellectual basis of East Asian 'economic miracles'.

Interpreting Tensions in East Asia

The following account seeks to consider North Korea's threats of war in a broader-than-usual context. For example, this involves those threats possibly being one amongst several manifestations of a long term 'civilization' contest between Western and East Asian societies that is perhaps coming to a head because growing economic and military strengths in East Asia's 'family states' have been built on neo-Confucian methods that are incompatible with those implicit in the the West's universalist / liberal traditions that the US's 'pivot to Asia' would seek to reinforce in the region.

It is by no means necessary to take such a broad view to produce reasonable explanations of tensions in East Asia.

Three big things are going on in east Asia. The most visible / disruptive is China's rise. Next comes resurgence (especially in Japan) of competing / mutually reinforcing nationalisms. Then is dangerous unpredictability of North Korea. South Korea's foreign policy think tank (Asia Institute) held conference on New World Disorder. Residents in Seoul are used to North Korean threats and don't behave as if they are at risk of imminent attack. The real risk arises when North Korea puts a nuclear warhead on a missile. Many others would be affected by Korean peninsular conflict. Chinese diplomats express frustration with Jong-un. But its influence is limited. North Korea can be as hostile to China as to US. China has probably concluded that living with Kim is better than the alternative - collapse of his regime and re-unification of the peninsular which would give the US a foothold (perhaps a military one) on China's border. Though some in Communist Party have suggested that North Korea has become a liability, giving it up would be seen as a a sign of weakness. China has never clearly articulated its ambitions - but rising military spending, a combatative approach to territorial disputes - suggests a desire to gain regional primacy. This is to be expected, However it generates resistance from neighbours. And xenophobic populism in China's blogoshpere fans nationalism elsewhere. This has pushed Vietnam and the Philippines closer to US. South Korea suggests that US should locate tactical nuclear weapons there, and raised questions about South Korea itself developing nuclear weapons. Japan's government has a nationalist pose that worries others. Disputes over islands have become entangled with Abe government's revisionism of Japan's WWII occupation of China and Korea. US has a problem. Its pivot to Asia was meant to underscore permanence of US balance of power in Asia - thus encouraging allies and deterring Chinese expansionism. However the US fears that Japan can treat US treaty as a shield behind which it can confront China. Some see the tensions in East Asia as a sustainable equilibrium, but this may not be so [1]

However, it is arguably worth considering the alternative, because different ways of thinking in East Asia lead to ways of doing things (including trying to win wars without fighting) that are quite different to those that Western observers are likely to be familiar with.

Look at the 'Forest' Not Just at the 'Trees'

There is a saying that some people ‘can’t see the forest for all the trees’.

This could be costly or perhaps even dangerous in relation to North Korea's threats of war (including nuclear attacks) against the US and South Korea, because that particular 'tree' (ie threat) has emerged in a 'forest' that involves an historical and geo-political contest (in which Korea currently has a foot in both camps) between the West's 'rational / responsible individualism' and various 'authoritarian / ethnic family-state' alternatives that have been developing in East Asia for decades.

The 'forest' implies the (uncertain) possibilities that  apparently-crazy threat by North Korea's 'supreme leader' could be intended (for example) to:

  • draw the US and its allies into an ambush (and perhaps that April 29 might be a critical date for a nuclear attack) because East Asia's 'authoritarian family-states' are currently facing severe risks - risks that are not obvious to outsiders but may have resulted in the apparently unexplainable war-rumblings (from China in particular) that have emerged across the region over the past couple of years; or
  • re-establish China's role as Asia's 'Middle Kingdom" by mediating the reunification of North and South Korea (under an 'authoritarian family-state' model?) if the US and its allies: (a) prove unwilling to engage in another Korean war because of the risk of being 'ambushed'; and (b) can't come up with any other effective response; or
  • prevent a new 'Middle Kingdom' domination of Korea because of the passionate commitment to 'independent development' that is the core of North Korea's church'e (Juche) ideology and which it views itself as the 'centre of the world' in promulgating.

One problem in assessing North Korea's threats is that Western observers seem much more likely than those in East Asia to be unable to see the 'forest' for all the ‘trees’.

“..... researchers used an eye-tracking device to pinpoint exactly where participants look when given a photo with a salient object (e.g., a train) set against a busy background. Americans looked outside the object an average of one time but had eight or nine fixations on the actual object. On the other hand, Chinese participants had one sharp initial fixation on the object followed by five or six fixations on the background context. “If people are seeing different things, it may be because they are looking differently at the world,” ....” (West C. How Culture Affects the Way we Think’, Observer, V20, No 7, 2007)

This difference in ways of looking at a situation is not limited to visual perception. Western minds rationally focus on specific causes and effects (ie ‘trees’), while an East Asian assessment of a situation will tend to be in terms of all the factors present and how they relate or can be made to relate (ie ‘forests’), rather than on individual elements. A noted Japanese ultranationalist once enigmatically remarked that 'The only things in this room that are truly Japanese are the things you cannot see' (ie what was truly Japanese was not the things, but the way they were arranged / related).

Illustration: Japan has many 'things' / 'trees' that look familiar (eg democratic / elected governments, a bureaucracy, banks, businesses) but it is misleading to assume that when one looks at those apparently familiar 'things' that one has understood Japan - because those 'things' operate in a way that Western observers won't be aware of (eg are driven by hierarchical social relationships rather than abstract concepts such as law or accounting principles) because of invisible cultural differences. And the consequences [??] can also be virtually invisible to those who think that looking at the apparently-familiar 'things' / 'trees' is sufficient to provide understanding.

Western methods of dealing with problems tend to focus rationally on individual components / projects subject to well established 'rules of the game' (eg law, accounting principles) which make it possible to ignore other parts of the 'forest' when dealing with a particular 'tree'. However in East Asia 'rules of the game' are not respected. Mao was criticised by his successors in China because of his inability to 'break any rules' (ie to do things in totally unprecedented ways) - see Communism versus Confucianism: The Continuing Contest in China. Deng Xiaoping (China's former paramount leader and the architect of 'socialism with Chinese characteristics') famously argued that whether something worked was the sole criteria for whether or not it was good: "It doesn't matter whether it's a white cat or a black, I think; a cat that catches mice is a good cat." [1]

Problems are traditionally addressed without assuming that there are any unchangeable 'rules of the game' by bringing the problem to the attention of all the 'trees' and then trying to bring together diverse and mutually-reinforcing contributions from all over the 'forest' into a solution (which then reinforces the power of an established regime, or becomes a new political power base - as Bo Xilia seemed to be attempting in China).  Power is not associated with making decisions but with using strategic information to induce others to take favourable actions. The Japanese strategy game of Go does not involve a single contest, but rather involves multiple, simultaneous contests anywhere on a large board. Where interests clash and neo-Confucian methods are being used to seek power, nothing may be publicly said but diverse and apparently unrelated contests will occur in many different places.

Similar observations have been offered in relation to China where 'wei qi' (the Chinese name for Go) has been used as an analogy for China's approach to economic development. Little attention is paid to the profitable use of capital in relation to particular investments - as most emphasis is placed on the benefits of the synergistic relationships that can be established between diverse activities.

Thus in seeking to understand East Asia it pays to give more attention to relationships amongst events / interests, than to individual elements.

In assessing increased security risks in East Asia (which include friction between China and its neighbours as well as North Korea’s blustering), it may help Western observers to pay more attention to the ‘forest’ (ie to the context, what else is going on, what other threats exist) than to the ‘trees’ (eg a particular threat of war viewed in isolation). And this needs to be done in 'Asian' (rather than Western) terms - which can be a quite difficult intellectual challenge.

The present attempt to look at the 'forest' suggests that, while North Korea has its own agendas that need to be considered, the source of these threats may lie in coordinated or conflicted behind-the-scenes efforts to defend / advance the position of Asia's 'authoritarian family-states' by nationalistic neo-Confucian networks in Japan’s bureaucracy, China’s so-called Communist Party, China’s worldwide Diaspora (ie in 'Greater China') as well as in North Korea's regime. And this possibility needs to be considered in traditional Asian 'Art of War' terms (eg featuring deception; very long term agendas; etc) rather than being taken at face value and considered only in terms of current events.

It is suggested below that rather than being an ignorant ideologue as it appears, North Korea's 'supreme leader' may be acting out the role of what can be likened to a 'barking dog' to attract attention to the Korean peninsular and thus either: (a) create an opportunity for China to increase its status as regional power-broker in Asia at US expense (eg by successfully promoting reunification of North and South Korea as 'autocratic family-states'); or (b) prevent the loss of North Korea's independence that that that outcome involves. 

Alternately, and less likely, it could be that North Korea is acting as 'attack dog' on others' behalf - and under one version of that scenario:

  •  a nuclear attack against the US could actually happen in parallel with apparently unrelated financial, cyber, terrorist and diplomatic actions; and
  • in providing military support to South Korea the US and its allies could find that they have been enticed in to an ambush because the threat actually comes from the entire 'forest' (autocratic Asia) not just from the 'tree' that is shouting threats. 

If so there would be a need to to simultaneously deal with several complex threats simultaneously and collaboratively - which would be a significant, though not impossible, organisational challenge.

Why: One scenario suggested below involves efforts to undermine the liberal Western international order through diverse, individually-complex and complementary actions that would have mutually-reinforcing feedback effects. To even understand the risks there is a need for those with state-of-art expertise and experience in several different areas to be involved, and supported by generalists with sufficient competence to act as rapporteurs in developing integrated responses.

Failure to deal simultaneously with multiple areas of quite different expertise is costly - as can be illustrated by the primarily security / military response to terrorist threats posed by Islamist extremists, because: (a) the costs of security / military responses were high, and the results were unsatisfactory; and (b) there were arguably options to dramatically reduce the terrorist threat by discrediting the ideology of the extremists' spiritual leaders (eg as suggested in Discouraging Pointless Extremism, 2002+). But the latter required mobilizing knowledge and experience that were beyond the competence of those dealing with the threats from a security / military perspective. A narrow focus was arguably also costly because other parts of the geo-political 'forest' (ie developing financial system and economic difficulties) were 'off the radar' of authorities who were focused on dealing with security / military 'trees'.

One feature of 'forest-oriented' Art of War tactics is to create diverse complex and mutually reinforcing challenges whose overall implications are difficult to understand. Some suggestions about how this difficulty might be overcome are suggested (in relation to Australia) in  A Nation Building Agenda.

Features of the 'Forest'

Some features of the ‘forest’ that may need to be considered include:

  • A ‘clash of /  competition between civilizations’ that has been underway for centuries between Western societies (the Realm of the Rational / Responsible) and East Asia (The Realm of the Autocratic, Hierarchical and Intuitive Ethnic Group) – see Cultural Foundations of Western Strength and East Asia in Competing Civilizations.

Some speculations about how that clash / competition might have been working out in recent decades if one takes a traditional Art of War perspective are outlined in Broader Resistance to Western Influence?.

The latter (which is a possibility rather than a certainty) draws attention to indicators of long-term mercantilist (ie economically-based) efforts by Japan to achieve its WWII goal of creating an 'Asian Co-prosperity Sphere' relatively free of liberal Western influences and the possibility (though not certainty) that: (a) China's so-called Communist (but now actually neo-Confucian) Party might have entered into a coalition with Japan's ultranationalists to achieve this goal; and (b) Islamist extremists (who share some anti-liberal interests with Japan's ultranationalists) might have entered into a similar coalition with Japan's ultranationalist in order to divert US attention and resources from the economic contest by encouraging a 'war against terror' .

Various scenarios suggesting how threats from North Korea (which also has an 'authoritarian family-state' system, though in a different form to those in Japan and China) might make sense in this context are outlined below.

