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    Greater China
     Apr 17, 2008
Man at work: Rudd walks Asian tightrope
By Tanja Vestergaard

LONDON - Under the new premiership of Kevin Rudd, who came to power in November last year after winning a landslide election, Sino-Australian relations are growing closer - strategically and economically.

Rudd's visit to China last week, his only stop in Asia as part of his first world tour, served to carve out Australia's future relationship with the Asian giant setting the stage for an era of what Rudd has termed "true friendship" defined by constructive engagement delivered with a frank openness that does not rule out criticism. Rudd's accession to power has been widely welcomed in Beijing.

Notably, his Mandarin language skills and his position as a former diplomat in Beijing have made him more amicable to improving

relations with China. Meanwhile, the importance of maintaining healthy ties with China has been put into relief by the pivotal role played by the China's inexhaustible demand for resources fueling Australia's ongoing commodities boom, a key driver of the country's buoyant economy.

During Rudd's visit to China, following stopovers in the US and Europe, his capacity to engage in effective diplomacy with China, drawing on his solid diplomatic career, was put to the test. As the first political leader to pay China a visit since authorities launched a heavy-handed crackdown on unrest in the autonomous region of Tibet last month, Rudd faced significant pressure to raise the issue while at the same time attempting to avoid jeopardizing vital economic and business interests. His visit was not dominated by a strong focus on Tibet.

Rudd succeeded in cementing already close ties with China despite airing vocal criticism of the government's controversial human rights record. He thereby heeded calls to openly address the issue of Tibet, which many countries have sought to circumvent in the name of maintaining healthy trade relations with the economic powerhouse as the country seeks to use the upcoming Beijing Olympics to showcase its rise to great power status.

In a much-cited speech given at Beijing University, Rudd spoke out against China's human rights record and crackdown in Tibet, skillfully adopting an old Chinese term alluding to Australia's position as a "true friend" (zhengyou), "a partner who sees beyond immediate benefit to the broader and firm basis for continuing, profound and sincere friendship". As a result, Rudd redefined the rules of engagement, refusing to placate the Chinese government by silently accepting its policies on all counts while simultaneously emphasizing the importance of the Sino-Australian partnership.

In this respect, the Chinese official media has chosen to overlook his critical stance on issues ranging from development, to the environment and human rights, moving instead to enthusiastically embrace the new Labor government's offering of "true friendship".

Rudd's skilful maneuverings, based on his experience with the ways of Chinese diplomacy, as well as its growing importance as an ally in strategic and economic terms, have afforded the new prime minister a chance to put the Sino-Australian relationship on a new footing as the importance of the Asian power continues to grow in regards Australia's foreign policy. As indicated by its first half a year in power, the Rudd government may, however, faces some hard choices in formulating policy as moves to elevate close relations with China may well come at the price of weakening other bilateral ties in the Asia-Pacific and beyond.

Asia on the ascendant in Australia's policy
When the new Labor government under Rudd took power in Australia in November 2007, some observers held it to be a watershed in Australian politics, spelling an end to the 11-year rule of John Howard and his prioritization of the long-standing alliance with the United States and the United Kingdom in foreign policy in favor of a greater Asian focus. While Rudd has not forsaken long-standing ties with the US despite his critical stance on issues such as the environment and troop deployment to Afghanistan and Iraq, he has indeed sought to direct Australia's foreign policy further towards Asia, holding China as well as India to be "core parts of Australia's economic future".

Strategic dialogue launched
As part of efforts to build closer bilateral relations, the two countries launched the first round of Sino-Australian strategic dialogue on February 4-5, ushering in a new era in bilateral ties. This saw Australian Foreign Minister Steven Smith meeting his Chinese counterpart Yang Jiechi in Canberra where the former expressed support for China on a number of counts, including strategic relations in the Pacific and the environment.

The strategic dialogue was in fact launched prior to Rudd's accession to power by his predecessor John Howard and Chinese president Hu Jintao, who agreed on the measure in Sydney last September. The diplomatic forum has been embraced by Rudd and paves the way for long-term engagement as China has taken on a key role in Australia's foreign policy, with its energy diplomacy having tied the respective economies closer.

