Originally Published 2013-04-18 00:00:00 Published on Apr 18, 2013
When the rest of the world was kept in a state of shivering suspense by North Korea's nuclear and missile threats, Australian Prime Minister Julia Gillard quietly undertook an important visit to China -- her second official visit to Beijing in about two years.
Australia seeks new warmth in ties with China
When the rest of the world was kept in a state of shivering suspense by North Korea's nuclear and missile threats, Australian Prime Minister Julia Gillard was quietly undertaking an important visit to China. Her China visit during 5-10 April was a well-planned one which showed her good equations with the new Chinese leadership. It was her second official visit to Beijing in about two years, the first one being in April 2011.

Orientation towards Asia

The Gillard administration has shown its keenness to emphasize Australia's increasing orientation towards the Asia-Pacific region ever since it came to power. Last year, Canberra published a significant document titled "Australia in the Asian Century" which recognizes that Australia's future is linked to the rising Asia and that it should take advantage of many benefits that could flow from the continent. In particular, it stressed the importance of the emerging Asian middle class that could be a boon to Australia's trade and investment. Within a short time after assuming office, Gillard made official visits to Japan, China, India, South Korea, Malaysia, Indonesia and Singapore and thereby proved that she was serious about promoting the Asian orientation of Canberra's foreign policy. Stating that her China visit marked the "centrality of Asia in our foreign policy", she stressed that the timing of the visit was "deliberate and reflected the importance of Australia's rapidly evolving relationship with China and our high level political oversight of that relationship." She said, "Asia has wealth and the demand; whether we meet that demand is entirely up to us."

Gillard was among the first foreign dignitaries to meet Chinese President Xi Jinping and Prime Minister Li Keqiang within a month after their assumption of office. Both of them had visited Australia earlier twice and were quite familiar with China's relations with Canberra. Gillard's objective of achieving a major breakthrough in the bilateral relations was very clear as she was accompanied by her senior ministerial colleagues - Bob Carr, Foreign Minister, Craig Emersion, Trade minister, and Bill Shorten, Financial Services Minister.

Partnership Dialogue

The most important outcome of the visit is that both countries have decided to elevate their relations to a partnership dialogue. They have also decided to institutionalise the meeting of the two prime ministers as an annual summit meeting. Regular strategic and economic meetings between the two foreign and economic ministers and top officials will also take place annually. Calling it a "big forward step', a buoyant Gillard exclaimed, "Right around the world countries are competing for China's attention. They want to come to China and be heard. What we have secured is a structure that says we will be there at the table."

Australia's opposition leader Tony Abbot also extended his full support to the annual leadership dialogue. He congratulated Gillard for putting the bilateral relations on a sound footing.

Though there was no proposal for a defence dialogue, it was pointed out that there would be a new round of talks between the People's Liberation Army and the Australian Defence Department on joint military cooperation. To be sure, Gillard had some proposals for joint US-China-Australia naval exercises, but they were not discussed at present. Nevertheless, there was speculation that they could be taken up at an appropriate time in the future.

Direct trading

Another key outcome relates to a new arrangement whereby both countries will start having direct trading in their respective currencies. The Australian dollar is only the third currency to directly trade in China's foreign exchange market after the US dollar and the Japanese yen. China is Australia's biggest trading partner accounting for about $120 billion in 2011. Whereas China is far ahead of Japan, the US and India in trade, its investment in Australia is still small accounting for A $2 billion as against Japan's A$ 11 billion in 2011. But China has tremendous potential to increase its trade as well as investment.

Both Australia and China have also been involved in protracted negotiations for a free trade agreement since 2005 and more than thirty rounds of talks have taken place without an agreement as they are not able to reconcile their differing positions on subjects like raw materials and agricultural products. As and when an agreement is signed, their trade and investment relations will be greatly enhanced.

Yet another outcome is to be seen in China-Australia joint initiatives to help the least developed countries in the spheres of health and water resource management. China was a recipient of Australian aid for a fairly long time, but this year Canberra will phase out its role as a donor to China. Interestingly, both China and Australia have come together to extend aid and they have signed a memorandum for such joint efforts.

Regional security and Australia's dilemma

How does one explain Canberra's present embrace of China in the context of its traditional security alliance with the US? Washington's rebalance to the Asia-Pacific has been of great relevance to Australia. Both President Obama and Prime Minister Gillard jointly announced it in Canberra in December 2011 and the US decided to station 2,500 American marines in Darwin. Though some analysts in the US maintain that Obama's rebalancing strategy has been motivated mainly by the Asia-Pacific region's economic dynamism, it is hard to ignore the growing military and economic assertiveness of China too as a driving force. In Australia, there is overwhelming popular support for its security relations with the US. In an opinion poll conducted in 2012, more than 85% of Australians considered their alliance with the US as very important. But China has showed its wariness to Obama's rebalancing strategy as principally directed against its interests in the region. However, it values Australia as an important supplier of natural resources and would not like to burn its bridges with it. Similarly, Canberra too would like to keep China as an important economic partner without at the same time weakening its strong security ties with the US.

(The writer is a Distinguished Fellow at Observer Research Foundation, Delhi)

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