Elaboration: The methods described in the latter may be relevant because they:

  • Involved neo-Confucian elites accelerated economic ‘learning’ in whole industry clusters (eg consider the ‘vision development and administrative guidance’ process used as the basis for industry policy by Japan’s Ministry for International Trade and Industry). In China this neo-Confucian catalytic role appears to have been taken after Mao's death by the so-called Communist Party rather than by the bureaucracy as was the case in Japan presumably because under Mao the Confucian bureaucracy had been portrayed as oppressing the masses (see also China's Bigger Secret);
  • Were suggested by Eammon Fingleton (with unknown validity) to have been originally developed by Japan’s military in the 1930s, and transmitted from Japan to China in 1979;
  • Resulted in bad national balance sheets because national savings were committed without reliance on calculating such abstracts as 'profitability' (see Indicators of a lack of attention to profitability), and thus a constant risk of financial crises. Efforts to guard against crises:
    • Adversely affected the global financial system - because demand had to be repressed to ensure that there was no need to borrow in international profit-oriented financial markets and this required trading partners to be willing and able to sustain large current account deficits and ever rising debts (see Impacting the Global Financial System);
    • Led to ongoing contests over the nature of the global financial system (see An Unrecognised Clash of Financial Systems); and
    • Potentially made global economic growth unsustainable (see Structural Incompatibility Puts Global Growth at Risk, 2003+ and Debt Denial: Stage 3 of the GFC?). Unless asset values are rising rapidly to create a 'wealth effect' (as they were prior to the start of the GFC) it is very difficult to maintain growth if the first several percent of domestic demand goes to meet demand deficits elsewhere that are generated by financial repression to protect underdeveloped financial systems. Moreover when international financial imbalances remain large it is arguably impossible for counter-cyclical fiscal or monetary policies to create sustainable economic recovery (see Counter-cyclical policy can't solve structural problems );
    • May have led China to seek to establish to yuan as an international trade currency in the expectation that if it were to be backed by gold reserves, it might be accepted in exchange for hard currencies without anyone looking closely at China's national balance sheet (see also Buying Chinese War Bonds? in relation to the need to do this and Interpreting the Canary in the Gold Mine in relation to the potential divergence between the value of physical and paper gold)
  • Have created serious risks of political instability in China because its post-1978 'socialism with Chinese characteristics' (ie the undisclosed reintroduction of an elitist neo-Confucian social order to drive an economic 'miracle') was incompatible with the popularly-supported equality aspirations of China’s nominal communism (see Communism Versus Confucianism: The Continuing Contest in China) - especially because some in the so-called Communist Party took the opportunity to enrich their families (and thereby created what is arguably the world's most inequitable distributions of wealth).
  • China's likely efforts to create a new international neo-Confucian order on the basis of its growing economic and military strength - ie an order similar to that which existed in Asia prior to the arrival of Western influences - and of which Western societies have no recent experience. That this is under way is indicated by the apparently-easy potential cooption of Australia as a 'tributary state' under such an arrangement (see A Diplomatic Coup in Beijing: By Who?).  The creation of such an order would involve the use of behind-the-scenes  methods for influencing neighbours to collaborate in addressing supposed civilizational challenges that they face from outside. In East Asia such  invisible-to-Western-observers influences might be either welcomed or: (a) the source of growing war-rumblings across East Asia; and (b) tension with Japan and North Korea in particular because of the view of ultranationalists in Japan and devotees of church'e in North Korea that their own ethnic communities should be the 'centre of the world' in using those methods to achieve somewhat different goals;
  • The US's 'pivot towards Asia' to promote universalist values - which has the potential to provides a rallying-point for the various East Asian 'family states' and their potential allies world-wide who oppose those values;

In relation to the goals of the US's so-called 'pivot to Asia' it has been suggested that:

"As the President explained in Canberra, the overarching objective of the United States in the region is to sustain a stable security environment and a regional order rooted in economic openness, peaceful resolution of disputes and respect for universal rights and freedoms." [1]

Moreover, while many will believe that universal rights and individual liberty are widely accepted values that should attract general support, counter-arguments can be offered. For example:

  • East Asia's neo-Confucian 'family states' (eg Japan, China and North Korea) are anything but committed to economic openness; or universal anything; or individual rights at the expense of the 'family state' as a whole. To varying degrees their political and economic systems are incompatible with such values (to a high degree in the case of North Korea and with increasing subtlety in the cases of China and Japan) - and collectively their economic and military power is formidable.
  • Islamist extremists have a similar viewpoint (eg see possible collaboration with radical nationalists) - and their influence in the Muslim world remains non-trivial;
  • Despite expressed preference for peaceful resolution of disputes, recent attempts by the US and its allies to defend and expand economic openness / universal rights and freedoms have been based primarily on hard-power methods which have generated collateral damage, and soft power alternatives have not been serious deployed (eg consider Discouraging Pointless Extremism). While ignorance is more likely to be defeated in the academy than on the battlefield, the contest has been conducted mainly in the battlefield;
  • the intellectual / academic case for Western culture has been undermined by the dominance of 'post-modern' assumptions in the social science and humanities faculties of many universities. The view that cultural assumptions are merely a matter of preference and have no practical consequences is invalid, but seems to be 'politically correct' (eg see Eroding the West's Cultural Foundations).  In Australia a national history curriculum was adopted that did not even provide students with an ability to understand the foundations of their own liberal institutions and past strengths (see National History Curriculum: Information without Understanding);
  • various features of profit-focused Western financial systems have contributed to global economic dislocation (eg easy money policies, the emergence of complex financial systems and the adoption of the Euro without fiscal integration in Europe);
  • there is a widespread view that profit-focused Western style financial systems are solely responsible for economic dislocation. Such views are naive (eg see Soros might also see the world through blinkers), but have not been challenged because of a lack of any serious evaluation of the cultural issues involved. Thus resistance movements (such as the Occupy Movement) have emerged;
  • a loss of individual responsibility has undermined the viability of liberal Western institutions, and invited external contempt (see Eroding the Moral Foundations of Liberal Institutions).

And opponents of Western values would potentially be further encouraged by the perception that the West (the realm of the rational / responsible individual) is in terminal decline anyway

The values that the US 'pivot to Asia' seeks to promote are worthwhile, but substantial changes are probably needed before it is likely that such a process will be successful.

  • The parallels and differences between North Korea's system of socio-political-economy and those in (say) Japan and China. North Korea's church'e ideology involves an  extreme / isolationist form of East Asian cultural traditions (especially Confucianism) combined with Marxism - and suggests: (a) what China would have been like if it had not repudiated Maoist Communism in the late 1970s; (b) why China maintains ties with North Korea; and (c) that North Korea might resist China's domination. Though the issues involved are complex (see following notes) it appears that there is a cultural and ideological basis for either collaboration or conflict between North Korean, Japanese and Chinese nationalists that is not obvious if they are examined only from a Western perspective (ie in terms of concepts such as democracy, capitalism, socialism etc that do not really capture the radically different way in which East Asia thinks and works).

The North Korean Context: An overview of North Korea is provided by Wikipedia. A commentary [1] on the domestic environment in North Korea (which is relatively resource rich but economically underdeveloped) referred to:

  • its long history as the site of conflicts;
  • a commitment to 'self reliance' after 1948 (ie closing the country off economically and diplomatically) and to a philosophy of self-mastery (ie for North Korea to rely on itself alone). Independence was sought even in the face of famine, as was a strong defence system;
  • perception of the ruling dynasty as somewhat supernatural and 'born of heaven';
  • large numbers of people live in prisons and are subjected to abuses;
  • daily life being dominated by the family and propaganda;
  • an education system that does not involve learning - and does not prepare students for the modern world.

The apparent 'brain-washing' of North Korea's population raises questions about its cultural and educational  environment, it relation to which it has been noted (in sources many of which date from the 1990s) that:

  • North Korea's Juche (church'e) ideology holds that the masses are the masters of a country's development - and in the basis of a strong military posture and reliance on Korea's resources. It can be seen as a 'spirit of self reliance, and according to Kim Il-sung, Juche is based on the belief that "man is the master of everything and decides everything" [1];
  • Church'e is the cornerstone of North Korea / the monolithic ideology of the Party / the embodiment of Kim's wisdom. It was proclaimed in 1955 as the basis of a Korean centred revolution - rather than one to benefit other countries. It sought independent foreign policy; a self-sufficient economy and defence capacity. It was intended to build a monolithic system of authority under Kim's exclusive leadership. During the first 10 years of North Korea's existence from 1945 Marx-Leninism had been endorsed, and nationalism was minimized out of deference to China and the Soviet Union. Church'e was presented as meeting a need for a way to authoritatively interpret Marx-Leninism in Korea [1].
  • Marxism did not show how to achieve socialism, and this created scope for church'e. North Korea's leadership was influenced most by China's communist model (and Kim can be likened to Mao). But North Korea's system differs from China's - intellectuals were never seen as a class of exploiters (but were included). Its political system is best seen as corporatist (ie one that an involves and organic politic to the liberal, pluralist alternative). Kim is seen as the 'head and heart' of the body politic, not just as a victorious commander. There is an assumption that Korea is the centre of the world, radiating outwards the rays of church'e - especially to third world countries. The world's attention is focused on Korea. Society involves ever widening social circles revolving around Kim. The family remains the model for social organisation. One the outer circle are foreigners - as a reflection of Korea's extraordinary unity and history of exclusionism. However the circle keeps expanding to encompass foreigners under Kim and his church'e ideology [1]
  • Juche (church'e) ideology involves a fusion of Korean tradition (Confucianism) and Marxism. North Korea's system is different to that in other socialist states. Confucian culture ruled supreme for 500 years during the Joseon (Chos'n) dynasty. It led to an authoritarian political culture, that influences North Korea.  Confucianism provides: political ideology; a means for communication / ethics to bind society together; a view of education as a behaviour changer - and a way of creating a new humanity by internalising of control and discipline. As in Confucianism Juche stresses the formation of a new communist humanity. It puts action before theory. Confucianism which had previously been accepted by criticised during Japanese colonial period (eg because of its emphasis on five relationships (ie father and son; ruler and minister; husband and wife; elder and younger brother and amongst friends) and three bonds (ie to father / ruler / husband) - but was later incorporated into the Juche ideology as the basis for authoritarianism in North Korea (The Resurrection of Confucianism in North Korea, Review of Korean Studies, 2010)
  • North Korea's experience of Japanese colonialism (1910-1945) had a major impact on the country. It brought development / underdevelopment, agrarian growth, industrialization, dislocation. It spawned a new role for the central state / new political leaders / communism / nationalism / armed resistance / treacherous collaboration. Koreans had always felt superior to Japan, because of its closer links with China. After 1910 Japan substituted its ways for Korea's (ie it brought in a Japanese ruling elite. modern Japanese education (replacing the Confucian classics), Japanese capital and the Japanese language). This was seen as illegitimate and humiliating - especially as Japan and Korea had formerly been very similar. Japan's bureaucracies were big by colonial standards. Many new institutions were established. Koreans became second class citizens. Japan held Korea tightly and watched it closely. The strong highly centralised state mimicked that in Japan (intervening in the economy / suppressing dissent). Koreans always saw all benefits going to Japan, but Japan's strong colonial state, the multiplicity of bureaucracies, administrative guidance of the economy, repression of labour unions and dissidents provided a post-WWII model for both Korea's. Japan showed Korea an early version of the bureaucratic-authoritarian path to industrialization [1].
  • North's Korea's modern revival of Chosn Confucianism is an ideological phenomenon (ie it involves the use for Confucianism as a way for political elites to manipulate the population and legitimize their role). The image of the family-state comes from the regimes political discourses. Its Church'e (Juche) ideology has been systematised and transformed through Confucianism. Confucianism has been used to legitimize the regimes political power [1]
  • Church'e is a break with the Confucian past. It was developed by Kim Il Sung during the period of struggle against Japanese imperialism. It emphasises cultural / economic and political isolationism - while stressing the error of imitating others or becoming international. North Korea has promoted church'e thought worldwide. It provides a relentless emphasis on self-sacrifice and hard work. Everything is expected to be possible through dedication and hard work [1]
  • North Korea has created a system of totalitarian control which exceeds anything in the Soviet Union or Eastern Europe. The population is rigidly controlled. Individuals rights are subordinate to the state and the Party. Education, mass mobilization, persuasion and coercion are used to ensure political / social conformity [1]
  • Formal education has been central to social and cultural development for centuries. During the Chosn Dynasty the royal court established Confucian schools. There was a neo-Confucian emphasis in the sixteenth century. In the 19th and 20th early 20th centuries, Western curricula started to be taught. After the separation of North Korea, the education system was modelled on that of the Soviet Union [1]
  • Neo-Confucianism (which combines the social ethics of the classic Chinese philosophers with Buddhist / Daoist metaphysics) was the dominant value system of the Chosn dynasty. "One of neo-Confucianism's basic ideas is that the institutions and practices of a properly ordered human community express the immutable principles or laws that govern the cosmos. Through correct social practice, as defined by Confucian sages and their commentators, individuals can achieve self-cultivation and a kind of spiritual unity with heaven (although this was rarely described in mystic or ecstatic terms). Neo-Confucianism defines formal social relations on all levels of society. Social relations are not conceived in terms of the happiness or satisfaction of the individuals involved, but in terms of the harmonious integration of individuals into a collective whole, which, like the properly cultivated individual, mirrors the harmony of the natural order." This became rigid by the sixteenth century - with an emphasis on hierarchy in social relations and individual self-control. There was no emphasis on individual rights. [1]
  • North Korea's official religion is the cult of Kim Il Sung. North Korea has sought to use its few Christians to promote links with South Korea and the West and the North's reunification agenda. Those Christians see no contradiction in venerating the 'great leader' and his secular church'e philosophy (just as Japan's Christians had been forced to accept the divine status of Japan's emperor before WWII) [1]
  • North Korea's primary / secondary education system includes a balance between academic and political subjects - though there is a strong political component in some 'academic' subjects. Special deference towards political leaders is expected [1];
  • The role of literature and art in North Korea is primarily didactic - ie an instrument for inculcating ideology and the need to continue the struggle for revolution and the reunification of Korea. Foreign (especially Japanese and American imperialists) are predicted as monsters. The state and the Korean worker's Party control the production of literature and art - and there are no underground movements like those in the Soviet Union of China. There is little or no exposure to foreign influences. There is an emphasis on: taking the best from the past and discarding change; and collective consciousness [1]

