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Danger of undefined territories in the South and East China Sea

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The number of disputes has risen over the decades in the region known for dynamic economy, competition, rich waters, possible big oil and gas reserves, important international roads, global trade flows, distrust, inability to define territory boundaries and lack of share of information between countries. Various actions, including harassing vessels, blockading islets and shoals and destroying equipment have increased diplomatic tensions.

Many unresolved territorial disputes till this day exists. From the map below we can see that almost all countries in this part of Asia have some unresolved maritime or other long lasting territorial dispute waiting for salvation.

Conflicts in the South and East China’s sea

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Source: Thomas Wright’s “Outlaw of the Sea” in Foreign Affairs.

 

Resources are important drivers of competition in this area. The sea is deep and no official records of oil and natural gas, so far only assumptions exist for the area has not been entirely researched yet but it has great potential. In the rising importance of energy and its price, desire to control this area is also rising. Estimates of reserves differ and reach up to 213 billion barrels of oil and 900 trillion cubic feet of natural gas, which is in oil reserves 10 times the proven US reserves and with natural gas equal to Qatar reserves. Another reason and source of conflict are also fishery resources. All coastal countries have developed fishing industry and with fishing in the disputes waters different incidents such as harassment, confiscation of catches and equipment and also imprisonment of fisherman happen. Many of these areas are being patrolled by coastal guard and local maritime agencies. Another reason for rising tensions has been pointed out and that is China’s rise and evolving regional dynamic. With growing capabilities, globalization and rising economic capabilities is China more and more dependent on other countries to trade and that’s why open access and water corridors to China represents great importance. China’s growing military budget also poses some concerns to other countries in the region. Also growing nationalism has been seen in Asia.

To understand the basis of the conflicts one needs to look way back into the history, international laws, agreements and conventions and last but not least every country’s interpretation for every single conflict alone.

China Sea Territory Disputes

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Source: Money Morning staff research.

 

Spartly islands and Paracel islands are lying in the South China Sea, where the People’s Republic of China makes extensive claims so called “nine-dash line” (claims almost 90% of areas of the South China Sea) seen also on the map above. Brunei, Malaysia, Philippines, Vietnam and Taiwan have claims over some part of mentioned territories. China and Vietnam claim they have historic rights. Philippines on the other hand, invoke its geographical proximity. Malaysia and Brunei (does not claim any of the disputed islands) claims of territory have a background in the United Nations Convention on the Law of the Sea and their economic exclusive zones. Bigger disputes exist in the South as they do in the East, where have we seen also more escalations and tensions in recent times.

In the East China Sea, China, Japan, and Taiwan each claim a Japan-administered island that Japan calls the Senkakus, China the Diaoyu Islands, and Taiwan the Diaoyutai Islands. The BBC has reported of the importance of the islands in its rich fishery grounds, potential oil and gas reserves, strategic positions and rising competition between the United States and primacy for military primacy in Asia-Pacific region. The dispute over inhabited land began escalating after the United Nations Law of Sea codified access to maritime resources based on control of nearby land features.

The Scarborough Shoal is claimed by China and Taiwan. China defines territory as it’s one based on the line that no other country recognizes. The Philippines filed the case at the Permanent Court of Arbitration in 2013 but China has refused to take part in the process. Even successful pursue at the United Nation tribunal will not make China obliging by the ruling. This could also have a negative impact in a case of Philippines failure because it will be less likely that other countries in the region that have similar disputes will turn to international institution to resolve their disagreements. Another two disputed in the region are among others The Macclesfield Bank which is claimed by China, Taiwan, Vietnam and the Philippines and Pratas islands that are claimed by China and Taiwan.

Council of the Foreign Relations has suggested some preemptive potential measures should be made: resource sharing, military – to- military communication, bilateral management of the disputes, dispute resolution mechanisms with third party get involved, International court of justice and international arbitration. Peace and stability should be guaranteed also by ASEAN, which plays an important role in this region. The question lingers is Asia pacific diplomacy going to be able to settle the disputes in Asia-Pacific region?

