Comments on Robert Gottliebsen “Turning on a Chinese axis”, 19/05/2009, http://www.businessspectator.com.au/bs.nsf/Article/future-pd20090519-S6T4N?OpenDocument&src=sph&alerts&loc=center.
Dear Robert, what you said in this article is important issue that will have significant implications for many in the world, whether one is currently aware of it and is concerned with it or not.
If the trends of the international economies of the past two decades are any guide to the future, it seems that the continual shift in the economic powers among world big economies will see the rise of China as the world largest economy in the not long distant future.
I call this international geoeconomics of our time. This, coupled with the high saving rates of the Chinese, does imply that the Chinese will be a very large international banker, to underwrite many things, not to mention the huge US government debts.
It is quite likely that the international geoeconomics will also shape international geopolitics. The world has to accommodate the changing and changed reality. But that is not our focus here in this forum, so let’s focus on business and economics.
The rise of China economically and the relative decline of the US economy internationally as seen in its falling share of the world economy, will mean there is a need to reform or restructure some of the international institutions that have been built on the post-war economic reality, with the strong focus on the dominance of the US and the west Europeans in the governance of those institutions.
Reforming IMF, the world bank and WTO will not only reflect the need to accommodate the rise of the Chinese economy and its shares in international trade and capital flows, but more importantly the collective transformation of some of the big developing economies, the BRIC for example, and Russia.
Economically and politically, Japan has been underweighted internationally, due to its role in World War II. This also needs to change to be more just and more appropriate in the current world reality more than 60 years after that war. But there have been difficulties in allowing Japan to play a bigger role, because of strong reactions from some of the Asian countries that suffered in the hands of Japanese imperial army during the Second World War. Japan will need to reconcile with its near neighbors on those issues.
Elsewhere when I commented on an article, I made a proposal to introduce a new governing or final voting system (see http://mrlincolns.blogspot.com/2009/05/new-voting-mechanism.html, or http://www.eastasiaforum.org/2009/05/11/the-chiang-mai-initiative-china-japan-and-financial-regionalism/). That proposal attempts to inject new thinking in terms of the governance of international institutions.
That proposal combines the current UN senate-style voting and IMF (economically) representative voting, to give a larger role for every country irrespective its size, but at the same time recognize economic accountability. That reflects the world trends of globalization and integration, and the human nature of our current time of becoming more humanitarianism.
The international community needs to persuade big powers, old, new and emerging, to accept a new and more humanitarian approach to the governing of we human beings at this age.
Showing posts with label geopolitics. Show all posts
Showing posts with label geopolitics. Show all posts
2009-04-24
Strategic gaming by Australian government - good or bad?
This blog will discuss potential strategic gaming by governments in relation to investment and trade. This issue arose from reading an article on KGB's Business Spectator, asking for the Australian government to price out the Chinalco bid to invest in Rio Tinto.
It seems that author seemed to understand more about Rio's business its own management team. He was concerned that the management is going to sell its assets short. Unable to influence the management, he attempted to influence the government.
It might appear to be legitimate concerns and a reasonable approach, if one assumes the game is going to be played only once and only Australian government has the choices to move, other governments are assumed to not react irrespective what the Australian government does.
However, assumptions are just assumptions. Sometimes they cannot be farther away from the truth. Anyone with some knowledge of game theories would understand that the above assumptions are very simplistic, unpractical and cannot be applied to real businesses.
If more realistic assumptions are made in the context of Australia - China relations and the international mining sector, one would certainly wonder why the Australian government would want to engage strategic gaming in relation to such investments. One has to consider carefully the potential possible options each government has, any first move, counter moves and continuous plays. Were it to start, there could be many rounds of plays and the outcomes for each side are very hard to predict.
Australia is a middle power internationally as it often self claimed. Its influence in the international arena is noticeable but fairly limited if one to be realistic. It is located in the Asia Pacific region and naturally wants to develop deep relationships with the Asia region where some of our important trading partners lie.
China is an emerging power with a rapidly growing economy now ranked third in the world. It will probably not be too long for it to replace Japan to become the second. Some forecast that China will become the largest economy before the middle of the century.
China would probably regard Australia highly. The main reasons include:
· The two countries are very complementary with each other economically;
a) Australia, an industrialised country with expensive labour costs, is rich in mineral and agricultural resources;
b) China, an industrialising and emerging economy with a huge need for resources, has abundant cheap labour supply, but lack of natural resources in per capita terms;
c) Compared to some other big resources rich countries, Australia is closer to China geographically;
d) Australia does not have too overly discriminative trade barriers for China, as some other larger industrialised countries do.