Comparing North Korea  with Japan and China

North Korea apparently combines traditional East Asian cultures with Marxism, while Japan and China have combined those traditions with something a democratic non-capitalism and socialism  respectively. It is noted (somewhat randomly) that:

  • there are some common features of all three systems - including the image of the 'family-state' and the role now played by neo-Confucianism (see features mentioned above) in enabling social elites to influence the 'family's' thinking and actions. In both North Korea and Japan the 'family-state' is a single unit, whereas in China it comprises many different sub-elements (ie China is a 'try of sand' rather than a 'block of granite'). Strict control is sought in all cases, though the degree of subtlety varies (being greatest in Japan and least in North Korea). China apparently / possibly intends to shift towards an education system based on traditional systems of Chinese thought that could make a population unthinkingly responsive to leaders' suggestions and willing to sacrifice self for the community (ie in the direction of North Korea);
  • Chinese nationalists view both Korea and Japan as having been colonised by the 'great Han race' [1]
  • both Korea and China used Confucianism as the means of interpreting Communism in 'Asian' terms (ie as 'socialism with Chinese characteristics' and North Korea's church'e ideology respectively), while Japan used it as a means for interpreting democracy and a non-capitalistic market economy in 'Asian' terms;
  • in both North Korea and Japan there is a Confucian perception that leaders have a link with 'heaven' (ie with an expectation that they will act in accordance with what is for the good of their ethnic community), and in China there is a search for ways to overcome problems of corruption / abuses of power - perhaps through redeveloping the Confucian expectation of a 'mantle of heaven';
  • Japan's ultranationalists have a view that Japan could take the central role in the world that parallels North Korea's perception under its church'e ideology. This could potentially lead to conflicts of interests amongst leaders in those countries as China increasingly uses into increasing economic / strength to assert its status as a new 'Middle Kingdom' in Asia (which requires that others accept tributary status). Not everyone can be the 'centre of the world', and the fact that all share neo-Confucian methods does not mean that those  methods are being used to achieve identical / compatible goals;
  • Korea (both north and South) endorses an ethnic nationalism (ie the view that Koreans form a race / ethnic groups and a distinct culture). This emerged during Japanese occupation - and was a motive for resisting Japanese occupation. It parallels the views of Japanese ultranationalism and German Nazism that prevailed prior to WWI - and continues to the present in Korea with a commitment to the ethnic homogeneity and pure bloodline of the 'Great Han' race [1]
  • North Korea, China and Japan all share a passionate commitment to the uniqueness of each society, and a resentment of the economic, military and political power and influence of Western societies with their commitment to universal values and to individuals (rather than the 'family-state'). China's international relations are based on non-interference - and a disregard for what Western observers see as 'human rights' abuses. North Korea's church'e ideology is all about self-reliance and not being influenced by others. Japanese prime minister expressed a desire to 'get our culture back', and growing nationalism in Japan can be interpreted as a desire to turn inward [1].

North Korea's isolationism might also indicate how Japan and China might turn inward at some future time, as they have in the past when coping with the outside world seemed too hard / not worth it (eg after the voyages of China's Admiral Zheng He, and as Japan did during the Tokugawa period from the start of the 17th century until it was forced to open by Admiral Perry).

  • The increasing signs of resurgent (ultra?) nationalism in Japan - including the portrayal of Japan's early 20th century colonial and military interventions in Korea and China as part of a noble cause (see Reverting to the Soul of a Samurai);
  •  South Korea's apparent shift to a more liberal / Western-style political and economic order in recent years (eg reducing the role of the chaebol as economic instruments of the state) - after having used Neo-Confucian methods initially as the basis for its rapid economic modernisation,. This could be seen as treasonous by those committed to what are believed to be proper 'Asian' (ie autocratic family-state) models for the region's development. Moreover this approach might be reversing under South Korea's new apparently-more-China-friendly president;
  • The growing risks of either: (a) a crippling global financial / economic crises; or (b) financial / economic crises (and thus severe social stresses and perhaps even political failure) affecting countries such as Japan and China because of the the incompatibility between what is required for global financial stability and the imbalances that have been intrinsic to 'Asian' mercantilist economic strategies (see Japan's Predicament and China: Heading for a Crash or a Meltdown).

Elaboration: These risks are not easily seen but relate to the way financial systems have been used by Japan and China to achieve political / mercantilist goals (see above) and the incompatibility between these and the Western-style international financial system which facilitates commercially oriented initiative by independent enterprises to meet the needs of individuals as savers or consumers. It can be noted that:

  • serious problems affecting the global financial system are becoming increasingly obvious that can't be resolved without addressing the mercantilist economic tactics used by countries such as Japan and China;
  • countermeasures are available that should be effective (eg see China may not have the solution, but it seems to have a problem). However if such counter-measures are not put in place the financial systems that are the foundations of Western economic and military capabilities could be seriously compromised;
  • the US is showing signs of: (a) recognising that it has been the subject of mercantilist challenges from East Asia, and also increasing military challenges; (b) economic recovery driven (for example) by a housing recovery and shale gas developments; and (c) the adoption of tactics that might enhance its economic competitiveness;
  • the trigger point for a financial crisis in (say) Japan or China would involve the emergence of current account deficits that forced such countries to rely on borrowing in international profit-focused capital markets to fund growth. This is not immediately likely because of the accumulated foreign exchange reserves eg that a former World Bank expert China noted that those reserves protected China from the 'sovereign risk' otherwise associated with its financial practices. However there is a limit to which foreign exchange reserves can provide such protection;
  • Japan is already experiencing current account deficits, and China is headed that way. Though statistics showing a sudden Chinese export boom emerged in early 2013, they were not matched by trading partners' trade data;
  • China has sought to promote the use of its currency (the Renminbi / Yuan) for trade. In the absence of a current account surplus, China would no longer have a torrent of $US from net exports to prevent the need to borrow in international markets. Thus it might hope to obtain foreign exchange to cover any current account deficits in return for the Yuan. The problem with this is that it is not clear why anyone (other than a 'tributary' state) would want to hold the Yuan [1]. The latter is a 'political' rather than a 'commercial' currency. It is a component of an economic system that allocates 'market oriented' resources on the basis of consensus amongst the ethnic connections of a neo-Confucian elite (rather than on the basis of profit focused judgements by independent enterprises) and is not backed by a solid financial market.

There are undoubtedly other features of the 'forest' that have not occurred to the present writer.

Implications for Security Threats: Some Scenarios

The possible implications of the ‘forest’ in terms of various security threats that are emerging in East Asia were previously speculated in Looking for meaning in war warnings from Asia and Whose intentions: Kim's or China's?.

In brief: The former suggested that, though there were various ways to interpret the friction / sabre rattling between Japan and China, the possibility of an anti-Western coalition between the neo-Confucian factions that dominate both should not be ignored.

The latter suggested a 'barking dog' scenario under which North Korea's blustering might usefully be viewed as a means of achieving relatively low-cost strategic gains for China at US expense.

However these are by no means the only possibilities, and other scenarios can be suggested in relation to North Korea's threats.

Firstly North Korea could be simply an isolationist rogue state. This seems to be the case, and what is happening makes no obvious sense - though North Korea apparently believes that its church'e ideology (see above) provides a possible model of world-wide relevance under Korean leadership. This belief might justify 'making a lot of noise' to attract attention (especially the attention of less developed nations).

However, while North Korea's threats may reflect such ambitions and / or domestic political agendas, given the 'forest' mentioned above there is a case for taking a broader view.

A second alternative is that North Korea could (as also suggested above) be a 'barking dog' - ie making a lot of noise in the hope of generating relatively low-cost strategic gains for China relative to the US because of:

  • the probability that neo-Confucian methods can encourage or discourage aggressiveness in what is perhaps a Chinese vassal state (and perhaps also a 'China in training') [eg by encouraging Kim Jong-un (Korea's young leader) to believe that acting tough is the best way to secure his political position and get a good deal / concessions / cash for North Korea - as suggested below];
  • the costs to the US of increasing its military involvement in Asia both financially and in terms of again dislocating efforts to maintain / increase its economic strength and develop effective non-military collaboration in Asia. One observer pointed to the obvious difference between the US's military deployment and China's economic collaboration emphasis in their efforts to boost their relative influence in Asia (see The Future of Asia: Hard Liberal versus Soft Autocratic Options); and
  • the potential for demonstrating to Asia and the world both: (a) that the US’s military capacity is of no use against lunatic regimes; and (b) that China’s behind-the-scenes methods of exerting influence can (in due course) be more effective – perhaps as part of a process to re-establish China’s role as the ‘Middle Kingdom’. Boosting China's role as the regional power-broker (which 'trees-focused-and-forest-blind' Western observers immediately and predictably perceive as the best way to solve the problem) could be a primary motive for the whole exercise.  Suggestions from China that South Korea should look to China's leaders (rather than to the US) to reduce its risk of being attacked by North Korea can also be noted [1] - as can the fact that China would be more willing to provide such support if South Korea steps back towards an 'authoritarian family-state' model rather than towards towards the West's 'rational / responsible individualism'.

An Explanation in Terms of Boosting China's Role. A contact in Australia who it was reasonable to assume had good Korean connections provided a possible explanation in terms of Korea's political situation (and China's potential role) along the following lines:

North Korea’s threats to attack South Korea and the US are the result of political contests within North Korea, and its international relationships (especially with South Korea, China, Russia, Japan and the US). North Korea’s new president Kim Jong-un (born in 1983) is seen by some in North Korea as too young, and has been competing to retain power with the husband [ ???] of one of his father’s daughters [???]. The husband is both older and more willing to listen to China. To prove himself Kim Jong-un tries to prove that he is very tough.

North Korea has already moved most of the equipment and forces that it would need for an attack very close to the border. [[This view was contradicted [1] by a source who privately claimed reliable Chinese and North Korean contacts  - and the reality was impossible to ascertain]]

Kim Jong-un’s goal is to gain concessions from other major powers with an involvement in the Korean Peninsula, as well as money.

The best solution for Korea would be for the US to remove its forces out so that China can help North and South Korea to re-unite (as East and West Germany did). They are one people, and have complementary strengths – the north is resource rich while the south has sophisticated economic capabilities. Together they could become very strong.

