Tag Archive for: Australia-China Relations

Australia–China relations effort must reflect strategic reality

Foreign Minister Marise Payne’s announcement of a $44 million ‘National Foundation for Australia–China Relations’ to harness efforts of the private sector, cultural organisations, NGOs, state and federal agencies, and the Chinese-Australian community ‘to turbo-charge our national effort in engaging China’ is a good idea.

While there are mutually beneficial parts of the Australia–China relationship, we can’t hide from the fact that there are also increasingly stark differences—mainly on security and strategic issues.

That’s unsurprising, given that President Xi Jinping is an authoritarian leader of a one-party state who enjoys near-absolute power.

As a result, Australian government policy—and communication with the Australian public about the Australia–China relationship—needs to be able to manage both the panda and the dragon.

Experience shows that, for the new foundation to work, its board will need to include voices who can speak about all aspects of the relationship.

To ignore the security and strategic elements would make it like the Gillard government’s 2012 Australia in the Asian century white paper, which ignored obvious security risks and spoke glowingly about economic opportunities.

That initiative died because it simply didn’t describe the world we live in, in which security and economics and cultural issues are all intertwined.

So the board of this new foundation will need to have at least one defence and national security voice on it—which we’ll hopefully see when the government decides on its appointees.

The time of the Chinese state ‘hiding and biding’ under Deng Xiaoping is over. Now the dragon of the Chinese state under Xi is using its national power assertively and aggressively.

That’s true about its military power; a prime example is the South China Sea, where the Chinese military is aggressively seeking control of areas and features that it doesn’t own and which others claim.

It’s also true about its economic power. The extensive soft loans made under the auspices of Xi’s Belt and Road Initiative are already succumbing to corruption problems and leaving unsustainable debts. Beijing has also shown a willingness to use economic measures as punishment—for example, in its ongoing refusal to take Australian coal imports.

And in cyber power, the large-scale intellectual property theft and cyber intrusion into other nations’ systems for state and corporate purposes continues unabated.

Add foreign interference—including covert interference in the political systems of other countries—and technology like 5G communications (which Xi sees as a source of both strategic and economic power), and there’s a long list of Chinese actions that are causing problems in the relationship with Australia.

Unless the goals, policies, practices and actions of the Chinese state change, Australia, along with many other governments and nations, will need to balance mutually productive engagement with growing strategic differences.

It’s wrong to fall into the trap of talking about troubles with China simply as a bilateral issue for Australia to manage.

It’s even worse to talk about the problems in the relationship as stemming from the Australian government’s responses, when the root causes are the actions of the Chinese state.

The European Union has just ‘reset’ its own relationship with China. And that’s not to focus on harmony and speak more softly about differences. Instead, it is making ‘a further EU policy shift towards a more realistic, assertive, and multi-faceted approach’.

The EU needed to rebalance its relationship with China because, among other things, it now recognises the Chinese state as ‘an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance’.

So, it’s certainly worthwhile emphasising the harmonious, mutually beneficial elements of our relationship with China. But we know that more tough decisions will be required of future Australian governments because of the way the Chinese state is using its power in the world.

Examples include deciding what foreign investment to approve or knock back (we’ve already reached critical mass for Chinese investment in our nation’s vital infrastructure, as indicated by the rejection of a bid that would have given Chinese entities control of gas distribution along Australia’s east coast); stopping work in our universities that advances China’s military or state security capabilities—something that’s just not in our national interest; and responding to further punitive economic measures against Australian exports to China.

As the national foundation for Australia–China relations takes shape, it must develop in a way that mirrors reality and so take into account the connections between the security, economic and cultural issues that affect the relationship.

Not doing so will severely limit the foundation’s utility in helping to manage and communicate this important relationship to the Chinese and Australian people.

Policy, Guns and Money: The director’s cut

In our final podcast for 2018, ASPI Executive Director Peter Jennings discusses the big issues of the year including Australia’s stance on China, US President Donald Trump, defence spending and Huawei with Michael Shoebridge, ASPI’s defence and strategy director.

Australia’s diplomatic course between China and the United States

One feature of the Australian government’s 2017 foreign policy white paper was the balance struck between tough talk on China’s challenge to US hegemony in Asia and the message that regional military modernisation posed no threat to Australia. Despite the dysfunction roiling Australian politics since then, that judgement still holds.

Both the government and the opposition are showing signs of finding a strategic path through this era of sturm und drang.

