Successful balancing act

Australia offers a gold example to other countries of how to avoid the predicament of having to choose sides in the game of major powers

The recent resumption of high-level contacts between China and the United States, especially the China-US summit meeting in San Francisco, has raised positive expectations among the international community for an improvement in bilateral relations.

The convening of the 30th Asia-Pacific Economic Cooperation Economic Leaders' Meeting in San Francisco has also injected new impetus into promoting openness and cooperation in the Asia-Pacific region.

It is hoped that the positive trend will continue, but the agitated state of the strategic game between China and the US has not yet fundamentally changed, and there is still a long way to go for the bilateral ties to return to a healthy and stable track that will benefit not only themselves but the region at large.

As the China-US competition is becoming increasingly normalized, Asia-Pacific countries continue to face the dilemma of "taking sides".On the one hand, they are aware that to varying degrees they still depend on the US for security. On the other hand, they fully realize that China is their most important trading partner, and their economic growth is inseparable from their cooperation with China. If they ignore that fact and coordinate with the US to contain China, their partnership with China will be inevitably compromised.

However, the US' strategic adjustment has broken the former pattern of "relying on the US for security and relying on China economically". From the Barack Obama administration's "pivot to the Asia-Pacific" policy, which viewed China as the US' main rival, to the Donald Trump administration's instigation of trade and technology wars against China, to the Joe Biden administration's commitment to forming a "values-based alliance" and cliques to encircle China, the room for Asia-Pacific countries to make strategic choices has been compressed.

Even today, whether to "take sides" or to "seek an independent balance" has become a very thorny issue for these countries.

Over the past five years, Australia has made bold attempts on this issue. As an important ally of the US in the region and a member of the US-led Five Eyes Alliance, which also includes the United Kingdom, Canada, New Zealand and Australia, with its multiple special identities, seems quite confident in dealing with the issues related to China-US competition. From the Scott Morrison administration's policy of "siding with Washington" to the Anthony Albanese administration's returning relations with major powers back to a "strategic balance", Australia's policy underwent a 180-degree reversal.

In the face of the China-US competition, the Morrison administration apparently made a series of mistakes. The first mistake was to misjudge China's resistance to the US' trade and technology attacks in the face of the US and the West's systemic advantages. It did not foresee that the US would become the first to fall into a greater dilemma as a result of its trade and technology wars.

The US' economic trade deficit with China has not decreased, instead it has increased from $275.8 billion in 2017 to nearly $400 billion in 2022, making its consumers more dependent on "made-in-China" products. The US' "small yard with high fences" policy has not prevented China's technological breakthroughs in the fields such as semiconductors, new energy and information communication, but has instead caused heavy losses to its own high-tech enterprises' exports to China. The challenging "industrial relocation", high labor costs, and frequent union strikes cause continuous blows to the US' manufacturing plan.

According to macroeconomic data provider CEIC, since 2018, the export volume of inland provinces and cities in China has increased by 94 percent, far higher than India's 41 percent, Mexico's 43 percent, and Vietnam's 56 percent during the same period. Undoubtedly, these countries are still unable to challenge China's status as the "world factory".

The Morrison administration's second mistake was betting on the US' victory and China's failure to indulge a strategic speculative mentality. On the one hand, it fantasized about taking advantage of China's dependence on Australia's mineral resources to force Beijing to make concessions and compromises; and on the other hand, it sought to shape Australia into a "pioneer" of the US' "Indo-Pacific strategy" in exchange for economic rewards and security assistance from the US and Western allies. However, to its disappointment, China soon turned to countries such as Russia, Kazakhstan and Brazil for imports of industrial raw materials, accelerating the pace of replacing Australia.

What is more ironic is that Australia's partners rushed to claim the market share lost by Australia in China. According to researchers from the University of Technology Sydney, Australia's exports of the 12 goods affected by the US sanctions decreased by $12.6 billion, while the US' exports to China increased by $4.6 billion, and Canada's and New Zealand's exports increased by $1.11 billion and $786 million respectively. Obviously, Australia's US-led security allies have been the biggest beneficiaries of China-Australia trade frictions.

The Morrison government's third mistake was to refuse to recognize these two mistakes, allow risks to spiral out of control, and continuously upgrade its anti-China policies. From banning Huawei from building its 5G network to obstructing China-Australia economic and trade cooperation under the Belt and Road Initiative framework, and cooperating with the US to intervene in the Taiwan question and other issues, it forced China to take reciprocal countermeasures. China-Australia ties hit rock bottom because of its reckless moves.

But from the inauguration of the new Australian government in May 2022 to Albanese's visit to China this November, the rapid thawing of bilateral relations and the positive momentum of a turnaround in just 18 months indicate that the Albanese administration has done something right in developing relations with China.

On the one hand, the Albanese government maintains a calm mind and demonstrates diplomatic independence. Its approach to dealing with Beijing has begun to return to caution and thoughtful consideration, emphasizing that Australia should contact and cooperate with China from the perspective of national interests.

On the other hand, the Albanese administration keeps showing sincerity and emphasizes consistency between its words and deeds. In addition to continuously releasing friendly signals in diplomacy, the Albanese government revoked its World Trade Organization lawsuit against China and gave a nod to a cooperation project of Chinese companies in the Port of Darwin. As a result, the economic and trade negotiations between the two countries have been restarted, and a series of economic and trade disputes have been resolved since the first half of this year.

Australia's experience and lessons are enlightening for Asia-Pacific countries that face the pressure of "taking sides" because of the China-US competition. It should be noted that China-US relations are far more complex than imagined, with multiple components of confrontation, cooperation, and competition coexisting. In this situation, Asia-Pacific countries should not act as "pawns" in the game of major powers, but rather as "players" in promoting regional peace and development. They should utilize independent diplomacy and a strategic balance to increase their own room for maneuver on policies.

All parties in the Asia-Pacific should cherish the region's hard-earned peace and stability. China adheres to peaceful development and opposes a new Cold War in the region. Confronting competition with the US, China does not want or request Asia — Pacific countries to take sides or stand in line. And China is willing to share its development opportunities with all members of the Asia-Pacific community, working together to achieve win-win cooperation.

The author is an assistant research fellow at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. The author contributed this article to China Watch, a think tank powered by China Daily.

The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.