Two recent developments hint at a weakening of the US dominated security system in East Asia. In September 2011, US President Obama told Congress that his administration would refit Taiwan’s F-16 A/Bs but would not provide next generation F-16 C/Ds. Prior to that, as China has become Australia's most important trading partner, a debate had emerged about Australia’s stance as a key alliance partner of the US.
Australia is an intriguing example of the dilemma facing many regional powers. In the last few years, China has become its most important trading partner, accounting in 2010 for 19.1% of trade (of AUS103 billion), ahead of Japan at 12.3% and the US at 9%. China took 22.2% of Australian exports in 2010, worth some AUS64 billion, while Japan took AUS45.7 billion worth of goods. Rates of growth in Chinese trade are also strong, with exports growing by 34% in 2010 compared to 13.4% for trade with Japan. China was also the third most important source of foreign direct investment into Australia in 2010.
In short, Australian economic dependence on China is significant and growing. This situation has good aspects. Australia ran a large trading surplus with China in 2010, presenting a pleasing contrast to the US or European economies (excepting Germany). The fiscal windfall has also permitted the government to run counter-cyclical economic policies. Yet it also has bad aspects, such as an overreliance on commodity exports and a risk of Dutch disease owing to the high price of the Australian dollar.
This economic relationship is also intensifying the strategic dilemma facing Canberra. Australia’s main security relationship is with the US, through the 1951 ANZUS Treaty and other strategic commitments. These links originated in joint efforts to defeat Japan in World War Two, but evolved to see Canberra through the Cold War years and concerns about Indonesia in the 1990s. The perception of Jakarta as a threat to Australia has faded, though, as that country has democratised. Most states in South East Asia are now on good terms with Australia, and in any event lack the wherewithal necessary to attack, given the distances involved and Australia’s own military capacity. Accordingly, the biggest potential threat to regional security now derives from the rise of China and any potential US response to that systemic shift. It is that change which has prompted Australians to ask questions about the alliance’s merit.
In this context, in September 2010, Hugh White, a professor at the Australian National University in Canberra, outlined his view of Australia’s strategic dilemma. White argued that the best outcome for Australia of China’s rise would be US acceptance of Beijing’s new status in a “Concert of Asia”. White contrasted this benign scenario with any American effort to contain China’s growing influence, which might provoke friction, even war, between the two powers, with major implications for Australian national security. White then set out a range of policy options, such as retaining close ties with the US, moving towards China in strategic terms, adopting a policy of armed neutrality on a Swiss or Swedish model, and building an alliance with South East Asian states. He also raised the prospect of fading into a weak neutrality, as New Zealand has done, simply by failing to make a difficult choice. This debate has revived in the last few weeks as new trade figures have reinforced the scale of Australian reliance on Chinese growth.
It is hard not to see the debate in Australia as a sign of the weakening of the US led “hub and spoke” or San Francisco (after the US treaty with Japan) system, particularly because the debate has arisen notwithstanding the Obama administration’s much publicised “return to Asia”. After all, the system is strong but fragile; commentators have long argued that the failure of the US to fulfil its obligations to one party would render the other alliances worthless. Australia is the southern anchor of the system, and its departure would seriously weaken US ambitions to provide security in East Asia.
For all the strategic merits of White’s argument, though, they still do not match public opinion in Australia, which looks back to military achievements at Gallipoli in World War One and alongside the US in World War Two. Australia’s liberal democratic tradition also leaves its public deeply suspicious of Chinese intentions. Canberra thus remains tied the US by history, as are other US allies such as South Korea, Japan, Taiwan and the Philippines, which comprise the other “spokes”. Furthermore, China’s increasingly assertive foreign policy has driven these powers closer to the US despite the economic relationships.
For the moment, then, the “hub and spoke” system is sound. Yet this debate in Australia highlights the system’s growing vulnerabilities. Its component parts all hope to avoid choosing between Washington and Beijing, but a sense is growing that sooner or later a choice is inevitable. Any such move would alter the balance of power in East Asia significantly, with unpredictable consequences.