Published in The Australian Financial Review, 3 November 2020

The Quadrilateral Security Dialogue is not an anti-China alliance in the making, but ministerial talks held last month in Japan show Australia still confronts policy issues.

The salad days of the China growth story, when we could reap the economic rewards without confronting the strategic costs, are now behind us. The strategic consequences lie ahead.

It has become fashionable today to say that we made a terrible mistake in thinking that China’s participation in the global economy would make it a more open political system.

That may have been an expectation in Washington but I do not think that Australian policymakers suffered any such delusions. Some of our political leaders may have been intellectually attracted to the proposition that China’s opening to the world would ultimately lay bare the contradiction between an open economy and a closed polity.

But for the most part, Australia’s China policy has been framed around judgments about economic opportunities for Australia, together with a belief that a growing Chinese economy was good not only for the hundreds of millions of Chinese people living in poverty, but also for regional and global trade. The calculus was predominantly economic.

There were years when we imagined and hoped China may become a responsible stakeholder but we certainly did not see this as inevitable.

We observed that while political space was tightly controlled, China’s economic opening meant personal space was expanding from the days of uniform Mao suits and the Little Red Book.

China even went through a period when it thought that by bringing more democracy to the party it could avoid bringing democracy to the people.

But this did not last very long and the one thing we knew for certain about China was that the party was determined never to relinquish its monopoly on power. That is what Leninist systems do.

Also, the middle class that China’s growing economy created was not, unlike their European historical counterparts, in the vanguard of a push for more representative institutions. For the most part, they were the beneficiaries of the status quo shaped both by the rapid rise in their standard of living and a deep fear of instability.

In the 1950s and 1960s Australia saw China as a strategic threat captured by the caricature of the “Yellow Peril” and the downward thrust of Chinese communism.

But with the opening of the Chinese economy in 1978 , the focus shifted from strategic threat to economic opportunity. It is not that we were blind to the logic of economic power expanding strategic reach. But there was no sense of urgency in facing up to this reality.

We knew that an economically powerful China would not be like Japan, content to be a large economy but a sublimated strategic power. But what type of strategic power China would become was less clear.

Our judgment was that it was unlikely to be a classic revisionist power, not least because it had been a huge beneficiary of the international system. But we also knew China would not forever live by rules which it had no part in framing and would also want to create new institutions with China at the centre.

China would have us believe that history and time are on its side and that its predominance is inevitable.

All this began to change, first with the global financial crisis and then with the ascension of Xi Jinping.

After the crisis, China began to think that the US was on a steeper decline trajectory than previously thought and that the window of opportunity for China was therefore opening up sooner. Under Xi this judgment has deepened. China has abandoned "hide and bide" because it believes its time has come and so it no longer needs to hide its ambitions or bide its time.

This may well prove to be a spectacularly flawed judgement, but it is no less real for that. China, which well before Xi had made an art of convincing the world that it was more powerful than it was, now seems to convince itself this is the case.

China would have us believe that history and time are on its side and that its predominance is inevitable. It seems to want to reach back to the Middle Kingdom where harmony was a hierarchy with China at its peak. Other states knew their place and they would quickly see the logic of not acting in ways which ran counter to China’s interests.

For China, the past is the future, broken only by a century of humiliation and four decades of economic catch-up.

A return to the Middle Kingdom is, however, neither feasible nor desirable and is utterly incompatible with the multipolar world which is the more likely shape of the future.

This is where the Quad comes in.

The Quadrilateral Security Dialogue, which consists of Australia, the US, Japan and India, is not a grand anti-China military alliance in the making. It is not an Asian NATO, even if it is likely to see more military co-operation among the four countries. Indeed, India, is allergic to the very idea of alliances. Rather, the Quad is a means of managing China’s ambitions in a way that puts some constraints on how far it is prepared and allowed to go. It signals that leverage is a two-way street.

Of course to exercise leverage, the Quad will have to do more than meet and express its support for the peaceful resolution of disputes, the upholding of international law and the eschewing of coercion.

It will have to be prepared to make it clear that it is willing to impose costs on China for unacceptable behaviour. These costs might range from diplomatic through to economic all the way to collective measures to uphold principles such as freedom of navigation and the Law of the Sea.

Each member of the Quad brings a different perspective and motivation to its dealings with China. For the US, it is a means of helping blunt China’s ambitions for predominance and reinforcing the absolute determination of the US to stay number one. For Japan and India, which both carry historical baggage when it comes to China, it is a shared concern that a predominant China will narrow their strategic options and room for manoeuvre.

The one member of the Quad for whom the core issue is the character of the Chinese system is Australia. Indeed, Australia is perhaps the only member of the Quad whose anxieties about China would likely disappear if China were a democracy.

What would be the basis of our concern in those circumstances? Australia, after all, does not have any in-principle objection to the concept of a predominant power in our region. Quite the contrary. We have historically seen US strategic predominance as the bedrock of our security and also as the great enabler of economic growth in Asia.

The US may speak the language of a new ideological cold war but the reality is it is driven more by its determination to hold on to strategic primacy than a battle against an authoritarian system. The US would be just as determined to remain number one if China were a liberal democracy. And neither India nor Japan, for reasons of history and geography, would be at ease with a democratic China as the predominant power in the Indo-Pacific. We may be in the same Quad bed, but we each have very different dreams.

China portrays the Quad as containment by another name but we should not give China a veto over our strategic policy. Besides, constraining China differs from containment whose ultimate logic is a complete rejection of engagement. Containment seeks to thwart China. Constraining seeks to manage China.

Constraining China will take time to construct. It is unlikely the Quad will ever reach the NATO-like point where an attack on one is considered an attack on all. Indeed, the Quad currently has neither the unity of approach nor the will for serious collective action.

But China’s behaviour is shifting perceptions as more countries see with discomfort what an assertive China looks like. This has both hastened the urgency of pursuing arrangements such as the Quad and reduced the caution about offending China.

China currently seems determined to behave in ways which are quickly losing it friends and respect. Polling shows this is evident across the globe with negative sentiment about China rising substantially.

Yet China seems not to care. This is either the arrogance of a nation which believes that its time has come and it can do as it pleases, or it is a judgment that the domestic benefit to the party in China being seen to call the shots exceeds any diplomatic costs. Those of us who have worked as professional diplomats have learnt that domestic considerations beat foreign policy most of the time.

For all except the US, we are only too aware that unilaterally resisting Chinese pressure is hard and unilaterally constraining China is impossible: better to do it collectively and certainly a better option than the unilateral US containment of China. I say unilateral because I cannot see Japan, India or any country in south-east Asia supporting containment and I hope Australia will have more sense than to embrace it.

Peter Varghese is the Chancellor of the University of Queensland and a former secretary of the Department of Foreign Affairs and Trade.