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Kinling Lo

It is a substitution game on a grand scale.
As Australia has sided with the United States in the battle with China for regional influence, Beijing has flexed its trade muscle by blocking billions of dollars in Australian exports while opening the door to similar products from other countries.
In Chinese supermarkets and restaurants, Australian lobster may be off the shelves and menus but large quantities of the seafood from the US are allowed in as part of a US$36 billion trade deal.
And as soon as Australian coal became the target of import bans, Chinese traders reportedly turned to Indonesia and other suppliers for the fossil fuel.
But the efforts to ramp up pressure on Canberra go well beyond trade. Observers say Beijing is trying to erode Australia’s diplomatic influence in the region to the benefit of its own. It is a strategy that will not be without cost to the Chinese consumer, according to one analyst.


Beijing’s list of frustrations with Australia goes back to 2018, when Canberra barred Chinese tech giant Huawei Technologies from its 5G network and introduced legislation outlawing foreign interference in Australia’s domestic politics.
Then, in June 2019, a Lowy Institute poll suggested that the Australian public’s trust towards China to “act responsibly” was at its lowest point since the survey began 15 years earlier. That was followed by the Australian government voicing support for protests in Hong Kong
Australia was also very vocal earlier this year in calling for an international inquiry into the coronavirus pandemic, a move that China described as “poisoning bilateral relations”.
Fast forward to last month and Beijing reeled off more than a dozen grievances accusing Canberra of involvement in Chinese domestic affairs, including Hong Kong and Xinjiang.
In each of these cases, Canberra’s position was shared by Washington.
US$500 million of coal sits idle on anchored ships off China’s coast
Against this backdrop, China has blocked billions of dollars worth of Australian exports – including those lobsters – and imposed a 212 per cent tariff on Australian wine.
One of the biggest hits was in October and aimed at Australian coal, a major bulk export to China.
Soon after Chinese authorities reportedly told importers not to buy the Australian commodity, China’s state-backed Coal Transportation and Distribution Association signed a non-binding pact with Indonesia to ramp up purchases its coal supplies over the next three years.
Chinese coal traders were also turning to supplies from other countries, such as Mongolia, industry sources told the South China Morning Post.


The Indonesian coal agreement is one example of where Beijing has been luring countries with investment and trade promises, particularly among the 10-member Association of Southeast Asian Nations (Asean) and Pacific island countries.
Adam Ni, director of the Canberra-based China Policy Centre research organisation, said China’s use of rewards and punishments would grow.
“Increasingly, we will see China joining closer to Asean countries and others, at the same time using trade measures and other devices to punish these other countries that seem to be working with the US against China,” Ni said.
He said China could easily find alternatives for the targeted Australian products from other countries, even from those politically aligned with Canberra.
“When Australian wine is being restricted, somebody is going to benefit, as the demand will still be there. So, in some ways there is only so much … ‘like-minded countries’ can do. They have cognitive interests towards Beijing but they also have competitive interests,” Ni said.
Yet, Ni said, trade and economic coercion from China would not be sustainable in the long run because it placed a huge cost on its consumers, with China likely having to look for alternatives that were of higher price or lower quality.
Senior Chinese diplomat blames Australian media for negative spin on Beijing’s grievances
China’s efforts to gain sway in the region were also apparent late last month at a vice ministerial-level “special meeting on Covid-19” between China and 10 Pacific Island countries.
According to the Chinese foreign ministry, Beijing repeated its promise to make vaccines for the coronavirus accessible and affordable for developing countries, including Pacific nations.
But Beijing also seized the chance to gain political backing on non-pandemic affairs, including the ritual reaffirmation of the one-China principle – which Beijing translates to refusing to recognise self-ruled Taiwan as a country. In addition, it gained a pledge of “mutual support on issues involving each other’s core interests and major concerns”, a phrase Beijing has used in response to Australian and US criticism over human rights-related issues in Hong Kong and Xinjiang.


Some of those efforts could be paying off.
In this year’s Lowy Institute’s Asia Power Index released in October China was ranked as the second most influential in the region and Australia was sixth. The US was rated the most influential among 26 countries according to evaluations in eight areas, including cultural, diplomatic influence, military and economic capability.
Canberra’s best ranking was for defence networks in the region, coming second to the US, according to the report.
Dominic Meagher, an economist and visiting scholar at the Australian National University and the director of the Australasia Strategy Group, said that while China had taken some steps to prepare for worse relations with Australia, it appeared to be mainly focusing on looking for alternative commodities supply, such as iron ore, while Australia was maintaining its influence by gathering strategic partners.
“As for preparations for worsening relations: the Australian parliament has been investigating options for supply-chain resilience and export diversification, and the government has been investing heavily in its diplomatic efforts with other countries in the region, as well as friends and allies further away,” he said.
“Many countries are actively investing in alternatives to trade and investment with China because they no longer see China as a reliable partner … if China chooses to continue using punitive trade restrictions for political reasons, the main harm will be to people’s willingness to make long-term trade commitments with China,” Meagher said.


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Diplomacy


The Asia-Pacific region is a battleground for influence as China tries to get political backing from neighbours and small island nations
China may find costs to its import bans on Australian goods, say analysts



The Asia-Pacific region is a battleground for influence as China tries to get political backing from neighbours and small island nations.


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China-Australia row: from trade to coronavirus and foreign interference

The Asia-Pacific region is a battleground for influence as China tries to get political backing from neighbours and small island nations China may find costs to its import bans on Australian goods, say analysts

The Asia-Pacific region is a battleground for influence as China tries to get political backing from neighbours and small island nations

China may find costs to its import bans on Australian goods, say analysts