As Washington solidifies its Indo-Pacific strategy as part of its larger effort to counterbalance China, the regional powers that are also interested in curbing Chinese might may seek to settle their differences and deepen security cooperation. Stratfor's 2018 Annual Forecast stated that Australia would serve as a key swing state because of its strong trade relationship with China and the domestic controversies that have stemmed from those ties. Canberra's delicate balancing act with Beijing was tested by a period of political fragility in Australia, and that balancing act will continue to be tested as elections approach next year.
After a year of souring ties, Australia's new administration appears to be trying to improve its frosty relations with China. On. Nov. 7, Australian Foreign Minister Marise Payne is traveling to China for the Australia-China Foreign and Strategic Dialogue. In attending the summit, Payne is following in the footsteps of Trade Minister Simon Birmingham, who recently attended the first China International Import Expo in Shanghai, where $11 billion worth of deals were signed between Chinese and Australian companies.
Such high-level visits were largely halted late last year, when China imposed a freeze on Australian ministerial visits after Canberra accused Beijing of political meddling and heightened scrutiny on Chinese investments in technology, agriculture and energy. But after Canberra's latest change in government — its seventh in the past decade — the new administration led by Prime Minister Scott Morrison appears to have moderated its criticisms of Beijing and signaled a desire to lessen tensions while maintaining a strong defense to counterbalance Australia's much larger northern neighbor.
Both Beijing and Canberra currently have the political will necessary to restore their damaged relationship. For China, intensified U.S. economic attacks and a solidifying U.S. security presence around China's periphery have made Beijing keen to contain the United States' regional agenda by improving relations with neighboring states. To do this, China has worked to move past its military standoff with India and to manage its maritime disputes with Japan and the Association of Southeast Asian Nations (ASEAN). That strategy has resonated with its intended audience and countries have been eager to reap economic benefits from China, particularly given Washington's protectionist trade agenda.
The rivalry between China and the United States in the Indo-Pacific has continued to grow, pushing each state in the region to balance between the two sides. Japan, for example, has sought to emphasize economic cooperation with China even as it takes the lead in U.S. efforts to counterbalance Beijing's rise. India, on the other hand, has taken a prudent approach by refraining from participation in the U.S. security framework while strengthening its defense cooperation with Washington and Tokyo to counter China's maritime expansion.
Why It Matters
Like its neighbors in the region, Australia has no choice but to manage its relationship with China carefully. China is Australia's largest trading partner and a key investor, but Beijing has also become a growing threat to Canberra's security and sphere of influence. Still, strained domestic politics and a rapidly evolving strategic environment have put Australia's strategy on an inconsistent course during the past three years. Deteriorating relations with Beijing have caused Chinese investment in Australia to decline and heightened discourse on China's political interference has heightened concerns that Canberra will limit access for Chinese researchers and students.
Canberra still has a growing need to counterbalance Beijing, and easing tensions won't eliminate the deepening strategic tension between Australia and China. Coinciding with Payne's visit, Canberra warned that it intends to block a Chinese consortium from purchasing an Australian energy infrastructure company over national security concerns. In addition, Australia is increasing its military presence and economic aid programs in the South Pacific to expand its influence. Australia is also considering building a base in Papua New Guinea, where China's investment outreach and port expansion concerns Canberra. Although Australia remains cautious about the U.S. formation of a collective security structure and freedom of navigation operations in the South China Sea, its competing interests with Beijing will shape Canberra's response to China's rising influence regardless of what path their bilateral relations take.