Deng Xiaoping and his successors shrewdly decided to keep launching experiments in liberalisation, and expand the ones that seemed to work. They opened China to outside investment, and it came flooding in. They did the physical infrastructure work necessary to create a first-rate system of ports, rail connections, roads, and now of course airports, and they allowed foreign and Chinese entrepreneurs to build their factories on this platform.

Throughout, 'rule-based' operation, as opposed to arbitrary or subjective granting or withholding of favour, has been the weak part of the system. Rule-of-law has of course steadily increased, mainly in areas where necessary for economic efficiency. The Chinese Customs Service must operate reliably if high-tech exporters are to exist in China. The multi-billion dollar daily financial flows in and out of China require a banking system that, at least in its external dealings, accords with normal financial standards. Safety and production standards are more and more important. But every expansion of rule-of-law is contested. In different ways that is the significance of the Bo Xilai and Chen Guangchen episodes.

Everything about China's next stage of development seems likely to intensify these pressures. Or, as any remaining Marxists in China might put it, everything about China's growth is likely intensify the contradictions! The more extreme the polarisation of wealth and opportunity in China, the more the left-behinds are likely to wonder about the rules for success. The more sophisticated the commercial and technological ambitions of Chinese firms, the more they will care about improvements in transparency and rule of law. Two examples I describe are the desired expansion in air-travel systems, blocked now mainly by unpredictable, opposite-of-transparent opposition from China's security-state forces; and the bogged-down nature of China's internet connections with the outside world.

It is appropriate to end this exchange with your identification of the central question and tension in China's next phase. That there's a contradiction between the Chinese Government's range of ambitions for China and its reluctance to give up control is the fundamental starting-point truth.

How that contradiction will be resolved I wish I could say, but can't. I look forward to returning to this topic with you over the months and years, when we have more evidence about which of these forces is gaining strength. And for your colleagues in Australia, I hope these exchanges are at least a useful leaven to the next round of discussion on the impending China-centric age.

Agriculture is a primary stumbling block; vocal farm lobbies in all three countries, particularly Japan and Korea, will vigorously oppose attempts to dismantle subsidies that enable them to earn a living. Political disputes could also derail the process, despite the best efforts of all parties to prioritise economic growth. China, Japan and Korea still disagree on a range of hot-button nationalist issues.

Seoul and Tokyo are perennially at loggerheads over compensation payments to 'comfort women' sex slaves of Japanese forces during World War II. The two also disagree on the sovereignty of two rocky islets the Koreans call Dokdo and known in Japan as Takeshima. Tokyo and Beijing contest ownership of a chain of islands called Diaoyu in China and Senkaku by Japan. Japanese war atrocities still provoke anger in China, and both Korea and Japan are exasperated by the intrusions of aggressive Chinese fishing vessels into their waters.

If these and other obstacles can be cleared, a CJK FTA would change the face of Asian trade. Australia is negotiating FTAs with all three countries, but it has been slow going and preferential trade arrangements between the three giants could dilute some of the gains. Moreover, an FTA would draw Japan and Korea closer to China politically as well as economically, posing question marks over whether the US and its Western allies could take the support of Tokyo and Seoul for granted as they tend to do now.

Though a presidential election in Korea and an imminent power transfer in China might complicate the FTA talks, success cannot be counted out. Each government has shown the political will to push through contentious FTAs in the past. More than 100 trade pacts have been signed by Asian economies, around half of them in the more developed markets of East Asia.

Photo by Flickr user Ville Misaki. 

For example, it's not unreasonable to argue that the East Asian economies have pursued their own distinctive growth path. If we start with the World Bank's 101 middle income countries in 1960 but then restrict our sample to East Asian economies, the odds suddenly look an awful lot better: of 14 countries, five had made it to high-income status by 2008.

You could push this even further, if you wanted: it has been argued that there is a difference between the Northeast and Southeast Asian growth models. And of the six middle-income Northeast Asian economies in 1960, four had graduated to the high-income category by 2008.

Two points, then:

1. Those old arguments  about whether there is a distinctively successful East Asian growth model (remember the heated debate about this famous World Bank Report on the East Asian Miracle from the early 1990s?) may still have some useful life in them.
2. Sample selection matters, including in defining the relevant population (all middle income countries? Just East Asian ones?).

 

In the past, Australian understanding of the uniqueness of this continent has translated into a belief that many of our geopolitical problems are as unique as our geography. The 'home alone' element in this basic belief was well conveyed in the book titles of leading Australian diplomats after the American defeat in Vietnam, including Malcolm Booker's 1976 tome The Last Domino and Alan Renouf's The Frightened Country from 1979.

In the same territory, Paul Hasluck wrote in 1980 that Australia was 'without a perch' on the international stage, raising significant questions about the nation's 'situation, resources, risks, opportunities and options...we are not sure of our own identity nor fully acceptable politically to other member nations in the geographic region to which we belong.'

In the decades since, the shift has been from talking about Australia as a unique outsider towards ideas of belonging, membership and partnership; in Dick Woolcott's wonderful phrase, to an Australia that is 'the odd man in'. To turn around Hasluck's metaphor, Australia now has a perch on the same tree as everyone else. It may be a puzzling place to be, but at least we have a lot of other birds to talk to.

A shared quandary, of course, does not always produce similar answers. Yet Australia is not alone in putting new effort into convincing the Americans that we like having them around. A lot of other birds in the Asian aviary are showing more public affection for the American eagle. Thus, US Secretary of Defense Leon Panetta gave his keynote speech in Singapore on the US military rebalancing towards Asia and then flew on to visit those important new partners, Vietnam and India.

