Quick Take | China’s fallout with Australia: the tip of the iceberg?

Power abhors a vacuum. And China is increasingly stepping into the gap in the world economic order

Reading Time:3 minutes

Peacekeeper troops from China deployed by the United Nations Mission in South Sudan last year. Photo: AFP

Published: 2:48pm, 16 Dec 2017Updated: 2:48pm, 16 Dec 2017

As Beijing’s influence in the global economy grows and Washington’s clout recedes under its “America First” policy, political fallouts similar to that between China and Australia are to be expected.

Even before President Donald Trump’s presidency, China was making strides as a world power. The “Belt and Road Initiative”, in which Beijing plans to invest US$1 trillion in the next five years in a New Silk Road that will involve the building of infrastructure across some 65 countries, revealed its ambition to become an even bigger force in the global economy.

Its growing influence comes as the Trump administration is losing its focus on the multilateral trading and economic order. Unlike the previous Obama administration, which promoted a “pivot to Asia”, the United States today is questioning its role in international organisations such as the World Trade Organisation, creating a gap in global economic leadership.

Australian Prime Minister Malcolm Turnbull takes a selfie with President Xi Jinping, US President Donald Trump and Vietnamese President Tran Dai Quang at an APEC meeting last month.

China’s influence has already caused political upheaval in Australia, where it has invested a great deal and has been accused of meddling through political donations. But this is not the only place where its long-standing policy of non-interference has been chipped away because of its necessary engagement with policymakers in countries where it wishes to invest.

Building railways and investing in the energy sector involve negotiating licences and agreements, which naturally means that China will want to impose its own terms for such investment while the recipient country wishes to maximise its own benefits. For instance, in Kenya, where China is building a major railroad extension, China’s agreement is to hire 70 per cent locals, the rest, Chinese.