Teja Palko is a Slovenian writer. She finished studies on Master’s Degree programme in Defense Science at the Faculty of Social Science at University in Ljubljana.

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Chinese Diplomacy: Xi’s “Twin” Victory over Biden, Modi?

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On China, the US public stands apart and India’s Hindu majority population is described by Beijing as “self-deceptive.” In the wake of the Indian government’s decision to withdraw troops on the border with China and Biden’s recent “twin” failure to rally its European allies against Beijing, a Chinese scholar is claiming a “double” victory over both Washington and New Delhi.  

On February 19, the US President Joseph Biden delivered a speech at the 2021 Munich Security Conference. In his first public appearance in the world, President Biden categorically outlined his foreign policy approach and said: “How the United States, Europe and Asia work together to secure the peace, and defend our shared values and advance our prosperity across the Pacific will be among the most consequential efforts we undertake.” The international media, from London to Paris to Tokyo to New Delhi, applauded Biden’s 15-minute virtual assurance to partners, allies and friendly countries in Europe and Asia that “America is back.”

In Beijing, however, the Biden speech was not only interpreted in a strikingly different manner, but the conclusions drawn in the state-controlled Chinese media too were “out of the box,” so to speak. Commenting on the new US leader’s first “twin” multilateral appearances since taking office – at the MSC and at G7 summit, both on the same day – the sister publication of the Chinese Communist Party’s mouthpiece People’s Daily but widely acknowledged in the global media as China’s authentic official view, the English Language hyper-nationalist Global Times dismissed Biden’s debut “twin” attempt “to rally allies against China” as utter failure.

In a signed commentary entitled “Biden fails to pit allies against China in debut at G7, Munich events,” GT staffer Zhang Han wrote: “In a speech to the virtual G7 summit, Biden stressed the need for US and allies to collectively deal with economic threats posed by China. At the Munich Security Conference, Biden said we must prepare together for long-term strategic competition with China and vowed to restart multilateralism after four years of America first policies.”(Emphasis added) But as was expected, Biden’s calls did not gain much traction among US allies in Europe, Zhang Han concluded.

Calling Biden’s efforts to project China as “fabricated enemy” in his twin attempt in one day as gross error, professor Li Haidong of China’s authoritative Foreign Affairs University was quoted in the above GT commentary as saying: “The uncertainty of US politics has weakened Europeans’ own confidence in the former leader of the alliance, not to mention the fact that each country has their own problems to handle and is unlikely to confront an ‘fabricated enemy’.” In another GT story published a day before the G7 summit, professor Wang Yiwei, director of the International Affairs Institute at Beijing’s Renmin University said: “What Biden wants to do at the G7 meeting is like putting ‘new wine into an old bottle,’ but other G7 countries such as Germany, Italy and France, including even Japan, not all of them see China as the ‘enemy’.”

Reporting for the popular news app platform Guancha.cn, Zhang Chengjing reminded her readers “Of course, he [Biden] did not forget to mention China in his speech and called on European allies to be prepared for long-term strategic competition with China.” To which, a reader responded by saying “I wonder if Mr. Biden knows about the ancient Chinese idiom Kè zhōu qiú jiàn – ‘silly solutions?’ The humankind has entered the 21st century, is it possible to return to the world pattern of the 20th century?” The reader was obviously jibing at Biden’s remark in Munich that “The partnership between Europe and the United States in my view is, and must remain, the cornerstone of all that we hope to accomplish in the 21st century, just as we did in the 20th century.”

It is pertinent to mention, Beijing’s commentariat meticulously scrutinizes the global media – especially op-ed columns on China related themes. A recent POLITICO analysis on the Europe’s expectations from Biden’s Munich address surely did not go unnoticed in Beijing. Widely influential in the European Union, the analysis said: “Indeed, while there is bipartisan consensus in the US that China represents a   fundamental threat to Western democracy. The Europeans are much more sanguine. That’s due in large part to Europe’s desire to maintain and expand commercial ties with China.”