Australia differs from some of the other players in the formal and enthusiastic expression of its affection for the US as the benign military hegemon. Nick Bisley makes a big but eminently arguable call when he judges that the Australia-US alliance is in the best shape of its 60-year history:

The Australia-US alliance has been politically tightened, operationally engaged for over a decade, and subtly adjusted to respond to the changing international environment. The political foundations in Australia are very robust and the alliance is likely to retain its current centrality over the longer-term. Australia has hitched its strategic wagon very firmly to the United States. But such a close commitment has knock-on consequences for the rest of Australia’s foreign policy. Whether in its dealings at the United Nations or its relationship with China, managing the externalities of its close relationship with the United States will be a central, and at times difficult, task for Australia’s diplomats in the future. Australia, the United States, and other regional allies, must also recognize the risk that placing such an emphasis on continued American military predominance is likely to increase regional friction, particularly with China, and steps should be taken to establish mechanisms for minimizing these risks.

Just beefing up the US alliance is not going to be enough to steer Australia through the Asian Century. But an important element of the dilemma is that it is widely shared.  And in considering equations produced by a declining America and a rising China, many in Asia are showing a certain Oz-like enthusiasm for the US. Perhaps a fragment of Hilaire Belloc echoes through their minds: '... always keep a-hold of Nurse, For fear of finding something worse.'

I belabor this point for two reasons, one about China and one about the United States. About China, the point is that this chaos and tension is so much more striking when you are in the country than when you are reading or thinking about it from a distance. That's true anywhere, but I think it's especially important in this case. And about the United States, the point is that the 'foreign policy elites' that contend over US policy have a wider range of views about China in particular than might be apparent from afar.

Of course I realise that the whole world is aware of many cleavages in American foreign policy: neo-cons versus 'realists', soft-power people versus hard-power interventionists, Atlanticists versus North Americanists versus Pacific-oriented people, the AIPAC group versus its sceptics, and on through the list. All this is is obvious, but it's a prelude to my answer to your question. And the answer is: American policy elites vary tremendously in their attitudes toward and assessments of China. The fact of that variation deserves more attention than I think it usually receives in Australia, as do the reasons that lead the different camps to their views.

Let me make the strongest argument against my own case: in the 30+ years since Jimmy Carter and Deng Xiaoping took formal steps toward normalised relations, US foreign policy toward China has been more generally consistent than its policy toward most other parts of the world. Despite their differences in countless other areas, Presidents Carter, Reagan, Bush I, Clinton, Bush II, and Obama have maintained the following three-element approach toward China:

• Part 1: It is better to try to work with China than to set in for another mainly-adversarial Cold War relationship.
• Part 2: the established powers should view China's economic and technological rise as overall a good rather than a bad development, since the challenges created by a prospering China are more manageable than those created by China's continued isolation and backwardness.
• Part 3: notwithstanding the previous two points, the US and China will still have a range of serious differences and disagreements, which may become acute at times. (Past examples obviously include the Tiananmen crackdown, the US bombing of the Chinese embassy in Serbia, and the plane-collision accident at the start of the Bush II era. Recent examples include the Google showdown and the Chen Guangcheng case. Ongoing frictions involve Taiwan arms sales, visits of the Dalai Lama, and trade disputes.) 

If you look at the range of official US policies and elite-level US attitudes toward China in these 30+ years, I think you can fit just about everything within a band defined by those three principles.

There is a fourth codicil, which is: whichever party is out of power will accuse the incumbent president of being too soft toward China, even though the out-of-power group will assume the same policy if it takes office. The classic example here is Bill Clinton. As a candidate, he lambasted the first President Bush for truckling to the 'butchers of Beijing'. As president, he oversaw China's entry to the WTO.

Yet despite this consistency of policy, which in my view reflects a fairly constant and realistic assessment of America's strategic interests in dealing with China, there is a huge range of 'elite' level view of China. Some people cannot be bothered to think about it, compared with Middle East issues, the Af-Pak front, the whole 'Global War on Terror' concept, Russian and European dramas, Mexico, and so on. Other people are China-centric to the exclusion of all else.

Perhaps more important, among those who take China seriously, there is a very deep (and often well-informed!) range of opinion about the prospects for China itself. For many decades now, the Chinese leadership has avoided political and economic crises at just the last moment. Does that mainly indicate their skill and dexterity? Or does it mainly indicate that they are pushing their luck and soon will face problems they cannot solve? Does the economy's huge reliance on infrastructure, investment, and exports constitute a strength or a terrible weakness? Are environmental constraints to main challenge to China's growth or mainly a stimulus for Chinese success in clean-tech industries?

Again as you know, the last few chapters of my book are an attempt to grapple with questions like these. I introduce them here to indicate that while there are countless Americans who have not paid sufficient attention to China's rise (as there are countless Brazilians, Russians, Poles, you name it) at the elite levels of US governmental, commercial, and academic life, you will find very rich debate about what is propelling China, what is impeding it, and what the consequences may be for America and the world.

Many Americans may be in denial about China. As a historical/cultural note: ordinary members of the public in big, continental countries tend to be inward looking and parochial. It's been a long-term trait of China and America alike, and it's a basic difference from the built-in outlook of countries that are smaller either in landmass, like Holland, or in population, like Australia.

This brings me at long last back to Australia. I enjoy almost everything about Australia's attitude and outlook, in my frequent visits there as part of the US Studies Centre at Sydney Uni (I will be there again early next month). I very much respect the outsized role that Australian writers and analysts have played in thinking about Asia (if I wanted to wallow in cliché, I could talk about 'punching above your weight'). But my impression is that both at the elite level and among the general public, today's Australians are much more certain about China's rise and dominance, and therefore much more likely to speculate about the 'China-centric age', than their American counterparts. Possible reasons for this difference:

1. Perhaps it's an entirely natural difference in perspective, since Australia's economy is already so much smaller than China's and America's is still much larger. Australian analysts are accustomed to thinking of the country's interests in a world defined by larger powers, and they are recalibrating their sights now. Additionally, there is no plausible scenario in which the United States suffers any kind of direct military threat from China; that is not the case for Australia. This difference also can explain different outlooks. 
2. Perhaps it shows something about American denialism, insularity, inability to face unpleasant facts.
3. Perhaps it shows something about Australian over-reading of the evidence, with too credulous a view of China and too doom-laden a view of the United States.

