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After APEC, Australia Remains Caught Between the US and China

23 November 2018

As rancor at the meeting shows, striking the balance between the two great powers will only get more challenging.

Dr Bates Gill

Associate Fellow, Asia-Pacific Programme and US and the Americas Programme (based in Australia)



Security forces, including ships from the US Navy, Royal Australian Navy and Royal New Zealand Navy, patrol around P&O Cruises ship Pacific Explorer, which hosted part of the APEC summit in Port Moresby. Photo: Getty Images.



It was the diplomatic equivalent of a food fight. At the Asia Pacific Economic Cooperation (APEC) forum, held last week in Port Moresby, Papua New Guinea (PNG), the United States and China traded barely-veiled barbs and their growing rivalry prevented agreement on a final communique for the first time since the organization’s founding nearly 30 years ago.

Many equate these results with failure. But the forum accurately reflects the region’s evolving geostrategic dynamics. Importantly, the gathering provided a platform on which those dynamics could unfold peaceably, if contentiously – which is exactly what APEC should be doing. And, also true to APEC’s intent, it allowed for the advancement of the interests of smaller players while they tried to navigate the dilemma of great power competition.

Case in point: Australia. Canberra came prepared to have an impact. It was especially keen to do so given that the host, PNG, is Australia’s closest neighbour, separated by less than 100 kilometres of open water. PNG is also representative of many other Pacific island nations in Australia’s strategic backyard, all in need of development and greater opportunity to benefit from the region’s economic growth.

Hence, Prime Minister Scott Morrison announced a further ‘stepping up’ of Australia’s presence in its Pacific neighbourhood. On the economic and development front, the Australian prime minister formally opened the School of Business and Public Policy at the University of Papua New Guinea and – along with Japan, New Zealand and the United States – announced a joint plan to provide 70 per cent of the PNG population with electricity by 2030. (Only 13 per cent have reliable access to electricity today.)

As for regional security initiatives, Australia announced an enhanced security cooperationarrangement with Vanuatu, to include infrastructure improvements, training and advisory services for the Vanuatu police forces, as well as a pledge to make progress on a bilateral security treaty. Canberra will also join with the United States and PNG to build new facilities at the Lombrum naval base on the east side of PNG’s Manus island.

But in taking these steps, Australia exhibited the delicate diplomatic act it needs to perform as it balances relations between a rising China and an uncertain America.

Canberra is clearly concerned about China’s growing presence in the south Pacific.  Its economic initiatives during the APEC summit can be seen as countermoves in response to China’s already extensive economic development assistance to Pacific island nations.  Extending security assistance to Vanuatu and upgrading PNG’s naval facilities – including the possibility that Australian and US military vessels could be berthed there – is an unmistakable response to Australian newspaper reports that China aimed to build a naval base in Vanuatu.

But Australia has good reason to worry about American engagement in the Indo-Pacific as well. The recent concentration of US interest in the region – led by Vice President Mike Pence’s blunt China speech in October and his pointed remarks at APEC – have come belatedly in the Trump administration’s first term, and have not yet established the reassurance America’s allies and friends need about US commitment to the region. As a result, Canberra is no doubt relieved to solidify its partnership with Washington through the PNG electrification scheme and joint development and possible use of the Manus island naval base.

Yet Australia’s middle power dilemma persists. Even as Canberra takes steps in its immediate neighbourhood to counterbalance China, it cannot go too far. China remains – and for the foreseeable future will remain – Australia’s most important trading partner and its fastest growing foreign investor. Divisions run deep in Australia about the best way forward for China policy, with the business community and many in the foreign policy establishment urging caution to avoid alienating Beijing.

And while Canberra welcomes the signals of greater American engagement in the region, there is far less support for an openly confrontational US approach toward China. Australia has much to lose in joining an escalating trade war with China or taking part in overt containment of China’s rise. This is all the more so given the continuing volatility and unpredictable nature of US foreign policy, including in the Indo-Pacific.

Australia is not alone in this. Even Shinzo Abe’s Japan – buffeted by US trade threats, unsatisfactory results with North Korea and continuing White House complaints about Japan’s host-nation support for US forces – also seeks stable and improving relations with its major neighbours China and Russia. This pattern repeats itself across much of the Indo-Pacific.

The raucousness and rancor of the APEC summit only exacerbates what was already a difficult dilemma for small and medium powers in the region. Understandably, they want it both ways: continued beneficial relations with the United States and China. But the lesson of Port Moresby is this: striking that balance is only going to get more challenging in the years ahead.


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