Insight & Analysis

Taiwan-Strait tensions put squeeze on Australia

Published: Aug 2022

Australia is economically dependent on China, but reliant on the United States for its security. This puts the country in a tricky position when it comes to US-China tensions in the Taiwan Strait.

With the United States sending aircraft and warships to the Taiwan Strait, it looks like tensions with China show no signs of abating. Amid this situation, Australia finds itself walking a diplomatic tightrope, needing to balance its economic and security interests. So far, key spokespeople have taken a conciliatory tone. Australian Foreign Minister Penny Wong this week called for the two sides to de-escalate and return to stability, and Australia’s Defence Minister said there should be a “return to normal peaceful behaviour.”

As a culturally Anglo-Saxon nation in the Asia-Pacific region, Australia’s position is interesting as it is economically dependent on China, yet it depends on the United States for its security. Saul Eslake, Economist and Founder of Corinna Economic Advisory, comments that Australia has had a difficult economic relationship with China and is heavily dependent on it. This economic dependence has left Australia vulnerable to economic coercion, says Eslake.

Potentially, this could manifest itself if US-China tensions over Taiwan were to escalate further, with sanctions being imposed. In this situation, Australia could be hit with bans on its commodity exports to China, such as iron ore, which could massively impact its economy.

Australia-China relations have already been fraught in recent years. In particular, there have been flare-ups over Australia’s outspoken comments blaming China for Covid, the technology company Huawei being considered a risk to national security by Australia, and China being accused of human rights abuses in Xinjiang.

Dr Jennifer Hsu, Research Fellow, Public Opinion and Foreign Policy Program, Lowy Institute comments that there has been a recent thawing in Australia-China relations. Anthony Albanese became Prime Minister in May this year, and since then the tone has been less confrontational. However, Taiwan could still be a “sticking point” between China and Australia, notes Hsu.

There were signs of this after a recent speech by Xiao Qian, the Chinese Ambassador to Australia, at the National Press Club of Australia. The speech was entitled ‘Strive to Bring China-Australia Comprehensive Strategic Partnership Back on the Right Track’ and he spoke of the opportunity to reset the relations between Australia and China and promote mutual understanding. Also, he spoke of a need to change the perception of China and that it should be regarded as a partner – not a rival.

On the issue of Taiwan, he said that Nancy Pelosi’s visit was a “serious violation of the one-China principle and the provisions of the three China-US joint communiqués. It has a severe impact on the political foundation of China-US relations, and seriously infringes upon China’s sovereignty and territorial integrity.” He went on to emphasise that Australia had committed to the one-China principle. “The one-China principle is a solemn commitment by successive Australian governments. It should be strictly abided by and fully honoured. It should not be misinterpreted or compromised in practice. We hope the Australian side could take China-Australia relations with serious attitude, handle the Taiwan question with caution, but without discount,” he said.

His words were met with “deep concern” by Jim Molan, Senator for New South Wales, who expressed his alarm in an open letter to the president of the press club. He wrote, “His thinly veiled aggression, deflection and blame-shifting are, unfortunately, what we’ve come to expect from the increasingly belligerent Chinese Communist Party regime.” He continued, “Most alarming was the ambassador’s refusal to rule out force in ‘reuniting Taiwan with the motherland’, even discussing the planned ‘re-education’ of Taiwanese citizens that will happen when (not if) this occurs.”

Such comments are likely to be echoed in other quarters in Australia. Meanwhile, although other politicians are calling for a de-escalation in the Taiwan Strait, Australia may ultimately be squeezed and forced to choose between its economic and security interests if the situation worsens.

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