Australia’s response to China’s rise

Australia-China RelationsIntroductionAustralia has been a loyal supporter of the US-centred international order for decades. But like many other powers in the Indo-Pacific, today it must cope with China’s rise. The PRC is a primary economic partner, but it is also a geopolitical challenge due to its growing presence in the countries around Australia. As such, relations with Beijing and Washington will shape Canberra’s foreign policy in the years to come.

Australia’s Geopolitics

Australia is a vast island with a 24 million-strong population concentrated on its south-eastern coasts, which also represents the main fertile area in a mostly desert country. Australia has a developed economy: in 2017 its GDP amounted to around $1.25 trillion in terms of purchasing power parity, and it grew of 2.2% in the same year. 

It is an important exporter of minerals and agricultural products, and like all islands it depends on the sea lanes of communication to engage in trade. 

Militarily, is has relatively small but well-quipped armed forces; with the Navy being the most developed branch. In addition, it is gradually modernizing its assets.

All in all, while it ranks as a middle power in absolute terms, it is a true hegemon at the regional level. Along with New Zealand, its junior partner, Australia has kept the islands of Melanesia – namely Papua New Guinea, Fiji and Vanuatu – firmly in its sphere of influence for decades. This was done by using a combination of trade, economic aid and security cooperation; and has occasionally caused some degree of political tension between these states and Australia. 

Canberra was also one of the main sponsors and a founding member of the region’s most important international organization, the Pacific Island Forum. Such policy was not only based on its own geopolitical needs, but also on Washington’s. 

As a matter of fact, Australia has been a devoted ally of the US and an important component of its “hub-and-spoke” security architecture in the Asia-Pacific. After all, their strategic goals were complementary: the US needed a security partner in the region to indirectly exert its influence and prevent it from falling under the control of a hostile power like the USSR.

Whereas Australia welcomed a powerful protector capable of ensuring maritime security in the broader Indo-Pacific area, which is essential due to its reliance on sea lanes of communication for trade. The degree of Canberra’s commitment to the alliance with Washington is evident when considering that it has actively participated with combat troops in all the major conflicts where the latter was involved; notably Korea, Vietnam, Afghanistan, Iraq and the intervention against the self-proclaimed Islamic State.

However, this long-lasting situation has been changing in the past decade due to China’s rise. Its extraordinary economic growth and its expanding influence are having a deep impact on the international order of the Asia-Pacific, with important implications on Australia.

The Sino-Australian Relations

When the Chinese Civil War ended in 1949, as most of the US-aligned countries Australia did not recognize the government of the People’s Republic of China as the legitimate representative of the Chinese nation. Instead, it maintained its diplomatic relations only with the Taiwan-based Republic of China. But like the quasi totality of states, this changed in the wake of the Sino-American rapprochement of 1972. 

By the end of that year, Canberra switched its recognition from Taipei to Beijing. Since then their bilateral relations have greatly expanded, notably in economic terms. China has become Australia’s main trade partner: the two have concluded a free trade agreement in 2015; and data referring to 2017 indicate that the PRC accounted for 35% of Australia’s exports and 24% of its imports. In comparison, Australia’s trade volume to and from US amounted just 3.5% and 10% respectively.

Initially, the relations between Canberra and Beijing have been positive and mostly based on mutually-beneficial trade. After all, the two are not involved in any direct territorial dispute and have complementary economic needs; with China importing raw materials in exchange for cheap manufactured products. 

However, this has been gradually changing in recent years. Even in the economic realm, fears of Chinese appropriation of precious technology has alarmed Australia’s decision-makers. But there were also accusations that Beijing was trying to meddle in the country’s political process. This caused a diplomatic spat in 2017; prompting China to suspend, albeit not officially, the visits by Australian ministers on its territory. 

The situation normalised after Scott Morrison became the new Prime Minister of Australia following a political crisis. Soon, economic deals worth several billion dollars were signed between Chinese and Australian firms during an expo in Shanghai. Still, while the PRC remains a trade & investment partner of primary importance, its international assertiveness and expanding influence are raising concerns in Australia.