Perhaps there are elements of all these ingredients. I can promise you that many of my countrymen take China and its prospects very, very seriously, and debate its pluses and minuses much as we do those of the US itself. And meanwhile, we assume that Australia is again in a favored-by-circumstances-and-shrewdness position!

That is more than you asked for, but as you can tell, I am engaged by this theme.

They are more ambitious and a bit more ephemeral than that. What they have in common is that they are ongoing attempts to reshape the nation in some fundamental respect, not just economically or demographically but culturally and morally. And it seems difficult to deny that, in all three cases, governments have led the way.

Benjamin Herscovitch at CIS is right that, in many respects, Australian integration with Asia is already happening and has been for some decades. But what I suggested in my earlier post is that the global economic and strategic realignment toward Asia is so severe and so potentially disruptive for Australia that it requires an evolution of our national consciousness (or identity?) rather than just a realignment of our markets.

I'm not sure what this evolution should look like, or even if it is necessary. It may be that we can go along basically as we are, trading with the region but remaining culturally, politically and strategically quite separated. But the power shifts occurring in our region leave me with the nagging feeling that, if we don't make this shift on our own relatively favourable terms now, we may regret it.

Photo by Flickr user kitchener.lord.

For several years the chaebol have resisted efforts to unwind cross-shareholdings that critics say allow owning families to illegally retain control. Prosecutors are seeking convictions on corruption charges of the heads of SK and Hanwha groups, and Samsung and LG were recently fined for price-fixing of laptop PCs. Chaebols are also accused of monopolising key sectors (Hyundai has 80% of the car market), destroying entrepreneurial capacity by hoovering up the best minds, and squeezing the life out of start-ups and other small businesses. A recent foray by the daughters of chaebol owners into fancy bakeries ended badly when they had to close them down in the face of a public furore.

Many Koreans now want to see real reform of the chaebol, and political parties seem intent on delivering. The opposition Democratic Unity Party has vowed to revive a cap on equity investments by chaebol and crack down on the web of cross-shareholdings that keep affiliates under family control. If an opposition candidate wins the presidential election in December, chaebols can expect unprecedented restrictions, especially as conservatives who control the legislature have pledged similar crackdowns.

Questions remain, however: are the chaebols too powerful to rein in, and if they can be controlled, what are the risks to Korea's economy?

The inelegant-sounding term COMAC stands for Commercial Aircraft Corporation of China, and as you rightly point out, I argue in my book that it will be a very long time, if ever, before its products will be more attractive than Airbuses or Boeings to purchasers who have a choice. And on that point: everyone involved understands that the program's success will depend crucially on early purchasers who do not have free choice: some of China's state-owned domestic carriers, and the likes of Air Laos or Air Sudan who might receive COMAC planes as part of larger aid or trade deals with China. As the Chinese are quick to point out, big-airplane sales have always had a large political component. And both the Europeans and the Americans have, in their different ways, put national muscle behind the national-champion airplane companies.

In one sense the odds are against China's success in this realm, simply because the odds are so heavily against any entrant. Where the United States once had a proliferation of commercial aircraft companies — Lockheed, Curtiss, McDonnell Douglas, Hughes, Republic, many others — only Boeing remains. Europe has gone from dozens of firms to Airbus; and the rest of the world mainly supplies components or smaller planes. And hard as the business is for anyone — Japanese, Indians, Scandinavians — I argue that it will be particularly challenging for China. Which brings me to the real answer to your question.

Why are Chinese organisations and individuals trying so hard in this exceptionally tough and discouraging field? In my view, it is partly because the Chinese officials have not yet realised just how tough it is going to be — and partly because they have.

The 'not realised' aspect is, as you suggest, the sheer national glamour and ambition of extending China's reach in this field, as has happened in so many other areas. Big, ambitious, modern countries have their own airplanes, so why shouldn't China? You can dismiss this impulse as unrealistic and costly, but it's in keeping with a lot of other Chinese all-fronts efforts just now.

At the next step up the practicality ladder, Chinese technologists certainly know that Boeing is always America's largest exporter, and aerospace is the sector that accounts for the largest share of the US trade surplus. China's own expansion in its domestic aerospace market will be the big demand driver for both Boeing and Airbus. Why, Chinese officials must think, shouldn't more of this business go to their own firms?

Then, as I try to argue in the book, there is the factor that illustrates the real importance of Chinese efforts in this realm. In short, aerospace represents the type of industry in which Chinese companies will have to succeed if China is to take the next step in its economic evolution.

To telescope the argument here: in 30 years, China has moved hundreds of millions of people from rural poverty to relatively low-wage urban industrial life (plus, it has moved some people to billionaire status). But it has quite notably failed to create or foster the internationally competitive corporations that control most of the profit in international commerce and create higher-wage jobs; the likes of Apple, Mercedes, Samsung, Pfizer, GE. One big focus of China's current '12th Five-Year Plan' (a concept that in itself may seem preposterous in the Western world) is to will China's way up the industrial-value ladder by aiming for success in a number of these fields. 
 
I could go on (I made part of this case in the New York Times recently) but I will stop for now. Are the Chinese officials fanciful and unrealistic in pursuing their aviation dreams? Yes. But that's not the only thing that is going on.

Of course that level of interaction is significant, and of course in these dealings other countries and their leaders play important roles. While we were living in Beijing, Kevin Rudd came to China and gave his zhengyou ('true friend' or 'tough love') speech to the Chinese leaders. At different stages in recent history John Howard and Julia Gillard have played important balance-setting or intermediary roles in American relations with Asia in general and China in particular. Given his very extensive connections with and knowledge of American history, culture, and political lore, Bob Carr is probably better positioned than any senior Australian minister in years to play this role.