What is most intriguing or perhaps cynical was the reading of the US leader’s online speech in Munich by Zhang Zhikan, a seasoned US affairs analyst at Beijing’s left-leaning and the CPC sponsored Kunlun Research Institute. In his signed commentary on the Institute’s website, Zhang wrote: “US President Biden delivered a speech at the G7 summit in which he declared that the era of American exceptionalism is over.” (Emphasis added) Zhang didn’t stop at that but went to conclude: “The fact that President Biden delivered such loaded speech on his world’s foreign policy debut is a clear admittance that an era (of the US domination) is over, and that a more complicated struggle is coming.” Indeed Zhang was referring to Biden’s remark that “be prepared for a long-term strategic competition with China.”

Going by the language and substance of the manner in which the Chinese media has been reporting the Biden speeches respectively at the MSC and at the G7 summit, it is quite likely Zhang Zhikan has surely substantially missed a vital component of Biden’s remarks and is a victim of what is proverbially called “lost in translation.” Granted Zhang might have been “misled” by the twisted manner in which the Chinese media reported Biden’s twin speeches at G7, Munich events. What is startling is Zhang claiming Biden has “retreated” from Trump’s aggressive stance on Taiwan. Referring to Biden’s remarks made on China – including on Hong Kong, Xinjiang and Taiwan, at the CNN’s town hall event days before the Munich online speech, Zhang said: “[Biden admits] The US has withdrawn from Trump’s past practices on Taiwan and other issues.”

Let us recall what did Biden say at the town hall in Milwaukee, Wisconsin that Zhang Zhikan was referring to? On February 16 at the town hall event, when asked about his Lunar New Year call with the Chinese leader Xi Jinping, Biden replied: “I point out to him no American president can be sustained as a president, if he doesn’t reflect the values of the United States. And so the idea is, that I am not going to speak out against what he’s doing in Hong Kong, what he’s doing with the Uyghurs in the western mountains of China and Taiwan trying to end the one China policy by making it forceful…”

Implying the Biden administration was climbing down in the wake of China’s amazingly quick economic recovery from the impact of Covid-19 pandemic, Zhang Zhikun’s cynical approach was evident in his claiming “victory” over India too. Attributing the news of the Indian troops withdrawal from the conflict-ridden China’s western border – just a few days before the Biden “retreat” – to China’s formidable national strength, Zhang saw a close link between the two developments. Echoing Zhang’s view, an article in a popular Chinese mobile phone news platform recently argued “the Indian economic asymmetries with China” is why India frequently provokes border skirmishes with China. Citing the news platform Jinri Toutiao, an Indian China watcher wrote: “India dreams to become the centre of the world manufacturing but has been bullied and pushed over by the biggest hegemon China, therefore by way of ‘border provocation,’ ‘flaring up anti-China sentiments,’ and ‘by boycotting Chinese goods’ India wishes to achieve this goal.”

To sum up, Zhang Zhikong rejoicing over China’s “twin” victory over Washington and New Delhi is no doubt reflection of the current mood in Beijing based on “managing” the world situation well. In Beijing’s view, a series of international “China’s diplomatic” victories in recent months, namely China’s success in fighting coronavirus pandemic, China being the only leading world economy to register economic recovery and relatively spectacular economic growth in 2020, signing of the RCEP, inking China-Europe Investment Agreement, more recently and last but not least China’s vaccine diplomacy as well as Xi-Biden telephone conversation – all these have been the key factors resulting in both Biden “retreat” and China’s “psychological warfare” defeat of  New Delhi, respectively.

Finally, if tone and tenor of most international affairs commentaries during the past fortnight in the Chinese media are any indication, the Lunar Year of Ox has proved to be an auspicious beginning for China and her standing in the world. In the words of a Chinese IR scholar: “All the areas where we failed to make breakthroughs in the recent past are now showing our victories. All good things are now being delivered at China’s door. The world is suddenly cheering for us!”

It seems the world had started believing the China story has ended in Shakespearean tragedy. However, Beijing reckons the China story is going to end in a Shakespearean comedy. The Chinese Lunar year calendar cycle is of sixty years. The zodiac animal when the most famous Chinese slogan “The Chinese People have now Stood Up” was first heard in mainland China in 1949 was Ox – many Chinese are reminding the world!    

