As the final post in this series ^[1] on ^[2] grand ^[3] strategy ^[4], I’m going to apply the framework developed earlier to one of the day’s biggest challenges (and opportunities)—China’s emergence on the world stage. Ironically, despite the acres of newsprint devoted to the subject in the rest of the world, the clearest grand strategy is probably the one the Chinese themselves are pursuing, which reflects the core interests ^[5] of the state (or at least the leadership), most notably political stability and preserving the leading role of the Chinese Communist Party. Achieving those objectives ^[6] informs the way in which the Chinese state makes use of all instruments of national power, whether in defending territorial integrity, maintaining internal harmony or building linkages with other nations that can deliver the economic growth seen as essential to legitimising the Party’s role. Given this, for the rest of the world, the task becomes identifying the strategy that they should adopt to build the international relationship they would like.

Australia has a complex and diverse relationship with China today, but it has evolved through interactions at many levels of government and business without any overarching plan. If we were to pursue a grand strategy, the broad choices are denial, reform or engagement. A denial grand strategy seems problematic; there are currently no areas of our strategic interests threatened by China for which we would consider using military power (and increasingly no credible way our military power could sway China anyway). The relationship between the two countries has few areas of significant disagreement and is instead mutually beneficial, with both sides having an interest in making it more so. As a middle power, Australia isn’t in a position to choose this kind of strategy, but we could be a small part of a future American-led one which some ^[7] are trying to convince the US to adopt, largely based on concerns about China’s political system.

A reform grand strategy to change China’s social rules towards liberal democracy appears unrealistic for any state to presently undertake. While there is some genuine discontent ^[8] within China about the existing governmental social rules and there are groups and individuals who could act as ideational advocates, most support the current domestic political order. And without the extant social rules collapsing, their replacement cannot be set in motion. And even if it could, the outcome might be less predictable than hoped.

An engagement grand strategy which leverages off the current Chinese political system seems a more practical option. When the Chinese Communist Party decided to reform the economy and open the country to international investment, it devolved power ^[9] to the regional and local level. The political system is less monolithic than we imagine and has become increasingly pluralist, with numerous politically influential ^[10], competing ^[11] state and non-state domestic groups. An engagement grand strategy can build on this to work with and strengthen compatible, well-placed domestic groups.

The diversity of such groups suggests multiple connection points. However, these groups operate within broad guidelines emanating from the Chinese Communist Party. There may be opportunities to engage some of those groups and key individuals to build an institutional type of order between Australia and China where both sides agree on the operating rules, military threats are not seen as an option, and both cooperate to reach common objectives, particularly economic and financial. The aim would be to build linkages with Party groups and influential individuals in a manner that gives them a stake in sustaining and deepening mutually beneficial relations.

This would allow us to make an already multifaceted relationship less fragmented. Adopting an institutional order would see the relationship placed on a more formal and stable basis, with multiple transnational linkages between Australian and Chinese domestic state and non-state actors. The instruments of national power could be used in a variety of ways to build and sustain an institutional order.

For example, the diplomatic instrument would be focussed on establishing the basis for an institutional order and formalising it through building durable political linkages ^[12] and understandings. These would be essential for Australia to gain an appreciation of Chinese politics deep enough to be able to attempt influence policy outcomes; this would be a difficult task but important to achieving grand strategic success. In this, the military instrument may be able to build helpful connections with the PLA and other Chinese state agencies through increased cooperation on security issues of interest to both nations, such as peacekeeping. The informational instrument could concentrate on building social and cultural linkages across Chinese society through making use of popular culture, public diplomacy and place branding.

The economic instrument could be the most useful as the Chinese interest in the relationship is principally economic. Australia might be able to purposefully attract further suitable large-scale investments by selected Chinese state-owned-enterprises (SOE) and private companies. In advancing the interests of such organisations the individuals and groups concerned can also potentially advance Australia’s interest in a long-term, mutually beneficial relationship. With some in Australia fretting over SOEs, an initial objective of an institutionalist order may be to formalise investment guidelines that meets both countries needs and provides a degree of reassurance to both sides. While an SOE may place an emphasis on long-term national matters, commercial companies can stress short-term profits; both approaches have shortcomings that an institutionalist order may be able to ameliorate (or exploit).

The Australia–China relationship has to be built for the long-term and, given the many variables, the future is rather uncertain. An engagement grand strategy could be resourced using a long-term market approach. Market mechanisms can be used to encourage deepening and broadening the transnational linkages in the business sectors that will best support the envisaged institutional order. Incentives could be used to encourage Australian companies to invest in the problematic Chinese market by lessening risk and thus building new connections. Taking best advantage of commercial and social linkages though might require Australia to actively build new skills and a greater capacity for focused sustained interaction. Australia’s soon-to-be-released Asian Century White Paper will be instructive in this regard.

Managing demand, offering incentives and employing subtle regulatory actions can help build the ties between the two nations to establish and sustain a stable institutional order, although such is gained at the seeming price of helping the Communist Party stay in power. There may be real gains for the two countries in terms of security and prosperity, but such a grand strategy is likely to be unwelcome to those seeking political change in China—a task beyond Australia’s power alone in any case.

Grand strategy isn’t simply strategy on a larger scale but something different. While this series has just provided the bare bones, the simple grand strategy framework described in recent posts can help in thinking about such complex matters as the end game in Afghanistan and how we adopt to the ‘Asian Century’. These are complex and grand ideas, and they need careful contemplation.

Peter Layton is undertaking a research PhD in grand strategy at UNSW.