If the Asia-Pacific picture wasn’t complicated enough already, Australia’s 2016 Defence White Paper (see below) is likely to make matters a whole lot murkier. Aside from a proposed 84 percent increase in its defence budget over the next decade (from $23 billion in 2016-17 to around $42.4 billion by 2025-26), the white paper’s references to the South China Sea are likely to cause ripples in the region — particularly in Beijing.
But before we jump into Canberra’s latest publication, it’s worth looking at what’s been happening in the South China Sea — in which Brunei, Cambodia, China, Indonesia, Malaysia, Philippines, Singapore, Taiwan and Vietnam have territorial claims — over the past month.
The story so far
Beijing appears to be accelerating its process of aggressive expansion that has been underway for the past two years — marked by the building of ports, military facilities and airstrips, while creating islands out of reefs. And this month alone, China has been accused of setting up radar systems, deploying missiles and even deploying fighter jets in the South China Sea.
An estimated $5 trillion worth of goods are traded through this sea, and the US has in the past, accused China of attempting to militarise this ‘key conduit for world trade’. Vietnam has criticised China’s moves in the South China Sea that “violate Vietnam's sovereignty, escalate militarisation of the East Sea, but also threaten peace, stability in the region, and maritime and overflight security, safety and freedom”
On its part, Beijing has accused the Philippines — that sought and achieved (in 2015) The Hague’s arbitration on its maritime dispute with China, with a verdict expected later this year — of ‘political provocation’, and insisted that Manila was the one to shut the door on bilateral negotiations.
Meanwhile, voices in Vietnam and the US are trying to drag India into the melee.
It may be recalled that in 2013, Vietnam had offered India seven oil blocks in the South China Sea. This was seen as no more than a strategic move since India is unlikely to ever drill there for oil, but it allows New Delhi to have some sort of presence in the region. This week, Hanoi reiterated its offer, inviting India “to explore and exploit resources within (its) 200-nautical-mile EEZ (exclusive economic zone)”. That this EEZ lies in one of the disputed sections of the South China Sea goes without saying.
The US, or more precisely, Republican senator John McCain has urged India and the US to consider joint patrols in the South China Sea. While the US government has dismissed this notion, McCain, the self-proclaimed ‘great fan’ of Modi opined that this would be “a very good time to announce that you are considering it (joint patrols)”. However, rather than trying to send a message to New Delhi, it appears that the plan was to send the message to Beijing, which unsurprisingly took the bait.
“We hope that… relevant parties would stop the so-called joint military drills and patrols, and cease constant reinforcement of military buildup in the Asia-Pacific,” said China’s foreign ministry spokesperson Hua Chunying.
Where does Australia fit in?
Australia is that strange piece of the jigsaw puzzle. You know the one. It looks a lot like it should fit into a particular gap, but the pattern doesn’t quite match up. And then it puts you into a quandary about whether you had assembled the other pieces incorrectly, and before you know it, nothing seems to make any sense.
In an article in July 2015, I had contended that the military strategies of the US, China and Japan had put them on a collision course in the Asia-Pacific region. Adding Australia to that mix is interesting because of what it has in common with the US and Japan.
China is Australia’s largest trade partner, with bilateral trade reaching around $115 billion in 2013-14, and in December 2015, the two countries concluded a free trade agreement that render 86 percent of Australia’s goods exports to China duty-free.
Japan ($50 billion bilateral trade in 2014) and the US ($44 billion in 2014) are Australia’s second and third largest trade partners respectively. Both these countries also count China as their biggest trade partner: China-Japan bilateral trade in 2014 was worth around $343.7 billion and China-US trade in 2015 was worth just under $600 billion..
That bilateral investment between the Australia and China stood at around $90 billion in 2015 and illustrate the fact that Beijing is a very important partner for Canberra.
At the same time, Australia, Japan, the US and India are part of what Japanese president Shinzo Abe described in an article in 2012 as ‘Asia’s Democratic Security Diamond’ (subscription required). He wrote about the four countries coming together to “form a diamond to safeguard the maritime commons stretching from the Indian Ocean region to the western Pacific”.
The phrase ‘caught between a rock and a hard place’ has rarely seemed as appropriate, and Australia has in recent history managed to deftly balance its relations with China on one hand and the US and Japan on the other. That is until September last year, when recently-sworn-in prime minister Malcolm Turnbull termed China’s activities in the South China Sea as ‘pushing the envelope’.
China’s foreign ministry promptly responded with a sharp rebuke expressing the “hope that Australia will stay committed to not taking sides on issues concerning disputes over sovereignty”.
What does the defence white paper tell us?
First off, the document recognises US-China relations as the ‘most strategically important factors in the Indo-Pacific region’ for the near future and identifies that the evolution of ties between Washington and Beijing will be ‘fundamental’ to Australia’s ‘future strategic circumstances’.
Pointing out that the US will ‘continue to be Australia’s most important strategic partner’, the white paper — much like Japan in 2015 — “welcomes and supports the critical role of the United States in ensuring stability” in the region.
This cannot have gone down well with China.
Claiming not to take sides on ‘competing territorial claims’, the document expresses Australian concerns about “land reclamation and construction activity” in the South China Sea, while adding:
Australia opposes the use of artificial structures in the South China Sea for military purposes. Australia also opposes the assertion of associated territorial claims and maritime rights which are not in accordance with international law, including the United Nations Convention on the Law of the Sea (UNCLOS).
This cannot — and as it turns out, did not —go down well with China, with the Chinese foreign ministry issuing another swift admonition. Expressing serious concern and dissatisfaction with the white paper’s ‘negative statement on issues concerning the South China Sea’, spokesperson Chunying added that “we definitely do not want to see tensions or arms race in the region”.
The last part is presumably an allusion to both, the document’s observations about China’s military rise, as well as Australia’s planned 84 percent increase in defence spending. A bit of perspective is useful here: In 2015, Australia had the 11th largest defence budget with the US (around $570 billion) and China ($191 billion) sitting atop the list.
According to the white paper, Canberra intends to devote funds to capital investment, sustainment costs, people capability and operating costs. And there doesn't seem to be a reason to be skeptical. After all, Australia is not going to be able to compete militarily with a belligerent China, and more importantly, stands to gain nothing from engaging the 'Middle Kingdom'. In fact, it stands to lose a whole lot more. For instance, Australian exports of coal to China have already been dropping, and threaten to drop further. Beijing has enjoyed warm relations with Canberra and will not be too keen to antagonise the land Down Under, unless it is truly provoked. Therefore, it would make sense for Canberra not to wade into the watery minefield that is the South China Sea.
At the same time, the US — that has already shifted its strategic focus from West Asia and Afghanistan to the Asia-Pacific — and Japan — in the process of shedding its pacifist interpretation of its Constitution — will be eager to secure the support of their ally in containing China. With enough South East Asian countries, including US treaty allies like the Philippines and Vietnam, apparently ready to join the effort, pressure on Australia is likely to mount.
Which way will Prime Minister Malcolm Turnbull steer his ship?
Only time will tell.
Read the full text of the Australian defence white paper here: