Juggling relations

PUBLISHED : Friday, 30 November, 2007, 12:00am
UPDATED : Friday, 30 November, 2007, 12:00am

When official figures are released on Australia's global trade for this year, they are expected to show that China has emerged for the first time as the country's leading trade partner. It is already way ahead of the United States, and is rapidly overhauling Japan. Statistics released in August showed that Australia's goods and services trade with China last year reached A$50.3 billion (HK$342.5 billion), just less than A$5 billion short of the value of Australia's two-way trade with Japan. Fuelled by ravenous demand in China for Australian iron ore, copper, coal and other resources, and the appetite in Australia for the Chinese-manufactured goods these raw materials help produce, Australia-China commerce increased 21 per cent last year. That made the solid 8 per cent rise in trade with Japan look somewhat pedestrian.

Australia is now bonded to East Asia by exchanges of goods and services. They accounted for 50 per cent of its trade with the world last year and this ratio is set to rise further, especially if China continues to grow fast. But the Chinese ascendancy is not only a historic turning point for Australia in trade terms.

Since it was a British colony, Australia's top trading partners have also shared a similar security outlook and threat perception. These have been the foundation for alliances, in the case of Britain and later the US, and an increasingly wide-ranging strategic partnership, in the case of Japan. This is not the case with China, at least not yet.

Will it be the outcome of new Prime Minister Kevin Rudd's term of office? Mr Rudd, who spent much of the 1980s in China as a diplomat and consultant, and is fluent in Putonghua, certainly appears to have the inclination, knowledge and diplomatic skills to forge a closer partnership with China.

He recognises that Australia's continued prosperity, and his Labor Party's electoral fortunes, are tied to China's continued economic progress. But Mr Rudd is not starry-eyed about China.

He told a meeting of defence specialists in Canberra in August that Beijing's programme to modernise its nuclear and conventional forces would present new challenges to Australia and the Asia-Pacific region.

Clearly, the new government will try hard to sustain its vital economic ties to China while maintaining its broader relationships with the US and Japan, including security commitments. Many other regional states are engaged in a similar juggling act.

One thing they all fear is a crisis over Taiwan that would force them to choose sides. This could come as early as March when the island holds a referendum on joining the UN, despite strong opposition from Beijing. Australia has a big interest in working with like-minded Asian nations, and the US, to avoid such a crisis.

Michael Richardson is a security specialist at the Institute of Southeast Asian Studies in Singapore. This is a personal comment