Australia has faced the same policy issue for the past 15 years; Balancing economic ties with China, whilst sustaining its strategic relationship with the US in order to secure its position in the Indo Pacific region. However, caught in the crossfire of great power competition, this is proven increasingly difficult, as Canberra struggles to adjust to hard-line policy measures taken by both countries.
The Corona pandemic has again cast a direct light on this issue, the voices pushing for a more independent Australia away from China. The most recent unveiling of the new $270 billion defence budget by the Morrison Government, interpreted against the backdrop of escalating tensions between Beijing and Canberra, demonstrates the robust response that Australia has begun to take in foreign policy, yet the solution is not so clear cut.
“Australia is accustomed to operating in a multilateral environment as a middle power”.
–John Varano, Australian Institute of International Affairs
Traditionally, Australia’s interests have lied with preserving the rules-based order. As stated by senior manager of NBN Australia John Varano, Canberra has long been ‘accustomed to operating in a multilateral environment as a middle power’. As such, our enthusiastic participation through international institutions such as the WTO and the UN with other democracies, though not without its criticisms, is an important strategy to secure Australian interests, and keep its head above the water.
The traditional balancing game of benefiting economically from China, whilst maintaining relations with the US and preserving diplomatic capital for security assurance, has proven somewhat effective thus far. However, the stakes have drastically increased since the US strengthened its gaze upon Asia to contain the rise of ‘assertive China’.
Many theorists have debated the role Beijing envisions for itself, whether it be a global superpower or regional hegemon. Regardless, it is evident that China under Xi Jinping is no longer interested in benign coexistence, rather establishing a Sino centric dominance in the Indo Pacific region. The military escalation of the South China Sea, investments to European and developing countries alike through AIIA and the Belt and Road initiative (BRI), are just a few of the many tactics that Beijing has employed to ensure economic and geopolitical outreach.
Australia’s hesitation to confront China on many ideological and strategic fronts has commonly been a chaffing point in its ‘mateship’ with the US. Whilst Washington is commonly cited as our most important external actor in foreign policy since WWII, in the face of strong economic benefits, and needless to say, the significance of Beijing being our largest trading partner, it is not surprising that numerous human rights issues (Tibet, Uyghur Muslim Camps), defence and economic coercion tactics, have tended to be swept under the rug by Canberra.
The ‘American response to a more externally aggressive…China is likely to endure and become sharper, broader and deeper’, says the United States Study Centre. The issue is that whilst the White House is able to employ significant economic and military capabilities, and implement radical shifts in its China policy, this is not the same for Australia. As China’s external aggression in the region continues to increase, and the gap between what both competing states demand from Australia widens, playing Switzerland is no longer proving to be an option we can pursue.
Since the 2010s, policymakers have realised the dangers of an over-reliance upon China’s economy, and have implemented policy measures in order to mitigate the vulnerability. As noticed by then-Secretary John Fraser for the Treasury in 2015, the decreasing demand upon natural resources and the inevitable economic slowdown from Beijing, stipulated that Canberra refocus upon other export markets for future prosperity.
Yet unfortunately, Covid-19 has demonstrated the deep entrenchment of economic ties and the damage that has ensued. Specifically, the negative impact felt by the student tourism and export industries, with manufacturing supply chains and commodity prices following the same detriment. As estimated by PWC Australia, our GDP is likely to be reduced up to $34.2 billion by March 2021.
What’s clear is that the consensus to pull away from China and focus on ‘diversifying Australia’s relationships’ is greater than ever. UNSW Professor Shaun Carney details the ‘fog of delusion’ amongst Australians that has lifted following pandemic events, including the trade ‘punishments’ that have been subjected upon export industries, spurring greater action for alignment with other countries.
Yet which countries, remain the question.
Some critics are calling for Australia to distance itself from the two domineering powers altogether, and instead further foreign relations with other states such as India or the European Union. Whilst these are important for trade relations, it is obvious geopolitical location in the Indo-Pacific forces Australia to confront the US-China issue.
Others have echoed the longstanding sentiment of a closer relationship with the United States, providing support to its leadership on all multilateral fronts. Although, observing the current US trajectory under the Trump administration and its debilitating compromise of the rules-based order, seriously casts doubt as to the kind of ‘leadership’, if any, that the US can provide, and Australia would be able to get behind. The failure at utilising key multilateral institutions to globally handle the pandemic outbreak alone illustrates this point.
Of course, there is optimism that key allies, including Australia, will get behind the US regardless of the next presidency. What again must be stressed upon, and key for Australia’s interests as a middle power is the employment of the neo-liberal world order that Canberra can operate within, whether or not the US and China continue to struggle for power. Demonstrating to the US, the merits of the international system it once propelled seems to be the most optimal solution in this case. Australia’s success in its Covid-19 inquiry campaign has thus far seemed to prove the point in placing pressure on China through multilateral means.
Not surprisingly, there are voices within our own business communities who advocate for the maintenance of amicable relations with China. After all, the prosperity of many export commodities and university institutions rely on this relationship. The split on the political front for a united China policy is also evidenced by the Victorian government as the only state to sign onto the BRI–against Canberra’s wishes.
This said, the general population and media seems to have spurred on the national government’s stance; Media pieces titled “China can’t bully us into submission: the PM has Australians’ backing” exemplify the support for the hard-line tactics exercised by the Morrison cabinet post-COVID-19. The political fuelled investigation submitted at the WHA, newly legislated anti-foreign interference laws, banned Hua Wei 5G network are all part of Canberra’s personal efforts to curb China’s influence in Australia’s domestic borders. The unveiling of the new $270 defence budget with a focus upon cybersecurity is the latest turn of events, a good indication for the toughening of Australia’s strategic policy. What is yet to be clear, is how the government will solve its economic reliance issues.
As China continues its hostile outlook in foreign affairs, Australian policymakers must consider its best cards to choose, so that when China sneezes, we don’t catch a cold.