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A brief history of Sino-Australian political relations from 1949 to 2020

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Former prime minister Malcolm Turnbull and Mr Xi met for a bilateral talk during the G20 Forum in Hangzhou.(Supplied: Twitter)

To understand what is happening now requires an understanding of history. The recent Sino-Australian relations have been like a roller coaster ride, which needs to date back to history at least from 1949.

There are several characteristics worth mentioning in Sino-Australian relations. First, there have been diplomatic ups-and-downs between the two governments due to the divergence of the two countries’ political systems and ideology. Second, by comparison, bilateral ties have generally been improving for decades due to the reciprocal economic complementarities and cooperation despite the recent trade disputes. Third, Sino-Australian relations “has become more unequal with the passage of time” due to China’s rise. Fourth, the influence of the US on the foreign policy of Australia cannot be underestimated. In terms of structure, this part will be divided into four periods, posited on the founding of the People’s Republic of China in 1949, the establishment of diplomatic relations in 1972, the outbreak of Tiananmen Incident in 1989 and the recent decline of bilateral relations starting from 2015 with additional illustration of the influence of the US in Australian foreign policy.

The Pre-recognition politicial relations from 1949 to 1971

Graeme Dobell argues, “China has always loomed in the Australian consciousness”, possibly because Australia is geographically located in the Asia Pacific and surrounded by Asian countries with a significant number of ethnic Chinese. Historically, China was viewed in Australia as a threat, namely, “Yellow Peril”. The notion is a color-metaphor, full of racism. East Asians, especially the ethnic Chinese, are an existential hazard to other countries as immigrants.  Professor Gina Marchetti argues that

the rooted in medieval fears of Genghis Khan and Mongolian invasions of Europe, the yellow peril combines racist terrors of alien cultures, sexual anxieties, and the belief that the West will be overpowered and enveloped by the irresistible, dark, occult forces of the east.

In Australia, as a Western country located away from the West,  its Immigration Restriction Act of 1901, infamous as the White Australia Policy, was designed to prohibit Chinese settlers. “Fear of China and hostility to the Chinese immigrants were factors” that supported the Federation of Australia, and both factors existed for decades. The federating of Australia was the process by which the sixBritish colonies consented to unite and become the Commonwealth of Australia. Liberal Prime Minister Harold Holt formally abolished the White Australia Policy in 1966 with the introduction of the Migration Act 1966. By legislating legal equality among European and non-European migrants, this new Act has opened a new immigration history era. It has been the most crucial step in forminga multicultural society in Australia.

However, Australia’s unique geographic location and huge disparity of population between Australia and China have decided that the natural insecurity of Australia as a nation, for that linguistically, historically and intellectually, Australian ancestry originates from Europe, and its vital economic partner and most crucial military ally is the United States, both far away from Australia. Furthermore, Gyngell argues there is always “fear of abandonment” in Australian foreign policy. Likewise, former Australian Minister for Foreign Affairs Gareth Evans and former Australian diplomat Bruce Grant confirm that

the evolution of Australian foreign policy needs to be assessed against a background in Australian politics of persistent anxiety about a threat from Asia: sometimes vague and undifferentiated, sometimes specific, but always there.

In this period, China was viewed in Australia as a threat, namely, the aforementioned “Yellow Peril” and “Red Menace”. Arguably, the Red Menace has always existed in the Australian society and the government until now,which is a term applied during the Cold War for describing a nation that faces the increasing authoritarian threat of communism. This term was used to refer to the Soviet Union, while nowadays, it has been employed to mean Communist China. Besides, the difference of scare only reflects the extent to which the Australian government fears the Chinese Communist Party. From 1949 to 1972, especially when Australian and Chinese troops participated in the Korean War as rivals and later the Cultural Revolution was launched in China, Sino-Australian relations were hostile to each other due to the fact they were both subordinated to different political and ideological camps: USSR-led communism and the United Stated-led capitalism.

