Australian Economy

what would war with China look like?

This article is based on Kevin Rudd’s Richard Larkins Oration delivered at Monash University on Wednesday night.


If humanity is to avoid a bloody war over Taiwan, we all need a clear understanding of what such a confrontation might actually look like.

We now live in a dangerous time. Although the Chinese Communist Party is not on a general war footing in preparation for an imminent invasion, Chinese President Xi Jinping has now prioritised security squarely above economics.

The Chinese president’s report to October’s 20th Party Congress shifted the party’s formal conclusion about China’s external security environment: instead of “peace and development” as “the main trend of our time”, Xi emphasises “dangers in peacetime” and preparation for the “dangerous storm”.

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This confirms our analysis that a clear danger zone is emerging in the late 2020s and early 2030s, when China believes it will have sufficiently narrowed its military gap with the United States and insulated itself against financial sanctions. China is also watching for weakening US and allied political resolve, particularly if a neo-isolationist Republican were elected president in 2024, 2028 or 2032.

I continue to be worried about the ease (or, in some cases, excitement) with which some public figures talk loosely about the possibility of war. I include in this our alternative prime minister, Peter Dutton, who as defence minister declared it “inconceivable” that Australia would not join such a war — as though we are discussing some minor re-run of Margaret Thatcher in the Falklands, rather than a conflagration that could lead to World War III.

It may help our national discussion to think clearly about the different war scenarios that go beyond the classical image of a military invasion.

One possibility is that China could blockade Taiwan to strangle its economy, either through its now formidable naval assets or the threat of conventional rocket forces — capabilities we saw on display in China’s reaction to US Speaker Nancy Pelosi’s visit in August. Such actions by China are likely to invite a US naval and air response.

Alternatively, China could launch a comprehensive cyberattack with the aim of crippling Taiwan’s civilian and military infrastructure. This would also invite American and Taiwanese countermeasures against Chinese critical infrastructure, enhancing the risk of non-cyber escalation given the vulnerability of military assets cut off from communications systems.

A third possibility is China attempting to take one of Taiwan’s offshore islands. Any Taiwanese government would face irresistible political pressure to defend its territorial integrity. The Chinese may gamble that American leaders could not justify a military response to their own people in defence of some distant island, and cause the rest of the world to doubt American resolve.

Fourth, China could still embark on a full-scale territorial invasion that, if it were to succeed, would probably involve a combined amphibious, airborne and special-forces operation bigger than the D-Day landings in 1944. This is the most problematic scenario of all, involving possible pre-emptive strikes on American military assets in nearby Guam, which is sovereign US territory, and Japan. It could also trigger US strikes against Chinese missile forces in Fujian. Needless to say, under this scenario, the immediate escalation into a general war could be rapid.

Add to all of these scenarios the risk of nuclear escalation if China were to begin losing a conventional war. In such a circumstance, it would be unwise to rule out the possible threat or use of nuclear weapons to safeguard the regime.

The real-world consequences of any such war would be of an order of magnitude not seen in our lifetimes. The civilian casualties on Taiwan — an island democracy of about 25 million people — would be impossible to predict. Taiwanese repeatedly tell pollsters they would fight to the bitter end. Nikkei estimates the global economic cost of war would immediately evaporate about 3% of global GDP and bring about a global depression. If China prevailed, it would upend the prevailing regional security order and undermine the credibility of US security guarantees to its treaty allies in Asia and Europe.

Australia’s economy would massively contract. We would also face the mass exodus of refugees seeking safety from war zones. Furthermore, if America failed, we would face the possibility of funding our own form of large-scale armed neutrality for the future — a profound challenge given our population size, vast geography and, at present, limited military resources.

We cannot imagine how the global order would be reshaped by such a war. What we know is that the first and second world wars both radically remoulded the world in ways that could not have been anticipated.

These questions demand serious, mature discussion. It is to all our benefit that Prime Minister Albanese has taken the temperature down in Australia-China relations in his recent meeting with President Xi Jinping. Just as it is good that presidents Biden and Xi had done likewise for the US-China relationship for the immediate period ahead.

But for us, the core strategic challenge for medium- to long-term US-China and Australia-China relations outlined above should no longer be kicked around as a domestic political football — either to win favour within the internal politics of the tawdry conservative political ecosystems of the Liberal and National parties, or as an attempted electoral wedge against Labor for being allegedly soft on China, as Dutton and Morrison sought to do during the last election, and spectacularly failed.

There are three core questions within this debate: first, how to manage the unfolding strategic competition between China and the US to reduce the risk of crisis, conflict and war by accident over the decade ahead; secondly, whether a combination of military, financial, economic, technological and political deterrence can be effectively deployed to cause the Chinese leadership to conclude, by the late ‘20s and early ‘30s, that the risks of war by design against Taiwan, the US and its allies are still too great to pull the trigger; and, finally, if war occurs, to consider the consequences of either Chinese or American failure.

These are the biggest questions this country has faced in its national security and foreign policy since World War II. And they require our focused national attention.

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