South Korea’s new president (Park Geun-hye) is much more willing to listen to China than her predecessor (Lee Myung-bak)

To understand this there is a need to consider 'who's who' in the Kim dynasty. This includes:

Kim Il-sung (1912-1924) who led North Korea from its establishment in 1948 til his death. He: was autocratic; established an all-pervasive cult of personality; promoted the church'e ideology; and is still regarded as the 'Eternal President'

Kim Jong-il (1941-2011) who succeeded his father, Kim Il-sung  as 'supreme leader' in 1994 until his death

Kim Jong-un (1983- ) is the third son of Kim Jong-il, who was appointed as his father's successor in 2009, and is North Korea's current 'supreme leader' (though he is a member of a tripartite committee that in theory equally share one third of the president's powers - the others being Kim Yong-nam (1928- ) Kim Jong-il's eldest son and who is chairman of the Supreme People's Assembly and Pak Pong-ju who is Premier of North Korea).

Against this is the apparent church'e view that Korea should be independent of all foreign influences, including China's, despite the features they have in common. However this objection might be negated by a claim that China would merely act as peacemaker between North and South Korea, and the assumption that a war-weary and internally divided US might be willing to accede to this in preference to becoming involved in a new Korean war that could result in being 'ambushed' (as in many Western movies) if the 'US's posse chases the gun-toting outlaws up a dry gulch'.

A weird, but not necessarily impossible, version of the 'barking dog' scenario is that North Korea's (partly Western educated) 'supreme leader' might be desperately trying to get an opportunity to get outside help to head off a China-sponsored reunification of Korea as a Chinese tributary state (which is one possible outcome).

In support of this scenario it is noted that:

  • Kim Jung-un reportedly asked US President Obama to 'just phone me';
  • a domestic political power contest may exist between the young Kim Jong-un and an older leader who might be more willing than he is to 'listen to China';
  • a passionate commitment to 'separate development' is the foundation of North Korea's church'e ideology and the view that North Korea is the 'centre of the world' in promulgating that world-changing ideology;
  • there are indications that war-rumblings between Japan and China could emerge from China flexing its diplomatic muscles in Asia, in ways that threaten Japan's perceptions of its status;
  • the 'leadership' role of elites in East Asia can consist of creating 'chaos' which forces their subordinates to collaborate in creating a new order - and the undoubted chaos being created by Kim Jong-un (which will force many global powers to collaborate in finding a solution) can be viewed in that light.

The third alternative is that North Korea might be an 'attack dog' - seeking to generate real conflicts to enable itself and allies to obtain vengeance for perceived historical injuries, or to progress emerging conflicts. Two different scenarios can be envisage involving either:

Elaboration: As a 'barking dog' North Korea has: (a) a militaristic population with the world's largest army (including reserves) of 8 million; (b) second rate weaponry; and (c) no allies. However as an 'attack dog' acting on behalf of others North Korea might not only possess an army of 8 million but also: (a) sophisticated weaponry / logistic capabilities provided by allies; and (b) unexpected allies.

North Korea has threatened pre-emptive (perhaps nuclear) strikes against the US and South Korea.

Attack Dog Scenario 1 ('We Fooled You')

However as an 'attack dog', it is possible that North Korea's real target could be Japan (if the friction between China and Japan is real and relates to the injuries that Japan inflicted on China in the 1930s and 1940s - as North Korea maintains massive resentment of Japan because of both this and Japan's 1910-1945 colonisation). If China were encouraging North Korea as an 'attack dog' as its proxy for action against Japan, US intervention on behalf of Japan would presumably be limited to destroying the 'dog's' ability to launch further attacks. One problem with this revenge-for-the-1930s-and-1940s scenario is that it is not clear, from North Korea's viewpoint, why such an attack would be launched now - though Japan's increased nationalist rhetoric and suggestions that the early 20th century colonisation of Korea was part of a noble program might provide an explanation..

However China's motivation under the 'Attack Dog 1' scenario might involve North Korea acting as China's 'attack dog' in relation to the current sabre-rattling between China and Japan which could have its origin not only in history but also in: (a) Japan's increasingly nationalist rhetoric and attempt to rationalize its invasion of China in the 1930s; and (b) the serious current political and economic difficulties that China now faces as a consequence of the apparent transmission to China's so-called Communist Party in the late 1970s of the neo-Confucian methods that had been the basis of Japan's pre-1990s economic miracles.

Attack Dog Scenario 2 ('Don't say we didn't declare war before we attacked this time')

However, if the possible anti-Western-liberalism coalition between neo-Confucian elites in Japan and China is real, then the 'attack dog's' target for attacks could be South Korea and the US in order to:

  • discipline South Korea for its perceived treason through apparently accepting a more 'liberal' / Western approach to 'Asian' development (an action that would be 'justified' on a similar basis to the Tiananmen Square massacre) and draw the US into what would amount to an 'ambush' as it provides military aid to South Korea against an attack that seems to be coming only from North Korea but could actually involve many different apparently unrelated elements;
  • help gain revenge for: (a) centuries of perceived injuries that resulted from Western expansion, for which the US is the main current banner carrier; (b) US Admiral Perry's intervention in the mid-19th century that forced Japan to open to the West; (c) Japan's military defeat in WWII, in particular in relation to the atomic bombing of Hiroshima and Nagasaki; and (d) the outcome of the Korean War; and
  • reduce the risk of the financial crises that will affect Japan and China if the global financial system is stabilized / reformed under Western-style rules (ie if action is taken against systems dependent on 'financial repression' to defend poorly developed financial systems).

The sudden and unexpected drop in the value of gold in April 2013 seems likely to presage a major new financial crisis and also affect the way the global financial system evolves (as suggested in Interpreting the Canary in the Gold Mine).

Though a run on physical gold that caused problems for holders of paper gold may have been a factor in the gold crash and though China and various other countries have been prominent boosting demand for physical gold, it seems most likely that the event was simply a product of the interaction of diverse causes.

In relation to this way-out (and thus not necessarily likely) version of the 'attack dog' scenario it can be noted that:

  • There are reasonable indications: (a) that Japan's ultranationalist factions and neo-Confucian bureaucracy have sought to use traditional Art of War tactics to undermine the US since 1945 through mercantilist economic tactics, despite Japan's official position as the 'good cop' in Asia (from a US perspective); and (b) that China was brought into this process in the late 1970s;
  • China and North Korea might participate in a coalition with Japan (even though they have strongly resented Japan's colonial and military interventions prior to 1945, and the lack of any apology) if:
    • private apologies for historical offences have been offered;
    • Japan's pre-1945 'Asian Co prosperity Sphere' ambitions and post-1945 mercantilist economic tactics were presented as compatible with China's and North Korea's current ambitions;
    • it was seen as possible to make a significant difference to the US's (and thus the West's) economic, military and political power through a diversity of coordinated but apparently unrelated actions.

 Such coordinated attacks might include:

  • the threatened (possibly nuclear) attack from North Korea - which would either: (a) generate a massive US response (eg 'turning North Korea into a car park') that further weakened the US's international status (see below); or (b) bog the US and its allies down in another more-or-less-conventional 'Asian' war in defence of South Korea - and thus impose unwanted costs and disrupt US efforts to get its economy and a liberal global financial system back into order;
  • further disrupting the global financial system (and also and the Internet), which are critical elements of the 'nervous system' of the Western-style global order, but much less important to the way East Asia operates (see below);
  • unexpected new attacks against US targets by Islamist extremists worldwide (noting the uncertain possibility that the latter were acting in coalition with Japan's ultranationalists in launching the 911 attacks - eg Osama Bin Laden's reported reference to the US atomic attacks in Japan at the end of WWII as one of the justifications for the 911 attacks);.
  • efforts to lay foundations for international collaboration independent of post-WWII Western-style international machinery (through the BRICS network and otherwise)
Speculations about Disabling the Financial System and the Internet

The global financial system is weak (see Debt Denial: Stage 3 of the GFC) largely, though not solely, as a consequence of the macroeconomic distortions associated with East Asian systems of socio-political-economy . Moreover:

  • when / if the international financial system recovers East Asian economies are likely to suffer serious relative decline for reasons referred to above;
  • capitalistic (ie profit-oriented) finance is the 'nervous system' of Western economies - but much less important in East Asia where economic coordination tends to be achieved through social relations (rather than by independent calculations of profitability). As noted above the West's strength in economic affairs lies in dealing rationally with individual activities ('trees') in an ordered environment (eg involving a rule of law and profit-focuses accounting principles), while the strength of East Asian neo-Confucian traditions lies in developing consensus without reliance on any given 'rules of the game'.  Thus creating chaos in financial system might incapacitate the West economically, but be less serious in East Asia ;
  • the global financial system could be weakened further by cyber attacks against financial institutions (eg consider China's alleged involvements cyber warfare) or by irresponsible quantitative easing.

    In relation to the latter, there is a need to consider: (a) the role that Japan played through easy money policies and 'carry trades' in creating the asset bubbles that contributed to the GFC (ie Japan was for many significant years the world's main source of credit) (see An Unrecognised Clash of Financial Systems and GFC Causes); and (b) its recent monetary actions seem to have gone beyond the measures adopted by reserve banks in the US and Europe.

    Financial repression in Japan (ie a financial system that is arranged to direct savings / credit into investment, rather than to households for consumption) is arguably the reason that Japan has experienced two decades of deflation. This is are now being used to justify extreme quantitative easing that will presumably be intended to: (a) direct new credit into carry-trades and asset bubbles elsewhere; and (b) devalue the Yen - both of which might reduce Japan's need to borrowing in international profit-focused financial markets.

    What actually happened as a consequence is difficult to interpret as it was suggested that:

    •  this presumption about substantial capital outflow was the reverse of what was actually happening [1], but that
    • interest rate risk increased in Japan - perhaps in recognition of its government's extraordinarily heavy debt levels. Under some circumstances this could lead to a flight of capital from Japan into $US [1]

The Internet is now a critically important element of the 'nervous system' of Western societies (ie it allows analysts with different perspectives to communicate to make rational sense out of a complex and rapidly evolving political and economic environment). However the Internet is much less important in East Asia (because abstract understanding is less important than intuitive consensus), and is potentially vulnerable to the cyber warfare capacities that China is seen to have been developing.

If North Korea is acting in coalition with Japan and China it might then posses an army of 8m 'virtual samurai' and also: (a) more advanced technological capabilities (supplied by allies) than those publicly demonstrated; (b) unexpected logistic capabilities and (c) an ability to launch nuclear attacks against the US using long range missiles, for which any nuclear responses would be limited to North Korea (ie the 'attack dog' might be willing to be sacrificed - noting the emphasis on self-sacrifice that is a major element of North Korea's national ideology - and to expect that its allies would significant weaken the US and its allies through 'unrelated' attacks on the the West's (financial / communications) 'nervous system'). China and Japan would not be seen to be involved in a military sense and could continue uninterrupted economic and military build ups.

If a nuclear attack on the US provoked a severe military response, then the US's global status (and liberal geo-political agendas) would be eroded (as occurred after the 911 attacks) because, its response would be:

  • directed against one of the world's most backward societies - and one whose 'mission' has been to mobilize support for its church'e ideology from other poorly developed societies;
  • popularly portrayed in China as an attack by capitalist-imperialists on a Chinese ally, and equated in Japan with the still-resented US nuclear attacks on Hiroshima and Nagasaki to end WWII;  and
  • viewed with limited sympathy in many parts of the world because of the sorts of blowback that has been the outcome of US efforts to use military force to support the creation of a democratic capitalistic world order - in an environment in which that order is increasingly strained and questioned because capitalism is seen (arguably incorrectly) as the main cause of the GFC.

In support of the Attack Dog 2 Scenario is that:

  • some possible components are in clearly place. North Korea has threatened war. Japan has launched an aggressive (?) program of quantitative easing that could be expected to stimulate asset bubbles and further increase the already-significant risk of another financial crisis. China's cyber-warfare capacities seem to be well developed, and to have been causing security concerns;
  • the US 'pivot to Asia' in support of liberal Western values could provoke a reaction from the 'family states' (notably Japan, China and North Korea) opposed to those values (see above);
  • the out-of-the-blue terrorist attack on the Boston Marathon suggests the possibility  that a new program of attacks by Islamist extremists could be experienced. However it certainly does not prove this - especially if there is only one isolated incident and as responsibility for that attack has not been established (though it appears that Islamist links are possible [1, 2]);
  • Japan's prime minister has also made nationalistic remarks that could be seen to inflame tensions in the region (and perhaps would be a way to both encourage nationalists across the region, and also divert suspicion from Japan if the US and South Korea were attacked by North Korea). [1];
  • the General Secretary of China's Communist Party has espoused a nationalistic vision of the resurgence of the 'Chinese race' - which is significant in that: (a) China's nationalists reportedly perceive both Korea and Japan to have been colonised by the 'Great Han Race'; and (c) Japan's ultranationalist regarded Japan's Han origins as the basis for efforts to co-opt China (Japan's 'big brother') in the 1930s as part of Japan's push for an Asian Co-prosperity Sphere.