It is already set to be followed by a second round later this year and mirrors similar dialogues that are currently taking place between China and the US, albeit in the economic sphere, and between Australia, the US and Japan focusing on defense and strategy, with the latter seeing India invited to partake last year. The Sino-Australian strategic dialogue holds the promise of further deepening of ties between the two nations. It, however, also presents a new set of challenges as improving ties with Beijing may adversely affect Canberra's relations with its key strategic ally the United States and its long-term main trading partner Japan, as well as clouding prospects for its stated goal of improving ties with India.

Dispelling China's encirclement fears
Sending a clear signal to its long-term alliance partners the US and Japan, Australia used the first round of strategic dialogue to assure China that it will no longer participate in the quadrilateral strategic dialogue involving India that was launched last year. With this significant shift in policy, the Rudd government effectively narrowed down the forum to its initial trilateral framework.

This strategic grouping, counting Australia, the US and Japan, known under the heading of "the Arc of Democracies", came to fruition at a security forum held in March 2006, attended by US Secretary of State Condoleezza Rice, then Australian foreign minister Alexander Downer and former foreign minister of Japan Taro Aso. The US has long viewed China as a "strategic competitor", pursuing a policy of establishing bases on its periphery in the Asia-Pacific, including in Japan on the country's doorstep.

The trilateral security grouping has not surprisingly been viewed by China as a means of containment, with the Beijing government repeatedly criticizing such US foreign policy moves as emanating "Cold War mentality". The 2006 tripartite strategic dialogue was followed by the signing of the bilateral Japan-Australia Joint Declaration on Security Co-operation in March 2007, coming at a time when the Japanese government, then under the leadership of hawkish prime minister Shinzo Abe, was bent on a policy of normalization in foreign policy.

Japan's move to sign a strategic military partnership agreement with Australia, its only comprehensive security agreement besides its long-standing security pact with the US, was viewed by China as seeking to extend what was widely considered as a containment doctrine, thereby intensifying the country's sense of encirclement. Given preceding events, the Chinese political leadership was naturally irked by the move of the trilateral security grouping to invite its long-term rival in the region, India, to join talks in 2007. Beijing castigated the move to include India as yet another bid to balance its rise to great power status in the Asia-Pacific and beyond.

Considering India's legacy of non-alignment and commitment to strategic autonomy in foreign affairs, it is doubtful to what extent it would have been supportive of firmly establishing itself as part of such a framework in any case. However, the symbolic move - coming after the US concluded the controversial 2006 nuclear agreement and the new Framework for US-India Defense Relationship the previous year - did not elude Beijing.

Given such concerns over the past years, China has every reason to approve of the budding Sino-Australian strategic dialogue as it serves to assuage Beijing that a solid encirclement campaign spearheaded by the US, including India, will not win the unconditional support of Canberra. Such prospects are in any case increasingly mediated by China's growing importance for its long-term strategic competitors, having grown to become the largest trading partner of all the countries included in the so-called "Arc of Democracies".

The price of improving ties with China
In establishing closer relations with China, tensions between the Asian giant on one hand and the US and its key Pacific ally, Japan, on the other in terms of trade and strategic relations have presented Australia with a challenge.

The US has long been Australia's key ally, a partnership that has been cemented under the Liberal John Howard government, with Australia deploying troops to both Afghanistan and Iraq to assist in its ally's "war on terror", in consequence spurring consternation in various parts of the Pacific. Rudd has, after coming to power, reaffirmed Australia's close relations with the George W Bush administration, albeit advocating a softer and more multilateral foreign policy stance than that of his predecessor.

Under Rudd's rule, Australia faces the task of balancing its national interests between its key strategic partner, the US, and what has grown to become its most important trading partner, China. The country has notably emerged as a major market for Australian raw materials, notably minerals and petroleum, with Western Australia supplying some 40% of China's iron ore imports.

China has as such gained increasing influence in Australia as evidenced by the recent acquisition of mining multinational Rio Tinto by state-owned Aluminum Corp of China (Chinalco) orchestrated in coordination with US-owned Alcoa Inc in what was China's largest-ever foreign investment. The move prevented Australian-based mining giant BHP Billiton from acquiring it, triggering signs of an emergent economic nationalism in Australia, whose Treasury subsequently launched a set of principles to guide foreign investment in the country and to pre-empt this from becoming overly concentrated in one sector.