The steady development of Sino-Australian political relations from 1972 to 1989

During this period, Sino-Australian relations encountered the most drastic ups and downs the bilateral ties have ever experienced. In 1972, the Whitlam Labor government’s election marked the most radical turning point in Sino-Australian history by establishing diplomatic relations with China in December of the same year. Despite the endeavor, Whitlam made, this new chapter of the bilateral relations is mainly dependent on the change of  China Policy from the strongest ally of Australia, the United States. More concretely, in the early 1970s, the American army was withdrawn from Vietnam, indirectly ending the military collisions with the People’s Liberation Army.At the beginning of 1972, Nixon has his dramatic visit to Beijing and Shanghai.

From 1972 to 1989, the bilateral relations were at the stage of steady development. Partly, the positive Sino-Australian relations can be attributed to the same view of opposing the Soviet threat, which facilitated the Sino-Australian cooperation. More specifically, in July 1973, the first Sino-Australian trade agreement was signed by the Chinese government and the Whitlam government. The visit of Whitlam to Beijing in late 1973 culminated in a joint communique, concurring with the promotion of views exchanges among the Sino-Australian officials. In 1976, during the period of the Coalition-led Fraser government, “the Australian Parliament even stood in silence in the honor” of Mao Zedong, when Mao passed away. In 1978, the Australia-China Council was built by the Coalition-led Fraser government to facilitate bilateral relations.

Furthermore, in the 1980s, with the economic reform of Deng Xiaoping and the incrementally frequent visits of Sino-Australian senior leaders, the Australian government saw the economic opportunities China may bring, and the Chinese government also realized the Chinese modernization might benefit from the support of Australia. Mackerras argues that “the mid-1980s saw the relationship reach a peak”. In 1984, the ALP-led Hawke government launched the China Action Plan, “an overall economic program towards China”, aiming to deepen bilateral economic cooperation. In 1985, Hawke told the Australian parliament that a ‘special relationship’ between the two countries was forming.

The realistic Sino-Australian political relations from 1990 to 2015

The outbreak of the Tiananmen Incident in 1989 was a devastating turnaround in Sino-Australian relations, bringing the vigorous relations to a sudden stop. To some extent, Deng’s economic reform gave Australia and the Western world an illusion that China tried to become more Western. Contrariwise, the Incident shattered misapprehension of the special relationship between the two countries and has pushed human rights to one of the central issues that needs to be addressed in the bilateral agenda until now. It is noteworthy that the negative influence of the Tiananmen Incident was in all domains. Antagonized by the Australian broadcasting of violence in Beijing, the Australian people, including politicians, business people, scholars and religious figures, unanimously condemned Beijing. All aspects of Sino-Australian relations were affected at varying levels.

Arguably, after the Tiananmen Incident, the attitudes of the Australian government has changed to be more pragmatic and national-interest-driven. Wang argues that  the reassessment of Sino-Australian relations “did not lead to a fundamental policy shift” in Canberra “and human rights were not emphasized to the detriment of Australia’s economic interests”. In 1993, as the first Australian Prime Minister after the Incident, Keating visited China, breaking the diplomatic ice, partly because he needed to push wool exports to China.

Noticeably, from 1989 to 2015, China and the comparison of world powers experienced earthshaking changes. The hazards of the Asian Financial Crisis in 1998 and the Global Financial Crisis in 2008 lead to the economic meltdown of some Southeastern countries and the relative decline of the West. Bearing the two Crises, China has benefited enormously, even the most, from joining the WTO and other regional and global economic organizations as a member of economic globalization. At the end of 2010, China surpassed Japan and has become the second-biggest global economy, indicating that the global economic center has gradually transferred to East Asia. During this period, Hong Kong and Macao were subsequently handed over to China, enhancing China’s confidence. There is no doubt that bilateral relations have been increasingly asymmetrical during this time, leading to the concept of equal partners less possible.

