China has no room for maneuver against the US and Australia

We must not allow external forces to interfere in our regionThe Chinese president’s reply, Xi Jinping, to the recent signing between the US, the United Kingdom and Australia of the military pact AUKUS -the latest move by Washington to confront Beijing’s expansionist policy in the Indo-Pacific- heralded far-reaching repercussions throughout the region. His words after the agreement, the most evident proof to date of the Biden Administration’s desire to strengthen the military capabilities of its allies in the area, came a day after Beijing accused the signatories of the pact of “intensify the arms race“and demand that they leave behind” their mentality of Cold War”. “Otherwise, they will end up hurting themselves,” he warned. All this, just a week after the conversation between Biden and Jinping about how to avoid that the pulse between the two powers leads to a conflict.

The mention of the “Cold War” is not trivial. Such rhetoric reflects the recognition by the Chinese Government that The US mobilizes its allies in the Indo-Pacific to counter the increasingly aggressive movements of Beijing in a strategic region, key to the world economy (30% of global trade circulates through it) and conformed by an intricate puzzle in which the interests of Japan, South Korea and Australia itself intersect, the aspirations of India as regional power and China’s territorial claims, currently engaged in one of the largest military expenditures in history. The AUKUS pact does not include an explicit reference to the Asian giant but US Government sources cited by Politico They admitted after the announcement of the agreement that this is another move by the Western allies to counter China’s rise in the military and technological fields.

The threats from Beijing were immediate. They came through the ‘Global Times‘, the international speaker of Chinese propaganda, quoting unidentified “military experts” warned that the deployment of nuclear submarines in Australia – one of the key points of the agreement – makes the country “a target of nuclear attack” if a conflict breaks out. All when relations between the two countries have deteriorated in recent years: Australia has passed laws to limit Chinese interference in its territory and requested an investigation into the origin of Covid-19, which angered Beijing; China, meanwhile, has responded with tariff hikes and limitations on Australian products like barley, wine, coal or meat, which has meant millions in losses for Canberra.

Beijing, however, has less room for maneuver than official propaganda claims. “At this time there are already sanctions against Australia, which in recent times increased its interdependence with China by opening up to its investments, to the point that Beijing tried to influence the 2018 elections. When Canberra ended that influence, tariffs came. The AUKUS agreement is the ratification that Australia intends to regain its independence“explains to La Información Alfredo Arahuetes, professor at the Faculty of Economics and Business at the Universidad Pontificia Comillas-ICADE and an expert in world economy. Despite the shock, China remains Australia’s main trading partner, with a bilateral exchange valued at 156,681 million euros in 2019.

As for the US, Arahuetes foresees even less consequences due to the mutual dependence between the two powers. “China has a strong commercial and financial dependence on its main customer. Chinese growth has been slowing since July and its strongest variable is exports. The US is one of its main markets, Beijing cannot afford a confrontation now, “he says. Of the three AUKUS signatory countries, The United Kingdom is the one with the weakest position in the face of possible economic retaliation from China, especially after Brexit. One of the pillars when building its new international relations was precisely the Asian giant. Beijing is the main investor on the island and London wanted it to be its biggest trading partner. “The British movement is logical from the point of view that the United Kingdom seeks its place in the world, it is possible that it is pursuing a free trade agreement with the United States. It may be that, in exchange for AUKUS, Washington considers that possibility,” adds Arahuetes .

For France, the big loser in this story, AUKUS has dealt a devastating blow to its diplomacy and its arms industry. The pact marks the end of a multi-million dollar agreement between Paris and Canberra, celebrated in France as the “contract of the century”, to build 12 submarines that would be used by the Australian Navy. “It’s a rag stab“, in the words of the head of French diplomacy, Jean-Yves Le Drian. Meanwhile, the Macron government appeals to review the alliances, an unease expressed with the call for consultations of its ambassadors in Washington and Canberra. It is an unprecedented measure; never before has Paris experienced such diplomatic tension with the United StatesNot even during his fierce opposition to the Gulf War.


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