Foreign Affairs Friday: Australia and China

Australia and China have had an up-and-down relationship lately. Here are some recent happenings:

• An Australian mining company pulled out of a big iron ore deal with a Chinese (state owned) company. Shortly thereafter, some Chinese-born employees of the Aussie company were arrested in China for supposedly spying.
  

• Another Chinese company (tied to the state) signed a big deal to buy lots of natural gas from Australia.

• Much to China's chagrin, Australia allowed a leader of China's Uighur minority (which participated in recent riots) to visit the country.

China is important to Australia because it is a big purchaser of Australian natural resources (mainly metals). China is Australia's second-largest export market (behind Japan), so it is crucial to Australia's economic growth. At the same time, China is becoming more powerful, and could come to dominate the Asia-Pacific region and become a threat to Australia. Because of uncertainty about how friendly China will be in the future, Australia, like other countries, is wary of China's strategy of buying up resources at the source, rather than purchasing them via the marketplace. Similar concern was raised in the US in 2005 when a Chinese firm tried to buy Unocal, a US oil company. The fact that the Chinese government owns or directs its major companies fuels suspicion that these deals are about more than just meeting resource needs, and instead serve to give China leverage over other countries.

In managing China's rise, Australia will have to consider US actions. It wouldn't want to see a cold-war situation between the US and China, because that would force Australia to take sides. Australia would take the US side if necessary, but this might hurt it economically. Australia will also have to consider how much to cooperate with the US in places like Afghanistan. The operation there gives the Aussie military a chance to learn, gain experience, and earn favor with the US, but it could also use up resources that would instead go to homeland defense. Australia's recent defense white paper stresses that Australia wants to be able to fend for itself in case of an attack.

As we can see from this, the US isn't the only nation that has to recalculate its interests due to happenings in China. We also see that, while we share the same broad interests as our Western allies, each of these allies has its own unique interests to consider.