From 1989 to 2015, facing China’s economic rise, on the one hand, the Australian government and business took advantage of the historical opportunities and have been more engaged in the Chinese economy. For instance, the Coalition-led Howard government was a firm“ supporter for China’s accession to the WTO” to share better Chinese economic growth. In 2014, the Coalition-led Abbott government and the Chinese government started to portray the bilateral relations as a “comprehensive strategic partnership” due to the incremental and robust trade relations and more frequent communication between top leaders of the two sides. On the other hand, due to the different political ideologies and systems, and the gradually widening disparity of the two countries, there have been strong concerns in the Australian government that China may leverage trade over Australia. Foot  indicates the sense of uncertainty and insecurity in Canberra that

Has Beijing worked to support the dominant norms of the international order, or has it striven to overturn them? Has it ever deserved to be called “responsible power”, a term defined by the dominant states, or has it acted irresponsibly? To place these questions more explicitly within an international relations framework, has China shown itself since 1949, and more especially during the period of reform and opening since 1979, as capable of be socialized into supporting global norms? Or, as realists would predict, have there been signs that its rising power over the past two decades has generated new tensions in the international system? Looking more to the future, what kind challenge does its enhanced capabilities pose to the status quo?

Despite the dilemma that the Australian government has to face and the political ups and downs between the two countries during this period, “the growing sense of independence in formulating Australia’s policy towards China, as well as the increasing saliency of trade considerations in implementing such policy, has transcended political and inter-administration divides”. Thus, to some extent, although there were still ups and downs during this period from the ALP-led Hawke government to the Coalition-led Abbott government in 2015, the bilateral relations “appears to have become less uncertain” and matured. Arguably, the Australian government started to view China either without unjustified fear as they had before 1972, or super optimism as they had before 1989.

In fact, the differences may only exist in the style of how different administrations approach China. For instance, the first Mandarin-speaking Prime Minister Kevin Rudd introduced a concept called “Zhengyou in Chinese that means to voice different opinions to benefit the Chinese leadership. By comparison, another Prime Minister John Howard preferred to deal with China on more practical issues.

The increasingly strained bilateral political relations from 2016 to 2020

Bilateral relations have deteriorated since the exacerbation of territorial disputes in the South China Sea in 2016. The Australian government criticized China for not abiding by the South China Sea Arbitration, a joint statement with Japan and the US. In response, the Chinese government expressed its strong displeasure through its state-owned media the Global Times, denouncing Australia as a “paper cat”. Currently, the Australian government is concerned that Chinese activity in the South China Sea may threaten Asia pacific security, thus influencing Australian sovereignty and security.

More importantly, Australia’s closest and strongest ally, the US, initiated a trade war with China at the beginning of 2018.  Since Australia often follows American foreign policy, the increasingly intense Sino-American relations have negatively affected Sino-Australian relations. In the same year, Sino-Australian ties soured further when Australia became the first country to officially ban China’s Huawei from its 5G network. A similar prohibition on Huawei was later executed in the US in 2019.

In terms of domestic politics, there are continuously more negative speeches about China.Australian politician Andrew Hastie urges urged the Australian government and public to realistically recognize the unprecedented democratic conviction and security threat from China. He even goes “as far as to compare the Western tolerance of China’s rise with the appeasement of Nazi Germany”. Hamilton argues Chinese infiltration in Australia is a “silent invasion”. The Minister for Home Affairs Peter Dutton, one of most senior officers in the Liberal-Coalition-led Morrison administration, condemned China’s interference and cyber hacks in Australia and claimed that the policies of the CCP are incompatible with Australian values.

2020 may have been the most turbulent year for Sino-Australian relations so far. Facing the once-a-century Covid-19 pandemic, Beijing has taken trade actions against a series of Australian goods such as barley, cattle, wine, cotton and coal after the Morrison administration advocated an independent Covid-19 inquiry without consulting Beijing first.

The tension also extended to people-to-people exchange. Canberra has warned its residents against arbitrary arrest in China. In contrast, Beijing has cautioned against studying and visiting Australia due to purportedly increasing racism and discrimination against people of Chinese and Asian descent. At the end of 2020, Morrison reacted furiously and demanded an apology from Beijing to an image tweeted by a Chinese diplomat showing an Australian soldier holding a knife to an Afghan child’s throat, which has further shadowed current and future relations.

