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Asia's Game of Thrones
China Courts Australia with Trade Talk

Chinese Premier Li Keqiang recently made a major trip Down Under, in what Reuters sees as an attempt to fill a “Trump vacuum” left after the American pullout from the Trans-Pacific Partnership:

Australia and China found unprecedented common ground on trade during Li’s recent five-day visit Down Under, with a clear agenda of rejecting the “America First” protectionism touted by the new U.S. president.

“The cooperation between China and Australia showcases to the region and the world our determination to defend trade liberalization and advocate the benefits of free trade,” Turnbull told business leaders and politicians at a forum in Sydney, in comments closely echoed by Li.

Reutersfocus on “common ground” suggests that Australia is moving ever closer to China on trade, especially since Trump’s election. And there is truth to this: Trump’s withdrawal from TPP has given China a new opportunity to push its preferred trade agreements, which Australia seems amenable to. But Li’s trip also highlighted the ways that the two countries remain at odds, with Australia hesitant to embrace a China-led economic order as quickly or enthusiastically as Beijing might hope.

During Li’s trip, for instance, the two sides failed to reach agreement on the One Belt, One Road infrastructure program that Beijing has been pushing Canberra to sign on to. And while Li came to Australia bearing a major gift—a removal of export restrictions on chilled beef, which will open Chinese markets to a big Australian export—the Chinese side had little to show in exchange for the gesture. Moreover, China suffered a symbolic defeat shortly after Li left, when parliamentary opposition forced Malcolm Turnbull to abandon efforts to ratify an extradition treaty with China—a sign of the lingering distrust that many Australians still feel toward Beijing.

Despite China’s charm offensive, then, there are limits to Australia’s willingness to cozy up to China; for now, Canberra seems to be taking a “wait and see” approach before more fully embracing Chinese trade initiatives like OBOR. In the meantime, the Trump administration would be wise to make overtures to Australia to improve its own standing there. Between scrapping TPP, Trump’s combative phone call, and Obama’s failure to prevent China’s maritime gains, U.S. credibility has been eroding in Australia for some time now—and China is eager to pick up the pieces.

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  • KremlinKryptonite

    There is no such thing as a “Trump vacuum,” and when you read such a thing you can be sure that the author does not know how trade works, particularly in this case, or what they are talking about generally.
    Foreign Minister Julie Bishop points out that never before has Australia’s chief ally (US) and top economic partner (PRC) existed in a competitive relationship. Complicating matters significantly is Beijing’s habit of employing economic tools to punish perceived foreign policy transgressions.

    Col. Tom Hanson, the Assistant Chief of Staff at U.S. Army Pacific, said it more succinctly, “The time has come for Australians to make a choice. It’s very difficult to walk this fine line between balancing the alliance with the United States and the economic engagement with China,” adding that “there’s going to have to be a decision as to which one is more of a vital national interest for Australia.”

    • Unelected Leader

      Yes, and don’t forget the leading source of FDI into AUS is the USA. China isn’t even in the top five.

  • Andrew Allison

    You don’t suppose the fact that Australia’s exports to China are more than double those of the second largest market (Japan), representing 32% of the total, have any influence?

  • Fat_Man

    China is perfectly willing to let Australia be its prison spouse. China will buy raw materials and minimally processed agricultural products by the ship load. China will not let outsiders control industrial facilities in China. China will not let foreigners keep their intellectual property. They will either steal it, or strong arm the foreigners out of it. Have fun with China, Austrailia.

    • Suzy Dixon

      Yes, Successive Australian governments put themselves in this predicament. They jumped into bed with China, and it’s not an equal relationship because Australia is not a powerful state and has a very small population. Welcome to the real world Australia, here’s your cup of tea and a moon cake.
      Now, the Chinese can tell them not to allow US bombers to take off from Australian airfields, or Australian planes to take off on surveillance runs from Malaysian air fields, etc., and Australia has to take it or face real consequences.

  • Jacksonian_Libertarian

    Trusting the Chinese wouldn’t be wise.

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