The Australian

By Dennis Blair

The American relationship with Australia is unique and American expectations of the alliance are both global and regional.

Only a few nations feel a responsibility to support the formal and informal agreements, understandings and practices that underlie the global economic and security order from which all nations benefit. Fewer still are willing to spend diplomatic capital and effort, economic resources and military deployments to support them.

That international order is not a Pax Americana, nor is it the orderly and lawful world envisioned in the UN charter. It is a much more modest but vital construct in which there are limits on aggressive international and brutal domestic behaviour, and in which dictators are contained and on occasion removed from power. It is an order in which massive suffering is relieved.

On the economic side, it is a general commitment to freer trade and to making compromises in economic disputes in the interest of greater common prosperity. It is an order in which international co-operation is expected to deal with cross-cutting common dangers from global warming and environmental pollution to drug dealing and international crime.

The US counts on Australia as one of the handful of countries that feels a responsibility for supporting these arrangements and for contributing real resources, commensurate with its size, to address challenges to the order when they break out.

Australia plays this role in concert with the US and similarly committed countries in many different ways.

US and Australian ambassadors and their country teams work closely together in the world's trouble spots and in the headquarters of international organisations; Australian military commanders and their staffs and units continually plan and exercise with American regional commands; Australian intelligence agencies and their American counterparts continually compare views of developments in the world.

The alliance's regional aspect has elements of the global relationship, but separate characteristics. Australia is not America's deputy for its part of the world. Rather, Washington counts on Canberra to keep close watch on Southeast Asia and Oceania, to develop policy responses to crises that arise, confident that they will be policies and responses that the US will share and support.

The most controversial issue in the US–Australia relationship is how to deal with a rapidly rising China. From a global perspective, few Australians would prefer the Beijing order to the Washington order. However, from a regional perspective, Beijing's growing power and influence are simply a reality. In addition, the bilateral trade between Australia and China is coming to dominate Canberra's economic considerations.

Serious Australians publicly worry about Canberra being forced to choose between the US and China, between their traditional security ally and their dominant new export market.

From the US point of view, there is less to this dilemma than meets the eye. After all, America also has strong economic ties with China. America strongly favours China's integration into the world economy and believes it will lead to mutual benefit.

Neither the US nor Australia believes that China's view of economic relations is the same as its own.

Despite its membership in the World Trade Organisation, China does not hesitate to wield its economic muscle to support its security and development objectives. China's theft of intellectual property from American and other international companies is rampant. Australian citizens have been arrested and jailed for business practices that only China considers crimes. To pressure Japan and The Philippines, China has restricted the export of rare earth metals; permitted, if not encouraged, nationalistic boycotts of Japanese automobiles and other goods; and cut off imports from The Philippines.

Despite these challenges, American and Australian companies are increasingly making profits in China.

However, it would be foolhardy from a security viewpoint for either country to allow the Chinese market to dominate its economic future. China will not hesitate to use what influence it has for all its security objectives.

It would also be unwise from a purely economic viewpoint to become dependent on the Chinese market, since the economic future of China is increasingly uncertain.

The Chinese economic formula of the past — export of manufactured goods with cheap labour, heavy government infrastructure investment, foreign direct investment and scant consideration of environmental impacts — cannot be sustained in the future.

Chinese wages are rising rapidly, its workforce is beginning to shrink, there are fewer opportunities for productive infrastructure investment, international companies are looking elsewhere to invest and build, and Chinese popular opinion is demanding a cleaner environment.

Chinese economists and some of its leaders know that it must shift to an economy based more on private companies, domestic consumption and best environmental practices, but entrenched interests — state-owned enterprises, local governments — and a consensus-style of leadership will make change difficult.

Purely from an economic point of view, heavy dependence on the Chinese market does not make sense. To avoid dangerous dependence on a single national economy, Australia should seek diversity in its export markets.

Americans would find it difficult to understand economic relations with China causing Australia to draw closer to China's view of the future of the Asia-Pacific region.

That Chinese view is based on a nationalist concept of the region, rather than the concept of promotion of common goods that the US favoured during the period when its ability to dominate the region was unchallenged.

The Chinese view includes territorial claims that all its neighbours consider excessive, exclusive economic zones that maritime nations consider too restrictive, tolerance of brutal regimes such as North Korea and Myanmar, and a preference for bilateral relations based on relative power balances over international approaches that are based on common standards and common goods.

The US is not advocating a strategy of containing China.

Rather Washington, with the support of most of China's neighbours, is supporting policies of solving disputes by peaceful means, without military and economic coercion, based on compromise and common principles, but supported by a common resolve to oppose unilateral attempts by China to gain advantage. This is also the most prudent and consistent approach for Australia to take.

As it looks to the 21st century, Australia can take comfort from the successes of the past. In the 20th century, Australia and the US resisted unilateral military attempts to gain national advantage in East Asia, while sharing peaceful economic and diplomatic power and influence. They halted and defeated Japanese military aggression and then welcomed peaceful Japanese development and increased authority and influence. They opposed Soviet aggression and have been ready to co-operate with Russia on many issues.

China's rise brings a new set of challenges, but there are many grounds for optimism. China is nationalistic and smarts from the consequences of its historical weakness, but it does not have the internationally aggressive communist ideology of the Soviet Union or the sense of racial superiority and entitlement of imperialist Japan.

China has bet its future on economic growth based on economic engagement with the world, and knows it needs a peaceful international environment to support that engagement.

China's rhetorical commitment to democracy in the long term, however belied by its present practices, may in fact be realised by a more prosperous and assertive citizenry. The single-party, majority Chinese Taiwan transitioned peacefully to democracy and one-party, majority Chinese Singapore is changing.

Australia and the US should remain true to their historical commitment to open governments and open international systems.

This article was originally published in American Review, the Centre's journal