The Pandemic Depression
The Global Economy Will Never Be the Same
Australia is caught between two poles: the United States, its indispensable ally, and China, on which its economy overwhelmingly depends. As the strategic rivalry between the United States and China grows, Australia’s position between them becomes even more delicate. Inevitably, Australia’s foreign policy debate has now become focused around the question of how to manage and balance these two critical relationships.
Alas, Australia’s leaders have not handled the discussion gracefully. Both the current progressive government and the conservative opposition, which might well win the upcoming federal election on September 7, simply deny that there is a choice to be made. On one level, they are correct. Australia does not face an all-or-nothing choice right now. On another level, though, no one has ever seriously argued that it does, nor that it should make a choice if that can possibly be avoided. In fact, most everyone in Australia wants both relationships to flourish, so that the United States can keep Australians safe while China makes them rich.
But the fact of the matter is that Australia will be increasingly unable to compartmentalize its relationships with the United States and China. It used to be able to do so -- witness the fact that Australia has managed to make China its biggest trading parent while maintaining and even enhancing its alliance with the United States. But that is getting harder. The reason: both the United States and China now see their political and strategic relationship with Australia primarily in terms of their own rivalry. The result: Australia can strive for good ties with both, but will have to realize that each will be watching to make sure that the other doesn’t get the upper hand.
The first signs of this change came as early as 1996, when Beijing leaned hard on Canberra over its support for U.S. aircraft carrier deployments around Taiwan. Beijing froze ministerial contact, troublesome for a Canberra that was eager to build trade. Canberra got the message. Since then, Australian policymakers have become increasingly attentive to Beijing’s sensitivities. Recently, however, Canberra has been keen to show all-out support for several U.S. policies to which China objects. In 2011, for example, the Labor government warmly endorsed U.S. President Barack Obama’s pivot to Asia and welcomed U.S. marines to a new training base in Darwin. Beijing was quick to flick the whip -- it firmly reminded Canberra that it saw the pivot as directed at China -- and Canberra stepped back into line. Two recent major white papers have been much more Beijing-friendly, and Prime Minister Julia Gillard was rewarded with remarks about China and Australia’s “strategic partnership” when she visited Beijing earlier this year.
There is nothing very subtle or mysterious about Australia’s game. Canberra makes a great fuss of saying that it is not choosing sides because it wants to persuade both sides that it is really choosing theirs. In other words, Canberra is simply doing what smaller powers usually do when they are caught between rival giants: they try to tell both what they want to hear. But that is hard to do, especially with everyone watching, and Australians have little skill or experience in this kind of essentially duplicitous diplomacy.
The strategy does not appear to be fooling Washington. One senses among U.S. officials, beneath the back-slapping boilerplate of alliance solidarity, genuine disappointment and uncertainty about where Australia stands. Many of them had assumed that the stronger and more assertive China became, the harder Australians would cling to the United States. For one, the thinking went, Australia has been one of the country’s most loyal and reliable allies for decades. In addition, for Australians, the alliance with the United States has been woven into the country’s identity ever since the United States replaced Britain as the incarnation of Anglo-Saxon predominance in the Western Pacific. Until now, Australians have always seen that predominance as both the necessary and the sufficient condition for their security on the edge of Asia.
But China’s rise challenges these notions. For the first time since Europeans settled in Australia, an Asian power is rising to become the world’s biggest economy. This has certainly shifted Australia’s economic focus, as the country has come to believe that its future prosperity depends primarily on China. But more profoundly, it also raises strategic questions about whether U.S. power can still underwrite Australia’s security. The United States has faced foes in Asia before, but never any with an economy that could soon overtake its own. Thus Australia’s old ideas about its alliances are starting to fray, and so too are its deepest assumptions about its place in the world. Australia still needs the United States, and can hardly imagine doing without its support, but it also realizes that America’s role in Asia, and hence its role as Australia’s ally, must change as Asia is transformed.
This is inevitably traumatic for Australia, and trauma generates a good deal of muddle, denial, and timidity. The country’s politicians are disoriented by the profound shift in what has, for decades, been a very comfortable position. And Australians themselves would much prefer things to remain as they are. That gives their leaders even more reason to keep saying they do not have to make any hard choices.
Nor is Canberra alone in its confusion and doublespeak. Washington’s approach to China is just as misleading as Canberra’s. Indeed, Washington policymakers encourage Canberra’s evasions. They say that the United States does not ask friends like Australia to choose, while at the same time pressing Australia to do things, such as hosting marines in Darwin, that are clearly intended to counter China’s power, and which they know China will resent. (In fact, that’s the point.) Like the oft-made claim that the United States is not trying to contain China, the idea that the country does not ask countries to choose between Washington and Beijing only makes sense if the United States does not believe that China is challenging American primacy in Asia.
And, in fact, the United States’ whole approach to China is indeed based on a lingering hope that Beijing fundamentally accepts U.S. primacy, believing that it serves China’s interests as much as anyone else’s. If it does, China is not a challenge, and the United States has no need to contain it. And the United States’ friends in Asia don’t need to choose. Unfortunately, this hope is false. China is challenging the U.S.-led order in Asia; it seeks to replace it with “a new model of great-power relations,” as Chinese President Xi Jinping has noted. And that means that efforts such as the pivot, which are designed to sustain the United States’ primacy, do amount to a containment strategy, and U.S. allies like Australia do need to choose whether to support it in this or not.
And that brings us to the question of how long it will remain true that Australia does not have to make an all-or-nothing choice between the United States and China. That depends entirely on where U.S.-Chinese relations go from here. The further their rivalry escalates, the starker the options for Australia, and the more probable that, at some stage (and perhaps quite soon), Australia will find itself forced to pick. To understand the speed with which Australia could be staring the decision time in the face, look no further than the Senkaku/Diaoyu island dispute. Any armed clash over the islands between Japanese and Chinese forces would most likely draw America forces in to support Japan, and America in turn would almost certainly ask Australia to send forces, too. Australia takes no position on the legal and territorial issues involved in the East China Sea, but Canberra would see that failing to support the United States in such a crisis would gravely damage the countries’ alliance. On the other hand, people in Canberra know China well enough to understand that sending forces to fight against China would fatally damage a trading relationship on which the whole country’s economic future depends. It would be a disaster for Australia to face such a choice, whichever decision it made.
If Australia wants to avoid decision time, its highest diplomatic priority must be to help stem the escalating rivalry America and China. That rivalry is driven by the United States and China pursuing incompatible visions of their future roles in Asia. Defusing it requires Washington and Beijing to agree on a new regional order that goes some way to satisfying both of them, thus providing a durable basis for peace and stability in Asia. No one can say just what such an order would look like, but realistically it must give China a bigger leadership role than it has had until now and preserve a strong U.S. role as well. In essence, China and the United States would need to find a way to share power with one another as equals.
That would not be easy, because it runs counter to both countries’ self-image. But the consequences of failing to find a new and durable modus vivendi would be very grave indeed -- for America and China, as well as for the Australias of the world. Australia’s interest in such a deal is enormous, but Australia can do little to broker this kind of deal -- certainly it has no role as an intermediary between America and China. All it can do is urge both countries, especially its close ally the United States, to do so.
That would not be an easy step for Australia to take. For a country that has always relied on American primacy, the idea of the United States sharing power with China is scary. But Asia’s peace and stability, and hence Australia’s security and prosperity, require it -- and the country’s leaders have to recognize that. The real choice Australia faces now, then, is not East or West but whether to try to do everything possible to bring about a new order. If it decides it should, the first thing to do is to start talking frankly to America about the choices that America itself faces about China and the necessity of sharing power in Asia with China.