But the revelation to me was all the other strands of US-Chinese interaction, which day by day and even through the years have made an enormous difference in China's relations with the outside world and the US in particular. The most important of these is simply the Boeing corporation. As I describe, the first engineer ever hired by Bill Boeing for his new company, nearly 100 years ago, was a Chinese student who had found his way to MIT and eventually went back to China. In many cases, Boeing has been the de facto third sovereign power in dealings between the US and China. In one of those cases, as I describe, Boeing played the crucial intermediary role in persuading the Chinese to move beyond their Soviet-model air 'safety' system, which was leading to a horrendous crash record, to something more like international standards for certification and inspection of people and machines.

Below the level of Boeing itself there is the surprising diaspora of international figures (mainly but not solely American, with a noticeable share of Chinese-Americans among them) who have devoted their working lives to trying to improve the safety, reliability, environmental impact, and overall modern viability of the Chinese air system. I'll save for a later time cameos of some of the people I am talking about: 'Joe T', the Boeing and FAA veteran who was dispatched unwillingly to China to attend to customers there and ended up becoming a de facto member of the Chinese aviation bureaucracy; Steve Fulton, the ex-Alaska airlines pilot who figured out a way to solve the navigation problems posed by the high and forbidding Western Chinese territory; Francis Chao, Paul Fiduccia, and others from the small-airplane community who set their sights on persuading the People's Liberation Army to release its stranglehold on Chinese airspace; Boeing executive Al Bryant, who has decided to pioneer biofuel projects in China; the FAA officials who showed their amazed Chinese counterparts through the airspace rules around Washington DC; and on through a long list.

Actually, I'll say a word more about Steve Fulton now. This video portrays a flight I describe in my book, when American engineers dealt with Chinese airlines to permit the first-ever instrument landing in a very high airport in Tibet. (Which of course brings up political issues of its own.)

This is already too long, so let me end on this note: The surprise to me, and I think to many readers, is how multi-layered the Chinese-US interaction is in aerospace and many other areas; and, I would argue, how overall beneficial rather than hostile or confrontational those dealings have been.

Is this good news for Australia, or bad? I would argue 'good', for two reasons. First, almost anything that leads China and the US away from, rather than closer to, the always-possible zero-sum confrontation is beneficial to all concerned. Second, the Americans involved in these efforts are hyper-aware that they are always in danger of being too US-centric a presence within the Chinese system. So they are always at pains to describe their efforts as reflecting 'international' standards rather than purely American ones. And for that very reason, there is always additional room for 'international' voices, forces and participants who are from some place other than the United States.

That's a long initial reply; I will take the time to be more concise in future rounds!

What is concerning however is Australia’s inability to ensure that foreign policy is independent of outside pressures. While policy makers would appear to pursue independence in our aid and development activities through a purposeful focus on the Asia Pacific region, they have failed to ensure that our defence strategy remains at an arms length from the US. The ANZUS treaty was intended as a contingency plan for times of trouble, and though it has been largely symbolic, it has also come to be the cornerstone of both defence and foreign policy decision making. This is problematic for Australia in the Asian Century.

Almost forty years ago, Gough Whitlam offered his vision for Australian foreign policy:

"The change of government provides a new opportunity for us to reassess the whole range of Australian foreign policies and attitudes...Our thinking is towards a new independent Australian stance in international affairs, an Australia which will be less militarily orientated and not open to suggestions of racism; an Australia which will enjoy a growing standing as a distinctive, tolerant, cooperative and well-regarded nation, not only in the Asia and the Pacific region, but in the world at large".

Today, the Australian Government shapes the future of the region by strengthening the US alliance through enhanced military cooperation. Kissinger notes that countries which find themselves in the middle of struggling powers should avoid the pressure to privilege one relationship over the other. As the 2014 Defence White Paper is prepared, Australia must demonstrate to China that its foreign policy is developed in line with Australian interests — independently, rather than through the rubric of ANZUS and American influence.

Why is Secretary of Defense Panetta visiting Cam Ranh Bay? Why is he examining with Vietnam the potential to use, not only the naval facilities there, but an adjoining airfield? Far from contributing to peace and stability in the Western Pacific, they (the US) are creating a period of tension and even danger. Why? The United States can say this is not containment, as does the Australian Government, but nobody believes them. To continue to say that something that is obvious is not so, is to damage your own credibility.'

Fraser's verdict on Australian support for the Darwin Marines base deal was damning: 'The way Australia immediately rushed in, and once again tied herself to American coattails shows that the Australian Government does not understand how to secure peace.'

What was Fraser's proposed alternative to unconditional support for the US? Here, he tacitly referenced the hotly debated proposal by Hugh White on creating a Concert of Asia: 'The only solution that I can see of minimising the potential friction between these two major powers, is by cooperation. It is by partnership. It is if you like, by a concert of nations.'

The portion of Fraser's speech on balancing Australia's approach to the US-China strategic rivalry contained three allusions to the prevention of war as a policy approach. Firstly, that a concert of powers, presumably modelled on the historical Concert of Europe, could help to sustain dialogue and cooperation between the great powers, despite their disputes. Secondly, that Australia could help avoid conflict by acting independently and sending signals of engagement with China, rather than containment. Thirdly, that such balance and independence in Australia's approach to the US-China rivalry could, as when Robert Menzies refused to support any American-led war against China in the 1950s, give Australia more leverage to prevent future catastrophic wars.

