Regional trade: more than two giants

But setting aside the volatile relationships of the two giants, what was surprising - and welcome - was the growing recognition of other markets in the region by Australian business, notably Indonesia.

"Last year 66 per cent of Sydney participants said there would be limited damage to Australia from a trade war escalation. But now 68 per cent say it will be catastrophic.”

Indonesia has made a comeback amid the geopolitical rivalry of the past year. However audience polling overall at Asia Briefing LIVE events in both Sydney and Melbourne reinforced the more cautious attitude towards China which was the most striking feature of a recent Lowy Institute foreign policy poll.

Last year 90 per cent of participants thought Australia should try to work with China’s rising power in the Pacific. This year that figure declined to 73 per cent in Sydney and tumbled to 45 per cent in Melbourne.

Participants in Sydney were asked to choose which of five countries offered the best business opportunities for Australia and Indonesia made a strong appearance at 31 per cent, suggesting the recently signed bilateral trade agreement may be turning heads.

India was about the same as last year at 26 per cent while Japan and South Korea lagged at 6 per cent each. Again though, and noting recent evidence Australia has initially benefitted from the US-China trade war, there was a big rise in pessimism about the impact on Australia.

Last year 66 per cent of Sydney participants said there would be limited damage to Australia from a trade war escalation. But now 68 per cent say it will be catastrophic.

America first v the China dream

Outgoing Australian Department of Prime Minster and Cabinet secretary Martin Parkinson sees China’s economic success as the “single greatest thing to have happened globally over the last three decades and is to be welcomed, not resented”. Nevertheless, he also sees a superpower rivalry that will last for perhaps decades to come.

Yet when Daniel Russel surveys the patch he once managed as US Assistant Secretary of State for Asia, he has a different perspective. Russel neatly captured the way other countries feel they have been sidelined as spectators at a superpower clash by pointing out how the competing national visions of “America First” and the “China Dream” leave little room for neighbours or even friends.

He said other countries didn’t want to choose between the US and China but they faced an additional dilemma when the rivals had visions without much credibility.

London School of Economics visiting fellow, Shirley Yu, said contact between Chinese social sciences academics and American colleagues had virtually shut down due to visa restrictions.

The business and economic discussions saw a parallel debate about how much the decoupling between the US and China in trade would flow on around the world, eroding the common standards and rules which are at the heart of globalisation.

Yu argued decoupling between Chinese and US-led regulatory systems was entirely possible and was being actively sought by China as it pushed its technologies into the developing world. She predicted a comprehensive decoupling between the two superpowers would see the world “going back to an old-fashioned style of international relations”.

China’s infrastructure building Belt and Road Initiative (BRI) was at the heart of discussion with Yu saying its focus on the fastest growing parts of the world meant China’s technology companies couldn't possibly survive without great exposure to western economies.

While Russel called for much greater transparency from the BRI, he conceded the once controversial Chinese-sponsored Asia Infrastructure Investment Bank “had turned out more benign than expected”.

While Parkinson raised big concerns about the fate of global trade if supply chains could not continue flowing through many countries, he took a more benign approach to challenges to existing rules-based global architecture.

He noted recent crises like the global financial crisis had reduced support for existing liberal institutions and sparked demands for new regional institutions.

“We should expect, and even welcome, this kind of institutional smorgasbord if it means countries in our region stepping forward to ensure collective leadership and collective resilience,” he said.

Greg Earl is the editor of Asia Society Australia's monthly publication BRIEFING Monthly and was a former south east Asia correspondent for the Australian Financial Review.

This is an edited version of BRIEFING Monthly which can be accessed here.