When great friends are no help

Before Huawei: Australian prime minister Malcolm Turnbull with Chinese president Xi Jinping at the 2017 Asia-Pacific Economic Cooperation summit in Da Nang, Vietnam. Alex Ellinghausen/Fairfax Media/AAP Image

INSIDE STORYJohn Edwards 10 February 2021

Australia’s decision to join the United States in competition with China has backfired damagingly

China’s Grand Strategy and Australia’s Future in the New Global Order
By Geoff Raby | Melbourne University Publishing | $34.99 | 232 pages

These are early days, but it is already apparent that Joe Biden’s approach to China poses more difficult choices for Australia than did Donald Trump’s. The Trump administration was awkward enough, launching a bilateral trade negotiation that forced China to buy more US farm products — and therefore less from other countries, including Australia. By contrast, the Biden administration wants Australia to be an important part of a regional coalition against China in both the security and economic realms, an approach that will find many friends in Australia but obstruct our hopes of resuming a durable trading relationship.

Creating a regional anti-China coalition may be in America’s interest, and the Biden administration, like its predecessors, certainly thinks of China as America’s number one strategic competitor. But it is not necessarily in Australia’s interest. China’s continuing economic success is good for Australia; policies designed to obstruct that success are not. If America succeeds in hindering China’s technological progress, for example, one of the losers will be Australia.

This is not just because more than a third of Australia’s goods exports go to China. It is largely because China accounts for a little more than half the output of the entire East Asia and Pacific region. It is by far the largest economy in a highly integrated economic region of which Australia is a part, a region that accounts for three-quarters of Australia’s goods exports and nearly two-thirds of its goods imports. In Australian planning, China’s regional predominance should be assumed to persist and perhaps increase. It will continue to be the indispensable economic partner for most countries in the region, including Australia. This is the region in which Australia finds itself, now and forever.

In the Trump administration’s trade war, prime minister Scott Morrison declared Australia a neutral. Since the president wasn’t keenly seeking Australia’s support, that position was uncontroversial. With the new administration, neutrality is unlikely to be enough.

The best guide to the Biden administration’s approach to China was made public by its top Indo-Pacific official, Kurt Campbell, in early January. In a co-authored Foreign Affairs piece, Campbell wrote that China’s deployment of new weaponry (and the creation of weapons platforms in the South China Sea) increases the vulnerability of US aircraft carriers near China’s coasts. The US needs instead to deploy more long-range conventional missiles, unmanned aircraft, submarines and high-speed strike weapons.

In deploying these weapons, Campbell writes, the US should work with regional allies to disperse US forces around the region. This ambition fits well with Australia’s long-range submarines program and willingness to host American military facilities. At the same time, Campbell suggests, military deterrence of China should be enhanced by expanding defence arrangements between the US, Japan, Australia and India — the “Quad.”

But military arrangements will not be enough. Campbell believes the US should join or initiate China-related discussions among its friends in relation to “supply chains, investment regimes, and trade agreements.” He assumes the US will continue its “managed decoupling” from China. Tellingly, he complains of the recent EU–China investment agreement because it will “complicate a unified transatlantic approach under the Biden administration.” Separate negotiations between American allies and China will evidently be discouraged.

A “unified” approach to China by Europe and America will be complemented by a wider coalition, including Asian regional partners. Campbell favourably instances the D-10, proposed by Britain, which would include the G7 of big rich democracies plus Australia, India and South Korea. These coalitions, writes Campbell, “will be most urgent for questions of trade, technology, supply chains, and standards.” Under this proposal, Australia would be a member of a regional coalition whose members will presumably be discouraged by the Americans from making bilateral deals with China.

Australia will have no problem with joining discussions about China, sharing information or even attempting to agree a common list of complaints. But there is every problem with a joint negotiation with China, which is what Campbell appears to want. Such negotiations would inevitably be under US leadership, and pursue US priorities. Australia could find itself pressing China to open up to Alphabet, Amazon and Facebook, while at the same time complaining that these corporations pay little tax on their Australian revenues, have too much market power, and retain vast quantities of information about Australians. It could find itself pressing for a freely floating renminbi and a complete deregulation of China’s financial system, though Australian regulators may have strong reservations about both. It could find itself part of a coalition to retard China’s advanced industries, an objective directly contrary to Australian economic interests.

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