The establishment of closer ties with China may come at the price of concerns of economic nationalism at home, while being balanced by its pivotal role in strengthening the economy. This is also the case in the realm of foreign policy, where the price of closer ties with China may be inadvertently weakening ties with India in strategic affairs, and potentially with Japan.

Australia and India: Trade over strategy
The Rudd government immediately showed its face as regards to prioritizing between Asia's two giants - China and India - in the sphere of strategic relations, announcing in January that Australia would scrap a deal that was signed by the Howard government in August 2007 concerning the sale of uranium to India.

The new Labor government rejected the deal on the grounds that India was not a signatory to the nuclear Non-Proliferation Treaty (NPT), returning to Australia's long-term stance on the issue following the Howard government's departure with this position. The volte-face by the Rudd administration on the sale of uranium to India came as a significant loss to India's energy security needs given that Australia holds the world's largest reserves of uranium, amounting to some 40% of supplies worldwide.

The move has further created a hindrance to India's ability to gain approval for the US-India Nuclear Agreement at the International Atomic Energy Agency (IAEA) and the Nuclear Suppliers' Group (NSG). The promulgation of non-nuclear proliferation and disarmament is likely to take on greater importance in Australia's foreign policy under Rudd's leadership. Australian Foreign Minister Steven Smith has expressed a greater commitment to such a policy agenda, calling on various countries to ratify the Comprehensive Nuclear-Test Ban Treaty in order to bring it into force. Australia's potential push to take on a leadership issue in this area meanwhile precludes the use of uranium exports as a means to establish closer relations with India. While Rudd has recently reiterated that both China and India are "core parts of Australia's economic future", such choices are set to alienate the latter, thereby making it a challenge to nurture a close relationship, at least as regards high politics and strategic relations.

Australia's stance has in this respect relegated the process of deepening bilateral relations to the sphere of trade, at least for now. Growing ties have been made manifest in this area, with total trade increasing by 32% year-on-year reaching US$10.6 billion) in 2007 alone. India has come to take the place as Australia's ninth largest trading partner, while Australia is ranked as India's tenth largest.

Australia has so far shown its willingness to further improve ties in this sphere. Australia's Trade Minister Simon Crean held discussions with his Indian counterpart Kamal Nath in January, expressing Canberra's interest in having India join the Asia-Pacific Economic Cooperation forum and launching preliminary talks on negotiating a free-trade agreement. A feasibility study on this will be launched in New Delhi this week. The question remains as to whether Australia will succeed in establishing a comprehensive bilateral relationship with India given its reservations in the strategic sphere.

Australia and Japan: A fading alliance?
Increasingly close ties between China and Australia have grown to become a cause of real concern in Japan - a key ally of Australia - with fears being that the long-standing alliance may fade as a result. In the realm of strategic affairs, the Australian prime minister has made clear his opposition to the landmark bilateral security pact struck by the Howard government and Japan last year.

The move came after North Korea moved to conduct its first nuclear bomb test in October 2006, followed by China firing its first anti-satellite missile in January 2007, raising concerns of stability in the region and China's growing military might. The defense agreement effectively made Australia Japan's second-most important defense ally after the US. The deal inked between the two countries paved the way for increased cooperation in the areas of joint military exercises, counter-terrorism and intelligence sharing and was widely considered a step towards containing China by Beijing despite Japanese and Australian claims to the contrary.

Meanwhile, China has also replaced Japan as Australia's largest trading partner, taking away its long-term predominance in this area. Australia and Japan are nevertheless planning to commence free-trade talks, but bilateral tensions have increased in recent months as the Rudd government has taken a lead in seeking to halt Japanese whaling in Antarctic waters.

The whaling issue took on prominence in the international media in January when dramatic scenes came to the fore as a Japanese whaler kidnapped environmental activists who had been chasing it, inflaming anti-Japanese opinion in Australia. Adding to already strained relations, the Federal Court of Australia that month passed a ruling holding that the annual Japanese whaling fleet had breached the Environment Protection Act by hunting whales in the whale sanctuary in Australia's exclusive economic zone and Antarctic Territory, which is not recognized by the Japanese.