There are plenty of examples where Australian embassies have used websites, Facebook and other social media to promote Australian public diplomacy objectives. Not necessarily by DFAT but often by attached agencies, although the record admittedly is patchy. Tourism Australia, which promotes Australia overseas, recently developed a smart-phone application (though several years behind Malaysia's tourism authority). On the other hand, Austrade, the national trade promotional agency, hasn't yet developed a smart-phone application for its Study in Australia education information service.

The national education department (DEEWR) was at the forefront of the use of social media when it had responsibility for the promotion and marketing of Australian education overseas. Globally, DEEWR was at the cutting edge in terms of web presence with its worldwide, multi-lingual StudyinAustralia website. In Indonesia, it was leading the use of social media by Australian diplomatic services anywhere in the world.

In 2007, DEEWR established a Web 2.0 website (the same platform as Facebook, LinkedIn and others) called Ozmate to engage with Indonesians who had studied in Australia and since returned to Indonesia. Within months, it had thousands of subscribers, and the alumni networking website was not long after replicated by the US, UK, German and Dutch Embassies.

In addition to the use of social media for alumni activities, DEEWR had Friendster and Facebook accounts as far back as 2005, where the Australian Education Centres (AECs) were able to interact directly with prospective students, posting photos from workshops, tagging, leaving comments and answering follow-up questions. A local website provided news feeds about past and upcoming activities, and information and counselling for prospective students and their parents.

It is correct to say that social media would allow DFAT to engage with the public and interested groups. Indonesia is the world's 2nd biggest Facebook user (50 million users) and 15% of the world's tweets emanate from Indonesia (7 million users). Two years ago, the US Embassy in Jakarta (which Australia would like to emulate) created a Facebook fan page, and happily waved it in the faces of Australian diplomats in Jakarta who were restrained from using social media by bureaucrats and Ministerial offices in Canberra. 

The US Embassy Facebook fan page has 485,000 fans. To put this into quantitative terms, Indonesian motivational speaker Mario Teguh gets this many new Facebook fans every three months (he has 5.84 million fans). The latest Spiderman film had 2.5 million fans in Indonesia. So, Spiderman is five times more popular than Uncle Sam.

Indonesian musician and singer Sherina Munaf has 2.7 million followers on Twitter, and follows 400; while the US Embassy has 36,000 followers, and follows 6000. Sherina does not follow the US Embassy, but it follows her.

US e-diplomacy needs to be put into perspective. There are 55 million internet users in Indonesia, which means that less than 1% of those are currently reached by the US Embassy. With a total population of 245 million, the US Embassy reaches only 0.21% of all Indonesians via social media.

Compare the shallowness of interactions via social media to a traditional grass-roots strategy like the Australian Embassy's involvement in Deteksi, an annual and massive youth event in East Java. Each year over 100,000 junior and high school students compete to win the highly-prized Deteksi competition. To take the overall competition, students must first win the Australia quiz – to do that, they must have an in-depth knowledge of Australia (history, geography, politics, popular culture). There is no choice for the 100,000 teenagers; all who compete walk away with knowledge about Australia.

What is clear is that it is only one small, narrow demographic group that the US reaches through social media in Indonesia. The US Embassy is only reaching those already positively predisposed towards the US. Its social media strategy barely goes beyond the remit of engaging with its Facebook fans, simply talking to the already converted. The US Embassy strategy does not, however, reach the indifferent, ignorant or not seeking to know.

It makes sense for the Australian Embassy in Jakarta to be given the ability to engage in social media. It needs to engage with that portion of the community that uses social media, that is the young and middle class. This move should be applauded. And more so, because the Australian Embassy has done so without additional financial or personnel support — the US Embassy had significant new funds allocated to engage the best PR agencies in Jakarta to develop its strategy. So, kudos again to Australia's over-worked and under-funded diplomats.

However, it can't stop there! Social media can only do so much and reach so many. Social media only reaches the influential few, and reinforces their positive notions towards Australia. The Australian Embassy announcement stated, 'We hope that many friends of Australia in Indonesia will click "like" on our Facebook page'. It was an acknowledgment of the reality of how far e-diplomacy can go.

True public diplomacy goes beyond the already pre-disposed to the masses; to those indifferent, ignorant or not seeking to know. It seeks out a broader audience and encourages the general community to adopt a positive and open outlook. This is where Australia should be paying some serious attention. With only 22% of Indonesians accessing the internet, e-diplomacy is no solution in itself to the decline of Australia's broader public diplomacy capabilities — it is simply a necessary supplement.

Shangri-La is a great aid to synchronising ministerial calendars. With everyone in the same hotel, the bilaterals bloom like Singapore orchids. In one weekend, Panetta can hold meetings with counterparts from Singapore, Japan, South Korea, Australia and several others. Then he heads on to visit Vietnam and India. 

Shangri-La says some interesting things about the nascent nature of defence transparency in Asia. Not least, this think tank talkfest that has the clothes of summit has made it possible for regional defence establishments to gather at something like a multilateral setting. This ranks as a notable achievement for Asia.

As the Cold War ended, the Asia Pacific did create a government-level security dialogue, the ASEAN Regional Forum. But the Forum is run by Foreign Ministers. ASEAN, which jealously guards its right to be in the driving seat of such endeavours, couldn't get all its own Defence Ministers together until 2006, well after Shangri-La was born in 2002. 

In an appropriate bit of calendar synchronising, the sixth ASEAN Defence Ministers' meeting took place in Cambodia this week. The ten ASEAN ministers agreed to up the tempo of their meetings with their eight 'Plus' partners (Australia, China, India, Japan, New Zealand, South Korea, Russia and the US). The first ASEAN-Plus defence talks happened in 2010; the second meeting will be next year. After that, the ASEAN-Plus talks will happen every two years instead of having a three year gap. Do you start to get a feel for why a privately-run defence summit has been able to take centre stage?

