At Glover Cottages on Tuesday 1 March, Ross Garnaut AO, professorial research fellow in economics at Melbourne University and former ambassador to China, discussed President Trump and his apparent retreat from open trade. Over 100 members and guests attended and the event was covered by Sky News.

Professor Garnaut observed that among South and Southeast Asian countries, China, India, Indonesia, Vietnam, Philippines and to a lesser extent Thailand had all experienced unprecedented and sustained income growth from the start of the 21st century. So had some countries in Africa. This had not been matched by similar growth in the developed world, where downward pressure on prosperity and corrosion of the welfare state had led to anti-globalisation, a phenomenon particularly apparent in the United States, but also in other English-speaking countries and Spain.

The global economic crash of 2008 set off a decline in business investment. Substantial increases in imports from developing countries contributed to stagnation in middle-class incomes, a phenomenon worst felt in the United States. Intolerance to the free movement of people, trade and investment into affected countries followed. Hence the rise of populism and the advent of Donald Trump in America, and his immediate withdrawal from the TPP. The rise of Le Pen in France and other populists in Europe, and Pauline Hanson’s One Nation Party in Australia, have similar origins.

Professor Garnaut said that if Trump follows through on his threats to restrict trade and investment into the US, the exchange rate will rise along with an increasing trade deficit. He predicted that Trump will blame everything but his own policies for the resultant economic  deterioration. Meanwhile, China is heading in the opposite direction – more open trade, more Chinese investment abroad, as given expression by the Asian Infrastructure Investment Bank, Regional Comprehensive Economic Partnership, and the Belts and Roads program. Indeed, Chinese economic expansion could significantly offset US restrictions.

What does this mean for Australia? How to shore up our defences against it? Professor Garnaut thought we should accommodate gradualism and refuse to compromise on domestic economic sovereignty while continuing to take in properly processed immigrants. It would be a grave mistake, he said, if we do not rapidly develop more infrastructure – railways, roads, housing, schools, hospitals – to accommodate an increasing, mainly urban, population. In this context, it is disturbing to see our culture of immigration has changed from welcome and accommodation to one of fear and the unnecessary demonization of immigrants.

Report by Richard Broinowski