Right now, all China-watching eyes are on the National People’s Congress. However, there are lots of other things going on in the China world. This edition is to give a brief overview of what else is happening and what the ramifications for Australia can be.

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US pushback against alleged Chinese spy craft in commercial harbour cranes

Increasingly, allegations are coming from the United States that ports in the US are under threat from alleged spying devices found in Chinese-produced harbour cranes. Already at the end of last month, the Biden administration issued directives to ships and port facilities to report cyberattacks. At the same time, it gave the coast guard greater inspection powers of ships and port facilities. The administration also pledged to make greater investments over the next years in American-built cranes and port infrastructure that will pose less of a cyber security risk.

For Australia, the US pushback on Chinese-made equipment in port infrastructure has two ramifications. So far, it is unclear what the directive of the Biden administration’s directive means for other ports world-wide that use Chinese equipment and process goods and ships destined for the US. This means that it is also unclear in how for the United States might start exercising pressure on their allies to improve the security of their critical trade infrastructure as well. This is most likely to be the case for shipping facilities handling trade and exchange of goods with the US.

The second and potentially even bigger issue is the Port of Darwin. Australia conducted a security review last year to assess security implications of the 99-year port lease to a Chinese company. The outcome of that review was that there was no need to revisit or cancel the lease. However, in light of the most recent allegations coming out of the US and resulting also from a congressional investigation, pressure might be raised to revisit this decision. This is even more the case because the United States routinely rotate American military personnel through Darwin as part of its Marine Rotational Force. The US government is likely not going to be happy about the fact that it is stationing American troops in the vicinity of a Chinese-run harbour, while it is at the same time working on removing Chinese equipment from its own ports.

Like US pressure on its allies to ban Huawei from the construction of 5G networks in their countries, the issue of port equipment and related American security concerns have the potential to become a problem both for government authorities as well as for businesses operating port facilities.

 

Territorial clashes in the South China Sea

While Chinese policy makers meet in Beijing and ASEAN leaders travelled to Melbourne for the Australia-ASEAN summit, we have seen a renewed flare-up of territorial conflicts in the South China Sea. On Tuesday, a Philippine resupply ship and a Chinese coast guard vessel collided when the Philippine ship was on the way to resupply soldiers on a rusting vessel that the Philippines had grounded in Second Thomas Shoal in 1997 in a move to underline their territorial claims.

The stark confrontation that involved the collision of the Chinese and Philippine ships and the Chinese vessels use of water guns against the Philippine ship has been the most recent standoff in contested waters between the two countries. Relations between China and the Philippines over contested territories have been increasingly tense at least since the standoff over Scarborough Shoal at the beginning of 2012. Clashes between Chinese and Philippine vessels occur reasonably frequently and underpin the assumption that China is acting more belligerently and aggressively in the territorial conflicts in the South China Sea.

At the same time, it is important to keep in mind that the Philippines are not the only country with whom China has territorial conflicts in the region. Next to China and the Philippines, Malaysia, Vietnam, Brunei and Taiwan also claim different parts of the South China Sea as well. In contrast to the Philippines, however, these conflicts have attracted much less public attention and have been managed in a lower-profile manner. Considering the importance of the South China Sea as a major commercial shipping lane, it is therefore important to keep in mind the entire region and their different levels of engagement as well as conflicts with China. Stark and high-profile confrontation over territorial claims is not the choice of all countries in the region and their relations with China are less confrontational.

Keeping this in mind is even more important because China has increasingly framed the conflict as a move of the United States to interfere in geopolitics in the region. The blame game between China and the Philippines about who is responsible for the incident is well under way. However, at the same time, Chinese state media portray the clash as a result of a geopolitical struggle. Chinese state news agency Xinhua accused the US of using the Philippines as a “pawn” in its attempts to “destabilise” the region. Framing conflicts in this manner is potentially dangerous for all involved parties because it reduces foreign policy manoeuvring space for comparatively smaller powers in the entire region. The room for hedging and fence-sitting between China and the US is becoming increasingly smaller. If states do not want to partake in a geopolitical power struggle, they have to tread very carefully in this increasingly heated environment.

 

Australia-ASEAN summit in Melbourne

This week, leaders of ASEAN nations and Timor-Leste met in Melbourne to commemorate 50 years of partnership between ASEAN and Australia. On the sidelines of the summit, Australia also signed a “comprehensive partnership agreement” with Vietnam as well as a memorandum of understanding on cooperation in the energy and minerals sectors. This new partnership agreement elevates relations between Australia and Vietnam to the highest-possible level in the diplomatic pecking order of Vietnamese foreign policy. Additionally, Australia also signed an agreement with Laos to increase bilateral relations as well.

While none of these activities directly reflect on Australia’s relations with China, they are part of Australia attempts to boost engagement with other countries in the region. They form an element of Australia’s strategy to rebalance its economy and reduce dependency on China. Australia pledged the establishment of a $2 billion dollar Southeast Asia Investment Financing Facility in order to boost Australian investment in ASEAN countries. This is certainly an important step in increasing economic engagement in a rapidly growing and developing region.

At the same time, it is important to remember the diversity of ASEAN. ASEAN countries vary significantly in terms of the political systems they have. ASEAN members’ political systems reach from military-rule Myanmar over Communist Vietnam to representative democracy in the Philippines. At the same time, they have very divergent relations with China as well. The diverse political systems and different interests of ASEAN states have in the past frequently posed issues for the organisation that operates on strict principles of non-interference in other state’s internal affairs and organisational decision-making by consensus.

This diversity in ASEAN member states’ interests was also visible in this summit. All members were able to agree on calling for solving territorial conflicts in the South China Sea peacefully and without resorting to force. However, in the final summit declaration, no mention was made of the 2016 arbitration ruling in The Hague on the issue. In his press conference following the summit, Australian Prime Minister Albanese hinted at the need to reach consensus for the final declaration and the approach for dealing with the South China Sea issues was clearly an issue for this.

Independent of investment pledges and friendly summit declarations, the outcome of this meeting therefore indicates that ASEAN is an important partner for Australia. It also indicates that economic engagement can be deepened and there will certainly be economic opportunities for Australian businesses in the region. At the same time, however, it also makes clear that ASEAN is not a political forum for balancing against China. The interests of the member states are too diverse and so are their political and economic engagements with China. Ultimately, building good relations in the region is important, but reaching tangible outcomes for Australia will remain a case-by-case bilateral undertaking.

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