Can Asia-Pacific nations avoid taking sides in the US-China rivalry?

Opening remarks to Asia Pacific Panel, Global Leadership Foundation Annual Meeting, Wolfsberg, Switzerland, 16 November 2024

The intensity of the strategic competition between China and the US – which may well become even more intense with Donald Trump now in the White House surrounded by China hawks – is a source of real concern to every other country in the Asia-Pacific region. None of us want to be collateral damage if things go pear-shaped. For nearly all of us China is our largest economic partner, and for many of us the US has been for decades our primary security guarantor. None of us really want to have to make a stark choice between them – but the question for all of us, which we will be exploring in this session, is whether, or for how long, we can really avoid taking sides.

In this enterprise I’ll be joined by our distinguished colleagues former Thai Deputy PM and Commerce Minister, and WTO and UNCTAD head, Supichai; former Mongolian Prime Minister and President Elbegdorj; and former Indonesian Attorney-General Marzuki Darusman. Between us, we represent a cross-section of US allies, partners and friends of varying degrees of commitment to that relationship.

Each of us (beginning with me talking for a few minutes about Australia’s position) will try to address these four questions:

• the nature and extent of our economic and security ties with China and the US;
• how each of our countries feels, and we feel, about clearly taking sides with either;
• what we see as the most likely threats to our security and prosperity from either of the neighbourhood giants, and
• what would, or should, be our country’s positions should the worst happen and war break out between them.

What makes this tightrope so difficult to walk for so many of us in the region is that the behaviour of both the giants has not exactly been a thing of unalloyed beauty. In the case of China, concerns right across the region extend to:

• its international law-defying territorial ambition in, and militarization of, the South China Sea, wth its “9-dash line” recently expanded to 10;
• its repeatedly stated determination to unify Taiwan with the mainland, not excluding the use of force, in a context where its repressive actions in Hong Kong have made reunification on a "one country, two systems" basis a nonstarter;
• its continued assertiveness on other territorial fronts with Japan and India;
• its eff to increase its presence and influence in smaller but strategically significant regional players, including the Solomon Islands, Papua New Guinea and Timor Leste;
• its willingness to apply economic coercion, as Australia experienced more than most when we fell out of favour in recent years, and its general economic nationalism;
• its transition from a bystander to regular spoiler role in the United Nations Security Council and other multilateral contexts; and
• above all, anxiety – compounded by Beijing’s manifest determination to upset the status quo both regionally and globally – about the very significant expansion and modernization of its military, including nuclear, capability.

In the case of the United States, even before Trump’s re-election, there has been growing concern over the last few– not entirely confined to Washington’s allies and partners – about:

• the will and capacity of the US to stay the course in its long self-appointed role as regional security stabilizer and balancer, particularly given its distractions elsewhere with Russia’s invasion of Ukraine, and now again in the Middle East (with those concerns particularly resonating in context of North East Asia, where North Korea continues to expand its nuclear arsenal and engage in other military provocations in ways that alarm both South Korea and Japan, as well as of course now alarming Europe with its troop deployments to support Russia in Ukraine);
• Washington’s retreat from the open trading policies that have contributed so much to the region’s economic prosperity, and consequent stability; and
• the apparent determination of the US to demand recognition of its continued primacy, both regionally and globally, seeing just about every arena as a zero-sum struggle for dominance, and not accepting the reality of the tectonic-plate shift that has occurred with China’s rise, and its accompanying demand for its own regional strategic space and, globally, to be a rule maker, not just a rule-taker

Donald Trump’s re-election as President adds a whole new level of uncertainty to these concerns. He is far more transactional rather than ideological or conceptual in his approach to international relations; more inclined to see allies as encumbrances than assets; arguably more ego-driven than US national-interest driven; sometimes isolationist and sometimes impulsively interventionist. It’s simply impossible to predict how confrontational or how accommodating with China he will prove to be on both the economic and security front.

Australia’s Position

For my country, Australia, keeping our balance as we walk a tightrope between China and the United States is not an enterprise for the diplomatically or politically faint-hearted. The stakes could hardly be higher. And not only internationally but domestically, not least because we now have 1.4 million Australians with Chinese ancestry out of a population of 27 million, and their political voice is increasingly being heard.

