By Lavina Lee, Senior Lecturer, Macquarie University

The great English essayist and philosopher William Hazlitt popularised the aphorism that those who have encountered adversity are greater teachers of wisdom in the ways of the world than those who have only known prosperity.

It might seem like drawing a long bow, but this is of high relevance to how Australia ought to seek prosperity and security in the region. One need not be at odds with the other. Indeed, seeking prosperity and security is far more in alignment now than it has been for many decades.

Let’s begin with the concept of managing risk which is essential for any individual, firm, or nation. Enduring prosperity is about more than making as much money as quickly as we can. It is about managing risk through diversification – of buyers or suppliers – and paying attention to the exogenous shocks that affect economies and commerce.

This is where the point raised by Hazlitt comes into play. Australia did well selling commodities and services to China. The booming trade in commodities effectively kept Australia from recession in times of global crisis for around twenty-five years. Then geopolitics and a pandemic played havoc with our best laid plans to continually increase our exports to Asia’s largest economy. Those twin adversities should have reminded Australians of three realities.

First, non-economic possibilities need to be baked into any company’s strategy when dealing with a world being increasingly defined by geopolitical differences. Second, over-dependence on China as a buyer or supplier is a violation of basic risk management principles and cannot serve as a judicious foundation for enduring prosperity. And third, China is a big part of Asia but not the sum of it. Any credible economic Asia strategy must look beyond China for other markets and to diversify risk. A failure to consider these three realities is a cardinal lapse in due diligence for any executive or political leader. This is what the adversity of the past few years should have taught us.

There is another unfolding reality linked to the three outlined above. The post-Cold War world of the 1990s and 2000s is over. This was a time when economic opportunity and trade agreements were not tied to inchoate geopolitical concerns. They were glorious decades of open-ended and inclusive free trade agreements in a world where competition seemed to be confined to that between multilateral firms rather than nations.

Economic opportunity will occur between aligned nations

Those days are over. Increasingly, economic opportunity, the sharing of technology and knowhow, and interactions between peoples in an economic context will occur between nations of similar geopolitical bent and direction. For example, AUKUS might be ostensibly a military technology sharing agreement. But it is much more than that. It is one instance of the kind of exclusive cooperation between economies from the same geopolitical side. These will become more common.

For an advanced economy like Australia, economic opportunity and technological partnership will align ever closer with security considerations and interest. The point is that our economic future and strategic interests are actually converging. This does not mean that China becomes irrelevant to our prosperity. But China will be less important than the heyday of the previous decades when it appeared that it held the key to our economic success or stagnation. It is already clear that China’s thirst for commodities is in long-term decline.

All this means we need to be less pre-occupied with whether Australia is managing our bilateral relationship with China well or otherwise. There is also less need to juxtapose prosperity and security because that is a contrast from a fading and transient era. Rather, it is better to focus on the neglected tasks of improving our productivity and innovation. That will be the greater determinant of whether we do well or otherwise in the region that is unfolding. 

Dr Lavina Lee is a Senior Lecturer in the Department of Security Studies and Criminology at Macquarie University. 

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