· As a result, the two sides are more likely to be partners rather than competitors or foes;
a) Australia needs external markets for its rich mineral and agricultural products;
b) China needs reliable and stable supplies of natural resources and needs friendly external markets for its labour intensive goods and services; and
c) Australia will benefit from cheap imports.
· Looking from international geopolitical point of view, there appears to be a need for China to have a close friend that is also the friend of the US – the world sole superpower, so when important matters can’t be more effectively be dealt with between China and the US, the mutual friend of both sides can play an intermediate role to facilitate achieving a better resolution of issues;
a) Australia is a strong US ally and is realistically pragmatic in dealing with China,
b) It is highly unlikely that the Australia and China will clash over extremely important strategic issues largely because of the larger international context, mutual needs and geographical locations.
Australia is likely to continue its strong engagement with Asia, including China to gorge stronger relations with them. After all, as Garnaut’s (1989/90?) book indicates, Asia is in the ascendance. It has been occurring for some time already. The 21st century is likely to be dominated by dramatic shifts between continental heavy weights with lasting implications for the whole world.
Before engaging in governmental strategic gaming, perhaps all sides will have and need to carefully ponder strategic thinking first. If we ask for transparency by the Chinese government on important issues, such as military spending, we ourselves will need to be transparent on important issues as well. Trade, investment and commercial considerations are likely to be more dominant issues in the heads of Australian and Chinese governments. Whether it is established on mutual trust or mutual deterrence, some transparency will be needed and equilibrium to be reached. It will be in our own interest to do our homework well and first before making strategic gaming moves.
It seems that author seemed to understand more about Rio's business its own management team. He was concerned that the management is going to sell its assets short. Unable to influence the management, he attempted to influence the government.
It might appear to be legitimate concerns and a reasonable approach, if one assumes the game is going to be played only once and only Australian government has the choices to move, other governments are assumed to not react irrespective what the Australian government does.
However, assumptions are just assumptions. Sometimes they cannot be farther away from the truth. Anyone with some knowledge of game theories would understand that the above assumptions are very simplistic, unpractical and cannot be applied to real businesses.
If more realistic assumptions are made in the context of Australia - China relations and the international mining sector, one would certainly wonder why the Australian government would want to engage strategic gaming in relation to such investments. One has to consider carefully the potential possible options each government has, any first move, counter moves and continuous plays. Were it to start, there could be many rounds of plays and the outcomes for each side are very hard to predict.
Australia is a middle power internationally as it often self claimed. Its influence in the international arena is noticeable but fairly limited if one to be realistic. It is located in the Asia Pacific region and naturally wants to develop deep relationships with the Asia region where some of our important trading partners lie.
China is an emerging power with a rapidly growing economy now ranked third in the world. It will probably not be too long for it to replace Japan to become the second. Some forecast that China will become the largest economy before the middle of the century.
China would probably regard Australia highly. The main reasons include:
· The two countries are very complementary with each other economically;
a) Australia, an industrialised country with expensive labour costs, is rich in mineral and agricultural resources;
b) China, an industrialising and emerging economy with a huge need for resources, has abundant cheap labour supply, but lack of natural resources in per capita terms;
c) Compared to some other big resources rich countries, Australia is closer to China geographically;
d) Australia does not have too overly discriminative trade barriers for China, as some other larger industrialised countries do.
· As a result, the two sides are more likely to be partners rather than competitors or foes;
a) Australia needs external markets for its rich mineral and agricultural products;
b) China needs reliable and stable supplies of natural resources and needs friendly external markets for its labour intensive goods and services; and
c) Australia will benefit from cheap imports.
· Looking from international geopolitical point of view, there appears to be a need for China to have a close friend that is also the friend of the US – the world sole superpower, so when important matters can’t be more effectively be dealt with between China and the US, the mutual friend of both sides can play an intermediate role to facilitate achieving a better resolution of issues;
a) Australia is a strong US ally and is realistically pragmatic in dealing with China,
b) It is highly unlikely that the Australia and China will clash over extremely important strategic issues largely because of the larger international context, mutual needs and geographical locations.
Australia is likely to continue its strong engagement with Asia, including China to gorge stronger relations with them. After all, as Garnaut’s (1989/90?) book indicates, Asia is in the ascendance. It has been occurring for some time already. The 21st century is likely to be dominated by dramatic shifts between continental heavy weights with lasting implications for the whole world.
Before engaging in governmental strategic gaming, perhaps all sides will have and need to carefully ponder strategic thinking first. If we ask for transparency by the Chinese government on important issues, such as military spending, we ourselves will need to be transparent on important issues as well. Trade, investment and commercial considerations are likely to be more dominant issues in the heads of Australian and Chinese governments. Whether it is established on mutual trust or mutual deterrence, some transparency will be needed and equilibrium to be reached. It will be in our own interest to do our homework well and first before making strategic gaming moves.
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