incremental power has given it substantial leverage among key business constituencies in major democracies. It is inevitable this leverage will soon influence policy debates in those countries.
Australia is a compelling case study. It has fought alongside Uncle Sam in every single American war since the beginning of the 20th century. The military alliance with the US is the bedrock of Australian security. Yet, in 2009, China became Australia's largest export market.
How Australia balances this paradox could be educative. In the future India may encounter similar questions, even if not of the same magnitude. Much of what Australia does would depend on the influence of the Chinese constituencies within its system. These constituencies are individual, sectoral and geographical.
As per the Reserve Bank of Australia, in 2011 iron ore comprised 20% of Australia's total export value. China alone accounted for 70% of iron ore exports. This means one commodity and one buyer-country contributed 14% to Australian export. The implication for jobs and revenues gives a small group of Australian resource barons, who have grown wealthy due to the Chinese boom in the past decade, a disproportionate stake in the China relationship.
As a corollary, there are varying assessments of China in different states. In June 2012, Colin Barnett, premier (chief minister) of Western Australia, addressed a conference in Perth. "If you look at China," he said, "73% of all of Australia's exports to China come from Western Australia … Western Australia's exports to China in the last year amounted to $47 billion; the total exports to China of the entire United States of America were $91 billion." Eighty per cent of investment in Australia by Chinese State-owned enterprises, Barnett said, was investment in Western Australia.
The interplay between those statistics and strategic decision-making cannot be wished away. It is worth noting Barnett represents the Liberal Party, to the right of Australian politics and is supposedly harder on China on human rights and related issues.
Examples of individual barons are even more telling. In 2010, Clive Palmer of Resourcehouse signed a 20-year, US$ 60 billion coal deal with China, described as the largest export order in Australian history. The US$8 billion EMC (engineering management and construction) contract for the project went to a Chinese company. Initial funding was courtesy a $6-billion loan from a Chinese bank.
When Palmer's projects ran into environmental protests in 2012, he blamed an "offshore political power". He accused the Central Intelligence Agency of funding the green lobby to jeopardise Australian coal exports. The conspiracy theory was laughed at but Palmer was also stating his preferences. Interestingly, Palmer has placed a massive order with a government-owned ship-maker in China to build him a replica of the Titanic.
During the past week's India-China trade talks, there were concerns expressed at possible restrictions by New Delhi on sourcing of telecom equipment from Chinese companies such as Huawei Technologies. In Australia too Huawei has been in the news due to its chief executive's alleged proximity to the People's Liberation Army. In March, Huawei was banned from bidding for contracts for Australia's national broadband network.
Huawei certainly tried hard. Speaking on its behalf was Andrew Forrest of Fortescue Metals, another resource baron who has made millions from China. In a speech in Beijing, Forrest criticised the Australian government's decision. Huawei's Australian board - the first local board it set up in any country - covered the political spectrum. It included Alexander Downer, a former Liberal foreign minister, and John Brumby, former Labor premier of Victoria.
Other Chinese companies have offered lobbying contracts to a series of semi-retired politicians. Two former prime ministers, Bob Hawke and Paul Keating, have rendered strategic advice to insurance companies dealing with China and otherwise benefited from a post-retirement business relationship with China. Coincidentally, at a book release event a few weeks ago, Keating called for America to cede space to China and disparaged "the seemingly perpetual invocation of this human rights mantra". One foreign policy analyst is blunt in calling the rising number of high-profile Australians whose bank balance is determined by China his country's "soft underbelly".
Australia is not alone. The European Union (EU) has an embargo on arms sales to China going back to the Tiananmen Square killings of 1989. It will take a unanimous decision by the EU's 27 members to lift the ban. This has proved impossible, but French and German companies that have business interests in China have been lobbying. Some of them are supporting academic research programmes that study the benefits of removing the ban. The European academics in turn are given access and jobs in Beijing, completing the incestuous cycle.
Today, India is a spectator to this sport. One day will it become the arena?
Ashok Malik is a Delhi-based political commentator
The views expressed by the author are personal