The stance of the PRC in maritime disputes with neighbouring countries, notably in the South China Sea, is regarded as a destabilising factor that may hinder maritime security and threaten the freedom of navigation along the vital sea routes. 

In addition, China is increasing its presence in Melanesia, an area that Australia considers part of its geopolitical sphere of influence and that it wants to preserve from the intromissions of foreign powers; as this may undermine its national security. From the viewpoint of the Melanesian states, China is a huge and profitable export market for their mineral and energy resources;and unsurprisingly Papua New Guinea, Fiji and Vanuatu have all joined the Chinese-sponsored “One Belt, One Road” initiative in order to improve their infrastructure. Chinese investment started to flow into their economies and bilateral trade volume has soared. 

More specifically, China has overtaken Australia as Papua’s main export destination and as Vanuatu’s top trade partner. At the same time, the PRC has become the holder of large shares of the external debt of these countries; something that could easily translate into political leverage. 

There were also rumours that China wanted to establish a military presence in Vanuatu, but this was denied by both its government and China’s.

Australia’s Response to China’s Presence

As a reaction to Chinese activities in its surroundings, Australia has reacted by stepping up its own commitment in Melanesia in order to preserve its influence over it. In late 2018 Australia revealed an infrastructure plan worth more than $2 billion in favour of the islands in the Pacific. 

In addition, it will participate to a joint project with New Zealand, the US and Japan to upgrade the electric grid and the telecommunication network in Papua. This shows Canberra’s willingness to preserve its interests in the area, but the financial means it can commit remain small when compared to Beijing’s. 

The competition is also taking place over strategic facilities. When the PRC seemed about to launch a bid over Papua’s Lombrum naval base, Australia and the US intervened to anticipate its moves and upgrade the facility on their own. 

Canberra also prevailed over Beijing in funding the construction of a military installation in Fiji. In addition, Australia also plans to extend the scope of its security cooperation with neighbouring countries, notably in maritime and air patrols; and is strengthening its defence ties with the other main powers of the Indo-Pacific, notably via the Quadrilateral Security Dialogue that unites Australia, India, Japan and the US.

Australia is also modernizing its aero-naval forces. It has recently reached a deal worth $38 billion with France to build twelve Attack-class diesel-electric submarines, which are basically the conventionally-propelled version of the French Barracuda-class nuclear-powered attack submarines. The twelve units will feature noise-reduction measures as well as an air-independent propulsion system, which further enhances their survivability by allowing them to remain submerged for much longer periods than normal diesel-electric submarines. Canberra has also purchased nine frigates from the UK and three destroyers from Spain, plus air-refuelling planes jointly built by the UK and France. 

Finally, Australia is also upgrading its fleet of fighter planes by replacing its F/A-18 Hornets and Super Hornets with the new stealth-capable F-35A Lightning II. This emphasis on modern air and naval assets is essentially meant to boost Australia’s defence capabilities to counter the emerging Chinese threat and support the US forces in the Indo-Pacific.

Navigating Between the US and China

Similarly, to many other countries in the Indo-Pacific and elsewhere, Australia seems torn between its traditional security ties with the US and its more recent but well-consolidated economic partnership with the PRC. 

Until now, it seems that Canberra is trying to preserve and even reinforce its cooperation with both, but it is unclear how much this policy will be sustainable in the long term. As the Sino-American geopolitical competition gets more intense, it is likely that Australia and other powers will ultimately have to take sides. 

Its determination to preserve its influence over Melanesia and its closer security ties with America, Japan and India seem to indicate that when it comes to national security Australia is firm in siding with the US and like-minded countries on the basis of a common concern over China’s rise. The situation is constantly evolving, but what is sure is that the China-US dichotomy will play a central role in Australia’s foreign policy discourse in the years to come.