They know that keeping faith with the American alliance requires scepticism towards aspects of President Donald Trump’s foreign policy, and that the United States is being tested in Asia as never before. They know too that, despite Trump’s warmth towards Prime Minister Scott Morrison at the recent G20 summit (where he channelled Vietnam-era rhetoric by saying that ‘we will be with Australia and you all the way’), America’s words do not convey the gravitas of old. Accordingly, political leaders in Canberra have rediscovered the tradition of asserting, where necessary, greater self-reliance within the alliance.

Of course, this is what Washington seeks. But it would also prefer Canberra to be more forthcoming in pushing back against China, particularly via freedom-of-navigation operations in the South China Sea. Forget the ‘mateship’ mantra: there are hardliners in Washington scratching their heads at Australia’s China policy.

Both parties also know that it serves no purpose to play domestic politics with the China relationship. Whatever the legitimate concerns over foreign interference in Australia’s political system or the protection of critical national infrastructure, little is gained from reviving the invasion scare literature of the 1890s.

A consequence of all this is that a gap is opening up between the pragmatism of the government and the opposition on the one hand, and a stubborn hawkishness among some in parts of the Australian commentariat on the other.

One of the greatest ironies of recent months lies in the implicit rejection by both sides of Australian politics of the White House’s increasingly belligerent stance on China, encapsulated in Vice President Mike Pence’s remarks in early October. That speech was widely heralded by a host of eminent Australian academics and commentators as the inauguration of ‘Cold War 2.0’. Australian politicians, however, have wisely looked askance at this US crusade. Morrison argued strongly that US–China relations should not be ‘defined by confrontation’ and went on to reject a ‘cold war’ billing for his so-called Pacific pivot. Labor leader Bill Shorten was similarly emphatic that ‘pre-emptively framing China as a strategic threat’ was unhelpful.

Recall that amid the chaos of Trump’s first months in office, former Australian foreign minister Julie Bishop had often called for the return of Cold War–style US leadership that had founded and led the ‘rules-based order’. Yet when this rhetorical dimension of American leadership resurfaces, neither the government nor the opposition, or any key US regional ally, has lined up to parrot the American script.

For all the legitimate concerns about increasingly aggressive Chinese economic and strategic statecraft, it seems no US allies want to be shoehorned into a new cold war. Some hawks in Canberra have clearly forgotten the statement on China from last year’s US national security strategy, that ‘competition does not always mean hostility’. Pence repeated it in October, as has, more recently, Defense Secretary Jim Mattis. The question, too, is whether there is the political and popular will in the United States for a ‘long twilight struggle’ with Beijing.

The Morrison government does remain intent on sending China a message about its own regional resolve. With Beijing’s Pacific diplomacy in mind, it announced help for the Papua New Guinea government to develop a naval base on Manus Island. The precise nature of US involvement is not yet known, but it is supportive. The risk here is that ‘we have now associated the Manus base with a struggle for which the US is not equipped and which it is perhaps not even motivated to win’. Another risk is that such a move undermines Australia’s own calls for China to desist from militarising the Pacific.

At the same time, Australian trade minister Simon Birmingham insists that the US should not be surprised that Australia may be willing to co-fund infrastructure projects with China as part of its Belt and Road Initiative. This comes when Canberra is also discussing a rival infrastructure initiative with the US and Japan.

Elsewhere, the government is not aping Washington hardliners on China. While Canberra has expressed ‘alarm’ at reports of the mass detention of ethnic Uyghurs and other Muslim groups in Xinjiang—with Morrison saying he will not ‘showboat’ on human rights issues—some in the US Congress are pushing for the imposition of sanctions. And earlier in 2018, while Washington rescinded an invitation to China to participate in RIMPAC (Rim of the Pacific Exercise) in response to bomber landing drills in the South China Sea, Australia didn’t disinvite Beijing from participating in Exercise Kakadu.

If elected in 2019, Labor is unlikely to depart significantly from these settings on Australia’s relationships with the US and China. But it too will have internal debates over how to navigate through the choices thrown up by intense geopolitical rivalry.

It would do well to continue ignoring the trumpet-sounding and drum-beating in sections of the Australian commentariat that show signs of slipping into the tired clichés of a world that passed away nearly 30 years ago.

Why we need a radically new defence policy

Australia’s international security outlook is starting to look very unpredictable and potentially threatening. Australian defence planners must now deal with a world which is very different from any they have known before.

America is undermining the international order, it has started a seriously escalating trade war with China and it is threatening the unity of NATO. At the same time, China and Russia are becoming increasingly assertive militarily and aligned in their anti-Western attitudes. All this is taking place at the same time as a crisis of democracy in the West is distracting it from wielding its national power.

