2020 was a watershed year for India. Covid-19 wrecked the economy and once again proved that the Indian government, pressed by public concerns, would prioritise social spending over defence expenditure. At the same time, the fisticuffs with Chinese soldiers in Galwan, which led to the death of 20 Indian soldiers and an unconfirmed number of Chinese casualties, brought the India-China conflict to the front and center of the country’s security calculations.
Since Galwan, Indian strategic thinkers have sought to thread the needle between the country’s social priorities and defence concerns by suggesting that the Quadrilateral Initiative (QUAD) is the panacea for India’s security dilemma. More realistically, a workable alliance with the United States based on a fruitful weapons partnership between the two countries and the provision of military basing is a better option for New Delhi.
The fallacy of the QUAD
For the past 15 years optimists in the Indo-Pacific region have extolled the virtues of the QUAD even though skeptics have pointed out that the proposed alliance/initiative is overhyped and cannot work to contain a rising China. After Galwan, Indian analysts started to claim that Australia and Japan could be valuable strategic partners in the quest to deter China but such analyses overstate the abilities of Canberra and Tokyo against the economic and military juggernaut that is China.
Australia, under the leadership of its hawkish Prime Minister Scott Morrison, sought to pursue the line of the Trump Administration vis-à-vis China by raising internationally freedom of navigation in the South China Sea, the democracy question in Hong Kong, and the lack of Chinese transparency over Covid-19. The Chinese retaliated in a calculated and harsh manner to hurt the Australian economy and Trump could do little to help his friend in Canberra. The reason for this Australian weakness lies in the fact that since the early 2000s the Australian economy has become dependent on China as major source for export revenues.
As China’s economy started to grow it developed a hunger for natural resources and Australia became a ready provider while profiting from a significant boost to its commodity prices. Since the early 2000s, the economic relationship between the two countries has grown dramatically to the point where the expression now goes that, if China becomes poor, Australia is beggared.
Australia’s major exports to China are commodities, education, tourism, agriculture, and services and four of these revenue earners depend on a continued and thriving economic relationship with the Chinese. Australia sells large amounts of copper and iron ore to China and it was this sale of minerals that sparked a boom in the Australian economy from around 2010 and it continued until 2020 when Covid-19 stalled the global economy and pushed Australia into a recession. China imports $63 billion of iron ore, $16 billion of natural gas, and $14.6 billion dollars of coal from Australia thus setting up a crippling Australian dependency on commodity sales to China.
Over 205,000 Chinese students study in Australian universities while Chinese tourists are vital to the Australian tourism industry. Australian data reveals that the country gets 8.5 million visitors annually and 1.4 million of those are Chinese. Further, Australia makes $43.9 billion from tourism and $12 billion of that comes from Chinese tourists—over 25 percent of the revenues earned from tourism are from Chinese visitors.
Australia now sells about $12 billion of agricultural products to China which is about a quarter of Australia’s total agricultural exports. Australia has sought to reduce its dependency on the China market by seeking markets in India and attempting to raise trade between the two countries to $45 billion but, to put things in perspective, that would be an insufficient amount to compensate Canberra for the loss of the Chinese market given that Australia, in 2019, exported $160 billion worth of goods to China. Not surprisingly, this has led to a debate in Australian policy and business circles on how to deal with the economic fallout if China decides to play hardball with Canberra?
The Australian government has, therefore, despite the rhetoric of the current Prime Minister, sought to toe a fine line between being a strong US ally while not killing the Chinese goose that lays the economic golden egg. As Foreign Minister Marise Payne stated in a joint press conference with former US Secretary of State Mike Pompeo and former US Defence Secretary Mike Esper, “As my Prime Minister put it recently, the relationship that we have with China is important, and we have no intention of injuring it, but nor do we intend to do things that are contrary to our interests, and that is the premise from which we begin.”
Australia’s dependence on China was reflected in the country’s response to the India-China clash at Galwan. Much like Trump, the Australians reacted by calling for the issue to be resolved through negotiations but did not presume to offer their good offices as a mediator. Put simply, Australia is too small, too dependent on China, too casualty averse, and lacks the ability to project its military capability to South Asia.
Japan: The ageing, distant samurai
Japan has similar problems. Its population is aging rapidly as well as shrinking and an increasing amount of its budgetary resources has to go to look after a population which, by 2050, will have a median age over 50. Like Australia, Japan is economically interdependent on China with the 2019 bilateral trade between the two countries topping $280 billion. Japanese foreign policy analysts recognise that both militarily and economically China is surpassing Japan and as Miraya Solis has written, “China is also said to have eaten Tokyo’s lunch when it comes to the jewel of its diplomacy: economic engagement.”
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