Meanwhile, despite the global pandemic, there is increasing scrutiny in Australian media, including of the Hong Kong anti-extradition bill, the Xinjiang re-education camp, and China’s political donation to Australian political parties, Chinese spy students, the fight between Hong Kong and Chinese students in Australia, the defection of Wang Liqiang, Huawei backdoor suspicion and the detention of Cheng Lei and Yang Hengjun. According to the Lowy Institute poll in 2019, Australians’s trust in China to ‘act responsibly’ has dropped to 32 %, a 20-point decline from 2018. In 2020, trust in China has deteriorated to 23%, the lowest point in the Poll’s history.

Whatever, if any, evidence underpins these narratives or not, they seem to point out one reality: the plummeting state of Sino-Australian relations. Geoff Raby, former Australian Ambassador to China, even argues that Sino-Australian relations are at their lowest ebb since 1972.It may be controversial to argue that the current bilateral relations are worse than the relations in 1989, but it is appropriate to point out the reality that the Sino-Australian relations have been incrementally damaged. The Australian government’s dilemma is the overreliance of the Australian trade upon China and the exacerbated political disagreement. Jonathan Pearlman argues that “security and economics are tugging Canberra in different directions, as are its values and its interests”.

The Influence of the United States in Australian foreign policy

Undoubtedly, the Australian foreign policy has been influenced by the American government, as Australia has been called the “fifty-first state” of the US. Australia and the US have the same language background, similar European ancestry, similar political systems and strong economic ties. More importantly, in 1951, Canberra and Washington agreed on the Australia, New Zealand and United States Security Treaty (ANZUS), regulating that “an attack on either country’s armed forces or territory in the Pacific area” means “common danger” for the three countries. Since the US abolished its responsibilities to New Zealand due to the disputes of nuclear-armed ships, the ANZUS has become a bilateral treaty between Australia and the US and, separately, between Australia and New Zealand.

Given the American economic and military power around the world and the substantial disparity of Australia-American strengths, it is easy to argue that the ANZUS is the cornerstone of Australian security, and the US is the most important ally of Australia. In fact, Australia followed the US’s leadership through the UN, in the Korean War in 1950, the Vietnam War in 1962, the Afghanistan War in 2001 and the Iraq War in 2003 and recognized the PRC after the Nixon government had changed its China policy. To underpin the above view, Tow and Albinski affirm that the “ANZUS alliance remains Australia’s primary security relationship”. The former Australian diplomat Dr.Alison Broinowski argue that

Australia uncritically and voluntarily imitates its major ally (the United States) and its minor ally (the United Kingdom) in most things, yet lacks the capacity to do them well and the independence to do them differently. Having taken the drug of dependence from birth, Australia seems allied and addicted to it.

Thus, it is easy to question how independent Australia’s foreign policy is, especially its China policy, and argue that Australia does generally imitate the US’s foreign policy. As for the recent downturn of bilateral relations, Geoff Raby, an insider of Australia politics, believes that Canberra has developed policies to push back China’s rise in that the US started regarding China as a strategic competitor.

However, there is some policy flexibility in the Australian government, mainly economic-interests-motivated. To cite an instance, despite the opposition of the US, Australia participated in the China-led Asian Infrastructure Investment Bank in 2015 and leased the Port of Darwin to a Chinese company in the same year. Australia took the position as an outsider in terms of the Sino-American trade war, suggesting the two sides to end the fight to avoid the risks of collateral damage to Australia. Even in the 1950s and 1960s, when the Australian government adopted a hostile attitude towards China, the wheat trade between China and Australia“reached a significant level”.

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The Economic Revival of Japan

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Photo: Jezael Melgoza/ Unsplash

Amidst the uncertainty weaved by the pandemic, the stock markets around the world have shunned the preconceived notions associated to their functionality over the past year. While some sophisticated economies are suffering turmoil at the ensue of new Covid variants, deviant vaccination drives, and resumption of state-wide lockdowns, some of the countries are outright negating the educated forecasts made by seasoned financial experts all over the globe. China stands as a flag-bearer of such reality-defying markets: bagging GDP growth unlike any in the world whilst simultaneously controlling the virus strain in Beijing. Recent to the tally, however, is the quaint nation of Japan that despite being head-to-head with another gruesome wave of Coronavirus, still manages to consistently outperform the hailed champions of the global financial markets.

