Australia, a key US partner in the Indo-Pacific, boasts important economic relations with China. This is what Canberra risks taking a stand in the challenge between Washington and Beijing.
A new Ukraine in the Indo-Pacific? Such a scenario looks unrealistic and exaggerated. Yet, Australia risks finding itself in the middle of the clash of two giants: the United States on one side, and China on the other.
If Washington represents a solid military, political, and valuable ally of Canberra, at the same time Beijing is its main commercial partner. It is no coincidence that Anthony Albanese, the island’s prime minister, hailed "the improvement in relations between the two countries", obviously referring to relations between Australia and China.
Relations have deteriorated over the last few years due to accusations of espionage, the Australian choice to exclude the Chinese company Huawei from the country’s 5G network, the fierce clash over the origins of the Covid-19 pandemic, and, last but not least, by the increase in tensions between the USA and the Dragon, which have increasingly forced Australia to take one side against the other.
Australia in the line of fire
Australia has learned the hard way that adopting a clear and uncompromising position in the fight between the United States and China carries more risks than benefits. The Australian government, for example, agreed to be part of the Aukus, a security pact made by Canberra in 2021 with the United Kingdom and the United States. In doing so, the island has agreed to transform itself into the Western standard-bearer in Chinese containment in the Indo-Pacific, with all the attendant responsibilities and consequences.
First, the deal revolves around Australia’s commitment to finance the largest military program in the country’s history, including the purchase of a small fleet of nuclear-powered attack submarines, supplemented by at least three American submarines of the Virginia class, as well as other agreements of a technological and military nature. Estimated cost: 240 billion dollars to be spread over the next few years. A figure that initially did not weigh enough then became a boulder that pushed several Australian officials to talk about an expensive plan. As if that wasn’t enough, by becoming a sort of beachhead for the USA, Australia has exposed itself to Beijing’s ferocious reaction.
Canberra’s economic risk
Albanese, aware of Australia’s economic situation, has tried to mend relations with China. The Australian leader recently flew to meet his Chinese counterpart Xi Jinping. The economic mission appears to have been successful, judging by the fact that Beijing has lifted most of the trade blocks imposed on Canberra in 2020, in a move that cost the latter around 20 billion Australian dollars in "frozen" exports of raw materials and food. “China is our main trading partner. It represents more than 25% of our exports, and one in four jobs is linked to the trade sector. It is therefore an important relationship”, declared Albanese with all due respect to US geopolitical dossiers.
In 2021, bilateral trade between the two countries amounted to approximately 231.2 billion dollars, with an increase of 35.1% on an annual basis, with imports from China to Australia reaching $164.82 billion, up 40.6% compared to 2020. As if that wasn’t enough, the economies of the two countries are highly complementary. Let’s think about Australia’s minerals and China’s hunger for these goods. Australian commodities, particularly food and agricultural products (beef, wine, barley, and seafood, to name a few), natural resources (coal and gas), and wool, appeal to China’s appetite, while Australia’s rich reserves of critical minerals, particularly lithium and iron ore, make Canberra a strategic and significant trading partner for Beijing. With all due respect to Washington.
Original article published on Money.it Italy 2023-11-26 06:37:00. Original title: Così l’Australia rischia di restare schiacciata dalle tensioni Usa-Cina
