1. US-China trade war hurting Australian economy
Australia is reportedly facing a very serious threat to it’s economy from the US-China trade war, as the domestic economy is taking a big hit. Andrew Charlton, a director of economic strategy firm AlphaBeta and former economic adviser to Kevin Rudd during the global financial crisis, said: “We have a number of really important frailties in our economy, like very high debt levels, like the ongoing playout of a housing correction, it’s only been this week that the [Reserve Bank of Australia] has downgraded our GDP growth.” These negative effects have been clearly blamed on the US-China trade war, and their impact on Australian markets, with the ASX down and $50 billion wiped off Australian stocks this week. Despite the many worries of the risk of the trade war on the Australian economy, there is still confidence, as Treasurer Josh Frydenberg said: “We shouldn’t overreact to these developments but we should recognise that China’s currency moves and the increase in US tariffs are an unwanted escalation.” It is clear that any further economic escalation from China or the US could plunge the Australian economy.
2. US wants Australia to oppose China
The US sees Australia as a vital partner to oppose China’s economic and geopolitical influence, as US secretary of state Mike Pompeo said The U.S.-Australia alliance is “more vital than ever,” adding: “I want Australians to know they can always rely on the United States of America.” It is clear that the US intends to underline Australia’s importance in the fight against China, knowing that their economy is suffering from the situation. It remains to be seen how Australia will respond, but it appears unlikely that they leave the US’s side.
3. Have US-Australian relations always been about China?
The US’s military partnership with Australia, could be attributed mainly to the threat of China’s military, economic and geopolitical expansion. The US request to use Australian territory as part of its defence network is a response to Beijing’s use of economic development as a weapon to undermine US influence in both South-East Asia (SEA) and the Pacific. In recent years, China has increased its diplomatic efforts in the Pacific Island states by using foreign direct investment (FDI) as a means of winning favours from their governments. What is now transpiring in the Pacific has been going on in SEA for a number of years. In fact, it shows a specific pattern of how Beijing uses its financial power as leverage, and the US responding by using its allies in the region to limit this. Australia shows no inclination to become dependent on Chinese FDI like its northern SEA neighbours, or to allow its ports to be used for military staging, hence being an important asset to the US, in its fight against China, and much of the two nations’ relations have been dependant on this geopolitical game in the last years.
4. Australia finally opposes US
Despite Australia’s acceptance of its alliance with the US and its role in limiting China, the large nation has shown that it will not act as a puppet and has stood up to the US. Australian PM Scott Morrison said on Monday, after the United States revealed ambitions to site missiles in the Asia-Pacific region, that U.S. intermediate-range missiles will not be deployed in Australia. “It’s not been asked to us, not being considered, not been put to us. I think I the rule a line under that,” Morrison told reporters in Brisbane, the state capital of Queensland. It is visible, that although Australia itself is worried about China’s recent unpredictability, it will not accept all the terms the US presents to the nation.
5. The need for US fuel remains
Although Australia is not allowing the US to ultimately dictate its defence policies, the nation’s need for fuel may soften their stance, as they are currently in talks with the United States to buy millions of barrels of oil to boost dangerously low levels of fuel held on domestic soil. Australia has enough petrol and crude oil to last 28 days, well below the 90 days mandated by an international agreement. Australian energy minister Angus Taylor released a statement saying: “The government has undertaken this new initiative since the election to ensure that we continue to deliver increased security for Australians.” Australia has therefore hit a point where they have to dangerously balance their independence and honour, and its economic reliance on the US.