Part of Shangri-La's progress has been its slow acceptance, if not embrace, by China. Initially, Beijing didn't like what it saw as a creation with a big Anglo-American flavour. But not turning up didn't work too well; ditto for not sending top military brass. So from 2007, the PLA's deputy Chief of the General Staff led the delegation and to give a plenary presentation. And finally, last year, China's Defence Minister turned up.

Liang Guanglie is a no-show in Singapore this year. The Defence Minister preferred to talk to his ASEAN counterparts in Cambodia, where he could express China's displeasure at recent events in the South China Sea in bilateral meetings – especially in the two-way with the Philippines.

Shangri-La shouldn't discomfort Beijing too much. Ministers don't have to announce anything nor issue a formal concluding statement. This is the summit that makes a virtue out of not having official achievements. Like the ASEAN Regional Forum, Shangri-La is still noodling along at the first level, doing dialogue and confidence-building.

After SBY's speech on Friday night, the morning sessions on Saturday on 'US defence policy in an era of austerity' (opened by Panetta), followed by 'Protecting maritime freedoms' and 'Deterrence and regional stability'. With that as the public part, the private sessions that follow get a bit more specific, with one devoted to 'Containing the South China Sea disputes'.

All this talk matters because Asia's military mass is building. As IISS notes, Asia's defence spending this year is set to exceed Europe's for the first time in modern history.
 
 Thus, for IISS, Shangri-La is in the right place at the right time. This is the think tank version of the golden wonk trifecta: an agenda of policy issues of clear and compelling importance, the attention and attendance of key official players, and a wonderful cash generator.

 Photo by Flickr user chooyutshing.

'An Australian head of state can embody our modern aspirations,' proclaimed Paul Keating, in his most celebrated speech on the subject, An Australia Republic: the Way Forward, in June, 1995; 'our cultural diversity, our evolving relationships with Asia and the Pacific, our quest for reconciliation with Aboriginal Australians, our ambitions to create a society in which women have equal opportunity, equal representation and equal rights.'

Still powerful, however, is the idea expressed by Sir Robert Menzies in his much-lampooned 'I did but see her passing by' speech in 1963. The monarchy, he said, is 'an addition to our freedom, not a subtraction from it.' That has proved a resilient thought, and looks set to remain so with or without the presence of the Queen. Just witness the reaction last year to the Royal Wedding, where hotel wide-screens were switched from the footy to the nuptials.

How remarkable that a discussion about Australian in the Asian 21st century should touch upon a holdover from Australia in the British 18th century.

National identity and orientation is not a zero sum game, and one of Australia''s most attractive qualities is that it draws on so many influences. As its population has grown and become more diverse, it has become an aggregation of many different cultures, and the British influence has been diluted. Still, an extraordinary amount of cultural space is surrendered to the UK-made or UK-influenced. Just switch on ABC. It means the British monarchy is not as incongruous as it should be.
 
Last year saw an important demographic shift. For the first time in Australian history, immigrants from China outnumbered those from Britain. A Pom mini-exodus is also underway, which will probably be accelerated by the recent changes to LAHFA, the living away from home allowance, which have been met with howls of protest in the expat community. But the British footprint is still heavy, and Australia prefers to think of itself as a permanent fixture of of the Anglosphere, that relatively new term.

In some ways, the debate about the Republic is similar to the debate about Australia in Asia. It is not a pressing national priority. It is rarely discussed. It exposes a fear of the unknown and also a lack of national imagination. It goes to the country's historical and geographic mooring. Just as Republicans find it difficult to explain and agree on what a post-monarchical Australia would look like, Australian Asia-philes struggle as well with the vision thing.

Republicans are waiting for something to happen: the death of the Queen. The nitty gritty of the 'Australia in Asia' thing is also easily put off to some undetermined date when China becomes more of a rival to America.

Perhaps the timetables are linked. For Australia to become more Asian does it not have to become less British?

Photo by Flickr user Ginnos.

The huge variations stem from different delineations of which flows are considered development aid. In its White Paper, China itself categorises its aid primarily as grants, interest-free loans, and concessional loans administered through China Eximbank. This represents only a small element of China Eximbank's loan program. Its other official flows, such as export credits, constitute the majority of Chinese development financing. These other flows are often incorrectly classified as aid (which they are not, according to the definition of Official Development Assistance), thereby leading to considerable misconceptions about Chinese aid. In addition, Chinese aid is often part of a broader investment package in a given country.

Due to such misconceptions and the fact that several Chinese agencies, rather than one, coordinate aid, it is difficult to analyse Chinese aid alongside traditional aid or within frameworks like the Paris Declaration. Nevertheless, we can be sure that China's development cooperation activities will continue to increase. As such, it will be critical for Australia, given its special reach in the region, to engage with China.

India presents another interesting case. Although often overshadowed by China's rising presence, India's engagement in development cooperation dates back to the 1950s. Today, India is the 5th largest donor to Afghanistan. Like China, guiding principles include mutual benefit, non-interference, and technical and economic South-South cooperation. India disbursed over $1.5 billion in traditional foreign aid in 2011, even while it remained the world's largest recipient of multilateral assistance.

Quantifying and categorising Indian aid is a bit of blur, as it is with China, largely because Indian aid has been managed and disbursed through an array of government departments and technical agencies. The Government recently announced its intention to establish a dedicated Development Partnership Administration within its Ministry of External Affairs, a move which has long been under discussion. 

For both China and India, foreign assistance is a 'soft power' tool for developing strategic economic and political relationships with other countries. As the Asian Century unfolds, we can look forward to reflecting on how this soft power impacts China's and India's engagement with recipient countries in the region and with each other.

To leverage this momentum, it is important for OECD-DAC donors like Australia and organisations like The Asia Foundation to engage with emerging powers like China and India. Given their rapid growth, in terms of both magnitude and soft power reach, these nations will play an increasingly important role in shaping regional and global development in the years ahead.