Against the Attack Dog 2 Scenario is that:

  • the elements of an Attack Dog 2 scenario could be in place without necessarily implying any collaboration amongst those involved;  
  • Xi Jinping's nationalistic vision of of the resurgence of the 'Chinese race' could be purely for domestic consumption - to motivate China's people to look past their disaffection with the inequalities and abuses of power associated with rule by the so-called Communist Party;
  • it would require a lot to convince China and North Korea that they really can trust Japan now. Elsewhere in Asia, Japan appears to trigger not only resentments for past actions but a general perception that it simply can't be trusted;
  • there are reportedly signs of real frictions between Japan and China in relation to Asia-wide governance arrangements (ie those related to the way in which regulatory networks operate) [1]. The fact that Nomura (as significant player within Japan's financial institutions) has publicised weaknesses in China's financial system also reduces the likelihood of behind-the-scenes collaboration [1]. China Communist Party reportedly used anti-Japanese rhetoric connected with Japan's WWII actions in Japan as a means for building nationalistic support in the post Mao era [1];
  • it could be seen as an unnecessary overkill because: (a) there are alternative, less extreme, tactics for dealing with the challenges that the neo-Confucian 'autocratic family-states' face; and (b) the West (ie the realm of the rational / responsible individual) can be perceived to be in terminal decline anyway.

However if the Attack Dog 2 scenario is realistic then it might be that April 29 could be the date on which a nuclear attack on the US would be launched.

Why: April 29th is Shōwa Day - the anniversary of the birth of Emperor Hirohito (Japan's emperor from 1926 to 1989). As the head of Japan's 'family-state' Hirohito's approval would have been required for Japan's 1930s militarism and post-WWII mercantilism - by 'smiling on' those kuromaku (fixers in the relationship between government, business, Yakuza and the military) of whom he approved. The 'tale of the 47 ronin' has been said to be Japan's most popular folk tale - and concerns ronin (masterless samurai) who pretend dissolute living for decades after their master had died while trying to defeat an enemy so that they could get an opportunity to finally kill his enemy. A nuclear attack by North Korea on Shōwa Day (the day on which Japan not only celebrates an emperor's birthday but contemplates its struggles during his reign (the Shōwa era), including the still-resented US atomic attacks that ended WWII) would leave no one in Japan with any doubt about what was going on (even though nothing would need to be publicly said).

Overall the 'barking dog' scenarios (even including the 'weird' version) seem most likely, but the 'attack dog' scenarios (which could have more dire consequences for the world) should not be ignored. Even if they are invalid, there is a pressing need for greater awareness amongst Western observers that they might be possible.

A Soft Power Response

A possible ‘soft power’ response to early perceptions of security risks in Asia (ie China’s military build-up) was suggested in Comments on Australia's Strategic Edge in 2030.

With appropriate modification this might also be relevant to developing a strategy for responding the specific security threats, such as that associated with North Korea’s blustering. This might involve, for example:/

  • ensuring that defence, security and emergency response organizations as well as those dealing with financial / telecommunications systems consider the implications of broader views of North Korea's blustering such as those speculated above;
  • drawing public attention to such speculations, while denying that they were being considered;
  • seeking assessment of the situation from experts on Asia's 'Art of War' traditions;
  • promoting strategic Asia literacy amongst business, community and political leaders - and on this basis encouraging research into options for more financially / economically sustainable and less internationally-disruptive systems of socio-political-economy in countries such as Japan, China and North Korea;
  • highlighting in international forums (eg G20) the impossibility of achieving sustainable economic growth by counter-cyclical fiscal / monetary policies while substantial international financial imbalances remain unresolved - and thus bringing serious pressure to bear for reform of economic and financial systems in East Asia, while offering Asia-literate help in achieving those reforms;
  • a minimalist / reactive military response to North Korea's threats and actions as the lessons of Western efforts to use military force to establish a foundation for political and economic success in countries such as Iraq and Afghanistan (as in Vietnam) is that what works in Western societies does so because of many cultural and institutional pre-conditions that are not automatically present elsewhere (see Fatal Flaws and Saving Muslims from Themselves);
  • strengthening domestic economic and political institutions.
Addendum I: Do Others Share the 'China Dream'?

Do Others Share the China Dream? - email sent 6/5/13

Dr James Leibold,
La Trobe University

Re: The Impossible Dream, Inside Story, 22/4/13

Your very useful article dealt with the meaning of the ‘vision’ that is being presented to its people by China’s current leadership. I should like to suggest implications of the ‘China dream’ beyond those your article mentioned.

My interpretation of your article: After being appointed as party secretary Xi Jinping led the Politburo Standing Committee on a tour of the The Road to Rejuvenation exhibition at National Museum in Beijing - and there promised to pursue the 'China dream' (ie the great revival of the Chinese race). The exhibition tells the epic tale of China's decline and dismemberment at the hands of foreign forces and the struggle of the Communist-led people to reclaim their national pride, dignity and power. China is seen to finally be in control of its own destiny after 170 years of struggle (from opium Wars). Modern Chinese leaders have tried to define their leadership through such slogans as the China dream. Achieving the 'Chinese races’ great rejuvenation' is now seen to be closer. The 'China dream' was originally the title of a book by Liu Mingfu (a PLA colonel) which addressed overcoming American hegemony and assuming global supremacy. It was initially banned, but then republished after Xi's museum visit. Its call for a revival of Spartan, martial spirit echoes the new leadership’s crackdown on corruption and lavish living. The military (and its 'princeling generals') are key supporters / advisers of Xi, and China's more assertive foreign policy reflects the moralistic nationalism at the core of his statist vision. The Party's austerity program (outlined in Politburo's 'eight point regulation') aims to improve work styles and resembles the Maoist 'mass line'. In contrast to US approach this argues that China dream is a collective enterprise (ie the China dream asserts that if it is good for the country, it’s good for the nation and everyone benefits. This continues the cultural tradition of Eastern collectivism which holds that a big / powerful country safeguards the happiness of the people and allows everyone to share in benefits of state development. Individual dreams and state dreams are seen to be mutually related. This raises questions about whose dream matters most - the Party's or the people’s. On the Internet some Chinese dispute the 'China dream'. But others (soldiers and nationalists) embrace the dream. The China dream is a powerful method for grassroots mobilization - but the Party may not have the legitimacy / capacity to control the future. Xi's predecessor had a vision of 'China's peaceful rise'. Xi's 'China dream' may define the next decade or fizzle out. Xi is a relaxed / confident patriot who views his princeling status as mandate to rule. He is clearly different to his predecessor Hu - though both were risk averse - preserving the Communist Party's wealth and power above any other priority.

The potential pursuit of a Spartan / martial spirit (that you suggest was the original meaning of the ‘China dream’ and is compatible with newly emerging Politbureau policy) is clearly incompatible with the world’s (and Australia’s) expectation that China is preparing to shift from export and investment driven growth onto consumer-driven growth that would provide the demand to drive global growth that heavily indebted Western nations can no longer provide. However such a Spartan / martial spirit is compatible with:

  • The apparent shift in China’s education system towards starting education with rote learning of the Chinese classics (see Competing thought Cultures). That approach to education can be expected over time to create a community that is conditioned to comply with suggestions from the state, and not to place much emphasis on individuals thinking for themselves or on their individual interests;
  • The suppressed domestic demand that was critical to China’s role as the ‘Middle Kingdom’ prior to Western expansion (see Creating a New International 'Confucian' Political and Economic Order ). The latter involved tributary states gaining net material benefits from accepting China’s dominance as China’s people worked hard for limited reward;
  • The austerity and individual-sacrifice-in-the interest-of-the-nation-state that characterises North Korea (see North Korean Context);
  • The samurai spirit of which signs are re-emerging in Japan (see Reverting to the Soul of a Samurai which amongst other things refers to the current Prime Minister’s view of Japan’s 20th century invasion / colonisation of Korea and China as part of a ‘great cause’).

It can also be noted that:

  • Presenting a vision (such as the China dream) is a neo-Confucian technique for mobilizing a community (see also Look at the 'Forest' not just at the 'Trees' in relation to differences between East Asian and Western ways);
  • Chinese nationalists reportedly argue that the ‘great Han race’ colonised Korea and Japan centuries ago (see link in Comparisons with Japan and China) – and in the 1930s a similar belief in the ‘Han race’ led Japan to invade China (seen as Japan’s ‘big brother’) in an unsuccessful attempt to mobilize China’s support in establishing an Asian Co–Prosperity Sphere;
  • Incompatibilities between continued global economic growth and the financial systems that have been the basis of neo-Confucian economic ‘miracles’ in East Asia suggest that the region can’t simply keep going as it has been going (see Fasten Seat Belts: Rough Weather Ahead ).

The similarities between the aspirations of nationalists in Japan, China and North Korea do not help in resolving the question of whether they are currently in conflict or collaborating (an issue that is considered in 'Art of War' Speculations about North Korea's Threats). Concealed collaboration is possible (eg see Broader resistance to Western Influence?), but is by no means assured.

I would be interested in your response to my speculations.

John Craig

Addendum J: Soft Power Requires Changing Minds more than Providing Aid

Soft Power Requires Changing Minds more than Providing Aid - email sent 8/6/13

Dr Susan Harris Rimmer,
Director of Studies
Asia Pacific College of Studies,
ANU

Re: Why soft power is so hard: the impact of aid cuts on regional security, The Conversation, 7/6/13

Your article made a good case for a comprehensive and balanced approach to promoting Australia’s regional security, and for a significant role for ‘soft power’ in that mix. I should like to suggest ‘soft power’ options that are potentially both more effective and much cheaper than conventional foreign aid.

My interpretation of your article: Opposition foreign affairs minister said that Australia foreign policy assets (military, defence, economic, trade, diplomatic and foreign aid) will focus on economic diplomacy. This view of the role of foreign aid is important because of confusion in this year’s budget about this. The key question is what will make Australians secure in this region in the Asian century? Arguably foreign aid and development policy should be a core of Australia’s regional identity and ‘soft power’ in the Asian Century. Australia consistently under-invests in soft power (given that having the winning story is more important than having a winning army). Australia has a great story to tell (eg of humanitarian assistance). Yet this is not recognized in the budget. Aid should help overcome poverty. John Howard once suggested that building Mosques to support moderate Islamic schools helped reduce terrorism – and this probably doesn’t hurt. NGOs argue that health and education programs in PNG and community buildings in Afghanistan help. ASPI argued the need to carefully consider the link between aid and national security – though some NGOs object. The involvement of military forces in providing aid encroaches on the role of impartial NGOs. The US talks of three national security pillars (development, diplomacy and defense). The strategic use of soft power is a better solution.

Some suggestions about the importance, and nature, of ‘soft power’ options to improve Australia’s regional security are in Comments on Australia's Strategic Edge in 2030 (2011).

The latter points to the fact that ‘soft power’, ie the manipulation of access to information by Confucian intellectual elites: (a) was for centuries the primary method whereby political and economic power was exerted in China (and over China’s tributary states); and (b) has been the foundation of ‘economic miracles’ in authoritarian East Asian ‘family states’ (such as Japan and China) in recent decades. The assumptions that have been made about the nature of a possible Asian Century in the federal government’s white paper (ie that an Asian Century would involve Western-style institutions and methods in a different setting) appears quite inadequate (see Australia in the Claytons Century: The 'Asian' Century you have when you are not having an Asian Century, 2012). The possibility that an attempt is currently being made to recruit the US as a ‘tributary state’ by the use of ‘soft power’ methods is suggested in Will the US / China Summit be a Western or an East Asian Meeting? (2013).

