In recent years, Australia has established increasingly close economic relations with China yet, at the same time, it relies on a strategic alliance with the United States being the guarantor of its defense capability. But Australia’s growing dependence on trade with China is having an increasing impact on foreign policy. Canberra is finding it difficult to maintain a balance between its leading trading partner, China, and its major ally, the United States, at the same time.
For 70 years, the basis of bilateral relations between Canberra and Washington has been the ANZUS Treaty. The Australian and American sides should work together to strengthen their military capabilities, hold consultations and counter common threats in the Pacific. But the ANZUS is not binding, which provides Australia a wide field for strategic maneuvers to ensure its own security. After the global financial crisis of 2008, which negatively affected the American economy, Australia began to shift the vector of its foreign policy from West to East. During the 2010s, active trade and economic rapprochement with China, the main competitor of the US in the Indo-Pacific region, started. Washington showed its concern with its desire to strengthen its position in Australia and in the Indo-Pacific region as a whole and agreed to deploy a rotating US force near the Australian port city of Darwin in 2011 with a gradual increase in the contingent to 2,500 people. It is worth noting that Darwin is located about 3,000 km from the geopolitically important and politically turbulent South China Sea. The presence of US rotational troops in the Northern Territory will help supplement the US military contingents in GUAM, Hawaii, and Diego Garcia.
Darwin is the capital of the least economically developed Northern Territory of Australia (being a region in the North of Australia with a slightly lower status than that of the Australian state), which requires multi-million dollar investments. And the Chinese company Landbridge Group was willing to allocate them, offering to rent the port of Darwin for 99 years starting in 2015. Chinese participation in one of Australia’s significant strategic assets caused a critical response. For many years, the Australian ruling circles regarded this port as a strategic point for Australia’s development. They called it the “gateway to Asia,” through which up to 50% of cargo traffic to China passes. However, the deal was signed, and the value was $506 million. The port facilities rented by the company include the East Arm Wharf, the Darwin marine supply base, and the Fort Hill Wharf (used for cruise and military vessels), as well as commercial shipping channels within the port area.
Amid the excitement of a potential threat to national security, the Australian defense Minister Dennis Richardson said that Darwin’s port is primarily a commercial port, not a naval base.
In an interview in 2016, Landbridge Group Chief Executive Ye Cheng said that the investment in Darwin’s port is the company’s strategy to expand its shipping and energy interests. It serves China’s foreign policy goal of developing the “One Belt One Road” trade and economic initiative. It should be noted, Australia has not yet (as of September 2020) signed it, citing national security issues. If the Chinese initiative is implemented, Darwin’s port may become one of its key points, since the port provides China with access to Oceania, Indonesia, and the Indian Ocean. This could also have a positive impact on Australia’s trade turnover not only with China but also with other countries that have already joined the Chinese initiative. On the other hand, China may use Darwin’s port for possible pressure on Australia, such as restricting the access of the Australian and American navies to the port. Unfortunately, it is too late for Australia to do anything about this issue because, to terminate the lease, Canberra will have to pay a considerable amount of compensation to the Landbridge Group.
Thus, the discussions regarding direct investment from China to Australia are quite polarized. On the one hand, the arrival of Chinese investors in Australia contributes to the growth of competition and various industries’ development. In contrast, the negative perception of China’s investment growth as a potential threat to national security can lead to an adverse reaction from the Australian side and the Chinese side.
All of the above factors raise extreme concerns on the part of the United States. However, Australia dispels this worry by planning to increase its military strength to expand its coverage of the Indo-Pacific region. In February 2020, Australian Prime Minister Scott Morrison announced a $1.1 billion investment in RAAF Tindal, located 320 km from Darwin and playing a vital role in preventing security threats on the Australian continent. It is home to fighter jets and early warning aircraft used to detect ships and aircraft at long distances, hosting joint Australian-American military exercises.
In July 2020, Australian Foreign Minister Maris Payne and Defense Minister Linda Reynolds held talks in Washington with their American counterparts Mike Pompeo and Mark Esper on strengthening defense cooperation in the South China Sea. As a result, an additional agreement was reached to create a fuel reserve for the US military in Darwin, Australia, which will be serviced at the US’s expense. Canberra also stated that China’s territorial claims in the South China Sea do not comply with international law. It condemned Beijing on several issues, including the situation around Hong Kong.
It should be assumed that such a strategy of Australia and the United States can accelerate the achievement of the current American President’s Indo-Pacific strategy by increasing the mobility of the US armed forces in the region, and strengthening the military power of Australia.
The transformation of the Indo-Pacific region’s architecture due to the growing economic, political, and military influence of the People’s Republic of China (PRC) poses many challenges for Australia. For example, they affect its economic well-being, the nature of strategic interaction with the United States, and Canberra’s ability to maintain its leading position in the South Pacific. Therefore, the trends of strengthening trade relations between Australia and China clearly indicate that economic benefits do not always correspond to strategic objectives. Thus making the formation of Australia’s foreign policy more complex and multifaceted.
Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook”.
