On the eve of his departure overseas to attend the G7 summit, the prime minister gave a major speech on foreign policy to the Perth branch of the United States/ Asia society. Scott Morrison pushed back against the current assertive policy approach of China, calling on liberal democracies to resist coercive trade measures.
He implored free nations to work as one as they did during the Cold War to fight authoritarianism, the Prime Minister renewed his calls for a rules-based overhaul of global trade rules to prevent China’s ongoing threats to Australian exports. Mr Morrison said:
“There is much at stake for Australia, for our region, and the world. We are living in a time of great uncertainty not seen since the 1930s.
“We are facing heightened competition in the Indo-Pacific region. We need all nations to participate in the global system in ways that foster development and co-operation.
“Australia stands ready to engage in dialogue with all countries on shared challenges, including China when it is ready to do so.
“Patterns of co-operation within a liberal, rules-based order that have benefited us for so long are under renewed strain.”
The prime minister proposed that the multilateral rules-based system should be reinforced. In particular, he suggested that the World Trade Organisation and the World Health Organisation should be given more power to deal with breaches of the rules. In particular, he suggested that the WTO dispute settlement provisions should be amended to make them binding on parties to a dispute.
In a move that is likely to provoke China, Mr Morrison backed President Biden’s call for an investigation into the origins of the Covid-19 virus.
“I strongly support President Biden’s recent statement that we need to bolster and accelerate efforts to identify the origins of the Covid-19 pandemic.
“Having led calls for an independent inquiry, it remains Australia’s firm view that understanding the cause of this pandemic is essential for preventing the next one, for the benefit of all people.”
Are Scott Morrison’s representations to the G7 participants likely to have any impact on China’s future strategy? Probably not.
The Chinese have a clear strategy to dominate the world’s trade and payments system. In a few years, it will be the biggest economy in the world.
In contrast to the United States, China has no foreign debt. US debt equates to a year of its GDP.
China is now issuing loans in digital yuan to foreign purchasers of Chinese goods and services. It is also using digital yuan to purchase foreign goods and services. China’s ambition is to make the digital yuan an alternative reserve currency to the US dollar. If it is successful in this then it will totally disrupt the current trade and payments system.
In the worst-case scenario, creditors of the US will no longer want to hold US debt. A run on the dollar will force the US to buy back its debt with hard currency rather than resorting to the printing press.
This will bankrupt America and most of the western world, which denominates its debt in US dollars, and they will be no longer be able to provide welfare support to their citizens or maintain their defence assets.
In the circumstances, Scott Morrison’s initiatives appear a bit like closing the stable door after the horse has bolted.