GDP or Sovereignty, The China Policy Choice

ZH: "That's Something China Can't Tolerate": Tensions Erupt As China Slams Australia's "Irresponsible Comments"

"You can’t earn Chinese money and then politically make irresponsible comments about China and become unfriendly," said Cui Pijiang, director of the China Coking Industry Association. "I’m afraid … this is something the Chinese government can’t tolerate."

As Luttawk laid out in the Logic of Strategy and as I discussed in The Logic of Strategy: Yuan Devaluation and the Road to Trade War

If the U.S. and regional economies prefer U.S. influence in the region to that of Chinese influence (and putting aside all ideology, the distant hegemon remains more attractive than the near), they can choose a path of slower economic growth designed to keep China from becoming the dominant power.

Slower economic growth results from tariffs/restrictions on Chinese trade or in this Australian case, because the nation put sovereignty over trade.

Globalists opened their nations to Chinese economic domination and have little to no care for national sovereignty or the fate of their nations. As globalists fade from power in the West, the political calculus is changing. Australia is not a rabidly nationalist country preparing invasions of its neighbors, it is a government acting in the interests of its citizens and itself, defending its ability to act independently.

China wants a trade deal with the United States because imbalanced trade means China holds little sway over U.S. policy because it's harm is mainly limited to farmers and Boeing. When China boosts imports and trade is more balanced, and trade between the two nations grows, China will be in a position to issue similar dictates to an American President. China dislikes the U.S. abusing of its economic power and its status as issuer of the reserve currency. China also looks on with envy.

Each nation will choose its fate. Many nations have chosen GDP over sovereignty because they do not fear China. More than a few nations are breaking out of the U.S. system because American abuses of power have increased as its relative power declines. China is showing it will be no different, though cultural and political differences make for a more "abusive" China.

There's no win-win here. China isn't going to submit to Western authority and Western concepts of what is acceptable behavior by a nation state. If you can be bought they will own you, or you will lose business. China will find other resource exporters who are more politically pliable:

But one place that is sure to benefit from the escalation in trade tensions between Beijing and Canberra, is yet another Latin American nation that is slated to become China's next vassal colony. As S&P Global reports, Clombian thermal coal is proving attractive to Chinese buyers, who are picking up "super cheap" offers from producers and traders with around 1 million to 1.35 million mt of coal on its way to China from the South American exporter, plus additional cargoes to northeast Asian countries including South Korea.

In addition to not being politically charged, one other benefit of Colombia coal is that it is much cheaper: June-arrival Capesize cargoes of Colombian thermal coal are trading at $65/mt CFR China on a 5,500 kcal/kg NAR basis, which is cheaper than equivalent grade Australian cargoes priced at $68/mt.

Choosing sovereignty is best done earlier than later. The longer a nation waits, the more its economy will be entwined with trading partners, the greater the resistance to change. One need only look at President Trump potentially caving to China because he fears political losses in farming regions and wants the stock market propped up through the election. A nation's sovereignty traded away for trinkets, leaving a future President to risk full blown recession, depression or WWIII should America choose sovereignty at a later date.