The importance of ‘soft power’ in relation to reducing terrorism by Islamist extremists was suggested in Discouraging Pointless Extremism (2002) and We need Enlightenment to Combat Radicals (2013). The former argued that Australia should assist Muslim communities to understand what would be required for political stability and economic success, and thus demonstrate to extremists’ potential recruits that the extremists would further exacerbate the constraints on modernisation that Muslim-dominated societies have experienced for centuries. However, for reasons suggested also in Saving Muslims from Themselves (2012), the constraints on initiative that are implicit in the way Islam is enforced even by moderate Muslims implies that merely building mosques cannot be enough to eliminate the breeding grounds of extremism.

However Australia has made no serious use of ‘soft power’ – and this is, for example, arguably the main source of what is currently seen as an increasing security risk – ie that associated with the uncontrollable flow of asylum seekers from failing Muslim-dominated states (see The biggest issue missing from the asylum seeker debate, 2012).

Australia needs to get serious about ‘soft power’ – but not just (or even primarily) through providing conventional foreign aid.

I would be interested in your response to my speculations.

John Craig

Addendum K: The Future of Asia: Hard Liberal versus Soft Autocratic Options

The Future of Asia: Hard Liberal versus Soft Autocratic Options - email sent 15/10/13

Dan Steinbeck
Difference Group

Re: Two Visions: U.S. and Chinese Rebalancing in Asia, EconoMonitor, 14/10/13

Your article pointed to the discrepancy between the way in which the US and China seem to be seeking to boost their influence in Asia – the US seems to be giving priority to boosting its military capacity (which some could see as promoting a new Cold War) while China seeks greater influence through promoting economic collaboration.

There is little doubt that the US’s efforts to date have been poorly considered. Boosting support for liberal political economic and political institutions (relative to autocratic Asian alternatives) could be far more effectively achieved by ‘soft power’ methods – for reasons suggested in Comments on Australia's Strategic Edge in 2030. And the economic imbalances that have had their origin in East Asian systems of socio-political-economy could probably be challenged most effectively by methods that have nothing to do with the deployment of military forces (eg see China may not have the solution, but it seems to have a problem).

The US’s military emphasis is perhaps due to warlike rhetoric from the region (especially from China, Japan and North Korea) and a lack of strategic understanding of how East Asia traditionally operates (eg that Art of War strategies emphasise deception and traditionally seek to ‘win without fighting’).

However such strategic understanding is arguably also necessary to make sense of China’s ambition to create a Maritime Silk Road as the basis for a common destiny for China and ASEAN.

Some speculations about the way in which ASEAN countries (and perhaps others) might be linked into a China-centred ‘soft-power-empire’ were outlined in Creating a New International 'Confucian' Economic and Political Order? (2009). The latter referred to the likely recreation of tributary relationships similar to those that existed in Asia prior to Western expansion.

I would be interested in your response to my speculations.

John Craig

Addendum L: Is China Heading in the Direction of North Korea?

Is China Heading in the Direction of North Korea? - email sent 26/10/13

Ambrose Evans Prichard
Telegraph

Re: China turning into 'giant North Korea' say panda pundits, Telegraph, 25/10/13

Your article referred to claims by Minxin Pei and Jonathan Fenby that China might be reverting to sinister police-state Maoism (and become a giant ‘North Korea’ held down by repression alone). I should like to put a different ‘spin’ on that possibility.

My interpretation of the balance of your article: It is thus claimed by Minxin that people are losing faith in China’s ability to engineer a ‘soft’ political landing. However a member of China’s upper house recently claimed that Edmund Burke’s evolutionary conservatism is the new Maoism – and this is incompatible with Minxin’s claims (eg that the Communist Party is in a state of decay; core values are eroding; corruption is endemic). He also argues that high income economies tend to be democracies – as middle class fury does not tolerate such features. Recent cuts to bank lending rates are meaningless as most companies can’t borrow from banks – which gives rise to shadow banking. If interest rates were liberalized many SOEs would go bust. A recently establish free trade zone does not seem to be really politically supported or practical. China can’t open its capital accounts because capital would flee – and capital flight is already under way. Foreign exchange reserve claims are exaggerated. President Xi Jinping is seen to have taken over Bo Xilai’s vision – contrary to the perception that he was cut down for reviving talk of Red Guards and visions of the Cultural Revolution. Xi has revived self-criticism sessions – even in politbureau. He is quoting Mao and speaking of class enemies – which are Leninist reactions. Anti-corruption drives are seen as internal party warfare. China is not following Taiwan – as Taiwan was never totalitarian. Security forces are now in full control, but this may not continue. The rise and fall of Chinese dynasties depends on control of army. Xi’s party loyalists have been put into top military posts. Hopefully China will break historical determinism and find a civilized way forward. But clamping down on the Internet and Maoist revivalism makes this difficult

The claim outlined above, ie that China might actually be preparing for inward looking repression rather than the outward looking liberalization that is being proclaimed, is based on a perception that: (a) the Communist Party is becoming repressive rather than truly reformist; (b) a recently announced free trade zone does not seem to be genuinely supported; and (c) reliance is increasingly being placed on security forces to maintain control.

I should like to draw attention to other possible indications of inward-looking repressive intent.

First China’s education system is reportedly being organised to build education on the foundation of rote learning of certain Chinese classics (see article, The Poor Understanding of two thought cultures, referenced in Competing Thought Cultures). My understanding is that the primary intent and outcome of such an education system would be to create a compliant population – because (contrary to the intent of Western education) those Chinese classics seek to inculcate a view that attempts by individuals to understand what is good for themselves or the community is futile. This is thus probably a shift in the direction of thought control that seems to characterise North Korea (see North Korean context) and seems incompatible with the economic liberalization agenda that China has officially endorsed (see Financial and Educational Reform in China: Headed in Opposite Directions?).

Second there seems to be a lack of realism in emerging claims about China’s potential for financial system reform and its ability to provide a major stimulus to international trade and investment (see Preparing for a 'Con'?). The latter points, for example, to: (a) external observers’ beliefs that China’s economy has been being kept afloat by massive increases in credit a fair amount of which may be poorly directed (eg perhaps $230bn new credit was created in September 2003 alone); and (b) recent claims that China’s major banks are arranging write offs that would have a ‘big effect’ on fixing their balance sheets. If hundreds of $bns of bad debts are emerging annually, then the $4bn recent write-off by China’s major banks would be hardly likely to have a ‘big’ effect.

Third China’s likely actions may best be understood by considering the influence of a form of China’s traditional Confucianism (whereby society is controlled by bureaucratic / intellectual elites through the deployment of strategic information through a social hierarchy responsible to the source of military power) – rather than the possible ideological directions outlined in your article (ie that China may be reverting to ‘Maoism’ (Minxin’s view) or that something like Edmund Burke’s ‘evolutionary conservatism’ might be the ‘new Maoism’) . A modified form of Confucianism:

The late 1970s reintroduction of a form of Confucianism into China by the so-called ‘Communist Party’ would have had to be secretive because Mao’s cultural revolution was specifically targeted at purging Confucianism from China. Mao’s view had apparently been that Confucianism had been responsible for oppressing Chinese people for centuries (see more in Communism Versus Confucianism: The Continuing Contest in China). The latter notes that the significance of the Bo Xilia case in China was perhaps that there is widespread support in China for restoration of the social equality that Chinse people enjoyed under Maoism (ie all were poor but at least were equal) and considerable resentment of the fact that the methods that have since been used by the ‘Communist’ Party have reintroduced a form of Confucian social hierarchy.

Finally it seems possible that China is facing immense structural obstacles which might encourage its current leadership to conclude that inward-focused repression (perhaps combined with the establishment of a tributary empire like that which existed prior to Western expansion – see Xi’s Maritime Silk Road) might be the best option for maintaining their future power.

John Craig

Addendum M: Penance in the Politburo?

Penance in the Politburo? - email sent 1/11/13

Ambrose Evans –Prichard
Telegraph

Further to my response (Is China Heading in the Direction of North Korea? ) to your article about Minxin Pei’s observations of apparent decay in the Chinese state, I should like to draw attention to a ‘possible’ explanation of president Xi Jinping’s reported revival of self-criticism in the Politburo.

My hypothesis is that this does not reflect a desire to ensure that all members are committed to collectivist ‘working class’ goals (which would be the Leninist position that Minxin spoke of) but rather to promote their commitment to elitist communitarian behaviour (ie to submitting their personal interests to their roles as the head of an ethnic ‘family state’). This hypothesis is based on:

  • The apparently discrete adoption of neo-Confucian methods by the (so called) Communist Party as the basis for orchestrating China’s economic opening / modernisation from the 1970s;
  • A (plausible) account of the way in which China’s willingness to maintain high rates of capital investment to drive economic growth may be rationalised (see Outline of 'Rise of the Ferro Dollar'). The latter suggests that the achievement of spin-offs and synergistic relationships (which neo-Confucian methods of stimulating real-world / market changes would be effective in achieving) is the rational for that strategy;
  • The apparent inadequacy of those economic spin-offs / synergies in compensating for the rapid rise in China’s debt levels that accompanied widespread investment with limited regard to the profitable use of capital – so that China is potentially facing a debt-driven financial crisis (see Preparing for a 'Con'?);
  • The fact that members of the Communist Party have exploited their positions to benefit themselves / connections is presumably one of the reasons that the positive spin-offs / synergies have not been adequate to compensate for the limited emphasis on return on investment in particular endeavours. This would not be the only reason for this problem. However it might justify seeking ‘penance in the Politburo’.

I give no guarantees about the reliability of this hypothesis but merely suggest that it is worth considering.

John Craig

Addendum N: Smarter Authoritarians?

Smarter Authoritarians? - email sent 1/11/13

Editor
The Australian

Re: Psssst. Everybody’s doing it’, editorial, The Australian, 1/11/13

Your article realistically pointed out that espionage is central to protecting freedom and fighting terrorism.

I should like to suggest for your consideration that the current pressure that is emerging around the world to constrain (in particular) efforts by the US to collect strategic intelligence is thus (perhaps) a reflection of the behind-the-scenes influence of those who are motivated to constrain freedom and / or engage in terrorism.

The US has taken a global role since WWII in promoting a liberal international order – backed by its economic, diplomatic and military strength which in turn has relied on the collection of strategic intelligence. One can realistically argue that these US efforts have not always been effective or well directed. However blocking intelligence gathering on the grounds that it is a threat to others’ privacy would be a major step towards further undermining the US’s ability to use its economic, diplomatic and military capacity to influence global events.

When casting around for suspects to consider in orchestrating such a program it might be worth considering the nature of East Asian traditional ‘Art of War’ methods (which involve primarily the use of ‘soft power’ methods to undermine opponents’ capacities). Some suggestions on what this implies are outlined in Broadening the Scope of National Security and Look at the 'Forest' not just at the 'Trees'.  

The latter are part of a document, Comments on Australia’s Strategic Edge in 2030, which basically suggested that there is a need for much greater awareness and use of ‘soft power’ methods in dealing with smart authoritarian regimes.

John Craig


A Note on Possible Motivations: (added later) - The above is only one way of interpreting pressures that are emerging to constrain the collection of strategic intelligence by the US and its allies.

However it is worth recognising that liberal Western institutions (reliant on the rational social, economic and political initiative of individuals) have for decades apparently been facing increasing challenges (see Competing Civilization) from authoritarian systems involving:

  • East Asian nationalists who have built economic strength on Confucian-style enforcement of elite consensus; and
  • Islamist extremists who have been using terrorist tactics to promote further repression of individuals as the 'answer' to the historical problems affecting the Muslim world.

 There is also some possibility that:

Another possibility is that Western factions may have unwittingly been aiding the world's more authoritarian ideologies. It is, for example, suggested that the a British newspaper (The Guardian) had had access to information provided by Edward Snowdon about US intelligence gathering and had been going through those documents carefully and using then 'strategically' [1]. The irresponsibility of using stolen secret information that had presumably been gained in an effort to reduce security risks without an alternative method to deal with those security risks was suggested in Must Authoritarianism Triumph This Time?

