Why Australia won't 'pivot to China'

For the last twenty years, Australia’s economy has not seen a recession. In large part, this economic performance has been driven by China’s demand for Australia’s exports. Not content with a transactional relationship of this sort, Australia and China have developed strong official links by finalising a comprehensive free trade agreement. Cross-cultural collaboration has also flourished, with the development of organisations like the Australia-China Youth Dialogue. Educational links have become stronger. The Australian Government offers valuable scholarships for Australian students to study in China and Chinese students fill Australia’s universities. The bilateral relationship has become incredibly comprehensive in the last twenty years.

However, during these twenty years, Australia has sought closer strategic collaboration with the United States. Deals have been brokered for the US Marine Corps to train in Darwin and the Royal Australian Air Force has been an important contributor to Lockheed Martin’s F-35 programme. Australians have fought alongside the US in the Gulf War, the War on Terror and now against the Islamic State. The Australian Signals Directorate has continued to operate alongside the US National Security Agency in Pine Gap. Cross-cultural relations are also warm, with Australian musicians remaining popular in the US and American popular culture clearly influential in Australia. Education ties are also tight. The Fulbright Commission offers scholarships to Australian students to study in the US and US studies centres are popping up all over Australian universities. In the words of Prime Minister Turnbull, the Australia-US alliance is ‘very strong’.

At first glance, Australia seems to be having its cake and eating it too. Since the Washington Post reported that Donald Trump hectored Malcolm Turnbull, Australia’s foreign policy wonks have been in a flurry of activity about this very issue. In the midst of this flurry are two branches. One branch, lead by commentators like Hugh White and Linda Jakobson, contends that Australia should pivot to China. Another branch, lead by voices close to Australia’s defence community, contends that Australia’s institutional relationship with the US can withstand Trump’s angry phone call.

Both branches of thought hold some truth. Yet both misunderstand the true trajectory of Australian foreign policy. The trajectory has not been to pivot towards China and away from the US. Rather, the trajectory has been for Australia to develop a more independent foreign policy in which the country’s alliance with the US endures but its economic relationships in the world, not just China, strengthen and diversify.

While China may be Australia’s largest trading partner, the US is its second largest and Japan is its third largest. Korea is Australia’s fourth largest trading partner. Hence Australia’s trade interests are diverse in Asia. However, Australia’s investment interests are more interesting. The largest sources of foreign investment in Australia come from the US, the UK and Belgium, not from China or any other country in Asia. In fact, Australia is negotiating a free trade agreement with the EU and seeks to revive economic relations with the UK. The trend is for Australia’s economic interests to diversify around the world, not just in China or Asia.

Aside from the diversification of Australia’s economic interests, what is the evidence of Australia developing a more independent foreign policy? Let’s start with outlining the objectives the Australian Government has set for its increase in defence spending to AU$58.7 billion by 2025-26. This is aimed not only at strengthening the Australian Defence Force (ADF) but at ensuring Australia has an armaments industry that can provide for its own defence in the long run.

Australia’s deal with the French company DCNS to build the replacement for the Collins Class submarines demonstrate these objectives well. In this deal, Australia had two points on which it would not budge. Firstly, that the submarine had to be built in Australia. Secondly, that the procurement would lead to a rolling acquisition programme in which Australia would have sovereignty. DCNS agreed to these requirements unflinchingly, whereas the rival Japanese bidders were reportedly wary. Australia chose to sign the deal with DCNS for these reasons of sovereignty, despite the US offering tacit support to the Japanese bidders. By siding with a French company, the AU$50 billion deal also diversified Australia’s economic interests.

In the long run, this rolling acquisition programme could give Australia the knowledge and capability to provide for its own naval defence. If Australia can develop this capability to provide for the entire ADF, the country will have more responsibility for and thus more independence in the creation of its foreign policy. The deal with DCNS shows that Australia is likely to continue in this is the direction of a more independent foreign policy that seeks to diversify the country’s economic interests.

Calls for Australia to pivot away from the US and towards China are overblown. Similarly, the characterisation of Australia as a country that will always say ‘yes’ to the US is misguided. As James Curran has noted, Australia actually has a long history of saying ‘no’ to the US. This trend might just accelerate under President Trump, but will that mean Australia has to pivot to China? No, all it will mean is that Australia sees itself as a strong, independent nation that values its alliance with the US but wants to diversify its economic interests around the world. That means more trade with Asia but not at the expense of greater European investment. Having two powerful friends in China and the United States will not take anything away from that independence. All it will do is prove that Australia is a country with a bit of nous.