 

Hugh White suggests 'three obvious priorities'. Winding back aid is an excellent suggestion and this can probably be done with relative ease and only minor political damage.

But the others are far more resistant. Cows, Corby and people trafficking are emotional matters, so much easier to trigger and respond to than politics and culture. Even when steers are stunned and beauticians banished other issues will fill the space. 

We have to find a way to handle 'third order' crises just as we do when they occur in the UK or US. That requires a deeper understanding of Indonesian geography, history, politics and culture being offered through schools with the same energy applied to teaching about Europe. That must include beliefs.

Now here's the real challenge for largely secular Australia trying to understand the huge role faith plays in the lives of Indonesians – and the reverse. We have to engage with moderate Islam, still the mainstream religion despite the gangster mobs masquerading as pious Muslims. 

Past contacts have included government-sponsored high-level multi-faith conferences. These have usually been tolerant and worthy – but seldom touch the easily manipulated xenophobic folk in kampongs there and suburbs here.

This can't be a one-way mission. Indonesian Islam has a heavy PR job ahead to convince us that it really is 'moderate' (the other journalist cliché); so far only the liberals (backed by US funds) have shown the enthusiasm. So here's a task for Australian Muslims to develop an enduring relationship with their colleagues in Indonesia and extend that to the wider community.

The thousand-year relationship between Britain and France has been soaked in blood, twisted by distrust and warped by all the same differences that distort Australian-Indonesian understandings. 

For the Channel substitute the Arafura Sea. For us it should be easier to establish a Southeast Asian Entente Cordiale. We've never been to war with Indonesia, we both drive on the same side of the road, and the Republic is only 67 years old. Should be a pushover.

If there must be a little critical sting in any blog entry, laudatory as it might otherwise be, it would come here: the big Australian universities should start to look at undergraduate students from Asia (and elsewhere) less as money spinners and more as future brand carriers for Australia.

Take culture, including sport: Australia is very much in Asia's driver seat in music, together with Korea, and is uncontested in all other categories, including sport. Musicals touring Asia are cast with Australian actors, major art exhibitions on Asian tours swing through Sydney, Tokyo, Shanghai and perhaps Singapore.

In sport, a little bit more emphasis on the beautiful game would not hurt; I mean soccer of course, which is played by the entire non-Anglo-Saxon world. This would mean a little less focus on archaic sports such as Gaelic football (renamed Australian rules) and cricket. OK, I know South Asia is crazy about cricket, but they will eventually grow up, too). If the Australian soccer scene could finally get its act together, many soccer stars from Asia, who are forced to seek employment in Europe, would likely rather play in the neighbourhood.

So, relax Sam: becoming Asian is not primarily a national task to throw a lot of extra money and effort at. It's is a process which is foisted on Australia by history (the Asia Pacific as the key global region of the 21st century), by geography, by immigration and much more. It should to be accompanied of course, but it will roll on regardless.

Photo by Flickr user david-tattnig.

Each time our position was preserved. But now this is coming rapidly to an end thanks to the inexorable shift in economic weight as the great convergence erases the West's productivity advantage. This challenge is more formidable than those we have seen off before. 

This is one of the greatest shifts in our history and how we respond is indeed one of the great national tasks we have faced. One can see it as a phase, like multiculturalism, of the adaptation of a society transplanted from the northwest corner of Europe to the southeast corner of Asia. This phase has been delayed because Anglo-Saxon primacy in Asia has been prolonged for so long. But now we have to work out how to live in an Asia in which Anglo Saxons no longer wield preponderant power. It is going to be very different.

Why relations with Indonesia matter

The difference is not just about the US and China. Last week, I argued that Australia has to rethink its relationship with Indonesia precisely because Indonesia is going to be much richer and stronger than Australia within a few decades. We have always been richer and stronger than any of our neighbours. We do not see how profoundly the relationship has been shaped by the relative power balance between us, because it has worked our way and the stronger party is usually less aware of how power affects a relationship. 

Our foreign policy now has to focus very seriously on how we best preserve our interests in the relationship as power shifts from us to them. This is no abstract exercise in diplomacy; a good relationship with Indonesia when it is three or four times richer than us will be critical to our security and prosperity. A powerful Indonesia will not necessarily be threatening, but we will need to work hard to do whatever we can to make sure it isn't. This idea makes people edgy, but that is what weaker states have to do in managing relations with stronger neighbours. Lots of countries do it all the time. We've just never had to do it before.

What do we need to do?

Well, to put it most broadly, we need to start building the kind of relationship we want to have with Indonesia when Indonesia is a great power and we are, at best, a middle power. There are three obvious priorities. First, wind back the role of aid: we cannot buy a good relationship with Indonesia. Second, move on from our obsession on third order issues such as people-smuggling, live cattle and Schapelle Corby. Third, start building a sense of shared interests in the big questions about Asia's future and start resolving issues which might cause us problems in future. Above all, recognise that we are not going to be able to dictate the terms of this relationship. We need to take Indonesia's views of us seriously: Indonesia's President Susilo Bambang Yudhoyono spelled them out in a speech to the Australian parliament in 2010. There will need to be give and take, and as the weaker power we will do more of one than the other. We should not expect to like that, but we should get used to it.

Who is responsible?

In the end, as I argued back in 2010, it is our political leaders' job to understand how our place in the world is changing, to work out how to respond and to explain to the rest of us why this is necessary. We are seeing a major failure of political leadership on this at present. The Asian Century White Paper is a major opportunity for the government to change that and much depends on that opportunity being taken.

Of course, there are other reasons the Indonesia relationship is anaemic. One is the Indonesians themselves, who are not always keen to embrace us. Another is a version of the standard lament from foreign policy wonks, which is that there is no constituency for change: there are no votes in Indonesia policy and the number of Australians who stand to benefit from closer relations is small and diffuse (at least in the short term). And previously I suggested a fourth reason: that our politicians are wary of the implied reproach carried in every call for Australians to get to know Asia better.

