The last fortnight witnessed a few key developments in the Indo-Pacific region. The most significant one for Australia, was the Morrison government’s announcement of a $44 million National Foundation for Australia-China relations to deepen bilateral engagement in private sector, NGOs, government agencies and cultural organisations. In Foreign Minister Marise Payne’s words, the aim is ‘to turbo-charge our national effort in engaging China’. This is the latest Australian overture to Beijing, since Prime Minister Malcolm Turnbull launched a bid to ‘reset’ relations with the People’s Republic of China in September last year. Nonetheless, Australia has displayed a clear-eyed approach to China and despite the so-called reset, has taken steps to secure its own strategic interests vis-à-vis Beijing, such as the decision to prevent the Chinese company CK Infrastructure from gaining a majority stake in one of our main gas networks.

Our Trans-Tasman neighbour New Zealand, however, is culpable of trying to appease China. Prime Minister Jacinda Ardern visited China last week, where she reassured Beijing that her country wouldn’t discriminate against Chinese companies, in a marked reference to Huawei and ZTE. After the meeting, Chinese President Xi Jinping remarked that China-New Zealand relations ‘have become one of the closest between China and Western developed countries’. She was criticised because she didn’t publicly talk about or apply pressure on China with regard to its incarceration of millions of Uighur Muslims; Ardern had very recently earned global praise for her compassionate handling of the Christchurch terror attack and its aftermath. On New Zealand’s participation in China’s trillion-dollar Belt and Road Initiative, Ardern is reported to have remarked that Wellington ‘does not pick sides’, referring to US, Australia and India’s opposition to the mega-initiative.

The Australian government released its budget last fortnight. For the purposes of our discussion, it’s worth noting that the government has increased funding for counter-terrorism and counter-intelligence operations. There’s also been an increase in the defence budget, in keeping with the goals set out in the 2016 Australian Defence White Paper. However, foreign aid has taken a substantial hit, putting ‘Australia even further away from international goals to commit 0.7% of gross national income to foreign aid’. Australia has dropped in foreign aid rankings among OECD nations from 13th to 19th position. The aid budget has seen another change, with the majority of resources now to be diverted from Asia to the Pacific. Experts lament that this might ‘risk making Australia irrelevant in Asia’.

India has announced that it will boycott this year’s Belt and Road Forum in Beijing, in protest against the China-Pakistan Economic Corridor, which violates its sovereign claims over Pakistan-controlled Kashmir. This comes amid India’s overall tactical policy of reset with China, in place since the Wuhan summit between Narendra Modi and Xi Jinping in April last year. Nonetheless, New Delhi will send two of its warships, INS Kolkata and INS Shakti to the Chinese navy’s 70th anniversary celebrations later this month, even as the US has decided to boycott the event.

Following New Delhi’s successful anti-satellite missile test last month, it’s been revealed that India had originally conducted a test on 12th February but it had failed. NASA condemned the space debris created by India’s test, and suspended cooperation with India’s International Space Research Organisation, which it ultimately resumed after directions from the White House.

Philippines’ President Rodrigo Duterte is facing a popular backlash after his ‘weak response’ to China’s usurpation of Filipino rights in the South China Sea. It’s reported that hundreds of Chinese vessels have been sighted off the disputed Pagasa or Thitu Island since January this year. Duterte is accused of setting aside the territorial dispute to pursue friendly relations with Beijing. In response to the recent provocation, Duterte threatened military action if Chinese ships touched the island. The US, meanwhile, has stepped in to strengthen ties with its Asian ally and Filipino foreign affairs secretary Teodoro Locsin recently remarked that Washington ‘…will remain our only military ally. We don’t need any other.’ In March this year, the US had reassured the Philippines that it would come to its help if tensions flared in the South China Sea, under the terms of its military alliance.

Maldives has witnessed yet another successful democratic churn, with its largely free and fair parliamentary elections yielding unanimous support to the current president’s Maldivian Democratic Party. Maldives has a presidential form of government and the recent elections were US equivalent of the Congressional elections. Interestingly, the incumbent president, Ibrahim Mohamed Solih has won support on his mandate to reduce the island nation’s dependence on China to avoid its debt trap. The leader of the MDP, Mohammed Nasheed, who was in exile for the last few years, has now returned to the country. Both Nasheed and Solih are in favour of strengthening relations with Maldives’ traditional security provider, India. New Delhi granted aid worth $1.4 billion to the Maldives in December last year, shortly after Solih’s victory in the presidential elections.

On another note, Japan announced the name of its new imperial era, ‘Reiwa’, which would begin on the 1st of May after Prince Naruhito will take over the reigns from Emperor Akihito.

Significance for Australia

The announcement of the National Foundation for Australia-China Relations is a welcome step taken by the Morrison government. However, as Michael Shoebridge points out, any engagement with China should reflect the geo-strategic reality of Beijing’s emergence as a challenge to the rules-based order in the Indo-Pacific region. Australia’s policy on China, he writes, ‘needs to be able to manage both the panda and the dragon’. Australia has nonetheless displayed overall policy prudence on Huawei and other decisions, New Zealand’s drift towards Beijing, might be disconcerting for Canberra. As a fellow member of the Five Eyes alliance, Wellington would risk making itself vulnerable to Chinese espionage, jeopardising the security of the US-led intelligence-sharing partnership.

Australia’s budget has been received with positive feedback; however, our foreign aid cuts would severely undercut our ability to project influence in developing countries and deliver a blow to our soft power. This is even more unfortunate given that we have a budget surplus and a robustly growing economy.

India’s policy on the BRI would lend some reassurance to Australia as we’re on the same page on opposing opaque Chinese investments and creation of debt traps in developing countries. As we seek to build stronger relations with India in the Indo-Pacific, New Delhi’s consistent policy on the BRI creates further grounds for deepening cooperation between our two democracies.

The growing tensions between the Philippines and China in the South China Sea are a cause for deep concern to Australia. As a US ally, Australia would find itself drawn to any conflict between the US and China in the region and that would present Canberra with stark choices. Australia would hope for a peaceful settlement to the disputes but should prepare for any eventualities given the mercurial personalities of Duterte and Xi.

Maldives’ democratic turn-around in recent months, after a long period of political instability would be welcome to Australia. The case offers hope for the ability of smaller nations to push back against China’s attempts to buy undue influence through the BRI, and provides a positive reinforcement of the place of democracy and the rules-based order in the Indo-Pacific region.


Aakriti Bachhawat is a Researcher with the Defence and Strategy team at the Australian Strategic Policy Institute, and Research Assistant at the Griffith Asia Institute.