Australia and China benefitted from each other for years, but the situation has turned as Canberra has taken Washington's side in confronting Beijing. Frank Sieren asks how long Australia's economy can survive.
Apart from the United States, no country is as distrustful of China as Australia. Australian Home Affairs Minister Peter Dutton recently said China's Communist Party behaved in ways that were "inconsistent" with Australian values. The Chinese Embassy in Australia retaliated by accusing him of "anti-China rhetoric" and said his "slur on the Communist Party of China" was "an outright provocation to the Chinese people." While the opposition in Australia accused him of undermining the country's relationship with China, saying that he had shown a lack of "diplomatic skills."
Just a few years ago, Australia was still one of China's strongest supporters in the West. Now, the government has a long list of reproaches: accusing China of intellectual property theft, of interference in universities through the Confucius Institutes, and of undermining democracy by making non-transparent donations to loyal politicians.
There have also been various scandals this year that have exacerbated the situation, including China's arrest of the Chinese-Australian pro-democracy activist Yang Hengjun on charges of espionage and an attempt to hack into the Australian parliament's computer network, which Australian intelligence blamed on China.
Australia's new measures
The Australian government has introduced transparency laws to curb Chinese influence in Australia and more attention is paid to Chinese investment in sensitive areas such as energy networks or agriculture. Like the US, Australia has also banned Chinese giant Huawei from participating in the development of an Australian 5G network. Australian Prime Minister Scott Morrison has also called for China to no longer being treated as a developing country by World Trade Organization rules. Peter Dutton has called for an "open debate" about China's New Silk Road project, China's military buildup in the South China Sea and the growth of China's sphere of influence in the Indo-Pacific region.
But Australia has a problem. China is its biggest trading partner: Some 38 percent of Australia's exports go to China, that's 8 percent of Australia's GDP. No other country in the world is as dependent on China.
So far, Australia's economy, which has been growing for nearly three decades, has benefitted from Chinese immigrants, who both work and consume. Of 25 million Australians, some 1.2 million have Chinese origins. Many are currently worried that they could bear the brunt of anti-Chinese sentiment in Australia and face discrimination when it comes to security-related jobs. There are also over 100,000 Chinese students in Australia and they pay high fees. They have also come under fire in the Australian media as some of them sided with Beijing in regards to the pro-democracy protests in Hong Kong. Tourism from China, which has always been an important economic factor for Australia, is growing at its slowest rate in nine years. The tensions are leading some Chinese tourists and students to turn their backs on Australia. Experts say that these developments could cost Australia $543 million over the next two years.
The United States is hoping that a strategic dialogue with Japan, Australia and India will help stem rising Chinese influence in the Indo-Pacific region. Australia has ramped up its military spending and is now the world's second-biggest weapons importer, after Saudi Arabia and ahead of China and India. Washington is pleased by this.
Australia currently benefits from the US-China trade dispute by supplying over 60 percent of China's iron ore imports and half of its coal imports.
Canberra and Washington are currently working on a deal to decrease their future dependence on China, especially with regard to rare earth elements that are crucial to smartphones and other hi-tech products. China currently supplies 70 percent of the world's needs. Australia already produces 14 of the 35 sorts of rare earths needed by the US high tech industry. The idea is also to expand economic cooperation with Japan and South Korea. Beijing has already self-confidently said that it is not dependent on Australian resources and has other supplies.
Alone against China
However, Australia is a lone crusader against China in the region. Its neighbors tend to be getting closer to Beijing. Canberra, meanwhile, wants to participate in the Regional Comprehensive Economic Partnership. If the proposed free-trade agreement is created, it would join the 10 member states of the Association of Southeast Asian Nations and Japan, South Korea, China, India, Australia and New Zealand into the world's largest trading bloc. The planned agreement will be based on already existing trade agreements and will eliminate existing tolls on 90% of traded goods within 15 years. Some 3.5 billion people live in the future free-trade zone. Washington is not pleased that Australia wants to be part of the zone.
And here it is clear that the following question is paramount: How long will Australian voters put up with a government on a collision course with China if their daily lives are negatively influenced by the economic disadvantages? One thing that has become clear is that Canberra's ally in Washington is barely in a position to stave off the losses.
Frank Sieren has lived in Beijing for over 20 years.