Why China Can't Risk Any Bold Moves

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The Chinese government is feeling hard done by.

It has been carrying the burden of sustaining global growth in the face of European dithering and decay. Its purchase of American debt keeps the federal government there going.

Its appetite for resources remains the rock on which the Australian economy depends.

Yet in Hawaii, US President Barack Obama injected fresh energy into the Trans-Pacific Partnership free-trade zone that includes many of China's main trading partners, but not China.

If it wants to join, China will have to accept the rules laid down by the TPP. And it proved almost a step too far, in domestic political terms, when it copped the liberalisations required by its accession to the World Trade Organisation.

That's why it is almost inconceivable it will grant Australian business privileged access under a free-trade agreement now in its seventh arid year of negotiation.

This is especially so since the Australian business world is already in its thrall. We never hear of Australian business lobbying China to open its doors to investment there -- only of its lobbying the Australian authorities to open the doors wide to Chinese investment here.

So if the TPP does become a reality that includes the big players, the US and Japan -- at this stage a remote prospect -- it will almost certainly do so with China on the outside looking in.

On the security front, China always feels vulnerable because it has no alliances, unless one counts its ball and chain -- its old link with its communist kingdom neighbour, North Korea.

Its position is that its firepower remains modest compared with America's, and that it is merely modernising its military -- albeit a People's Liberation Army, the Communist Party's own forces that have held a special claim on the government since they saved the party's bacon by putting down the demonstrations of 1989.

China has, however, clearly been attempting in the past couple of years to test the limits of the power that has been fuelled by its growing economic muscle.

It has observed that previous great powers built a capacity to project military muscle to match their economies, and sought to test it first in the South China Sea.

This was a bad choice. Mainly just because of China's own successful growth through globalisation, this large patch of the Pacific has become one of the most important commercial arteries in the world and contains substantial anticipated oil and gas.

China's capacity to control access to the South China Sea therefore was going to be contested strongly by its neighbours, which have not been slow to enlist the support of the world's greatest sea power, the US.

Washington has been emboldened and energised by this backing, which gives it a new positive narrative -- engagement with economically vibrant and mostly democratic Asia -- to substitute for the dreadfully negative one of trying to contain terrorism in the Middle East and Afghanistan, a war that it is now committed to steadily tone down.

The political cycles in Washington and Beijing have become fascinatingly entangled. But while Obama will gain politically as he seeks a new term by appearing decisive, even adventurous, the opposite applies in China.

For the men lined up to take over from Hu Jintao and Wen Jiabao -- Xi Jinping as party general secretary, Li Keqiang in the No 2 role as premier -- any bold move risks being pounced on by their rivals as destabilising. This makes it especially galling that in regional terms they are still losing some ground.

Academics and others without official status are informally authorised to vent some of this inevitable frustration. Thus in the past few days we have seen Chinese elements attack India for planning to boost its troop numbers on the Chinese border, and The Philippines for celebrating rather noisily its alliance with the US, with a visit from Secretary of State Hillary Clinton.

A People's Daily commentary growled that "such Philippine provocations bring negative political influences to the region, China must take fitting measures to pay The Philippines back".

Vietnam, which has become especially irritated by conflict between its fishing and other vessels and Chinese vessels in the South China Sea, has rapidly developed an unlikely military relationship with the US.

South Korea has in the past few days arrested large numbers of Chinese fishing boats.

And as Burma prepares to take over as ASEAN's chair in 2013, its new military chief, General Min Aung Hlaing, has made Vietnam -- not, as usual, China -- his first port of call overseas in his new role.

This provides a setting in which Australia's modestly enlarged role in its US alliance can be more easily accommodated.

This is not "containment", as the Chinese government and, especially, its more nationalistic outliers would claim. China's business interests are almost ubiquitous, and that is mostly to be welcomed. But it is discovering the limits to its power -- limits intensified by regional concerns about its opaque governance -- just as the US government is also learning, in the debt negotiations in train in Washington, the limits to its own economic capacity.

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