Thursday, January 20, 2022
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AUKUS tips scales against China in its trade war with Australia

The formation of AUKUS, a trilateral security pact between Australia, the US and the UK, in the Indo-Pacific region, has put China on the backfoot, undermining its objective of bringing Australia to its knees by unleashing a severe trade and tariff war against it.

Peeved by Australia calling for an independent inquiry into the origins of the Coronavirus in 2019, China launched a trade and tariff war against that country. It imposed restrictions and tariffs on several Australian exports like barley, sugar, wine, coal, and copper ore. Ties between the two countries which were warm till 2014, have since frozen. In 2014, Chinese President Xi Jinping went to Australia declaring a permanent friendship between the two countries and even signed a bilateral free trade agreement a year later. They became so close that Victoria state in Australia even signed a memorandum of understanding for the Belt and Road Initiative with the Chinese government.

However, things began to sour between them over Australia’s concerns that China was consciously expanding its political influence in Canberra. As the US-China relations worsened, Australia found itself increasingly difficult to maintain a balance between its ties with the two countries. In 2018, Australia publicly banned Chinese telecom giants Huawei and ZTE from building its domestic 5G network. The following year came Australia’s demand for a virus probe against China. That was the last straw.

China used its economic heft to launch an open trade war against Australia. Anti-dumping and anti-subsidy duties were dumped on Australia. Australian exports were sanctioned for unbelievable reasons. Imports of fish products from that country were inordinately delayed in customs, leading to losses. Australia largely weathered the onslaught but sometimes it buckled. Like, for instance, in the case of Australian wine. China imposed tariffs of up to 212 per cent. That crushed domestic Australian distributors and Australia’s share in the world’s wine import market nosedived from 40 per cent to six per cent in 2020.

By the beginning of this year, Australia appeared to weather the worst, trading in new products and finding new export markets. For instance, it re-directed its coal exports to India instead. Saudi Arabia became the biggest importer of Australian barley instead of China.

And now, the AUKUS security pact, announced in September, has led to further deterioration of the Australia-China relations with Beijing seeing the pact as a personal affront and a deliberate attempt by the troika countries to contain it. What infuriated China was the critical agreement in the pact that the US and the UK will share advanced nuclear submarine technology with Australia as also information about long-range strike capabilities, artificial intelligence, and underwater systems.

Where Australia saw the pact as a “strategic victory”, the Chinese voiced concern that it will lead to nuclear proliferation in non-nuclear states (like Australia) and destabilise security in the Indo-Pacific region. China has its biggest political stakes in this region.

Experts are now assessing who between Australia and China is hurt more because of the trade war and the AUKUS pact. The fact remains that while the trade war badly affected Australia it did not force the country to adopt a pliant approach towards China. On top of it, the AUKUS pact opens a new front of confrontation, with the US and the UK formally backing Australia.

China continues to spew venom at AUKUS, saying it will “induce a new round of arms race” and “undermine regional stability” by sabotaging the prospects of a “nuclear-free zone in South-East Asia”. They are certainly talking points, but they do not take into account China’s own provocations and belligerence towards its neighbours in the South China Sea and its role in escalating tensions in the region because of its military and naval build-up.

For China its threat perception over AUKUS is real. The distant worry of a US-led western coalition against China is now a reality. What is worse, China’s bete noire Japan has endorsed the trilateral pact and Australia is actually a party to it. China is convinced AUKUS is an attempt to contain its rise in its area of influence and that the US has roped in Australia as a key anchor for its Indo-Pacific strategy.

China tried to raise the bogey of nuclear proliferation, but the argument is falling flat in face of known facts. The use of nuclear material for non-explosive military purposes is not banned by the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). Secondly, Australia is not even a signatory to the Treaty of Southeast Asia Nuclear-Weapon-Free Zone (Bangkok Treaty). Thirdly, the South Pacific Nuclear-Weapon-Free Zone Treaty (Rarotonga Treaty) “does not place any restrictions on nuclear-powered vessels”. China, for instance, has its nuclear attack submarine fleet in the region.

Realising this, Beijing has shifted its criticism from nuclear proliferation to blaming Australia for “exploiting loopholes by playing dirty”, thus “tramples on the spirit of the Treaty on the Non-Proliferation of Nuclear Weapons”. That is mere rhetoric because the nuclear submarines are not expected to enter the Australian navy before 2040. However, China is still worried that the inclusion of the Tomahawk-type cruise missiles in AUKUS will give the west a decisive edge in the geo-strategic rivalry with China.

Peeling away the rhetoric reveals China’s real and absolute worry with the AUKUS pact. It has to do with the west involving Japan in its bid to contain China even without having to formally include Tokyo to join the pact. SupChina, a New York-based, China-focused news, information, and business services platform, put the finger on the pulse, reporting: “With Japan at one vertex and India at the other, Australia’s nuclear submarines will allow the Allies to close a “strategic triangle at the second island chain’s southernmost point, shortening the distance for reconnaissance, monitoring, and rapid response against China, as well as achieving long-range hypersonic precision strike capabilities.”

While the Chinese are concerned that Australia, thanks to AUKUS, will set a “dangerous precedent by becoming the first non-nuclear weapon state to possess nuclear propulsion technology”, they seem to forget their own role “in tipping the regional nuclear balance, such as its ongoing rapid expansion of its nuclear arsenal in hundreds of new silos and mobile ICBMs, its recent test of nuclear-capable hypersonic missiles, or even President Xí’s festive April commissioning of a nuclear submarine “to manage the South China Sea”.

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