Addendum O: Changing Australia's Security Approach

Changing Australia's Security Approach - email sent 5/11/13

Murray Hunter

Re: Change needed in intelligence approach, Online Opinion, 4/11/13

Your article (which was clearly based on careful intelligence gathering) suggested that Australia should eliminate much of its intelligence gathering capacity and should not align itself with the US in order to avoid ‘missing the boat’ on a big shift in regional influence.

However the nature of the change in the international order and regional influence that is under way is by no means certain. The shifts in regional influence that Australia now needs to cope with were certainly not those described by the simplistic and over-optimistic Australia in the Asian Century White Paper (see ‘The ‘Asian’ Century you have when you are not having an Asian Century).

Quite the reverse in fact as the most probable imminent changes in the regional environment (see An Approaching Crisis?) will arguably involve:

  • financial crises (especially in Japan and China) associated with their huge state debts, casual accounting practices and evaporating ability to rely on export-driven growth; and
  • potential conflicts emanating from North Asia – to complement and increase the global risks of conflicts that are emerging in the Muslim world.

I should thus like to submit for your consideration that the change that Australia mainly needs in relation to its intelligence operations is probably not to eliminate them but rather to introduce more real Asia literacy (eg as suggested generally in Comments on Australia's Strategic Edge in 2030).

Eliminating intelligence-gathering would merely weaken the foundations of defence capabilities and facilitate gains by the breed of authoritarians that the world is currently confronting (for reasons suggested in Smarter Authoritarians?). It is by no means certain the authoritarians will be the ones who determine the ‘big shift in regional influence’ that Australia needs to avoid ‘missing the boat’ on (eg see Must Authoritarianism Triumph This Time?).

John Craig

Addendum P: Knowledge is Power: If You are Clever in the Way You Use It

Knowledge is Power: If You are Clever in the Way You Use It - email sent 11/11/13

Rowan Callick
The Australian

Re: Beijing pursues a global image with forceful projection , the Australian, 11/11/13

Your article drew attention to China’s probable expansion of a domestic method of exerting control (by influencing the nature of available information) into the international arena.

Might I respectfully suggests that the implications of this needs to be considered in the light of the fact that under East Asian traditions power in exerted, not by the Western method of making decisions on the basis of rational understanding, but rather by control (by highly educated elites) of the information that subordinates use as the basis of decision making (see comment on power and China's Bigger Secret).

John Craig

Addendum Q: Coordinated Efforts to Undermine Western Intelligence Gathering?

Coordinated Efforts to Undermine Western Intelligence Gathering? - email sent 19/11/13

Mark Kenny

Re: Caught red handed, without an easy fix, The Age, 19/11/13

Your article pointed to Australia’s diplomatic embarrassment about intelligence gathering activities in Indonesia, and to suggestions that a coordinated effort might be being made to undermine Western intelligence gathering generally (an activity that is a critical foundation of effective international relations and of defence / military strategies, and has to draw on more reliable sources than the local media).

“All countries gather information, but the first rule in the spy game is don't get caught. Just as was the case with the WikiLeaks docu-dump, Australia has been caught red-handed courtesy of the security failures of its senior alliance partner, the US. The information has come to light through Edward Snowden, who is now protected in Russia. This has raised suspicions that his information is being used for partisan strategic purposes. The claim is that information is being released in a manner designed to do maximum harm to potential weak points in the Western alliance. First came the hammer blow to US-German relations through the revelation of US hacking of Chancellor Angela Merkel's phone. Now we have another hit to Canberra-Jakarta relations “

Attempts to put such a coordinated effort into context are in Smarter Authoritarians and Changing Australia’s Security Approach, while the wisdom of continuing to collect intelligence in Indonesia is implied by the reportedly rising influence of more rigid / intolerant Islam (see Even Moderate Islam seems Damagingly Rigid and The Muslim World Seems to be Headed for Chaos) - even though all indications are that Indonesia's current regime is not complicit.

Clearly, as your article noted, intelligence gathering efforts require diplomatic skill. It also requires ensuring that such activities are well managed, and not able to be abused.

John Craig

Addendum R: Speculations about Asia's Arm's Race

Speculations about Asia's Arm's Race - email sent 7/12/13

Callum Newman

RE: Australia's Box Seat View of the Next Arms Race, Morning Money, 7/12/13

It is worth considering whether the potential conflict between China and Japan over a few islands is real, or whether it is a front for efforts by both to run up their military capacity in preparation for a confrontation with the US and its allies.

These possibilities are considered in both: Comments on Australia's Strategic Edge in 2030 and Art of War Speculations about North Korea's Threats. In relation to this it is noted that:

  • China certainly has a grievance against Japan which could generate conflict because of Japan’s militaristic actions in the late 19th / early 20th century and in the 1930-40s. However both Japan and China have grievances against Western societies (eg dating to the Opium Wars in China and Admiral Perry’s pressure on Japan to open to the world in the 1850s);
  • China’s Communist Party apparently justifies its authoritarian rule on the grounds that the Party is the means for China to gain vengeance for past oppression – and this seems to refer back to the time of the Opium Wars (as well as to Japan’s aggression in the general community mind);
  • Nationalists in China, Japan and Korea view all three countries as having been a product of the Great Han Race – and all now rely on neo-Confucian methods in implementing their socialist / democratic non-capitalist / Marxist systems respectively. Those methods involve massive difference in the way in which society is conceived and organised relative to Western traditions (eg see What does an 'Asian Century' Imply);
  • In the 1930’s Japan’s primary tactic for establishing an ‘Asian Co-prosperity Sphere’ involved gaining control of China’s emperor so as to (hopefully but unsuccessfully) bring China onside in pursuing that agenda because China was seen as Japan’s ‘big brother’;
  • The tactics that have been the basis for ‘economic miracles’ in East Asia were developed in Japan and spread across Asia. Those tactics were based on a modified form of the Confucian methods that prevailed across North Asia prior to Western expansion (whereby power was exerted by intellectual elites through control of the information available within the community). Eammon Fingleton (a Japan watcher) claims that those tactics were developed by the Japanese army in Manchuria in the 1930s and were passed to China in the late 1970s;
  • In the 1980s, while working for Queensland Government, I had direct exposure to Japanese ultranationalist factions acting on behalf of the Japanese government who seemed to be still trying to win WWII. This involved a 1945 Class A war criminal (who was a vocal admirer of Admiral Yamamoto who had developed Japan’s invasion plans for Australia in the 1940s) sponsoring the development in Australia of infrastructure that would have facilitated Yamamoto’s plans;
  • Traditional East Asian ‘Art of War’ tactics feature (for example): very long term action; deception; holding up a ‘mirror’ so that when others look they see a reflection of themselves; getting close to enemies; and winning before military conflict by encouraging enemies to become weak by serving them.

The possibility of collaboration (rather than conflict) between Japan and China should not be ignored by those having a box seat view of Asia’s coming arms race.

John Craig

Addendum S: Danger from Japan?

Danger from Japan? - email sent 17/5/14

Rob Copeland
Wall Street Journal

Re: Chanos: Japan’s Shinzo Abe Is ‘Most Dangerous Figure in Asia’, Money Beat, 16/5/14

Your article drew attention to a view that Japan’s prime minister is the biggest threat to Asia’s economy because he is an ultranationalist.

However there is nothing new about ultranationalist influences within Japan’s government. Considering post WWII history in the light of this is arguably worthwhile (eg as suggested in Broader resistance to Western Influence?). It is also worthwhile considering the relationship between the aspirations of Japan’s ultranationalists and the neo-Confucian systems of socio-political-economy that Japan pioneered as the basis for its pre-1990s ‘economic miracles’ - and which have been spread across much of across East Asia (see Understanding East Asia's Neo-Confucian Systems of Socio-political-economy). The latter do not involve acceptance of the universalist values or concern for the welfare and capabilities of rational individuals which have characterised Western systems.

John Craig

Addendum T: Beijing Could Not Afford to Wait

Beijing Could Not Afford to Wait - email sent 11/6/14

Dr Benjamin Herscovitch
Centre of Independent Studies

Re: Beijing’s real international ambitions, China Spectator, 11/6/14

Your article suggests that the existing liberal international order that the US supports will carry China to international pre-eminence – and that territorial disputes are the only real threat to peace in Asia. I would like to argue the reverse – ie that China’s current leadership is in an increasingly perilous position in a liberal international environment and that China’s territorial posturing is largely a diversionary tactic.

My interpretation of your article: Hans Morgenthau argues that ‘international politics, like all politics, is a struggle for power’. He saw the drive to live, propagate and dominate as inherent to human nature. The pitiless power politics in Asia seems to confirm this. Washington and Beijing are divided by strategic distrust. China seeks to bully its maritime neighbours – and countries in the region are expanding defence budgets and seeking US security assurances. How far Beijing will go is the question. China won’t challenge US-led Asian order of free-trade and free navigation. China complains about US ‘great power chauvinism’ and ‘superpower hegemony’ – and wants to see US unipolar international system replaced with a multipolar world. But China does not want to be the region’s new hegemonic power. China’s foreign minister emphasised that China does not want to replace US in its position in the world. For China, the benefits of usurping US leadership would be minimal. China is likely to have world’s largest GDP by 2019 – and China does not need to challenge US to achieve this. US-led liberal economic arrangements will allow China and other nations to surpass the US. However, while China might be content with slow decline of US-led unipolar international system, it may seek to change the territorial status quo. In 1982 Deng Xiaoping suggested that China would defer action on territorial disputes – and thus implied that these might be revisited in future. And as China’s power relative to its neighbours grows there may be a temptation to unilaterally seize territory. But Beijing’s revisionism is cautious and considered, It will allow US decline to loosen American pre-eminence and won’t resort to violence unless maritime neighbours block its territorial aggrandisement. China will employ tactics of domineering power politics when it can’t get its way by more enlightened means.

China’s rapid economic advancement has been built on a variation of the non-capitalistic neo-Confucian model that Japan pioneered (see Understanding East Asia's Neo-Confucian Systems of Socio-political-economy, 2009). This involves state-orchestrated economic development under which state-linked enterprises are funded by national savings that are mobilized through state-linked financial institutions with limited regard to return on capital (see Evidence). It does not rely on decisions by independent profit-seeking enterprises. Under Confucian teachings wealth is accumulated by savings, not by earning a return on capital (ie profit). Thus financial institutions tend to accumulate bad balance sheets and a financial crisis is inevitable in a liberal market environment unless the need to borrow from international profit-focused financial markets can be avoided by suppressing domestic demand so that investment is funded domestically through ‘tame’ banks. The Asian Financial Crisis in the late 1990s demonstrated the hazards facing countries with cronyist financial systems that lacked the protection of current account surpluses.

However seeking protection from financial crises by suppressing domestic demand is unsustainable in the long term (see Structural Incompatibility Puts Global Growth at Risk, 2003). Trading partners must be willing and able to sustain significant current account deficits and rising (eg household and government) debts if global economic growth is not to be stifled. They can’t do this forever. Accumulated debt now increasingly constrains the ability of the rest of the world to provide the excess demand that has been vital to protect the major non-capitalistic neo-Confucian economies from financial crises. China, for example, has been recognised to need to shift from export-dependent growth to domestically-driven growth – and thus must eventually face current account deficits and the hazards of having to import capital through financial institutions whose balance sheets would not withstand external scrutiny. Financial crises are now a significant risk for the major non-capitalist economies (see Japan's Predicament and China's Predicament). And if anyone bothered to publicise the macroeconomic constraint that the global economy faces from economies with non-capitalistic financial systems, the countries involved would presumably soon lose international standing (eg see China may not have the solution, but it seems to have a problem , 2010).

In this environment China is apparently seeking to establish a new international China-centred tributary system like that under which Asia was ruled prior to Western expansion so that it would hopefully not face the financial disciplines implicit in the liberal international order that the US has championed (The Resurgence of Ancient Authoritarianism in China). And the countries most at risk from those financial disciplines seem to be seeking to build their military capacities to defend their preferred authoritarian order as fast as they can – perhaps using trivial territorial disputes as a pretext.

I would be interested in your response to my speculations.

John Craig

Addendum T: Scratching the Surface of the 'New Japan'

Scratching the Surface of the 'New Japan' - email sent 14/7/14

Editor
The Australian

Re: Welcoming the New Japan, editorial, The Australian, 9/7/14

Your editorial suggested very appropriately that Australia should welcome a ‘new’ Japan. The problem is that, if one looks below the surface, it might be found that creating a ‘new’ Japan remains a future challenge, rather than a past accomplishment. If so Australia’s leaders and their allies perhaps will require a ‘new’ (and high) level of Asia literacy if they are to successfully meet that challenge.