Such incidents have helped to create a constructive environment for the planned commencement of free-trade talks between the two countries. Rudd's decision to not include Japan has not gone unnoticed; Japanese media and officials have lamented it and being echoed by the Australian opposition. Such moves spurred Rudd to hastily schedule a visit to Japan in June before participating in the G8 summit there in July. However, the Australian-Japanese friendship has been significantly closer in the past and Rudd is set to face challenges as he seeks to balance Japan's long-term importance with the ascendance of China on the foreign policy agenda.

The Pacific: an 'arc of instability'
In Australia's traditional sphere of influence in the Pacific, China has taken a growing role as it has come to be one of the focal points for Chinese-Taiwanese rivalry and the checkbook diplomacy that has followed in its wake. China's aid diplomacy in Pacific countries, such as the Solomon Islands, Papua New Guinea, Fiji and Samoa, has come under criticism for fueling corruption and, in some cases, fomenting political instability and ethnic violence. For example in the 2006 Solomon Islands election that saw anti-Chinese riots and the disposal of the prime minister.

Ensuring stability in the Pacific is set to remain high on the foreign policy agenda of Rudd, as it did during Howard's term. His Labor Party, immediately ahead of winning the 2007 elections, held that instability in various Pacific islands, including East Timor, the Solomon Islands, Fiji, Tonga and Papua New Guinea, made for an unstable neighborhood, coining what has commonly come to be known as Australia's "arc of instability" instead as its "arc of responsibility".

Rudd has, however, made it clear that he hopes that his administration can reverse criticism leveled against his predecessor in regard to his interventionist policy aimed at addressing high levels of crime, corruption and ethno-political tension in a bid to prevent states from failing. Such policies have over time earned Australia a tag as the "regional sheriff of the Pacific".

Rudd has launched a bid to revive relations with the Pacific, undertaking in March of this year a charm offensive to Papua New Guinea and the Solomon Islands after bilateral relations had soured under the Howard government. During the visits he made pledges of fresh aid as mutual conciliatory measures materialized, declaring at the end of trip that relations with the Pacific were "back on track" and vowing to host the Pacific Islands Forum in 2009 for the first time since 1994.

While Rudd's style may be more conciliatory than that of his predecessor, his stance so far does not signal any major changes in foreign policy. His willingness to intervene in the region when deemed necessary was proved at an early stage. He quickly reinforced the Australian-led International Stabilization Force (ISF) in East Timor in February, paying two visits to the nascent nation after renegade soldiers attacked its political leadership, shooting and severely wounding President Jose Ramos-Horta and raising questions of long-term stability there anew.

Pragmatism replaces ideology
Australia's foreign policy under Rudd will be characterized by continuity as well as change, with China's growing importance for the country in economic and strategic terms propelling the adoption of a pragmatic approach.

While not undermining long-term strategic frameworks on which the US's hub-and-spokes diplomacy in the Asia-Pacific was built, China's emergence as a great power in strategic and economic terms in the region is set to test foreign policy concepts taken for granted during the Howard administration.

In the face of growing Chinese investment in Australia accounting for its resource boom, it can no longer necessarily afford to spearhead an ideology deeply cemented in the Pax Americana as promulgated by Howard. However, this is not tantamount to placating the wills and whims of the Chinese government as made manifest on Rudd's world tour this April, with the newly coined "true friendship" seemingly being characterized by equal measures of frankness and friendliness, which may help to dispel concerns among domestic critics of China growing economic influence.

The Rudd government nevertheless faces a balancing act as it integrates its new ally China into its foreign policy framework while seeking to define what is in Australia's national interest. This question is set to reverberate in the formulation of policy in years to come and has also emerged domestically in recent months, with the government potentially facing a wave of economic nationalism as China continues its unbridled resource diplomacy in Australia by way of fueling its breakneck economic growth.

Tanja Vestergaard is a research analyst with the Country Intelligence Section of Global Insight where she covers the Asia-Pacific. Prior to joining the company, she has worked for the Danish Foreign Ministry, the Danish Embassy in Beijing, China, and the London-based International Institute for Strategic Studies. The views expressed in the article are her own. She can be contacted at tanja.vestergaard@gmail.com

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