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The End of Hedging in Australia’s China Policy and its Implications

15 Dec 2023
By Dr Alexander Korolev
13/03/2023. San Diego, United States. The Prime Minister Rishi Sunak, the Prime Minister of Australia Anthony Albanese and the President of the United States of America Joe Biden make a joint statement about future military collaboration at San Diego Naval Base. Source: Simon Walker / No 10 Downing Street /

For almost two decades, Canberra hedged its economic and security bets between China and the US rather successfully, with Australian policymakers announcing that the country would not have to choose between the two great powers. That era is over.

As a middle power in the Indo-Pacific, Australia has maintained and enhanced its alliance with the US while also bolstering cooperation with China – a pragmatic approach that served Canberra’s strategic and economic interests. This allowed Labor and Coalition leaders to hedge between the US and China and take a middle position on various issues, thus diversifying its economic and security stakes and maintaining diplomatic flexibility.

This foreign policy behaviour was epitomised in high-level statements emphasising that Canberra did not have to pick a side in the US-China rivalry. Prime Minister Julia Gillard stated in 2011 that “for Australia, this is not an either-or question […] Australia can maintain a close strategic alliance with the US while also enhancing its friendship with China, despite Beijing’s growing military and economic clout in the Asia-Pacific.” The then defence minister, David Johnston, also claimed that “we see there is a balance between our relationship with China and sustaining our strong alliance with the United States.” This foreign policy stance was not just rhetorical. Australia did take practical steps not to provoke China and, when necessary, reassured Beijing of Canberra’s benign intentions.

Things started to change dramatically in 2017 when Canberra started abandoning hedging, transitioning instead to full balancing with the US against China. In 2019, Australia cancelled its joint military exercises with China and later expressed open concerns about China’s influence over companies, universities, and political processes in Australia. In October 2020, Australia re-joined the naval Malabar Exercise with the US, Japan, and India, reversing an earlier stance of avoiding militarising the Quadrilateral Security Dialogue (QUAD). In September 2021, Australia joined the AUKUS (Australia-UK-US) security pact, seen by some as  glaringly anti-China due to its goals of stationing and building, with the US and the UK’s help, long-range nuclear-powered submarines in Australia and pushing back against a China-led “arc of autocracy.” After over 20 years of good relations with China and the US, Australia appears to have resolved its China contradictions by unequivocally siding with the US.

Joining AUKUS amid intensifying US-China rivalry represents a Rubicon moment in Australia’s foreign policy. Although its announcement did not mention China, AUKUS unequivocally aims to counter the rise of China in the Indo-Pacific. According to the Joint Leaders Statement, along with claiming to help “sustain peace and stability in the Indo-Pacific,” AUKUS will help allies “to protect” their “shared values.” Beyond the nuclear submarine deal itself, AUKUS seeks to enhance military interoperability, and the development of joint capabilities in such areas as hypersonic and long-range missiles, nuclear submarines, cyber security, quantum technologies, and artificial intelligence.

Not surprisingly, China has perceived the defence project as a “US-led bid to constrain the rising Asian superpower [China]” and a “part of US grand strategy in its intensified rivalry with China,” and even as a “critical step by the US to construct an Asia-Pacific NATO.” The former Labor Prime Minister Paul Keating savagely criticised the AUKUS decision as devastating, stating that “he [Albanese] screwed into place the last shekel in the long chain which the Americans have laid out to contain China. We are now part of a containment policy against China.”

At least two cases – Georgia and Ukraine – suggest that giving up on hedging might be a risky geopolitical endeavour for small and middle powers. While these two examples may be far removed from the Australian case (after all, Australia does not share borders with China and has a powerful military ally – the US), they offer cautionary tales for nations looking to balance against large assertive states.

The then Georgian President Michael Saakashvili sought to move closer to Washington while advancing relations with Russia, vowing to “do everything” to reach strategically meaningful relationships with each. Saakashvili’s rhetoric in the early 2000s strikingly resembles the Australian position of the early 2010s, stating that the “Russia or the West?” binary choice is unnecessary, further suggesting that the nation could achieve “the convergence of the American, Russian, and Georgian interests.”

As long as Saakashvili hedged, Russia-Georgia relations remained manageable. Moscow even agreed to gradually withdraw four Russian military bases from the Georgian territory. This hedging ended in 2008 when Georgia decided to advance military cooperation with the US and seek membership within NATO. This move triggered an irreversible deterioration of Russia-Georgia relations and, eventually, Russia’s military invasion on 8 August 2008, after which Georgia lost significant parts of its territory (Abkhazia and South Ossetia).

A similar pattern was observed in Ukraine before the 2014 Ukraine crisis. There, the then President Victor Yanukovich tried to hedge between Russia and the West, stating that “I intend to establish stable, strong partnerships with the European Union, Russia and the USA…” This stance worked, allowing Yanukovich to navigate the intensifying Russia-West rivalry and even reap benefits from both sides. However, the unequivocal reorientation to the West that followed Yanukovich’s fall from power was interpreted by the Kremlin as an immediate security threat that required an immediate response. Unfortunately for Ukraine, this response took the form of the annexation of Crimea and the instigation of “separatist movements” in Eastern Ukraine by Russia. As in the case of Georgia, Ukraine’s NATO membership has became a vague prospect.

The two cases show that  as great power rivalry intensifies, small and middle powers must be extremely cautious about their alignment decisions.

AUKUS and other moves by Canberra that indicated a tighter alliance with Washington have antagonised Beijing, even though they might be interpreted as Australia’s response to China’s increasingly assertive behaviour. Australia has become more closely aligned with the US’s military strategy to compete against China, and concerns abound about the possibility of Washington requesting Australia to deploy its new capabilities against the “enemy.”

In China’s perception, this shift presents the end of Australian middle power diplomacy and facilitates a more binary (US vs. China) regional power distribution. It also reinforces Beijing’s perception of Australia as a platform for US power projection against China. When structural competition between great powers becomes more pronounced, systemic pressure on smaller powers intensifies, and stakes involved in hedging rise dramatically. The costs of mistakes soar, as do the demands on policymakers’ geopolitical prudence.

Dr Alexander Korolev is a Senior Lecturer in Politics and International Relations in the School of Social Sciences at the University of New South Wales, Sydney. He received an MA in International Relations from Nankai University, Zhou Enlai School of Government, and PhD in Political Science from the Chinese University of Hong Kong.

This article is published under a Creative Commons Licence and may be republished with attribution.