Prime Minister Scott Morrison has admitted Australia has already spent billions on the now scrapped French submarine deal. Photo: AFP

“Flagpole sitting” was a fad in 1920’s America in which people competed to see who could stay precariously perched longest, with some striking a balance for days or even weeks.

When it comes to Australia’s dual relations with the United States and China, one sometimes wonders if the nation is aiming for a Guinness Book of World Records’ entry for “fence sitting.”

Australia’s May 18 election saw incumbent Prime Minister Scott Morrison and his Liberal Party surprisingly come out on top.

Although Australia’s China ties barely figured in the campaign, opposition Labor leader Bill Shorten had described China as a “strategic opportunity” rather than a “strategic threat” and noted if elected he would strive for a more rounded approach to Beijing.

Prime Minister Morrison’s government and previous Liberal administrations have been no less aware of China’s economic importance to Australia.

Chinese and Australian flags ripple in the wind. Photo: Facebook

But they have also passed strict new laws against foreign (aka Chinese) interference in Australian politics and civil society, and imposed a ban on the Chinese telecom company, Huawei, from participating in the country’s new 5G network.

They have also imposed new measures on foreign property purchases that have slowed once rampant Chinese buying. None of those measures, however, have decisively swung the pendulum between the US and China.

Whether Morrison leans towards or away from China – or attempts to stay “on the fence” – will largely define his legacy.

Australian Defense Minister Christopher Pyne recently commented: “The No 1 priority in the Indo-Pacific is managing the challenge of great power competition between the US and China.”

He then suggested Australia was well placed to act as an “honest broker” since “We are a trusted economic partner of China and military partner of the US.”

Conflicted interests

This talk of Australia getting protection from America while getting rich off China isn’t new. But those competing imperatives are leading to conflicts of interest Canberra will find increasingly difficult to wave away.

That was most visible in the granting of a Chinese company with close ties to the Communist Party a 99-year lease to operate the northern port of Darwin, where US Marines are also stationed.

Those conflicted interests could come to the fore again if Beijing steps up its intimidation of Taiwan, especially if its desired candidate loses the 2020 election.

Some analysts believe a China invasion could be on the cards, which would force Australia to decide if it will allow a free people to be enslaved in exchange for maintaining economic ties with China.

Tightening Chinese control of the South China Sea that excludes or targets certain nations, or a violent clash between Japan and China in the East China Sea, are other potential flash points where Australia would need to draw its own line in the sand.

Australia’s leaders are perhaps more aware of the Chinese threat than they publicly suggest.

Consider, for instance, Canberra’s rushed response in recent years to China’s political and economic inroads in the Central and South Pacific, moves that have portended a future PLA military presence in a region Australia has long considered its own sphere of influence.

A look at the map might leave Australian leaders feeling a little isolated if a few more things fall into place for China in the Pacific, including a mooted naval base on the island nation of Vanuatu.

Threatened sphere of influence

This also explains Australia’s move in late 2018 to refurbish – along with the US – the strategically located Lobrum Naval Base on nearby Papua New Guinea’s Manus Island.

The same motivation presumably led Australia to outbid China for the right to fund the redevelopment of Fiji’s Blackrock Training Center and operate a regional police and peacekeeping operations training center.

Australia’s “honest broker” approach might ultimately not be appreciated by either side. The Americans may grumble, but it’s the Chinese who will likely make Australia pay for such an “even-handed” approach.

Australia is now trying to convince itself that China didn’t impose lengthy delays on clearing Australian coal imports into the country earlier this year out of pique at Australia’s perceived “anti-Chinese” behavior, including a ban on Huawei from Australia’s 5G rollout.

But deep down Canberra knows. It presumably hasn’t forgotten the 2009 Rio Tinto case when China imprisoned for years a mining executive when it was unhappy over ore prices. And that was just anger over iron ore.

In recent years Beijing has also brazenly applied economic pressure against South Korea, Tokyo, the Philippines and others to influence political and security policies.
Australia knows what to expect.

Incompatible systems

And Australia as an honest broker between the US and China is not the same as balancing between the US and UK – two like-minded democratic countries.

