As long-standing allies, Australia and the United States share a deep relationship built on close diplomatic, economic, and defense collaboration. However, China’s growth as a regional economic and military power, coupled with erratic U.S. foreign policy, is pushing Australia towards closer accommodation with China.
The United States and Australia share a deep military relationship that began during World War I and has continued through conflicts in Vietnam, Iraq, and Afghanistan. The U.S. government labels Australia a “vital ally, partner, and friend” and recently rotated another 1,250 Marines along with a large contingent of U.S. aircraft through the Australian port city of Darwin. This follows an estimated $1.52 billion cost-sharing agreement from last October and the conclusion of annual joint military exercises. In addition, Australia and the United States are party to a preferential trade agreement known as AUSFTA. Australia exported around USD 9.3 billion worth of goods to the U.S. market in 2016 alone.
However, China’s strength as a military and economic power is changing Australians’ perceptions of the U.S.-Australian alliance. The China-Australia Free Trade Agreement went into force in December 2015 and quickly accelerated bilateral economic ties. In 2016, Australia exported over USD 60.6 billion worth of goods to the Chinese market, making China the sole destination for over 30 percent of all Australian exports. In March 2016, Chinese Premier Li Keqiang further deepened economic relations when he visited Canberra to conclude a raft of new agreements covering trade and energy. Underlying China's economic overtures to Australia, however, is the knowledge that China is unafraid to use its size and economic clout to punish foreign imports or detain foreign nationals.
Militarily, China continues to augment its naval power, especially in the South China Sea. While China’s activities have drawn condemnation, a perceived lack of response has created the impression that the United States is being pushed out of the region. In mid-2016, an annual poll conducted by the Lowy Institute revealed that an unusually low 71 percent of Australian respondents felt that the U.S.-Australian alliance was important for Australia’s security – 8 percent lower than the average over the past 10 years. Hugh White of Australia National University echoed some other Australian foreign policy experts when he called for Australia to "tacitly acquiesce to China's claims to regional leadership" in response to China’s economic leverage and fading U.S. attention.
While the Trump administration's unpredictable actions and words have heralded an age of uncertainty in U.S. foreign policy, the importance of the U.S.-Australian relationship is clearly understood by both nations. The continued stationing of U.S. troops and military assets in Darwin, along with annual joint military exercises in the Indian Ocean, indicates the continuing strength of U.S.-Australian ties. While the two nations are not top trading partners, the exchange of around USD 10 billion worth of goods, services, and investments each year is an important link.
Nevertheless, the economic benefits offered by a closer relationship with a Chinese nation increasingly eager for high-quality Australian exports are a strong temptation for Australian politicians and business leaders. As a trading partner, China holds enormous economic potential. On the other hand, Beijing's history of economic bullying of other countries makes Australian policymakers wary of over-reliance on China. Barring a serious disruption in bilateral relations, that suspicion is secondary to the trends that have made China Australia's number one trading partner.
Australia and the United States will continue to enjoy close diplomatic, economic, and military collaboration in the near term. However, Australia’s economic relationship with Beijing, along with shifting domestic sentiment, will pressure Australian policymakers to hew to Chinese opinions on crucial issues such as Tibet, human rights, and democracy. Meanwhile, China's island-building efforts and a continuing uncertainty in U.S.-Australian relations will likely pressure Australian military leaders and politicians to gradually accept and accommodate the reality of a Chinese-led regional order. Over time, Australia and China will likely deepen their trade and investment agreements and conduct joint military exercises more frequently. Under President Trump, the U.S. response to these changing dynamics is likely to be erratic, prompting confusion among senior Australian policymakers and generals and thereby strengthening Beijing’s position vis-à-vis Canberra.
Matthew Nitkoski is a Contributor to Parabellum Asia.