There needs to be some compromise in the relationship: Paul Kelly

Australia's economy and its public face a seemingly insurmountable series of challenges that threatens to leave the nation floundering amid a sea of emerging regional and global giants, each of whom are at various stages of strategising their way to prosperity and stability in the post-COVID world. 

This new reality comes as a shock, particularly as Australia as both a continent and a nation is unique in its position, has enjoyed relative geographic isolation from the flashpoints of global and regional conflagration of the 20th century.

Blessed with unrivalled resource wealth and, despite public commentary, an immense industrial potential, the nation has enjoyed the benevolence of the post-Second World War order, caught up in the promise of easy wealth generation through unfettered globalisation, economic neo-liberalism and the "end of history".

Amid this flurry of economic transformation propelling once 'developing' nations onto the world stage, the world's established powers, including Australia, now face a new paradigm, one committed to undermining and influencing the very fabric of Western democracies and the economic, strategic and political order they are built upon. 

As Australia has sought to push back against a rising level of economic, political and territorial expansionism at the hands of President Xi Jinping's rising communist China, the nation has drawn the ever-growing ire of its "primary economic partner" as it seeks to exert its influence and "manage" the public perception through economic, political and societal coercion on a massive scale.

Meanwhile, the increasing disruption of the Trump administration and the growing limitations of the US as Australia's "primary security partner" places Australia's political and strategic leaders at an increasingly concerning crossroads as they seek to navigate an era of economic turmoil and mounting great power competition. 

The growing war of words and increasing attempts at economic, political and strategic coercion by Beijing places the nation at a unique and potentially disastrous precipice. 

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While some Australian politicians have advocated for more capitulation to the bully boy tactics of China, namely the likes of Liberal senator Andrew Bragg and Labor MPs including senator Kim Carr and former senator Sam Dastyari, those actions place us at the mercy of a nation now blatant in its efforts to ravage the post-Second World War economic, political and strategic order. 

Charting a middle course is increasingly appealing, but doing so from a position of strength is equally important in the face of what ASPI executive director Peter Jennings classes as "wolf warrior" diplomacy and needs to include concessions from both sides. 

Tensions have a life of their own

Speaking to this, Paul Kelly has penned an interesting piece, titled 'Our China relationship needs help before it's too late', in which he explains the need for a renewed effort to smooth over the mounting tensions between Canberra and Beijing. 

Kelly establishes the basis for this thesis: "The task of Australian foreign policy is to see the world as it exists but not fall victim to that reality. Applied to China this demands a brutal recognition of the downward spiral in our relations but a purging of the pessimism that Australia can do nothing to improve things.

"There is a dangerous mood afoot in parts of the Canberra bur­eaucratic and political systems. Beyond that, these dangers now extend into our opinion-making elites.

"What is the goal of our China policy? If we operate on the assumption that China is the enemy then, as history foretells, China will become the enemy. Nothing is more certain. Our assumptions will be realised and the worse things get, the more the China hawks will boast how right they were.

"This process now is being played out. The deteriorating ties with China have a life and momentum of their own. The latest proof was China’s retaliation against Australian journalists last week.

"Of course, the originating problem is President Xi Jinping’s ruthless, controlling and assertive strategy. We can all agree on that. But the associated risk is Australian fatalism."

We need a strategy to deal with the global disruption

Building on these points, Kelly is clear in calling for the Australian public policy community to be clear, concise and targeted in developing a strategy to guide the nation's response to the mounting tensions. 

In doing so, Kelly also calls for a clear objective for Australian policy makers, stating, "One day, hopefully, Scott Morrison will sit down with China’s Premier, Li Keqiang. What positive messages, what areas of co-operation, what methods to repair relations will he offer? Listening to much of the debate about China in Australia you would think a litany of warnings, dissatisfactions and denunciations of China constitute a policy. Well, they don’t.

"What is Australia trying to achieve? It is possible to support most of the Turnbull and Morrison governments’ specific decisions that relate to China — as I do — but still ask this question because it is not sufficiently answered.

"There is one stance that should be rejected outright: that China has become such a hostile power that Australia must accept whatever retaliation Beijing inflicts in order to honour our sovereignty and values. This is the road to doom, but it has its champions."

Expanding on this, Kelly also identifies that in order for Australia to make the maximum effort to cordially resolve the tensions, without losing face Australia needs to accept three myths about it's relationship with the rising superpower: 

• The first is that we can do nothing to improve relations because that would only compromise who we are. Such thinking is monumental folly. The China debate cannot end with Australia luxuriating in its resolution when what is needed is judgement.
• The second myth is that our massive resources trade is safe from Beijing’s retaliation. Why is this so? China now invests in alternative sources of iron ore. Yet we assume Beijing won’t act against our coal, liquefied natural gas or iron ore because that would hurt China. This answer is too short-term when China thinks long term; witness its 2025 Made in China strategy of self-sufficiency in core technology.
• The third myth is that because the rupture in relations is not primarily Australia’s fault but stems from China’s own actions that we have little or no discretionary capacity in this situation.

In response to this, Kelly outlines the need for a "rebalance", as he describes: "In this new normal Australian policy needs to rebalance. We need to give greater priority to where Canberra and Beijing can work together, not just assume we become permanent adversaries. This must start with the renewal of economic, trade and tourism ties in the post-COVID-19 world where substantial mutual interest still exists."

However, it should be more broadly recognised that Australia also needs to adapt to this period of disruption and adequately prepare a cohesive, consistent policy response, one which echoes calls made by regular Defence Connect commentators – senator for NSW and Major General (Ret’d) Jim Molan, AO, DSC; Air Vice-Marshal (Ret’d) John Blackburn, AO; Major General (Ret’d) Gus McLachlan, AO; and Dr Peter Layton – in calling for greater long-term planning for the nation’s future.

In order to maximise the nation’s position, prosperity and security, is it time to introduce a role of a Minister for National Sovereignty or special envoy role to support the Prime Minister and respective ministers, both within the traditional confines of national security or national resilience like Defence and Foreign Affairs, to include infrastructure, energy, industry, health, agriculture and the like? 

Your thoughts 

Australia is defined by its economic, political and strategic relationships with the Indo-Pacific and the access to the growing economies and to strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.

Indo-Pacific Asia is at the epicentre of the 21st century’s era of great power competition and global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.

Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia. 

Australia is consistently told that as a nation we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry – but what if it didn’t have to be that way?

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific and what you would like to see from Australia’s political leaders in terms of shaking up the nation’s approach to our regional partners.

We would also like to hear your thoughts on the avenues Australia should pursue to support long-term economic growth and development in support of national security in the comments section below, or get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..