Rather, China and America are two incompatible systems. One is totalitarian and has concentration camps, black-prisons, and organ harvesting. The other, is the world’s leading democracy and a free country (like Australia) that people are literally dying to get into.

Moreover, it’s not limited or friendly competition the Chinese have in mind: China’s long term objective is to displace the US – both regionally and globally – and to eventually dominate worldwide.

Playing both sides isn’t likely to win Australia much forbearance. Some Chinese have even commented that Australia is a “big empty country with a lot of resources.” China is unlikely to take over Australia, but having it on a leash will do nicely.

A woman walks by Chinese language advertisements for Australian property in Sydney's Chinatown on June 21, 2017. Photo: AFP/William West
A woman walks by Chinese language advertisements for Australian property in Sydney’s Chinatown on June 21, 2017. Photo: AFP/William West

It’s almost an article of faith that Australia’s dependence on China’s fast-growing markets leaves it little room for maneuver. But it’s not clear that’s the case.

China is indeed a major market, but seldom mentioned is that China is likewise dependent on Australia’s natural resources to keep its factories running. Australia has a strong hand to play if it chooses to play it.

The US is Australia’s number one foreign direct investor in nearly all sectors of the economy, according to Australia’s Foreign Direct Investment Review Board, representing about 22% of total FDI. China’s investments represent a mere 4%. Japan and South Korea also import heaps of Australian minerals, including coal, iron ore and copper.

As for the 150,000 Chinese students now studying at Australian universities, oft-cited as a reason not to upset Beijing lest it calls them home, it sometimes appears the Australian government has put a dollar figure on its acquiescence to another country’s demands.

A splendid ally

Make no mistake, Australia is a splendid ally, possibly America’s best worldwide.

Australia has sent its forces into the South China Sea, up to Japan to help out with North Korea, and into Iraq and Afghanistan and other difficult military theaters over the years. It routinely steps in wherever asked, and never whines.

Indeed, the author wrote an assessment of Australian forces some years back for the US Marines and noted, “The biggest problem with the Australians is that there’s not ten times (10x) more of them.”

But at some point Australia will no longer be able to split the difference when it comes to China and the US. Many in Australia’s leadership have woken up to China’s malign influence efforts inside Australia.

Though it is ironic that rather than the intelligence services it was an academic, Professor Clive Hamilton, and a reporter, John Garnaut – the former Fairfax correspondent in Beijing – who deserve most credit for lifting the lid on Chinese Communist Party influence efforts in Australia’s politics and civil society.

Heeding such warnings, Canberra quickly passed a raft of laws in 2018 aimed to limit foreign interference in Australian politics to include a ban on foreign political donations and also requiring lobbyists acting on behalf of foreign principals to register and provide details of their lobbying activities.

Australia's Prime Minister Malcolm Turnbull and US President Donald Trump shake hands during a news conference at the White House in Washington, February 23, 2018. Photo: Reuters/Jonathan Ernst
Australia’s then Prime Minister Malcolm Turnbull and US President Donald Trump at the White House in Washington, February 23, 2018. Photo: Handout

Previously, there was no such requirement. Espionage laws have also since been tightened.

So it was heartening to see the opposition Labor Party distance itself from former Prime Minister Keating’s call for purging the intelligence services of supposedly racist anti-China officials. (Both Hamilton and Garnaut have been accused of racism in social media-driven bids to undermine their credibility.)

Presumably, Keating means officials not clever and opportunistic enough to serve as richly paid advisors to Chinese state-owned financial institutions.

This writer is from an American generation whose impression of Australia came from the famous photo of the survivors of the Australian 39th Battalion in formation on the Kokoda Track in 1942.

The Japanese would have done better to offer the 39th Battalion’s commander an advisory role to a port operations company at $880,000 a year, rather than fight their way to Port Moresby in Papua New Guinea. China appears to have learned that lesson better than Japan.

Now that Morrison and his Liberal Party have a new lease on life, they will learn soon enough (just as Shorten and Labor would have) that Australia’s “fence sitting” record can’t last indefinitely. Australia will soon face the stark choice between US-backed principles and independence, or Chinese money.

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