Australia has implemented some effective responses to the challenges posed by China to its security. But Canberra still lacks an overarching China strategy, writes Euan Graham in Australia’s Security in China’s Shadow.    

Australia has had one of the world’s most turbulent economic and political relationships with China in recent decades. In contrast to most advanced countries, Australia sailed through the 2008/09 global financial crisis thanks to natural resource exports to China. Then, the Australian government’s 2012 White Paper, “Australia in the Asian Century,” foresaw closer economic links with China being the source of Australia’s continued prosperity. But just eight years later, the Chinese government imposed severe economic sanctions on Australia, following the latter’s call for an independent, international enquiry into the origins of COVID-19.

In Australia’s Security in China’s Shadow, Euan Graham analyses the different aspects of the challenges that China poses to Australia’s security and assesses the efficacy of Canberra’s policy responses. Graham has been a close observer of Southeast and Northeast Asian security affairs through positions at the Singapore-based International Institute for Strategic Studies, La Trobe University, and the Lowy Institute.

In this new book, the author argues that Australia’s relationship with China presents a cautionary tale, “a warning of what lies in store when Western democracies pursue open-ended economic engagement with an authoritarian Marxist-Leninist party-state, heedless to the negative ramifications of dependency and fundamental political influence.”

The narrative begins with an overview of China’s influence operations and interference in Australian domestic affairs. It then tackles Australia’s economic relationship with China, which is based on the intense complementarity between their economies due to China’s high growth and inexhaustible demand for commodities, and Australia’s need for foreign capital to develop its economy. Indeed, Australia has had one of the world’s most “China-dependent” economies.

The next chapter focuses on recent changes and enhancements to Australia’s defence capability, alliance policy, and deterrent posture. Finally, the author analyses the China challenge for Australia’s regional statecraft in two sub-regions, namely maritime Southeast Asia and the Southwest Pacific.

Notwithstanding some ups-and-downs, Australia enjoyed fairly stable relations with China for some decades until around 2016/17 when, under the leadership of Prime Minister Malcolm Turnbull, Australia implemented counter-interference legislation and a ban on Chinese companies in the establishment of the country’s 5G system. Contrary to popular perceptions, Australia was not following Washington’s lead – rather it was ahead of the US in tackling these issues.

Graham’s analysis of many issues is insightful. When it came to imposing trade sanctions on Australia following its call for an enquiry into the origins of COVID-19, China miscalculated gravely. Most Australian exporters were able to find other markets for their products. Sanctions on Australia’s coal exports resulted in supply shortages, adversely affecting China’s energy markets. And China’s strong dependence on Australia’s iron ore was highlighted by its decision to not apply sanctions to this commodity.

What’s more, China’s economic coercion did not manage to change Australia’s policies regarding Taiwan, Xinjiang, Hong Kong or the South China Sea. “Australia’s ability to withstand punitive measures without suffering significant economic damage has sent a powerful signal to other countries that they need not compromise their foreign policy or sovereignty for the sake of commercial interests,” writes Graham.

In the defence area, Canberra has responded by boosting military spending, acquiring new, longer-range strike capabilities, and strengthening military integration within the US alliance. The AUKUS trilateral security pact is the most visible initiative, but there has also been a very substantial strengthening in the security partnership with Japan. Australia’s newly published Defence Strategic Review identified the return of major-power strategic competition to the Indo-Pacific as the “major feature of our region and time.”

Despite some positive developments, Graham also offers critical commentary. He laments the “Australian government’s reluctance to use counter-interference legislation to prosecute beyond a handful of cases,” which may have eroded its deterrence value. And he cautions that the Chinese Communist Party, the United Front Work Department, the People’s Liberation Army, and China’s intelligence services are all “learning organisations,” which are capable of adapting to restrictions on their activities.

The author also highlights the challenges for federal systems of governance in managing relations with China. Beijing has been able to bypass Canberra and build relations at lower levels of government which may pay little regard to national security in their decision making. The most notable example was the Victorian government’s 2018 Memorandum of Understanding on China’s Belt and Road Initiative, which in the end brought no concrete financial commitment from China and only ruffled feathers between Canberra and Melbourne. The national government belatedly implemented legislation enabling it to annul the Memorandum of Understanding.

Some of the harshest criticism is reserved for Australia’s academia where there is a “worrying degree” of elite capture. Graham argues that “Australia’s university sector presents elements of a national case study in microcosm and is a harbinger of the risks that are attached to a China-dependent business model, raising broader questions around the models’ corrosive effects on academic freedom and open debate within democratic societies.”

The author welcomes the active efforts of Australia’s new Labor government to invest in Australia’s relations with the Southwest Pacific, following a “recent history of relative neglect.” The decision by the Solomon Islands to pursue a bilateral security agreement with China in April 2022 highlights China’s growing interest in the sub-region. Graham believes that this sub-region offers Canberra the best prospect for shaping Australia’s security environment.

The conclusion that “Australia still lacks an overarching China strategy, much less a grand strategy” is troubling in light of the numerous studies and reports that have been undertaken in recent decades. He quite rightly notes that “accepting that the primary cause of Australia’s deteriorating relations with China is Beijing’s own behaviour has proved especially difficult for Australians who have been professionally or personally invested in a China-centred vision of the future.”

While he argues that “China has awoken Australia to a need for statecraft that is significantly more ambitious in scope than its customary reliance on great and powerful friends,” living in China’s shadow for the foreseeable future requires Australia to make greater efforts on national strategy. Moreover, with high-level contacts between Canberra and Beijing now resuming under Australia’s new Labor government, avoiding political appeasement for commercial gain will be a great challenge.

Australia’s Security in China’s Shadow is a very important book. It offers much food for thought for Australia at this critical juncture in its modern history. It also offers many lessons and insights for other countries, especially small and mid-sized countries, which are facing similar challenges.

This is a review of Euan Graham, Australia’s Security in China’s Shadow​ (ADELPHI AP490-492, 2023). ISBN 978-1-032-54660-5 (e-Book).

John West is adjunct professor at Tokyo’s Sophia University and executive director of the Asian Century Institute. His book Asian Century … on a Knife-Edge was reviewed in Australian Outlook.

This review is published under a Creative Commons License and may be republished with attribution.