Monday, April 25, 2011

Is China's growth good for Australia?

I found a couple of articles about China in this morning papers interesting. From The Age, Tim Colebatch writes that the International Monetary Fund projects that within 5 to 10 years, China will overtake the US in real economic output. This is not surprising; however the article also features an, on-line poll which asks: Is China's growth good for Australia? Of the 2900 votes received by mid-morning 72% of participants voted “yes”. In and of itself, this is not extraordinary but then moments later, I stumble across another article about China in the Herald Sun. In it, Matt Johnston writes that a recent Lowy Institute poll found that 72% of over 1000 Australians polled earlier this year fear the threat of war with China.

I found myself confounded or in the least, bemused by the different findings. Here we have one poll showing most of us welcoming China’s overtaking the U.S. economically while roughly the same number of us fears a war with China?

I would have thought that your economic strength also drives a nation’s military strength. The higher government revenue from for example taxes, the more money is available to train soldiers, buy military hardware and develop defensive and offensive capabilities. At one stage the Soviet Union was spending nearly 50% of GNP on its military; the rest is history however the U.S. even now, spends a relatively sum of its total economic output on its military. China and the U.S. rely on economic prosperity to finance military might. Contrariwise the Soviet Union and North Korea relied on military measures to build economic power with little success. This shows that economic power is the necessary state attribute to potential military might.

So why would polls show that we welcome China's economic growth but in unison fear a war with China, ignorance perhaps? Australia has been getting away with spending a paltry 1.8per cent of GDP on defence because we have enjoyed the benefits of stability provided by the United States in the western Pacific. Eventually, Australian governments will have to fill some of that US-less strategic vacuum with an enhanced Australian Defence Force. That means much more money for the ADF and less for other programs? Personally, I haven't a problem with the latter, but I am betting many of those who answered "yes" to the question, "Is China's growth good for Australia?" do not fully appreciate the consequences of China's continued growth.