America’s new National Defense Strategy, launched by Defense Secretary James Mattis in January this year, proclaims that interstate strategic competition, not terrorism, is now the primary concern for US national security. The central challenge to US prosperity and security is the re-emergence of long-term, strategic competition by the revisionist powers of China and Russia, which want to shape a world consistent with their authoritarian models.

Long-term strategic competition with China and Russia is now the principal priority for the US and requires increased military investment because of the magnitude of the threat they pose to US security today, and the potential for those threats to increase in the future. Mattis identifies the Indo-Pacific, Europe, and the Middle East as the three key regions prioritised for US preparedness for war. We should note here that he ranks the Indo-Pacific first, before Europe.

These key US judgements should be a wake-up call for Australia’s defence planners. We now live in a threatening world and it is no good pretending—as former foreign minister Julie Bishop did—that China and Russia are not becoming serious military threats to the West and its values.

The former director-general of the Office of National Assessments, Allan Gyngell, has recently stated that the international order we have known for the past 70 years has now ended. He said: ‘It’s not being challenged. It’s not changing. It’s over.’

That statement effectively undermines important judgements of the 2016 Defence White Paper with its utterances—on more than fifty occasions—of the importance of the rules-based international order to Australia’s security. Gyngell observes that the two previous international systems ended in war. This one, he says, seems to be draining away, as its core components led by the US lose confidence in its purpose, and emerging powers see opportunities to assert their interests.

An American belief in the West’s international security system and willingness to invest in it with an effective network of alliances are now in doubt. Each of the three elements that have characterised Australian foreign policy since 1945—the alliance, the region, and the rules-based order—now look very different. Donald Trump’s administration is pursuing interests and values in a number of areas which differ more clearly from Australia’s than any we have seen before.

At the same time, we are dealing with a China which is more confident, more powerful and more assertive. The speed and direction of change are challenging all previous comfortable assumptions about stability and peace in our region. The 2017 Foreign Policy White Paper argues that without American political, economic and security engagement, power in our region is likely to shift even more quickly.

The central question now is where will the leadership come from—if it is not from America—to sustain a stable new international order without conflict? We all know how the international order ended in the interwar years as rising new powers were appeased.

Russia wants to see the end of NATO and a weak and divided Europe, which is increasingly in prospect given Trump’s undermining of that alliance. Trump sees Russia as merely a competitor, not a potential enemy. That is not the view of key European members of NATO. In contrast, Trump describes the EU as a ‘foe’ that he claims was invented to take advantage of the US economically.

Trump’s meeting in Helsinki with Vladimir Putin on 16 July was an utter disaster. He described Putin as ‘extremely strong and powerful’ and accepted his advice—over that of the US intelligence community—that Russia had not interfered with US elections. Trump’s meeting with Putin has boosted Russia’s image of itself as a great power (velikaya derzhava).

China wants to be acknowledged as the natural hegemon of Asia and to see an end to America’s alliance system in the region, including ANZUS. On current trajectories, it would not be surprising if much of the Indo-Pacific region in 2030 is substantially shaped by China. The status quo is not likely to continue. These are central strategic challenges for Australia as China increasingly asserts power into our strategic space, not only in Southeast Asia but also in the South Pacific

At the same time, we are experiencing an increasingly unpredictable President Trump. He is boasting of having a trade war not only with China, but also the EU and Canada. If a fully-blown trade war results, the world will stumble into a moment of great geopolitical uncertainty. When this happened to the world in the 1930s the results were disastrous, including for Australia.

This week, France’s President, Emmanuel Macron, has warned that the ‘rise of nationalist forces is plunging the system of international cooperation into crisis’. By comparison, in his speech yesterday at the United Nations, President Trump asserted that ‘We reject the ideology of globalism and embrace the doctrine of patriotism’. And so, we are witnessing a potentially dangerous global shift away from internationalism towards extreme nationalism.

And we can take no joy in supposing that Trump will be gone in a little over two years. There are enduring popular grievances in America about the impact of globalisation and foreign trade on employment that support his populist stance of ‘America First.’

We are thus in a period of unpredictable strategic transition in which the comfortable assumptions of the past are over. I’m not one of those who believe that America is about to pull out of Asia, but I do think we need to give serious thought to what Australia should do if the US made it clear that it expects us to do a lot more for our own defence.

I suggest we need to focus on the following key challenges to deliberately develop a more self-reliant Australian defence policy.

First, we need to focus more on our own region of primary strategic concern, which includes Southeast Asia (including the South China Sea), the eastern Indian Ocean and the South Pacific. We should get out of Afghanistan and the Middle East and reassert our influence in our own region, as China moves increasingly to challenge our strategic space and constrain the projection of our national power.