Economically, China is by far Australia’s biggest trading partner, constituting 26% of our total trade (30% of our exports, and 20% of our imports), with an annual surplus our way of around USD 80bn: it would be catastrophic for us if those links were severed in the context of us being drawn into outright conflict. The US has a much smaller share of our total trade, just 8 %, but with a surplus its way of around USD 30bn (one of the few things Donald Trump seems to like about us).

In security terms, Australia is a rock-solid formal ally of the US, under the ANZUS Treaty of the 1950s, and certainly seen as such by China, with whom we have only a scattering of bilateral dialogue arrangements. We have participated in every major war the US has fought over the last century, although some commitments – especially Vietnam and the 2003 Gulf war – were not without strong domestic opposition.

The recent AUKUS agreement with the US and UK, for the acquisition of nuclear powered submarines and next generation military technology—together with new basing arrangements for the US military on our soil – have enmeshed us far more comprehensively with the US than ever before. But it remains to be seen whether all this will buy us any guarantee of direct US military support should we ever need it: Washington’s commitment under the ANZUS treaty is nothing like as strong as its commitment to NATO allies under Article 5 of that treaty.

It is very much in Australia’s national interest to avoid making a hard choice between the US and China for the indefinitely foreseeable future, but both elite and community opinion are divided on whether, or for how long, that will be possible.

Among policymakers and those in a position to influence them, one finds on one side of the divide many senior Defence and Intelligence officials, the conservative opposition political coalition, and certain elements of the media (notably the Murdoch press) and think-tank community. They tend to be very alarmist about China’s military threat potential, disturbed and fearful of its capacity to become a controlling regional hegemon, comfortable with continued US exceptionalism and claims of primacy, and supremely confident that the US will be there for us if we need them, even if its own interests are not immediately threatened.

On the other side of the policy community divide one finds most Foreign Affairs and Trade officials, past and present, other elements of the media, think-tank and academic communities, and most if not all senior members of the Albanese Labor Government. They – we – are less pessimistic about China-threat and hegemonic-control scenarios, much more troubled by the loss of sovereign agency involved in becoming too comprehensively enmeshed in the US military, and very sceptical about the quality of the insurance we are buying by doing so. There is a recognition that China wants now to be much more of a rule-maker than a rule taker globally and to have its own strategic space regionally, and would certainly prefer more kow-towing deference from its neighbours of the kind that it enjoyed in the past – but that is not to say that, the special case of Taiwan aside, outright military aggression ever needs to be or will be part of its repertoire.

Labor Foreign Minister Penny Wong, and Prime Minister Albanese, have often repeated the Biden Administration’s mantra re China of ‘cooperating where we can, competing where we must, and managing our differences wisely’, while putting much more emphasis on cooperation rather than competitive confrontation. Wong has made clear that she wants to see an Asia-Pacific environment where, as she has put it, ‘no country dominates, and no country is dominated’.

The biggest test Australia will face in continuing to avoid making a hard choice between China and the US will be if war breaks out over Taiwan. Labor Defence Minister Richard Marles – a true believer in US exceptionalism, primacy and love for its allies – has said Australia cannot be a ‘a passive bystander’ in such a contingency, while conservative Opposition leader Peter Dutton has gone so far as to say it is ‘inconceivable’ that we would not fight alongside the US. But others of us, while obviously deploring any attack on a flourishing democracy, can’t help but see Taiwan as a special case, not enjoying the same kind of universally recognised sovereignty as Kuwait or Ukraine; and one where our involvement in a war in its defence would make almost zero military difference but come at vast cost to us.

Community sentiment, as measured by Lowy Institute polling, generally echoes elite divisions. There is a roughly even division between those who agree that China is more of an economic partner than a security threat, and vice-versa. And while nearly two-thirds say the US alliance makes Australia safer, over 70% also believe – I, for one, think very perceptively – that it makes it more likely that we will be drawn into a war in Asia that it is not necessarily in our interests to fight.

The very latest poll testing this sentiment – the Resolve Political Monitor poll published just this week – makes the striking finding that 57% of Australians believe that we should avoid taking sides in any conflict between the US and China, with just 16% in favour of doing so.

My conclusion is that it is perfectly possible, and certainly desirable, for Australia and others in the region similarly torn, to avoid taking sides in the US-China rivalry for the foreseeable future – that the economic benefits of doing so are real, and the security risks involved vastly exaggerated. But no doubt views will differ on this, and let me start by testing them with my fellow panelists.