My interpretation of your editorial: Shinzo Abe’s speech to Australia’s parliament signified the richness, depth and breadth of Tokyo’s relationship with Canberra. Shared interests and common ideals include: open political systems, competitive markets, free trade, human right and the rule of law. Friendship has been built despite wartime events. The moment was also testament to the emergence of new more confident Japan following two decades of economic stagnation and the strategic rigidity of its post-war pacifist constitution. A once-militarist state, Japan has become a good international citizen – and has helped promote stability and prosperity in the Asia-Pacific region. It now wants to be seen as a more normal nation. This will be a diplomatic challenge for Australia, as China has argued that Japan is using Australia to build a network against China – Australia’s biggest trading partner. Others suggested wrongly that Abe’s visit will create new instability in the region. Beijing has increased its rhetoric and aggression in several territorial clashes with neighbours. Abe has called for the seas and skies of the Pacific and Indian Oceans to be open and free. Australia’s prime minister has advocated improving all of Australia’s international relationships – rather than taking the view that it is necessary to choose between (say) the US and China. Abe suggested that there should be no limits to Australia’s strategic and economic partnerships. Japan has played a key role in developing industries in Australia – and has more than four times China’s investments here. The trade pact will bring prosperity and friendship to both Japan and Australia.

There is a profound incompatibility between the cultural traditions that long prevailed in East Asia and the liberal Western-style aspirations (such as universal values, social equality under a rule of law and an emphasis on the welfare and capabilities of individuals) to which Asia was exposed as a result of rapid Western progress in recent centuries (see Competing Civilizations, 2001+). Japan, more than any other country, long struggled to resist such challenges to its traditional culture and social order. Now resistance most obviously comes from China's current regime.

Moreover, though Japan adopted nominally liberal political and economic arrangements after WWII, there are convincing indications that Japan’s resistance to liberal Western practices clearly continued behind the scenes at least until the late 1980s (see Broader Resistance to Western Influence?). Key points from the latter are outlined in an Attachment following this email.

There are undoubtedly indications that Japan has undergone a fundamental transformation since around 1990 after the financial system that underpinned its post-WWII mercantilist economic strategy collapsed (see A ‘New Japan’).

On the other hand the latter also suggests that there are also reasons for caution (eg a lack of transparency about Japan’s probably-imperially-mandated (rather than truly democratic) post-WWII system of government; the massive cultural obstacles to genuinely adopting liberal democratic arrangements; the difficulties that Western observers have in perceiving what is going on in cultures that lack transparency; the nature of traditional Art of War tactics; Japan’s response to its late-1980s financial crisis; recent indications that Japan’s financial / business dealings remain incompatible with a liberal market economy; Japan’s renewed risk of a massive financial / economic crisis – like that during the Great Depression which led to power being seized by Japanese militarists in the 1930s; and widely-expressed concerns about the possible ultra-nationalistic / militaristic aspirations of Japan’s prime minister (Shinzo Abe).

On balance it seems that looking below the surface of the ‘new’ Japan could well reveal … the ‘old’ Japan. The vision of a ‘new’ Japan is highly desirable – but Australia’s leaders (and their allies) may require a great deal of relevant knowledge and skill to help make it happen. Some speculations about a possible ‘soft power’ response to China’s increasingly assertiveness (and apparent efforts to create a new international order on the basis of traditional East Asian authoritarian / communitarian alternatives to liberal Western traditions) were outlined in Suggested Strategic Response.

If close examination of the ‘new’ Japan reveals it to be the ‘old’ Japan wearing new clothes, then a similar response to Japan would be appropriate.

The background to the present writer’s attempts to understand the issues outlined above is on the CPDS’ web-site.

John Craig


Attachment: Key Points in Broader resistance to Western Influence?

In brief this drew attention to:

  • The massive cultural differences between Western societies and those in East Asia with an ancient Chinese cultural heritage (eg in terms of the nature of: knowledge; power; governance; strategy; and economic methods). East Asian communities that (say) opened to international trade to boost their economic and military strength lacked the foundations needed for success through simply copying Western institutions;
  • the Meiji restoration in 1868 to promote Japan’s economic and military strength to resist liberal Western influences. The imperial restoration was apparently stimulated by Yakuza (Japanese organised crime) groups who had traditionally enforced social discipline on behalf of Japanese regimes (and thus in some sense were at that time the grass-roots voice of the Japanese community). Ultranationalist groups (including Yakuza organisations) have since then apparently consistently pursued themes of racial and cultural superiority and had significant political influence;
  • Japan’s unsuccessful efforts in WWII to use its military power to mobilize China to support the creation of an ‘Asian Co-prosperity Sphere’;
  • The post-WWII establishment of a nominally liberal democratic system of government in Japan, behind which power seems to have been actually exerted by Japan’s bureaucracy through a modified version of the Confucian methods whereby East Asia had been governed on behalf of emperors for centuries prior to Western expansion;
  • Japan’s post-war economic ‘miracles’ that were apparently orchestrated by Japan’s bureaucratic elites and financed with national savings to boost Japan’s economic power with little regard to return on capital. Though nominally independent, Japan’s banks and major companies were closely linked with agencies such as the Ministry of Finance and the Ministry of International Trade and Industry (MITI). The goal of those methods was mercantilist (ie building national economic power) rather than creating opportunities for citizens as investors / consumers;
  • The possibility suggested by an experienced Japan-watcher that those economic methods had been developed by Japan’s military in Manchuria in the 1930s and that they were transferred to China in the late 1970s;
  • The role a prominent ultranationalist, Ryochi Sasakawa, had in providing gambling-sourced funding for MITI’s special projects and as one of three top-level facilitators of relationships between government, industry and ultranationalist factions – a top-level-fixer role which in Japan would have required a mandate from Emperor Hirohito;
  • The virulent economic contest to be economically No 1 that Japan launched in the 1970s and 1980s – followed by the financial crisis that resulted in about 1990 when Japan’s non-capitalistic financial system collapsed as the result of creating vast quantities of credit for non-financially-viable investment;
  • The incompatibility between the non-capitalistic financial system that had been a core component of Japan’s post-war economic ‘miracles’ and the profit-focused international financial system which led to increasing difficulties (eg international trade and financial imbalances) and attempts by Japan from the 1970s to sponsor the creation of alternatives to Western-style international financial machinery.

Broader resistance to Western Influence? is part of a document (Comments on Australia's Strategic Edge in 2030, 2011) whose basic theme was that:

  • Australia’s strategic position is being challenged not only by the ‘hard power’ that China’s increasing belligerence implies, but also by the ‘soft power’ methods that characterise traditional East Asian Art of War strategies; and
  • The possibility of a hidden anti-Western coalition between Japan and China through their respective nationalistic factions should neither be ignored nor taken as given.
Addendum U: Are Analysts Making a Big Mistake about China and Japan?

Are Analysts Making a Big Mistake about China and Japan? - email sent 18/8/14

Professor Hugh White
Australian National University

Re: Is China making a big mistake about Japan?, China Spectator, 14/8/14

Your article raised questions about whether Japan might in future accept a subordinate status in a China-led Asia, or whether it might seek to establish itself as a major regional power in competition with China. However anti-Western collaboration by Japanese and Chinese nationalists is another possibility that would explain both the failure of Chinese analysts’ to portray Japan as a strategic competitor and the casualty-free Senkaku / Diaoyu Islands dispute which justifies military build-ups all around.

My interpretation of your article: It has long been assumed that China does not want a rearmed, strategically independent ‘normal’ Japan. But China’s assertive policies are pushing Japan to rearm and become strategically independent (ie a ‘normal’ Japan). This is the reverse of what analysts usually expect is in China’s interests and leads them to conclude that China is making a mistake and there is thus no threat to US regional leadership. However there are also other possibilities. China’s actions seemed designed to undermine Japan’s confidence in US protection – and this seems to have worked in terms of boosting Japan’s emphasis on collective self-defense and search for allies. Alternatives to assuming that China has made a mistake are: (a) China’s leaders assume that Japan is incapable of becoming a normal military power again (given demoralization by economic stagnation, political drift, demographic decline and natural disasters). Amy King (ANU) has argued that this is what China thinks. Chinese statements never mention Japan as a possible strategic rival. If Japan can’t respond to China’s assertive tactics, it may have no choice but to acquiesce to China’s regional leadership. However Japan may not be willing to do this – given its sense of identity and fears about what might happen under China’s regional leadership. Brad Glosserman (CSIS) has implied that Japan would accept a subordinate status in a China-led Asia. However there is also a real possibility that China has misunderstood Japan – and that Japan might respond to any decline in US influence by seeking to itself become a great / nuclear-armed state. This creates a dilemma for China – as to whether it would rather face Japan or the US as its major strategic rival in Asia.

In assessing what is happening it is desirable to recognise that the ancient Chinese cultural heritage of counties in East Asia (including Japan) involves ways of thinking, social organization and government that are quite different to Western traditions. An attempt to outline the intellectual foundations of those cultures and some of their consequences is in East Asia: The Realm of the Autocratic, Hierarchical and Intuitive Ethnic Group? 

Japan’s nationalists have a long history of resistance to Western influences presumably mainly because of the latter’s emphasis on liberal institutions that promote individual welfare and initiative (rather than the welfare and initiative of ethnic communities as a whole under the guidance of authoritarian social elites). After being forced to open to trade in the mid-19th century Japan’s nationalists sponsored the Meiji Restoration (ie renewed imperial rule) to build Japan’s economic and military strength. After the political and economic dislocation associated with the Great Depression in the 1930s Japan’s nationalists promoted military rule on behalf of the emperor and invasion of China in an effort to mobilize support from China (as Japan’s ‘big brother’) in establishing an ‘Asian’ Co-prosperity Sphere. And there are reasons to suspect that Japan’s nationalists (who apparently still remain extremely influential) might have orchestrated some sort of new / hidden / partial imperial restoration after 1945 in relation to the organisation of Japan’s post-war economic ‘miracles’ and the virulent contest with the US to be ‘No 1’ that lasted until the 1980s (see Broader Resistance to Western Influence). While there is no certainty, the latter refers to features of post-WWII Japan that seem more compatible with a variation of rule by Confucian bureaucracies on behalf of emperors that had been widespread in East Asia prior to Western expansion than the post-WWII democratic political system that Japan appeared to have adopted.  

It is also worth recognising that:

  • an experienced Japan-watcher suggested that Japan’s post-WWII economic methods had been developed by its military in Manchuria in the 1930s and transmitted to China in the late 1970s;
  • recent changes to government in China appear to have confirmed that the (so called) ‘Communist’ Party is also something like the Confucian bureaucracies that ruled across Asia for centuries on behalf of emperors prior to Western expansion (see The Resurgence of Ancient Authoritarianism in China) – and, if so, this raises questions about which ‘emperor’ the (so-called) ‘Communist’ Party would see itself as being accountable to;
  • China’s diverse attempts to promote a new international economic and political arrangement in competition with the post-WWII liberal Western-style international institutions can be seen as an attempt to re-create something like the trade-tribute systems under which Asia was administered from China in the centuries prior to Western expansion (see Creating a New International 'Confucian' Financial and Political Order?); and
  • Japan had sponsored efforts to create ‘Asian’ alternatives to Western-style financial systems since the 1970s because of a fundamental incompatibility between prevailing international institutional arrangements and the non-capitalist financial systems that have been part of the mercantilist (ie power rather than profit seeking) economic ‘miracles’ of the major East Asian economies (see A Generally Unrecognised 'Financial War'?) .

It is arguably unwise to try to understand East Asia's virtual 'whole-of-society bureaucracies' simply in terms of Western analogies for reasons suggested in Babes in the Asian Woods. And this applies in particular in relation to strategic / defence considerations. Ancient East Asian ‘Art of War’ strategies have features that derive from the region’s traditional cultural / social / government arrangements that have no close Western parallels – a point that is developed further in Comments on Australia's Strategic Edge in 2030.

Regards

John Craig