Is Australia now China’s strategic prize?
28 Mar 2017|

Image courtesy of Public Domain Pictures user George Hodan.

The Australia–China–US triangular relationship is becoming ever more important as Chinese power and influence continue to rise, as America’s Asia policy enters a highly uncertain and even capricious phase under President Donald Trump, and as Australia continues to fine-tune its delicate hedging game between Beijing and Washington.

At the start of 2017, among the three bilateral relationships—Australia–China, Australia–US, and China–US—it’s the relationship between Canberra and Beijing that’s going most smoothly. That’s something to celebrate because, for some time following Canberra’s immediate support of the South China Sea arbitration ruling released in July last year, China was considering economic punishment against Australia if it was to continue championing the ruling that Beijing had vehemently rejected.

Not only have memories about the ruling now faded, but Australia has sent clear signals that it’s pursuing an independent policy toward the South China Sea, one that’s distinct from America’s increasingly robust military posture. Thus, in response to repeated requests from American admirals that Canberra should conduct its own Freedom of Navigations Operations, both current and retired officials came out opposing the idea.

Foreign Minister Julie Bishop, whose declaratory support of the arbitral ruling last year irked the Chinese, has now told the US Secretary of State Rex Tillerson that ‘Australia will not change its past behavior in the South China Sea and not escalate tensions with Beijing.’ Equally important, during her press conference with the visiting Chinese Foreign Minister Wang Yi on 7 February, Bishop endorsed diplomatic dialogue between China and other South China Sea claimant states. It’s a position China has long promoted, particularly since the second half of last year as it sought to delegitimise the arbitration ruling.

Separately, Beijing is satisfied that the idea of an Australia–Indonesia joint patrol of the South China Sea has so far come to nothing. The idea doesn’t hold water, and given Indonesian President Joko Widodo’s friendly attitude toward China, Beijing was sceptical of its substance. Nevertheless, Bishop’s explicit rejection of the idea earlier this month was a delight to Beijing.

Thus, from China’s standpoint, Australia’s doing everything correctly regarding the South China Sea. Although Beijing still complains about the strengthening of the US–Australia military alliance, especially US deployments in Australia for China contingencies, it appears that the South China Sea is no longer an obstacle to deepening bilateral ties.

There’s also been plenty of good news on the economic front. Economic ties, buttressed by a comprehensive free trade agreement signed in 2015, are the central pillar of Sino-Australian relations.

As the Trump administration embraces ‘America First’ nationalism and protectionism, China seeks to fill the breach. Since the administration withdrew the US from the Trans-Pacific Partnership (TPP), which Beijing believed itself to be the target of, China has moved quickly to morph into a champion of globalisation and free trade. The main vehicle through which it has sought to do so has been through the Regional Comprehensive Economic Partnership (RCEP), which involves ten ASEAN countries and six others, including Australia.

During Wang’s meeting with Bishop at the 4th round of Sino-Australian diplomatic and strategic dialogue on 7 February, he urged all parties in the RCEP talks, including Australia, to expedite the negotiating process. He also emphasised the importance of protecting the multilateral trading system and opposed all manner of protectionism.

In contrast, Australia’s political relationship with the US has withstood a major disruption following a telephone call incident on 28 February.

Moreover, Chinese elites haven’t failed to notice the domestic debate inside Australia about the need for a new, independent foreign policy that would be less subordinate to the US and more focused on China. From Hugh White’s prediction that Australia ‘will move closer to China and further from America’ to Stephen Fitzgerald’s admission that ‘we are living in a Chinese world,’ Chinese elites can’t help but wonder whether Australia is now a strategic prize up for grabs in the age of Trump.

The reality, however, is more complex. Many differences remain in the bilateral relationship, even on the economic front. Although both countries support RCEP, they have different visions of what’s appropriate—China seeks a quick, “lowest-common-denominator” kind of deal, while Australia prefers a “high-quality’” one.

And despite progress made since late last year, Premier Li Keqiang’s visit last week for the fifth round of Sino-Australian prime ministers’ annual meeting fell short in advancing a core objective of China’s grand strategy: persuading Canberra to formally support the Belt and Road Initiative (BRI) by signing an agreement over the Northern Australia Infrastructure Facility.

There are still inherent limits to deepening the relationship. The pro-US wing still dominates policymaking when it comes to the Australia-US-China trilateral relationship. Tactically, Bishop supports Chinese diplomacy over the South China Sea; on a strategic level, however, she calls on the Trump administration to expand the US role in Asia. Although tension in the South China Sea has recently abated, its lingering toll can be seen in Australian suspicions of Chinese strategic ambitions, with spill-over effects on attitudes toward BRI and Chinese investments in Australia.

If Beijing is smart, it shouldn’t entertain the fantasy of wooing Australia by trying to drive a wedge between Canberra and Washington. That would be publicly offensive and strategically counterproductive. Rather, it should try by skilful diplomacy to address Australia’s major concern about the stability of a rules-based order, by proving that a powerful China will be a strong supporter of such an order. Meanwhile, it should demonstrate to Australia that China is a reliable economic and security partner whose cooperation will be in the long-term interest of Australian prosperity and security.

Once those aims are achieved, Australia’s alliance with the US should be less of a concern, simply because the Australia–China relationship will be so much stronger.