The 3rd biggest economy in the world astonished the financial gurus when Nikkei 225, Japan’s core stock market Index, soared up steadily over the last few weeks. With a 1.9% hike at the week’s opening on Monday, 15th February, Nikkei 225 Index surpassed the coveted 30000-point threshold after more than three decades. The economic rebound is associated to the export sector picking up the pace after a sluggish performance last year. The country still wrestles with the throttle of the pandemic; confirming over 1000 Covid-positive patients since November 16th and adding the cumulative death toll of 7056; surpassing the 7000 deaths mark in just under two weeks.

The positive effect, however, dawns since the daily confirmed cases are showing a steady drop; below 1000 daily-confirmed cases in over 4 months. This occurrence is in tandem to the global fall in the Covid cases. Moreover, Japan’s approval of the Covid vaccine produced by Pfizer Inc. is reflecting the recovery in the health condition of the country, especially a lucrative news amidst the second health emergency recently imposed in Tokyo.

Standing at the 30393.13-point mark, Nikkei 225 is expected to follow the bullish trend heavily over the following week as well. According to the measured forecasts, the bourse is optimally headed to strike the 33000-point mark after crossing the milestone of triple decades. This is due to the positive economic outlook in tandem to the rebooting of the global economy which would ultimately enable the export-reliant country. With Japan announcing a 12.7% GDP growth trailing from the recovery of the last quarter of 2020, followed by a hefty government stimulus to prompt domestic consumption, the Japanese bourse is expected to inflate by up to 30% by the end of the first quarter of 2021 in March, presumably speculating a record surge to bypass the highest ever figure of 38915.87-point, posted by Nikkei 225 back in 1989 before being subsequently floored by the notorious price bubble crash.

However, the economic recovery much less a record shattering surge in the market is heavily dependent on some of the core facets. The debacle of the nationalisation of vaccines is evident in Europe and ironically is the crisis posing more of a serious threat than the pandemic itself. Japan’s economic stability would only be possible given the vaccinations are administered effectively and timely with minimal resistance. As Japan still finds it hard to evade the emergency measures introduced in multiple regions, a vaccine crisis could intensify the emergency precautions and lockdowns may even gear into effect. This could seriously undermine the production capabilities of the country which ultimately could carry forward as an element hampering the blooming investor confidence in Japan.

Much to the global conformity of economic peril last year, Japan’s economy also contracted by 4.8% in 2020. The steep contraction, despite being of a greater extent relative to the 3.5% annualised shrinkage in the US economy, was still much controlled than the forecasted 5.3% fall projected by the International Monetary Fund (IMF). However, unlike some of the regional economies, the pandemic-induced decline lasted only for a short span of time before Japan waded through and rallied. Posting a 3% growth in the 4th quarter of 2020, when major economies like Germany and US grappled with recession, Japan steadily made surface.

Now as the pessimism looms in Europe and the political divide worsens in US, Investors are pouring confidence in Japanese equities which provide a solid foundation to the already surging Japanese Indices. This shift in perspective could be gauged by the purview of global stock positions taken by the active equity investors throughout the globe; pouring investments unlike the sceptical position adopted since January. The increasing investor confidence coupled by the improving economic and social health of Japan has proved monumental on the financial charts; despite being in the highs of a heavy stimulus, S&P 500 continues to be outperformed by Nikkei 225, sometimes even falling short by colossal margins to the returns added by the Japanese Index.

Which way the markets would turn and how Japan could sustain the whelming economic recovery depends largely on how Japan deals with Covid and how efficiently it regulates the vaccination drives. Moreover, Japan’s success may be upped the ante by any new misery that might befall on US or Europe that could ultimately drive more confidence and flare to the 3rdlargest economy of the world.

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