Second, while aiming for greater defence self-reliance it’s vital that we continue to have access to highly advanced American military equipment, combat systems and weapons, defence science, intelligence and surveillance, to ensure that we maintain a clear margin of military advantage in our own region. The simple fact is that we have no credible defence future without access to the military advantages the US alliance provides directly to us. Increased defence self-reliance for Australia can never mean defence self-sufficiency.

Third, we need to undertake a fundamental review of our relationship with Beijing and determine where its limits should lie. We have become far too dependent on China for our economic well-being. We need to consciously diversify our trade, investment, tourism and international student businesses with other countries. These should include Japan, South Korea, India, Vietnam and Indonesia—as well as Europe, which is experiencing its own problems with China.

Fourth, the time has come for some serious long-term defence planning for Australia’s strategic future. It should include considering crisis situations in which the US may look to Australia to join it in military contingencies such as the South China Sea, the Korean peninsula, the Indian Ocean and the South Pacific, and perhaps even Taiwan. Ministers and defence planners must avoid being caught by surprise by such events and seriously consider what our response might be, or not.

Fifth, we need to re-examine our core assumptions and messages about the alliance and how it may function during future crises in the Indo-Pacific. In emerging conditions of uncertainty, allies need to focus harder on understanding each other’s interests and calculations of risk.

Allies cannot take each other for granted or make assumptions about one another’s future decisions, including mutual expectations about future contingencies and the use of military force. American actions and signalling will have a decisive effect on the choices we face as a US ally. We need to be alert to the gaps between promise and delivery in today’s American defence and foreign policies.

Sixth, the ANZUS alliance has its best and most realistic chance to shape the long-term future regional order over the next few years. It will be much harder to influence and limit Chinese decision-making, and the strategic mindsets of other regional countries like India and Indonesia, in subsequent decades.

Passivity on the part of the US and its allies will give China the initiative and increase the prospect that future crises will lead either to an overcorrection or a back down by the US.

Chinese expansion in the South China Sea is a good example of Western passivity in the face of China’s political system, which can rapidly mobilise a coordinated effort to single-mindedly pursue its strategic interests. We may be seeing such Chinese behaviour being replicated now in the Indian Ocean and the South Pacific. Canberra and Washington need to be more direct with one another, and their polities, about this looming strategic challenge.

Profound and corrosive change could occur because of the US and its allies being passive or distracted as China expands its dominance. In this regard, Southeast Asia is likely to be a focus of Chinese power and coercion and become a zone for incremental steps towards Chinese hegemony and a sphere of influence. This would have severe strategic implications for Australia. China’s projection of military power in the South China Sea is already threatening to constrain our ability to defend our maritime approaches.

The next few years are critical to shape the perception of the willingness of US allies to incur risks and costs in limiting China’s ability to dominate the region. The United States and Australia should clearly identify what aspects of Chinese strategic behaviour they find unacceptable. This will require greater willingness to signal to China where its behaviour will be resisted

Finally, and above all else, we must recognise that we now face the prospect—for the first time since the Second World War—of a potential major power adversary, with whom we do not share fundamental values, operating in our neighbourhood and capable of threatening us with high intensity conflict.

To counter this eventuality, we must develop a stronger defence force capable of denying our approaches to a well-armed adversary.

The key issue here is whether we are now entering strategic warning time regarding future conflict, and whether our capabilities are sufficient to sustain a credible defence posture in a deteriorating strategic environment.

Events could now become more serious, much more quickly. Therefore, more thought should be given to planning for the expansion of the ADF and its capacity to engage in sustained high intensity conflict in our own defence—in a way that we haven’t previously had to consider for several generations.

Editor’s note: This is a transcript of a speech delivered by Paul Dibb at a panel discussion at the Australian National University on 27 September.

Policy, Guns and Money: Episode 2

In this podcast, we discuss Australia’s reset with China, the true cost of our new submarine fleet, big tech companies and online censorship, and Madeleine Nyst interviews Indonesia expert Natalie Sambhi.

Coping with the Beijing freezer

In a 2017 poll conducted by the Chinese newspaper Global Times, Australia had the dubious honour of being voted ‘least friendly country to China’. In the same Chinese Communist Party–linked newspaper, a recent editorial argued that a temporary cooling of China–Australia bilateral relations would be ‘a good lesson for Australia to learn’, while declaring that there were ‘no benefits for any country that chooses to take provocative measures against China’.

There’s been much commentary on the Australia–China relationship in the wake of the Australian government’s introduction of foreign interference legislation and the sharpened political rhetoric of Australia’s political leaders towards China—and the chill that followed from Beijing. The punitive refusals of visas, for instance, has even extended to the Australia-China Relations Institute, a ‘think tank’ headed by one of the most pro-Chinese voices in Australia, former foreign minister Bob Carr.

