By 30 November Australia will have a new parliament. Before then, however, her citizens will have to solve a puzzling dilemma: whom do they want to go with? With the USA or the People’s Republic of China?

The dilemma has been recently proposed by the academic and commentator, Hugh White. To be fair, most politicians and observers, including the recently ousted Prime Minister, Julia Gillard, believe that there is no need to choose at all. On the one hand, the USA would continue being Australia’s main security provider, obviously bearing in mind that in the most recent Defence White Paper (2009), the government affirmed the necessity to be more autonomous. On the other hand, China is Australia’s main trade partner, her major creditor, and one of her major investors, not to mention that every year 700,000 Chinese tourists visit Australia and 160,000 Chinese youth (40% of the total number of international students) study at her universities.

In the centre right Liberal Party, wariness about Chinese investments is growing. In a famous Beijing speech (24 July 2012) its leader (and potentially future PM) Tony Abbott clearly acknowledged the importance of Chinese presence in Australia, but added that ‘Chinese investment is complicated by the presence of state-owned enterprises’ and concluded by saying that ‘China is a good friend of Australia and it can be a better one.’ In other words, the Liberals seem to mean that Australia should clearly side with the USA and welcome strong economic relations with China, but bearing in mind the political and cultural differences between the two countries. Western market and Eastern ‘State’ can co-operate, but otherwise keep distances.

Others, like Hugh White, think that the issue is more complex, and in the future Australia might have to face a difficult choice – a dilemma. Rivalry between the USA and China is intensifying, and Australia might be forced to take side. Otherwise, she risks being ‘squeezed’ between the two great powers. Would the current PM, Kevin Rudd, the first Western leader who can fluently speak Mandarin and has a reputation as a Sinophile (even if in his previous spell as PM he did not spare criticism to Beijing), be the one who can make the right choice?  In broader terms, however, why does Australia have to make such a choice? Why does a traditional and loyal Commonwealth member have to reflect on its own identity and imagine a future with China in the USA’s place? Is Australia’s dilemma a sign of a more general decline of the ‘West’ or the so-called ‘Anglosphere’?

In many ways, it is. The idea itself of ‘Anglosphere’ is often cherished by those British and American neoconservatives who feel nostalgic about lost imperial greatness or praise rather ill-defined ‘Anglo-Saxon’ values. It is a somehow defensive concept, a sign of weakness in front of rising challenges in a range of fields. Let us consider some among such challenges, starting with the real economy.

Following the last IMF forecast (July 2013), 2013 growth will be 1.7% in the USA, 0.9% in the UK, 1.7% in Canada, 2.3% in Australia and New Zealand. Only the last two will break the 3% growth barrier in 2014. China’s growth projection, despite Western media’s ‘trumpeting’ about her ‘decline’, is 7.8%; India’s and Indonesia’s, 5.6%; Brazil and Russia (which anyway grow from a stronger base) will rise by 2.5%. Numbers tell the story that the gap between the ‘West’ and ‘emerging’ economies is shrinking, not widening. Qualitatively, similar considerations apply. The largest high tech company in the world by revenue is South Korea’s Samsung, just ahead of Apple (200 billion $). Maybe we are not surprised to find in the top ten Japan’s Panasonic and Fujitsu, but what about Taiwan’s Foxconn, currently number 4? Moreover, China’s Huawei, founded in Shenzhen in 1988, has already become the largest telecommunications equipment maker in the world, and 46% of its employees work in research and development. Beijing’s Lenovo, founded in 1984, is the world’s second largest pc vendor. USA corporations still lead, but feel the heat. By the way, can anyone mention a large European company in high tech industries and born in the last thirty years? Or shall we recall that even Nokia has been facing tremendous cuts, huge operating losses, and a downgrading of its stocks to ‘junk’ by Moody’s (June 2012)? Western decline is also tied to a now chronic difficulty to innovate, despite extraordinary cases such as the Silicon Valley.

In trade, the overall picture is not much different. China is already the world’s largest exporter, with ‘tiny’ Hong Kong ranking as number 12 (just one place behind the UK, which is a country of 63 million inhabitants…). The new Director General of the WTO, Brazil’s Mr de Azevedo, who will formally enter his office on 1 September, and is seen as a BRICS candidate, has defeated Mexico’s Herminio Blanco, usually considered as the US choice. On trade matters, China and the BRICS will have the chance to co-operate with the US and the EU, but also to oppose them. In this sense, an interesting and recent development is the re-opening of China-Australia talks on a free trade area (FTA) between them, which has been announced on last 24 July. Is this ‘only’ a business issue or will Australia (like other countries) have to face problems of political and cultural identity?

After all, a free trade agreement with the world’s leading exporter really does make sense! And in broader terms, the West’s failure to manage international affairs in key regions such as the Middle East and Central Asia is drawing more countries away from it and closer to China and the other ‘emerging economies’ (one case in point is Pakistan: the new PM’s first visit abroad has been to Beijing). One area in which the West (and in particular English-speaking countries) still holds the lead, however, is that of capital markets, with Wall Street’s and the dollar’s hegemony. When will a Pacific competitor arise?

The announced merger between the exchanges of Tokyo and Osaka became effective on 16 July. Japan’s stock market has thus consolidated its position as number three in the world. However, an Asia-Pacific equivalent of Wall Street needs China to be in. When will Beijing create the conditions for a global Asian Superbourse? China will then be able to fully compete with the USA. At that time, Australia’s dilemma will really materialise, and probably not just for Australia. Whom will the rest of the world go with?