US security or China trade? Australia caught in a bind, along with others in the region

Cary Huang says the dilemma faced by Australia, both a strategic ally of America and a major trade partner of China, is common to many Asian countries caught up in the intense Sino-US rivalry

PUBLISHED : Monday, 03 April, 2017, 1:07pm
UPDATED : Monday, 03 April, 2017, 8:49pm

In the face of heightened Sino-US tensions, many of China’s trade partners in the region find themselves in a conundrum, squeezed between their strategic imperatives and security considerations on the one hand, and their economic interests on the other.

Australia does not have to take sides between China and US: Chinese premier

Australia is one of them. So even when Canberra rolled out its red carpet to welcome Li Keqiang (李克強) last week, the first state visit by a Chinese premier in 11 years, Australian policymakers, academics and media were all locked in the “China choice” debate, on whether it should side with the US, its main ally, or China, its biggest trading partner.

Australia, like many other regional economies, have deep and vast trade and investment ties with China. The Asian giant has been Australia’s largest trading partner for the past eight years, while Australia is China’s eighth largest tradingpartner. After a bilateral free trade agreement came into force in December 2015, both nations ushered in a new boom era driven by the pact. Last year, trade between them reached US$108 billion, after having grown by leaps and bounds since the two forged diplomatic relations in 1972.

Make no mistake, Canberra, as with many of its peers in the region, will remain in the US-led Western camp

Beijing and Canberra also share common aspirations to restructure the global economy and its governance. Both China, the world’s biggest exporter, and Australia, a country abundant with natural resources, need an open global market and free trade.

Amid growing protectionism with the election of Donald Trump in the US and the advent of Brexit, China and Australia could cooperate to offer an example of how free trade would serve everyone’s interest.

Indeed, the two have joined hands to push forward negotiations on the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia-Pacific, after the disappointing failure of the US-led Trans-Pacific Partnership, of which Australia is a member.

So in their talks and open remarks, both Li and his host Malcolm Turnbull, the Australian prime minister, tried hard not to let an agenda promoting mutually beneficial cooperation be derailed by their obvious discomfort over political and security issues.

China and Australia show how to deal with differences

Just days before Li’s visit, Australian foreign minister Julie Bishop notably delivered a cautious note on her country’s relations with China, telling an audience in Singapore that China could not be a leader in the region as it was not a democracy, and urging the US to play a greater role in the Asia-Pacific region to check China’s rising clout and military assertiveness.

Bishop also called for greater efforts to uphold a ruling on the South China Sea by the international tribunal in The Hague, which last year flatly rejected China’s sovereign claim to large parts of the waters.

Security vs economics: Asean countries stuck between US and China in South China Sea row

Given the potential flashpoints over the South and East China seas, the Korean peninsula and Taiwan, and given recent tensions, many expect a new cold war to emerge between a US-led regional alliance under the umbrella of “free democracy”, and China, the world’s last major communist-ruled nation.

So, while trade or investment will be a positive-sum game for both China and Australia, the proposed closer strategic ties between the US, Japan, South Korea, India and Australia – allies which see China as a chief rival – put a big question mark over the so-called “comprehensive strategic partnership” between the two.

Make no mistake, Canberra, as with many of its peers in the region, will remain in the US-led Western camp as it looks to the world’s sole superpower for protection, with the deep belief that only democracy can bring about and ensure peace.

Cary Huang is a senior writer at the Post