But Australia isn’t the only state that has found itself inside the ‘Beijing freezer’. China has long deployed a diplomatic carrot-and-stick approach, wherein states are rewarded when they engage in activities that are favourable to Beijing’s interests and selectively punished for public criticism of the CCP’s actions and intentions. Status recognition is an important factor in Chinese foreign policy, with any perceived slights resulting in strained relations—as Australia and other countries are now learning.

Norway provides an instructive example of the ways China can punish and gradually transform the behaviour of states, particularly middle and smaller powers. Beijing put the Sino-Norwegian relationship in the deep freezer after the Nobel Peace Prize was awarded to Chinese dissident Liu Xiaobo, which included a ban on Norway’s lucrative salmon exports. Relations were deeply strained for six years despite the Norwegian Nobel Committee’s independence from the Norwegian government.

China demanded an apology but Norway repeatedly refused. The 2016 joint declaration that ended the stoush stopped short of an apology, but committed Oslo to acknowledging ‘China’s core interest and major concerns’ and to ‘do its best to avoid any future damage to the bilateral relations’. The thaw in relations followed substantive efforts at confidence-building, and highlights how China also benefits from normalised trading relations with other states.

More recently, China applied informal economic sanctions against South Korea in retaliation for its deployment of the Terminal High Altitude Area Defense (THAAD) system. As a consequence, Hyundai’s car sales in China dropped 64%, Lotte supermarket sales fell 95%, and the banning of Chinese tour groups to South Korea resulted in an estimated revenue loss of US$15.6 billion in 2017. While trade overall increased between the two states, pressure was selectively and skillfully deployed.

South Korean President Moon Jae-in, himself sceptical of THAAD, presented China’s President Xi Jinping with a ‘three no’s policy’ in response to the economic sanctions, promising no further deployment of THAAD, and no participation in US missile defence networks or a trilateral military alliance with the US and Japan.

More importantly, the retaliatory sanctions convinced the Moon administration that South Korea’s economy was too dependent on Chinese customers and needed to protect its national interest by diversifying its diplomatic and economic profile. It has since initiated a ‘New Southern policy’ aimed at deepening relations with the member states of ASEAN and India.

Singapore’s relations with Beijing also soured after the island nation appeared to side with the US and other countries in opposing China’s island-building and ongoing militarisation of the South China Sea. Singapore’s Prime Minister Lee Hsien Loong was excluded from the 2017 Belt and Road Summit in Beijing, and was invited for a state visit only after agreeing to sign a formal memorandum of understanding on Belt and Road collaboration in April.

So how can Australia and other middle powers in the region deal with Beijing’s ‘doghouse diplomacy’? Should policymakers roll over and acquiesce to China’s demands, or should they seek to cope with strained ties by pushing back or diversifying their economic relations?

Like South Korea, Australia would benefit from a more diverse trading profile and deeper economic engagement with the ASEAN states and India. It’s also in the collective interests of ‘like-minded’ states to form coalitions to manage their relations with Beijing, thereby preserving their independence and protecting their national interests.

According to the Lowy Institute’s Asia Power Index, the combined GDP (PPP) of Japan, India, Indonesia, South Korea and Australia is $20,087 trillion, compared with China’s $21,780 trillion and America’s $18,624 trillion. The annual military expenditure of these five middle powers is $204.1 billion (PPP), compared with China’s $210 billion and America’s $641 billion.

Unilaterally, middle powers have little capacity to shape international systems, but this data suggests that in concert they could push back against a coercive rising power, particularly if they retain the support of the US, which remains a significant player in the region and a key economic partner to states such as Australia.

The revived Trans-Pacific Partnership is a great example of how regional and middle-power states can articulate and defend their collective interests in coalitions that exclude great powers, although it remains to be seen how effective it will be in the absence of the US.

Australia needs to work more closely with other countries that are concerned by China’s destabilising actions in our region to effectively resist China’s retaliatory diplomacy while upholding international rules and norms. Beijing prefers to deal with states on a bilateral basis, allowing it to exert maximum economic and political leverage. By binding together, like-minded middle powers may be able to resist or blunt Beijing’s bullying behaviour.

But to do this, they will need to find a convergence of strategic and economic interests vis-à-vis China and a broad consensus about the rules, norms and institutional architecture that have supported regional peace and prosperity in the post–World War II period. No state can afford to turn its back on Beijing, but they can decide the terms on which they are willing to engage with China.