So can we frame the Indonesia-relations debate in 'loss aversion' terms? I think Hugh White has gone some way toward this by arguing that Australia risks drifting away from middle-powerdom to New Zealand-like small power status unless we wake up to the Asian Century. If that drift is accompanied by relative American decline in the region, then we face a future in which Australia is far less able to shape its own destiny and much more at the mercy of others.

But that's awfully abstract, and as post-World War II Britain shows, a sharp descent in world-power status does not have to be accompanied by lower living standards. In fact, both Britain and France show that the ride down can be very comfortable indeed. So although being a 'middle power' sounds nice, what's really in it for Australians?

Some might reply that this misses the point. It is precisely because foreign policy is such a marginal issue that there's no point bothering to try to convince the electorate. The key thing is to turn the political elites around. I suspect that's been true of a lot of foreign policy issues in the past, but if the claims made about the epochal change our region is undergoing are even half right, will that be enough this time around?

Perhaps I'm embarrassingly late to this revelation, but I'm now flirting with the conclusion that committing Australia fully to the Asian Century needs to be seen not simply as a policy task but as a great national project akin to multiculturalism, Aboriginal reconciliation or the deregulation of the national economy. It is a generational task, never fully completed, that goes to the core of our national identity.

And Indonesia is really the test case. If the political class and Australians generally can't be motivated to make some real commitment to our nearest and most important South East Asian neighbour, then what hope is there for our Asian push more generally?

(BTW, I haven't mentioned the responses from Dave McRae and Ariel Heryanto, but I am completely sympathetic to the idea that individuals and particularly students can be too utilitarian about this stuff; learning more about Indonesia is a very worthy end in itself. In fact, there is much to be said for the argument [made by my favourite political philosopher, Michael Oakeshott] that, properly speaking, university education should not be vocational at all. Rather, the purpose of such an education should be to immerse the student in a 'language' specific to a particular academic discipline, allowing them to make a contribution to the conversations taking place within and between such disciplines. It is these conversations that form the core of our civilisation.

That's a romantic and probably unrealistic view of the academy; Australian universities are now overwhelmingly vocational institutions which train students for careers. But even if universities could be brought around to this ideal, it does not follow that governments should have the same concerns as universities or as individuals wanting to achieve personal growth. By necessity, Australian foreign policy is utilitarian and focused on certain specific purposes. It always will be. For government, just being closer to Indonesia can never be an end in itself.)

My thinking remains mostly the same. Economic enmeshment – following Stephen's 'spiderweb of ties' concept – is the most critical. But to achieve this, Australia and Indonesia need to set ambitious goals (like making Indonesia one of our top trading partners in 10-20 years) and map a course to get there. Getting an agreement to get us there and overcoming the many barriers to the free flow of goods and services will require serious political commitment and engagement.

On the new Colombo Plan idea, I was almost persuaded by Hugh White's recent argument that treating our region as a 'charity case' shows how little we understand the Asian Century. The fact we give aid to Indonesia does create the wrong dynamic in the relationship in plenty of circumstances, but given poverty rates in Indonesia and Indonesia's critical importance to us, I think on balance it is still better to give in a big way, particularly towards higher education. And to perhaps address Hugh's concerns, it is not as though rich countries limit their higher education scholarships to developing countries. 

On the public diplomacy front, there needs to be an inversion of the current approach. Politicians need to stop trashing the relationship for purely domestic political advantage and instead promote a more realistic and accurate image of Indonesia, similar to the way we treat that other giant, the US.

Other ideas: perhaps we could look at a joint peacekeeping force that would deploy together on UN missions. Our soldiers could also look to build a joint regional emergency response team. This might help move perceptions of Indonesia as a security threat.

Onto Sam's second question, 'What harm is done by doing nothing?'

I'd say a lot. Indonesia's future matters a lot to us. Just think of the many different trajectories it could take: disintegration into several smaller states (East Timor has about a million people and look how hard it has been managing its transition; Indonesia has over 200 million) or return to autocracy or military rule. Then there's the possibility of the election of a president who whips up anti-Australian sentiment and perhaps does nothing about the small group of extremists. Or how about economic malaise and resulting increases in extremist sentiment? Or what about continued 6%+ economic growth and tens of millions joining the middle class that we can trade with? It's a no-brainer.

Of course, Australia only has limited influence, but why not use what influence we have to push for the outcome most clearly in our interest?

Photo by Flickr user Agianda.

If learning 'others' is universally good and essential to self-understanding, these 'others' need not be Indonesians. For most Australians, however, what could be better than Indonesia (not just Bali, or Jakarta)? It is one most confronting and richly diverse 'others' in the region. It is located on Australia's doorstep, rendering it the most affordable path to self-discovery.

In Australia and Indonesia alike, people know more and still desire to know more about the world's two empires on the other side of the globe than about their immediate neighbours. Despite all the complaints about the status of Indonesian studies in Australia, actually the situation here is better than in Indonesia.The question 'Why should more Australians learn Indonesia?' annoys me at times, because I assume everyone should know better. But the reverse question, 'Should Indonesians learn more about Australia?' is unthinkable in Indonesia. This is despite the fact that more Indonesians stay for lengthy periods in Australia than the reverse.

Indonesia has been narrowly defined in discussions about Australia-Indonesia relations. Most frequently, knowing Indonesia means knowing only two small circles of people who are equally isolated from the vast majority. One is the nation's elite (in government and business), the other is the underground terrorist leaders.

Why these two? The former is expected to be instrumental to Australians' efforts to maximise their interests. The other hardens the long-standing presumptions about 'others', reaffirming that the self has been morally superior all along. Both help Australians resist the challenge of learning more seriously about the world, and ultimately knowing themselves better.

Photo by Flickr user PixelPlacebo.